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These 27 stocks are the top investment ideas for the next 12 months to buy and own given current market conditions, according to Deutsche Bank

Business Insider logo Business Insider 10/8/2021 insider@insider.com (Lisa Kailai Han)
People walk past a branch of Deutsche Bank in Berlin, Germany. People walk past a branch of Deutsche Bank in Berlin, Germany. © Provided by Business Insider People walk past a branch of Deutsche Bank in Berlin, Germany. People walk past a branch of Deutsche Bank in Berlin, Germany.
  • September kicked off a worrying downturn to an otherwise stellar year for markets.
  • Every quarter Deutsche Bank asks its analysts for their best investment ideas for the next 12 months.
  • This quarter analysts picked 27 stocks across 5 sectors, including financials, healthcare, and more.

The fledgling economic prosperity that has been characteristic of 2021 seems to be coming to a grinding halt.

September lived up to its reputation as the worst month for the market - known as the "September Effect" - with the S&P 500's 4.8% decline this year far outpacing historical precedent.

October has a foreboding standing as the most volatile month for equities, given that the market suffered some of its worst crashes during this month - The Panic of 1907, the Great Depression's "Black Tuesday," 1987's "Black Monday," and the 2008 financial crisis all began in October.

With a tough month behind and a potentially worse month ahead, it can be hard for investors to decide exactly what stocks to buy now.

It doesn't help that an increasing number of investors, such as Mike Wilson, chief US equity strategist and CIO for Morgan Stanley, are beginning to say that signs point towards an upcoming selloff. "As growth decelerates and financial conditions tighten, valuations are likely to fall from their lofty levels," Wilson wrote in a September 27 note.

Taking these factors into consideration, analysts at Deutsche Bank recently released their quarterly top investment ideas to buy for the year ahead. Last quarter their picks returned 0.48% vs. the S&P 500's 1.91%, but they've beaten their benchmark in three of the previous four quarters - in fact, the analysts' picks over the last 12 months are up 41.72%, compared to the S&P 500's 29.03% gain in the same time frame.

Deutsche Bank's top investment ideas for the next 12 months

This quarter's 27 names span five sectors: Consumer, Financials, Healthcare, Industrials, and TMT (Technology, Media & Telecommunications).

In the consumer sector Deutsche Bank's stock picks are split between staples, which are necessary for living and are thus much more resilient to market volatility, and luxury discretionary products, which are elastic leisure goods such as restaurants or resorts.


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With vaccination booster efforts underway the discretionaries sector has already begun to recover, although the Delta variant has put a pin in recovery for hotels and cruise lines, and an expected increase in interest rates from the Fed may prove detrimental for this sector.

If cyclical sectors such as discretionaries are negatively impacted, consumer staples will appear more attractive in relative terms - though many consumer staples companies are currently feeling the pain from global supply chain shortages.

The financial sector is even more sensitive to interest rate volatility. For the past couple of months, as macroeconomic conditions have improved earnings growth and balance sheets throughout the industry have been robust, as proven by the results of the latest Fed stress test. However, if these favorable economic factors disappear, this sector, and especially consumer lending, will likely be more adversely affected.

There are a number of long-term positive factors that will benefit the healthcare sector, including an aging population both in the US and worldwide, the increasing prevalence of obesity globally, and an emerging middle class in developing countries.

These factors spell an overall healthy outlook for this sector, which will allow it to remain resilient even in the face of an economic downturn. However, the healthcare sector also faces certain risks as lawmakers try to pass legislation to regulate prices and to increase taxes.

Industrials span a wide range of sub-industries, but this sector primarily deals with companies involved with the production, distribution, or provision of services and supplies.

Increased spending in infrastructure from the government, combined with the economic reopening, has helped inject growth into this sector. However, the industrials sector is very sensitive to volatility in fuel costs and bottlenecks in the supply chain, two issues that have only worsened even as the economy recovers from the depths of the pandemic.

Finally, the TMT sector has received a major boost since the pandemic began and people needed to seek new avenues for work and entertainment at home. While this sector is expected to continue growing thanks to the significant expansion of 5G networks, tech companies are facing increasing scrutiny from lawmakers these days, and some claim that stocks in this sector are overvalued.

