Last year’s bearish trend has turned on a dime into 2023’s bull run, and the question now is, what next? One prominent name to wade in on the matter is billionaire Ken Fisher. With a history of decades-long investing success, Fisher knows a thing or two about market behavior.
The Fisher Investments founder famously started his independent money management firm with just $250 in 1979, a company that is now a $197-plus billion going concern, while Fisher’s own net worth stands north of $5 billion.
Right now, where most prognosticators are seeing signs of recession building up for the coming year, Fisher sees a historical analogy to 1967. That year, coming off a bearish year, with high inflation, in a divisive political environment, with war on the geopolitical radar, everyone predicted a deep recession. What happened was the opposite. As Fisher describes it: “1967 is the year when inflation peaks and falls, interest rates plateau, we don’t get the recession because widely anticipated recessions are met by mitigation and anticipation. It’s the most parallel period in modern history.”
While interesting as theory, what’s more interesting to us is the practical example that Fisher is giving. He’s going ‘long and strong’ to the bullish side, and doubling down on some of his stock positions in preparation for continued strong market performances.
We’ve opened up the TipRanks database to pull the details on two of his recent share purchases. Each is a Strong Buy, according to the analyst community, and has a solid upside potential for the coming year. Let’s take a closer look.
Veracyte, Inc. (VCYT)
We’ll start in the world of biotech, where Veracyte is a leader in the vital field of diagnostics. The company offers a range of medical tests that provide the answers both physicians and patients need – the former to provide proper care, the latter to have the comfort of knowledge, and for both the information need to make decisions. The company’s tests use innovations in genomic technology and machine learning to provide the most accurate diagnoses – which in turn lead to better treatments and outcomes. Veracyte has tests available for a variety of diseases, particularly cancers, such as lung cancer, prostate cancer, thyroid cancer, and breast cancer.
We won’t see Veracyte’s most recent financial results – for 4Q22 – until later this month, but so far, the company’s trend looks good for investors. Revenues have been rising consistently for the past couple of years, with the 3Q22 top line of $75.6 million representing a 25% year-over-year increase. This was supported by 26% y/y growth in global test volume, which reached 26,374 tests completed. Veracyte bumped its full-year revenue forecast up to the range of $288 million to $293 million, an increase of 5.2% at the midline. We’ll know on February 22 if the company has achieved that goal.
In the meantime, Ken Fisher is clearly upbeat about Veracyte. He already had a position in this stock, and in the last quarter increased it by 21%, or buying 348,096 shares. This brings Fisher’s total holding in VCYT to 2,085,604 shares, or almost 3% of the company. His shares are worth about $51 million at current valuations.
Veracyte’s array of cancer screening tests puts the company in a solid position, and has also caught the eye of Scotiabank analyst Sung Ji Nam, who writes: “VCYT is a pioneer in the Advanced Dx space, particularly with its thyroid cancer test… in March 2021, VCYT became the leader in the prostate cancer prognostic and therapy selection test market, and we expect Decipher’s prostate cancer test to be the key driver of VCYT’s double-digit top-line growth over the next few years. VCYT is also in the process of developing a non-invasive test for lung cancer which could represent the largest market opportunity for VCYT going forward (we estimate multi-billion dollars).”
“Given its commercial track record, multiple growth drivers ahead, and operating efficiency compared with peers, we believe VCYT is well positioned to maintain its double-digit revenue growth in the near term and to potentially further accelerate its growth longer term,” the analyst summed up.
Looking ahead, to quantify her bullish stance, Nam gives VCYT stock an Outperform (i.e. Buy) rating, and her price target of $33 implies a potential upside of ~35% on the one-year horizon. (To watch Sung’s track record, click here)
Overall, there are 4 recent analyst reviews on VCYT, they include 3 to Buy against just 1 to Hold, for a Strong Buy consensus rating. The shares are priced at $24.47 and the $33.33 average price target indicates room for 36% upside in the year ahead. (See VCYT stock forecast)
Intuit, Inc. (INTU)
The second Fisher pick we’re looking at is a software company. Intuit is the maker of the popular family of TurboTax and Quickbooks products, which facilitate bookkeeping, accounting, and tax calculations for individuals and small businesses. The company sees a regular peak in revenues coinciding with the calendar year second quarter – that includes the April deadline for individuals’ annual IRS tax returns.
That deadline is just two months away, and Intuit is gearing up for its regular busy season. In the meantime, we can look back at the firm’s last reported quarter – Q1 of fiscal ’23, the quarter ending on October 31 – and get an idea of where it stands now.
There have been some fits and starts, but overall, Intuit has seen steady top-line growth since the pandemic period. In fiscal 1Q23, the company’s revenue of $2.6 billion was up 29% from the prior-year result; this figure included a 13-point add from the acquisition of Mailchimp in fiscal 1Q22. In calendar year 2022, the company saw over $12 billion in total revenue. On the bottom line, Intuit’s non-GAAP EPS came in at $1.66 per share for Q2. This beat the $1.19 forecast by 39%, and was up 8.4% year-over-year.
We’ll see Intuit’s fiscal Q2 results on February 23. The company typically posts its highest quarterly revenue in fiscal Q3, reported in late spring; that report will include revenue results from the annual tax season.
Ken Fisher, however, is not waiting for these later reports – he’s expanding his holding in INTU now, and last quarter bought 462,468 shares. This marked an increase of 24% in his stake in the company, which now reaches 2,412,769 share and is valued at an impressive $1 billion.
Echoing Fisher’s activity, Mizuho analyst Siti Panigrahi is a big INTU fan and sees plenty to remain upbeat about.
“Intuit remains a defensive software name with strong cash flows and consistent shareholder returns… We expect Intuit to deliver a strong FQ2 given that current consensus expectations appear conservative across multiple segments. For Small Business, we expect upside driven by FY23 price increases and continued momentum in online services with tailwinds from employment and growing attach rate of payments. For Tax, FQ2 consensus implies a slow start trend in January similar to last year, while we believe IRS filings will return to pre-COVID trends,” Panigrahi opined.
Putting a number to his outlook, Panigrahi gives INTU shares a $650 price target, to suggest ~56% one-year upside that fully backs his Buy rating. (To watch Panigrahi’s track record, click here)
Overall, Intuit boasts a Strong Buy consensus rating based on 17 positive analyst reviews – enough to overwhelm the lone ‘Sell’ rating. The shares have a trading price of $417.50 and their average price target of $492.33 implies ~18% gain in the next 12 months. (See INTU stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.