Earnings season is here, and traders everywhere are betting on how companies have done over the last four months.
Morgan Stanley is no exception, but its analysts have a couple standout ideas. In a list the bank recently released, Morgan Stanley put together what it calls its "high conviction" stocks.
"For each of these stocks, our analyst has high conviction in a view that diverges from the Street’s, and expects a near-term event to drive the stock as the market’s view moves closer to ours," Morgan Stanley wrote in a recent note.
"High conviction" stocks are ones that the bank's analysts think the rest of Wall Street is underestimating. Earnings are coming soon for most of them, and Morgan Stanley's analysts believe other analysts have crunched the numbers wrong.
To compile the list, Morgan Stanley gathered its analysts' notes, price targets and earnings estimates and compared them to the rest of Wall Street. Some of the companies are expected to have higher profits, others are expected to have stronger sales numbers.
Morgan Stanley is convinced it is seeing something others are missing. If the bank is right, it's expecting the stock price of these companies to pop after Wall Street realizes its mistakes.
Each of the companies below is listed with their sector, stock price and reason Morgan Stanley thinks the company is set to pop.
Read below to find out which stocks made the list...
Priceline.com (PCLN)
Sector: Technology
Price Target: $2,100
Justification: The number of rooms Priceline is booking, along with a strong performance of Bookings.com in the US and better return on investment for advertisements, all lead to a higher beat on earnings than Wall Street is expecting.
All data is provided via Morgan Stanley
Servicenow (NOW)
Sector: Technology
Price Target: $124
Justification: A new CEO is bringing good changes to the company, and new products can expand the market opportunities for Servicenow.
All data is provided via Morgan Stanley
Agilent Technologies (A)
Sector: Healthcare
Price Target: $75
Justification: Wall Street isn't taking into account the cyclical nature of the stock, according to Morgan Stanley. Cyclical recovery is set to help revenues and organic growth this quarter, which could make it one of the company's strongest quarters in the last five years.
All data is provided via Morgan Stanley
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