Although Deutsche Bank didn't recommend any specific ETFs to take advantage of sector trends, investors can gain exposure to these sectors with ETFs such as the Vanguard Consumer Staples ETF (VDC), the SPDR S&P Retail ETF (XRT), the Vanguard Financials ETF (VFH), the iShares U.S. Healthcare ETF (IYH), the Vanguard Industrials ETF (VIS), and the iShares U.S. Technology ETF (IYW).

Below are the top 27 stock picks across the 5 aforementioned sectors, along with the company ticker, market capitalization, current price, price target, and commentary from Deutsche Bank analysts.

1. Colgate-Palmolive Markets Insider © Provided by Business Insider Markets Insider

Ticker: CL

Market Cap: $64 billion

Price target: $86

Summary: "Colgate has made notable strides recently in strengthening its historically dominant oral care franchise with a return to premium-based innovation and elevated marketing investment, while also driving steady growth across its portfolio in e-commerce, emerging markets, and Hill's. Looking ahead, cost pressure will remain acute, but we see the company capable of offsetting such headwinds over time via net price realization/RGM and cost savings/productivity. Moreover, skin care development and/or further portfolio enhancement via M&A represents underappreciated positive optionality." 

Risks: "Downside risks: Higher-than-expected cost inflation or supply chain pressures relative to productivity, increased/elevated competition constraining pricing power or market share, EM macro uncertainty, ineffective R&D/A&P, stronger USD, suboptimal capital allocation, and/or an unexpected slowdown in Hill's / Pet Care." − Steve Powers

Source: Deutsche Bank

2. Five Below Markets Insider © Provided by Business Insider Markets Insider

Ticker: FIVE

Market Cap: $10.9 billion

Price target: $265

Summary: "While headwinds abound in the discounter/dollar store space, at current levels we view FIVE as a buying opportunity based on the recent pullback in shares post the 9/1 earnings release, solid top-and-bottom line performance and keen management of supply chain and inflationary pressures. The company delivered solid 2Q earnings with strength across the categories and noted a strong start to 3Q sales. As a value operator and a destination for teen and millennial shoppers the company operates well in varying economic environments and remains a long term square footage story with ample white space for unit growth and market expansion."

Risks: "Downside risks include GPM deterioration, especially driven by increased penetration of online, expansion risks as FIVE moves into new markets, and consumer traffic not reaching pre-COVID-19 levels with consumers meaningfully shifting to online." − Krisztina Katai

Source: Deutsche Bank

3. Las Vegas Sands Markets Insider © Provided by Business Insider Markets Insider

Ticker: CL

Market Cap: $64 billion

Price target: $86

Summary: "After "re-opening" in 2020, it's been a difficult slog for Macau casino operators, as visa restrictions and other assorted issues have curbed visitation and materially depressed revenue, despite the facilities being open for business. While LVS is and has been EBITDAR positive in both Macau and Singapore since the 4Q20, the pace of the recovery has been a source of frustration for the investment community. Furthering this frustration was commentary from Macau officials regarding the new Gaming Law and concession process. We believe the confluence of these events have created a favorable risk-reward, most notably for longer term oriented investors, but we also believe further details on the new Gaming Law, which we expect to come forth in the 4Q21, are likely to provide much needed clarity, which we believe will be beneficial for shares at current levels."

Risks: "Downside risks: 1) an inability to forecast, within reason, the shape of the demand recovery, 2) a greater-than-expected impact from competitor openings on Cotai over the next 18 months, 3) unfavorable Government policies in the aftermath of the COVID-19 pandemic, and 4) general macroeconomic / geopolitical risks that go beyond what is currently contemplated in our estimates." − Carlo Santarelli

Source: Deutsche Bank

4. Playa Hotels & Resorts Markets Insider © Provided by Business Insider Markets Insider

Ticker: PLYA

Market Cap: $1.3 billion

Price target: $11

Summary: "We view PLYA as being uniquely positioned within the broader lodging industry to capture a likely robust winter 2021/spring 2022 travel period as vaccinated travelers feel more comfortable traveling again and entry/re-entry Covid restrictions ease in many regions. We believe the company could re-approach normalized (i.e., pre-Covid, pro forma for asset sales) EBITDA levels on a run-rate basis by the end of 2022, which is generally one year earlier than we expect for other lodging companies that are more reliant on corporate and group travel. PLYA continues to trade at a notable discount to our estimate of NAV, despite the portfolio's concentration in oceanfront beach locations that are generally naturally insulated from the threat of future competitive supply."

