Morgan Stanley says these top stocks have more room to run ahead of earnings
Morgan Stanley says there are still plenty of stocks that offer investors attractive upside heading into their earnings reports. The investment bank says companies like Spotify have more room to run ahead of their next quarterly reports. Other stocks rated buy at Morgan Stanley and screened by CNBC Pro include: Datadog, Warner Music Group, S & P Global and Starbucks. S & P Global Continued macroeconomic uncertainty is not a concern for the capital markets company, according to Morgan Stanley. Analyst Toni Kaplan says S & P Global remains a top idea ahead of earnings next week. “We view SPGI as a leading Information Services provider with a unique position among peers to expand in high-growth areas, ” she wrote. The Wall Street bank did trim its price target on S & P Global to $556 per share from $580 but says it’s still too attractive to ignore at current levels. “We are bullish on SPGI given its portfolio diversification, margin execution and capital-return profile,” she said. The stock is up more than 6% in the past month. Spotify Spotify is also firing on all cylinders, analyst Sean Diffley says. “SPOT keeps adding positive, meaningful and interactive engagement: more video, algo control, mixing tools, and [in real life] moments,” he wrote. Morgan Stanley says it likes how Spotify continues to innovate, adding new ways for users to interact with its platform. As a result, Diffley sees Spotify on track to blow past 300 million paid users. Other positive catalysts include an upcoming investor day. “At its first investor day in four years, SPOT can give investors tangible examples of how it ships product improvements and iterates in an AI world, in a label-friendly way,” he says. The Swedish company will report earnings on April 28 and shares are up 7% in the past month. Warner Music Group There’s “a lot to like, ” analyst Cameron Mansson-Perrone wrote in a recent note on the music company. Morgan Stanley recently raised its price target on the stock to $38 per share from $37 ahead of earnings in early May. “Our [overweight] thesis is predicated on the view that WMG remains one of 3 concentrated owners of music [intellectual property] in Western markets and that music remains undervalued,” he said. Mansson-Perrone also says AI concerns are overdone and urged investors to stay calm. “We see revenue and earnings acceleration at Warner Music supporting multiple re-rating, and believe AI fears are overblown,” he said. The stock is up more than 22% over the past month. Spotify “SPOT keeps adding positive, meaningful, and interactive engagement: more video, algo control, mixing tools, and [in real life] moments. … .At its first investor day in four years, SPOT can give investors tangible examples of how it ships product improvements and iterates in an AI world, in a label-friendly way.” Starbucks “So far we think SBUX is having success driving customers back into its stores and we see a better quarter than consensus on top line. YTD stock performance and investor views reasonably reflect this, in our view, but we still see favorable near term skew as the bear case is less convincing for the moment.” Warner Music Group “A lot to like. … .Our [overweight] thesis is predicated on the view that WMG remains one of 3 concentrated owners of music IP in Western markets and that music remains undervalued … We see revenue and earnings acceleration at Warner Music supporting multiple re-rating, and believe AI fears are overblown.” S & P Global “We view SPGI as a leading Information Services provider with a unique position among peers to expand in high-growth areas … We are bullish on SPGI given its portfolio diversification, margin execution and capital-return profile.” Datadog “Datadog heads into earnings with core business momentum, improving checks and line of sight to 30% growth in Q1 and upward estimate revisions for Q2/FY26. With positioning cautious given the recent pullback, we see an attractive setup.”
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