Morgan Stanley: Top Stocks Poised for Gains Before Earnings
Morgan Stanley has identified several stocks, including Datadog, Warner Music Group, S&P Global, Starbucks, and Spotify, that are positioned for potential gains ahead of their earnings reports. S&P Global is highlighted for its leading position in Information Services and diversification, despite macroeconomic concerns. Spotify is favored due to its continuous product innovation and upcoming investor day. Warner Music Group is viewed as undervalued due to its concentrated ownership of music IP. Furthermore, Starbucks shows signs of recovery in physical store traffic, and Datadog maintains momentum with positive growth projections.
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Morgan Stanley suggests several stocks possess significant upside potential as companies approach their upcoming earnings reports, highlighting key areas for investor attention.
Key Stocks Identified by Morgan Stanley
The investment bank has identified several stocks rated as 'buy' by Morgan Stanley and screened by CNBC Pro. These include:
Datadog
Warner Music Group (WMG)
S&P Global
Starbucks
Spotify
S&P Global: Resilience Amid Uncertainty
Morgan Stanley views S&P Global as a leading Information Services provider with a strong position for expansion in high-growth sectors, despite ongoing macroeconomic uncertainty. Analyst Toni Kaplan noted:
S&P Global's unique position allows for expansion in high-growth areas.
The bank remains bullish due to the company's portfolio diversification, margin execution, and capital-return profile.
While the price target was trimmed to $556 from $580, the stock is considered attractive at current levels.
Spotify: Innovation Driving Growth
Analysts point to Spotify's continuous innovation as a major positive catalyst. Sean Diffley highlighted:
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The platform is adding positive, meaningful, and interactive engagement features, including more video and advanced mixing tools.
The upcoming investor day offers a chance to demonstrate product improvements and iteration strategies in the AI era.
The company is projected to surpass 300 million paid users.
Warner Music Group: Undervalued Music IP
Morgan Stanley recently increased its price target for WMG to $38 from $37 ahead of early May earnings. The investment thesis centers on:
WMG's role as one of the three concentrated owners of music intellectual property (IP) in Western markets.
Analysts suggest that revenue and earnings acceleration could support a multiple re-rating, dismissing current AI concerns as overstated.
Starbucks: Signs of Store Recovery
Regarding Starbucks, the bank noted positive signs of customer return to physical locations. While current stock performance reflects positive investor sentiment, the firm maintains a favorable near-term outlook.
Datadog: Momentum Ahead of Earnings
Datadog is noted for its core business momentum. The company is expected to report strong figures, with analysts pointing to:
Improved checks and a clear path toward 30% growth in Q1.