Risks: "Downside risks: a slower than anticipated recovery in leisure travel volumes, a potential inability for PLYA to re-attain prior peak RevPAR levels, the possibility of more severe than anticipated upward pressure on operating costs, exposure to markets that carry above-average hurricane/tropical storm event risk, and elevated financial leverage." − Chris Woronka

Source: Deutsche Bank

5. Texas Roadhouse Markets Insider © Provided by Business Insider Markets Insider

Ticker: TXRH

Market Cap: $6.6 billion

Price Target: $118

Summary: "We like TXRH both tactically as well as with a one, three, and five year view. This is a best idea within our U.S. Restaurants coverage universe. On the back of our recent upgrade to Buy, we are designating TXRH as our top pick. At present, we see ~22 to 23% upside potential to our price target of $118, which represents our current base case thinking. Said base-case scenario revolves around revenue assumptions that might appear high in the absolute sense, but which also could be argued to be conservative, given what we know about the QTD strength that was discussed in late April."

Risks: "Risks include a slowing of SSS at the Texas Roadhouse brand, which could occur if current consumer demand proves to be a temporary phenomenon, as well as commodity and wage inflation that could come in above our expectations." − Brian Mullan

Source: Deutsche Bank

6. Under Armour Markets Insider © Provided by Business Insider Markets Insider

Ticker: UAA

Market Cap: $9.2 billion

Price Target: $34

Summary: "We are forecasting an ~550 bps increase in the EBIT margin rate (from 2019 levels) by FY23 as benefits are reaped from multiple years of resetting the cost base, improving inventory control and pricing, and altering the distribution mix. In addition, we believe UAA's decision to reinvest some of this year's upside into additional marketing efforts is paying off with strong top-line results, and we think this sets up the company favorably in 2022 as a combination of market share gains, investments rolling off, and cost base reductions should drive meaningful SG&A leverage."

Risks: "Downside risks include: 1) a product offering that may not resonate with the consumer long-term given the marketplace's shift to athleisure over performance; 2) inability to recapture sales from wholesale door reductions; 3) higher priced premium product not resonating with consumers; and 4) volatile trends due to the COVID-19 pandemic and industry-wide supply chain challenges." − Gabriella Carbone

Source: Deutsche Bank

7. American Express Markets Insider © Provided by Business Insider Markets Insider

Ticker: AXP

Market Cap: $140 billion

Price Target: $190

Summary: "We believe AXP offers a solid returns and moderate relative upside, driven by stronger-relative expected EPS gr. and ROTCE vs. peers, and more insulated trading multiples/earnings stream amongst the cards from any potential worsening of consumer/credit expectations vs. card peers. We believe shares of AXP offer better prospects for solid returns and relative upside over the next twelve months, driven by stronger relative expected EPS gr. and ROTCE vs. peers stemming from the reopening trade, particularly as more consumers become comfortable with travel/entertainment spending." 

Risks: "Downside risks: (1) growing credit concerns, particularlyamong AXP's T&E and SME segments (2) a material slowdown in consumer/commercial spending could adversely impact revenue/EPS gr. ests.; (3) AXP is exposed to future regulatory/policy changes on interchange revenue, card loan yields, etc., which represents a longer-term risk to profitability/growth; and (4) the loss or decline of key, strategic partnerships could adversely impact revenue/EPS gr. expectations." − Meng Jiao

Source: Deutsche Bank

8. Charles Schwab Markets Insider © Provided by Business Insider Markets Insider

Ticker: SCHW

Market Cap: $143 billion

Price Target: $99

Summary: "With Charles Schwab much more highly levered to interest rates than any other company in our coverage (over half of net revenue), a backdrop in which interest rates are expected to rise should remain a positive catalyst for the stock. Combined with strong client organic growth trends and cost saves from the TD Ameritrade acquisition, we see gradually higher interest rates helping SCHW's EPS exceed consensus and drive upward earnings revisions over at least the next 1-2 years." 

Risks: "Downside risks are: 1) a convergence in short-term rates towards zero and/or a decline in long-term yields, 2) a severe equity market downturn (especially if driven by a weakening economy), 3) a substantial slowdown in organic growth and/or a rise in client attrition associated with the TD Ameritrade acquisition, 4) any industry competition that creates further pricing pressure in trading, asset management, or deposit products, 5) much less EPS accretion from the TD Ameritrade acquisition, 6) any major system integration problems with the TD Ameritrade acquisition, and 7) higher US corporate tax rates." − Brian Bedell

Source: Deutsche Bank

9. Macerich Markets Insider © Provided by Business Insider Markets Insider

Ticker: MAC

Market Cap: $3.9 billion

Price Target: $24

Summary: "Macerich's public valuation screens favorably on both an absolute and relative basis. We view MAC as the top value investment among our covered REITs, as it trades at a ~5x turn discount to pre-covid NTM P/FFO levels. Leasing momentum and demand continues to remain robust as we reach pandemic escape velocity, with traditional and new categories showing strong interest in high quality Class A Town Centers. Further, we forecast the occupancy inflection point is behind MAC as the business has stabilized and is poised to resume growth, albeit from a lower base." 

Risks: "MAC's primary downside risks are weaker than expected lease demand and greater than anticipated equity issuance. Softened lease demand would hinder the company's ability to sustain and grow occupancy, especially in its core California, Arizona and New York markets while greater than anticipated equity issuance would further dilute earnings. Delays in the cadence of redevelopment stabilizations or spend, or lower-than-expected returns, could also impact our estimates particularly if the cost of materials/labor remains elevated or if department store closures accelerate. MAC's overall leverage also remains elevated versus peers." − Derek Johnston

Source: Deutsche Bank

10. Wells Fargo Markets Insider © Provided by Business Insider Markets Insider

Ticker: WFC

Market Cap: $191 billion

Price target: $55

Summary: "In summary, WFC is very well positioned for rising interest rates, credit quality will remain strong for several years, the asset cap will eventually be lifted (we now believe by Fall of 2022) and a multi-year efficiency effort will help drive strong operating leverage when revenue growth resumes."

Risks: "Primary downside risks include lack of clarity surrounding expenses, regulatory pressures, a prolonged downturn/recession and ongoing revenue weakness, etc." − Matt O'Connor

Source: Deutsche Bank

11. Davita Markets Insider © Provided by Business Insider Markets Insider

Ticker: DVA

Market Cap: $12 billion

Price target: $207

Summary: "We continue to be upbeat on the outlook for DVA shares at current levels after DVA provided disclosures around its IKC division alongside 2Q earnings. Management laid out a clear overview and plan for the unit, which should generate about $2b in revenue in 2021 and grow to $4b in 2022. We continue to expect DVA to disclose gross revenues by the end of FY21, at which point they would be incorporated into consensus and the Street can turn toward valuing the OI tailwind as the unit approaches profitability in 2023."

Risks: "Risks to our price target for DaVita (DVA) include: 1) longer than expected impact on treatment growth from COVID-driven mortality 2) Continued lack of disclosure around its capitated, risk-sharing business 3) deteriorating reimbursement trends; 4) unforeseen regulatory changes; and 5) ballot initiatives similar to California seeking to cut commercial rates for dialysis services." − Pito Chickering

Source: Deutsche Bank

12. McKesson Markets Insider © Provided by Business Insider Markets Insider

Ticker: MCK

Market Cap: $31 billion

Price target: $261

Summary: "In MCK shares, we see the potential for continued strong operating performance, relatively low levels of regulation risk and overhangs fading as it relates to the opioid settlement. MCK is starting to see drug volumes normalize post the Covid crisis and should continue to have some upside optionality in its medical business related to medical kitting, medical office supplies and the rebound in immunizations resulting from the Delta variant." 

Risks: "Risks to our thesis include unexpected changes in the script count growth of large pharmacy accounts, the pending opioid settlement, or the outcome of meaningful drug reform attempts." − George Hill

Source: Deutsche Bank

13. Medtronic Markets Insider © Provided by Business Insider Markets Insider

Ticker: MDT

Market Cap: $170 billion

Price target: $149

Summary: "While the current COVID hospitalization surge from Delta clearly casts uncertainty around near-term procedure volumes, MDT's F1Q results/commentary and reaffirmed full-year sales guidance furthers our confidence around the recovery continuing to unfold in the back half of FY22 – near-term pressures/uncertainties notwithstanding. Our constructive thesis on MDT remains centered around the company's robust pipeline and a strong flow of major new product introductions continuing over the next several quarters. As was once again evidenced by F1Q, recent product launches are already yielding share capture across divisions (including above-market growth in the company's three largest businesses of CRM, spine, and surgical devices), and impending launches should lead to improved performance in more challenged areas like neurovascular and especially diabetes."

Risks: "Risks include: (1) Inability to deliver mid-singledigit underlying revenue growth consistently and sustainably; (2) inability to achieve operating margin targets; (3) share losses in key franchises; (4) inability to offset price pressure with new products; (5) pipeline setbacks such as poor clinical trial data or disappointing commercial adoption of key new products; and (6) Accelerating pricing pressure on key products." − Pito Chickering

Source: Deutsche Bank

14. Albemarle Markets Insider © Provided by Business Insider Markets Insider

Ticker: ALB

Market Cap: $26 billion

Price Target: $270

Summary: "With the lithium market entering a multi-year period of tightening that should support steadily rising prices, 2 new world-scale projects starting up by Q1'22 that will increase Albemarle's lithium capacity by more than 80% and the largest, most diverse lithium resource base in the world that provides more "shots on goal" than any other company, we believe Albemarle is well positioned to capitalize on the forecasted 30% compound growth in lithium demand thru '25."

Risks: "Key downside risks include new lithium supply, lower lithium prices, a slower-than-expected ramp-up of electric vehicles demand, price erosion in elemental bromine and brominated flame retardants, a downturn in consumer electronics demand." − David Begleiter

Source: Deutsche Bank

15. Alcoa Markets Insider © Provided by Business Insider Markets Insider

Ticker: AA

Market Cap: $9 billion

Price target: $60

Summary: "We continue to see a compelling structural story building in aluminum, further supercharged by recent supply disruptions across the value chain. A focus on cost management (optimization of asset portfolio and legacy liabilities) over the past several years has placed Alcoa in a strong position for when aluminum prices improve, which is now occurring. Supported by strong cash generation (2021/22 FCF yield of ~11%/17%), we continue to like Alcoa based on its capacity to return cash to shareholders as the company de-levers below its adj. net debt target. Lastly, we see our estimates coming in well above street, with potential for further upside from reset of value-add product premiums."

Risks: "Risks include: lower-than-expected prices for bauxite, alumina and aluminum on weaker supply/demand dynamics in China, the leading producer and consumer of aluminum; higher operating costs and imports; geographical concentration as US accounts for almost half of sales and is a higher-cost production region; and FX." − Sathish Kasinathan

Source: Deutsche Bank

16. Ardagh Metal Packaging Markets Insider © Provided by Business Insider Markets Insider

Ticker: AMBP

Market Cap: $6.1 billion

Price target: $14

Summary: "We anticipate continued underlying demand strength for aluminum beverage cans and for the substrate to continue to gain share of the beverage pack mix. Ardagh Metal Packaging should see the highest growth out of the three publicly traded companies given its beverage mix and capacity additions coming online over the next four years. The company also has the most attractive valuation on a relative basis compared to its beverage can peers, despite being the only true pure play beverage can company."

Risks: "Downside risks to include a material deceleration in beverage can demand, capacity additions outpacing demand leading to oversupply, lack of successful execution on key Business Growth Investment start ups, new entrants to key markets, loss of share to competitors, substitution risk to other packaging substrates and unfavorable currency exchange rates. The lack of liquidity in the stock given only 18% of shares outstanding is public free float is a risk as well." − Kyle White

Source: Deutsche Bank

17. Dana Markets Insider © Provided by Business Insider Markets Insider

Ticker: DAN

Market Cap: $3.5 billion

Price Target: $34

Summary: "We see Dana as one of the most underrated stocks to benefit from the industry-wide shift toward electrification given its superior technology portfolio and complete powertrain capability, and solid traction to date within commercial and light vehicles; beyond EVs, we continue to like its favorable end-market exposure and consistently robust operational execution. We believe DAN is well positioned to benefit from vehicle electrification going forward and also is managing well through the semis shortage due to its diversified end-market mix."

Risks: "Dana is sensitive to the cyclicality of automotive, truck and off-highway vehicle demand. A volume downturn in any of these markets would impact Dana's revenue and earnings significantly. Dana also faces risk from integrating its newly acquired electrification related technology and not being competitive enough in these new fields." − Emmanuel Rosner

Source: Deutsche Bank

18. Delta Markets Insider © Provided by Business Insider Markets Insider

Ticker: DAL

Market Cap: $27 billion

Price target: $55

Summary: "We believe that over the next 12 months, Delta offers an attractive risk-return profile as it is one of the best positioned airlines to benefit from a strong demand recovery. Our thesis on Delta is predicated on the following: 1) meaningful earnings growth as it comes out of the downturn, 2) significant balance sheet deleveraging cycle which commenced this year, and 3) structural cost savings facilitated by the pandemic. Furthermore, despite being one of the best positioned airlines in a recovery, Delta's share performance has lagged the majority of airline stocks in our coverage universe."

Risks: "Risks include the reinforcement of international travel restrictions and/or the reintroduction of lockdowns due to a spike in COVID-19 cases. The aforementioned could lead to reduced consumer and business traveler confidence which would further depress long-haul demand. An additional downside risk is fuel price volatility: every 10% move in jet fuel impacts our 2021 EPS estimate by $0.70." − Mike Linenberg

Source: Deutsche Bank

19. Star Bulk Carriers Markets Insider © Provided by Business Insider Markets Insider

Ticker: SBLK

Market Cap: $2.4 billion

Price Target: $40

Summary: "Within our transportation and shipping coverage, we have been steadfast in our positive view on shares of StarBulk (SBLK) – the world's largest shipper of dry bulk commodities. Our positive stance is predicated on mgmt's value-creative capital allocation strategies, prudent risk management vis-à-vis low net leverage, potential for SBLK to emerge as a sole platform in dry bulk shipping for accretive growth and its ability to return significant capital to shareholders."

Risks: "We maintain our Buy rating; risks include a reduction/slowdown in global growth, weak China data and commodity price deflation." − Amit Mehrotra

Source: Deutsche Bank

20. Vertiv MarketWatch © Provided by Business Insider MarketWatch

Ticker: VRT

Market Cap: $8.5 billion

Price Target: $30

Summary: "Despite VRT's supply chain and price/cost headwinds being among the most acute in our group, we view this as transitory; recent weakness in the stock poses favorable risk-reward to own a pure play data center equipment manufacturer, that has both structural/thematic tailwinds and an attractive top-line and margin story, at a discount to peers."

Risks: "Risks to the downside: Inability to gain traction on operational initiatives aimed at closing the margin gap vs. peers; secular shifts in the data center industry; prolonged service decline due to lack of access to customer sites; extended supply chain issues resulting in lost share; exogenous factors (macroeconomic deterioration)." − Nicole DeBlase

Source: Deutsche Bank

21. Dell Technologies Markets Insider © Provided by Business Insider Markets Insider

Ticker: DELL

Market Cap: $76 billion

Price target: $120

Summary: "With DELL's core business continuing to be valued below peers and the enterprise IT environment improving, we believe the valuation gap will close as we approach the VMware spin-off and revenue/EPS will continue to grow. After adjusting for its VMware ownership, DELL's core business trades at a discount to peers despite its market leadership position in the majority of its markets. We believe that this discount will close as we approach the VMware spin-off and DELL further reduces its debt with the special dividend received from VMware."

Risks: "Key downside risks include a slowing IT spending environment, high debt levels and loss of market share in its core businesses." − Sidney Ho

Source: Deutsche Bank

22. PagSeguro Markets Insider © Provided by Business Insider Markets Insider

Ticker: PAGS

Market Cap: $17 billion

Price Target: $70

Summary: "PAGS has cemented itself as the market leader in the fast-growing Brazilian micromerchants market and is now moving successfully up market to larger merchants in SMB and branching out to consumers generating new consumer driven fees through its PagBank offering, which together, are significantly increasing its TAM. We believe PagBank will continue to benefit from higher engagement with the expansion/rollout of new products while acquiring TPV will be driven by the company's SMB hub strategy and further expansion into eCommerce."

Risks: "Main downside risks include slower volume growth than expected including potential headwinds from the pandemic, increased competition from new and existing players, regulatory risks impacting payment structures in Brazil, and market volatility as well as headline risks." − Bryan Keane

Source: Deutsche Bank

23. Palo Alto Networks Markets Insider © Provided by Business Insider Markets Insider

Ticker: PANW

Market Cap: $36 billion

Price Target: $560

Summary: "PANW has a cash-cow firewall business that we think will prove sticky. We are constructive on PANWs improving mix toward recurring revenue, with clear momentum in Prisma Access and also some evidence of traction with Cortex XDR and Prisma Cloud. We look for 23% revenue and 25% EBITDA FY21-24 CAGR, attractive for a company currently trading on ~30x FY2 Adj. EBITDA. We see PANW shares at this level offering growth at a reasonable price." 

Risks: "The key risk to our thesis is that PANW's stubbornly low profitability will keep a lid on PANW's valuation." − Patrick Colville

Source: Deutsche Bank

24. Qualcomm Markets Insider © Provided by Business Insider Markets Insider

Ticker: QCOM

Market Cap: $151 billion

Price Target: $190

Summary: "Entering 2H21, we believe there are multiple positive catalysts supporting upside for QCOM, namely the iPhone 13 ramp coupled with increased 5G mix in smartphones globally (~40% DBe in CY21E from ~20% in CY20), additional capacity coming up at TSMC enabling QCOM to aggressively address demand in China and upcoming Analyst Day scheduled in November."

Risks: "Downside risks include macro, 4G/5G device market growth, market-share loss, unfavorable legal/regulatory rulings, design-win execution, 5G device sell-through at customers, execution on cost controls, and volatility from customer and end market concentration." − Ross Seymore

Source: Deutsche Bank

25. RingCentral Markets Insider © Provided by Business Insider Markets Insider

Ticker: RNG

Market Cap: $20 billion

Price Target: $400

Summary: "We view RingCentral as a top beneficiary of a multi-year shift towards cloud-based unified communications. Given the very early stages of this migration, and the value of RNG's strategic partnerships, we see a multi-year path towards mid 20% top-line growth and 30%+ Adj. EPS growth over the next several years."

Risks: "Key Risks: competitive threats from peers (ie: Microsoft Teams, Zoom Phone), slower than expected customer shifts towards cloud UCaaS solutions, and slowdowns in broader SME/Enterprise spending." − Matthew Niknam

Source: Deutsche Bank

26. S&P Global Markets Insider © Provided by Business Insider Markets Insider

Ticker: SPGI

Market Cap: $108 billion

Price Target: $475

Summary: "We believe the pending merger with INFO has created an attractive buying opportunity given the strategic rationale for the merger and the potential revenue and cost synergies driving upside to the earnings accretion guidance. The merger is expected to close in 4Q21 and we expect the stock to rally going into the merger close, given investor expectations for a large Accelerated Share Repurchase (ASR). In addition, we believe the pull backs on potential merger delays could create accumulation opportunities as the fundamentals remain intact and we expect the stock to grind higher post-merger as synergies and earnings come into focus."

Risks: "Risks include: limited visibility into issuance trends post the pandemic, international expansion costs, and regulatory concerns." − Sameer Kalucha

Source: Deutsche Bank

27. T-Mobile Markets Insider © Provided by Business Insider Markets Insider

Ticker: TMUS

Market Cap: $157 billion

Price Target: $195

Summary: "We believe T-Mobile is the best multiyear growth story in wireless and cable, with multiple levers for value creation; including subscriber driven revenue growth, margin expansion (from merger synergies and increasing scale), and declining capital intensity (beginning in 2023). We expect these factors will drive a FCF CAGR of 27% over the next 5 years. Our $195 PT implies 54% upside, and represents a valuation of 11x 2022E EV/EBITDA, which we think is justified based on T-Mobile's attractive multiyear growth outlook." 

Risks: "Risks include: (a) failure to execute on the Sprint merger as it relates to either network integration or commercial operations, (b) disruptive or irrational competition in the wireless industry, including possibly from new entrants, (c) failure to drive further network improvements or incremental subscriber growth, which could jeopardize T-Mobile's ability to meet our revenue, EBITDA, and FCF forecasts." − Bryan Kraft

Source: Deutsche Bank

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