Morgan Stanley says there are still plenty of stocks with plenty of upside potential for earnings. The investment bank says companies like Alibaba have more room to execute heading into their next quarterly report. Other stocks rated Overweight by Morgan Stanley and screened by CNBC Pro include Grab, Natera, Cadence Design Systems, and Apple. China’s global online marketplace Alibaba stock is too attractive to ignore, investment banks say. Analyst Gary Yu remains firm on Alibaba as the top choice ahead of the company’s financial results in late August. “We expect Alibaba, which has China’s largest cloud infrastructure, to gain market share in China’s current evolving AI cycle,” he said. Morgan Stanley said it also expects other positive catalysts, including “strong cash flow generation capabilities, dividends and continued stock repurchases.” Still, Yu said investors should still buy the stock, even though he recently lowered his price target to $180 per share from $190. Alibaba is up 17% this month. Ride-hailing, grocery and food delivery companies in Southeast Asia are firing on all cylinders, according to Morgan Stanley. Analyst Divya Gangahar sees some bright spots ahead of the company’s quarterly results, due in early August, including improving demand and accelerating growth. “We expect a strong quarter with sales of +22% and adjusted EBITDA of USD 166 million in the second quarter,” he said. The Wall Street bank also raised its price target to $6.25 per share from $5.90. “There is room for further buybacks, and we think the risk reward is very attractive,” he continued. The stock is down 12% this month. Cadence Design Systems The electronic automation systems software company is undervalued, according to a team led by analyst Lee Simpson. “We see a good chance of further guidance increases this quarter, which we believe is highly valued by the market,” he said ahead of Monday’s earnings release. Simpson says Agentic AI is the “key to the moat.” Meanwhile, Morgan Stanley urged investors to stay calm and buy on the edge. “We reiterate our OW rating and $370 PT as we expect solid margin/revenue recovery next year on trading consolidation and early physical AI momentum,” he said. The stock price is down 13% as of July. “On net, we are raising our NTRA stock price target to $310 from the previous $250. This reflects an approximately 15x EV/’26 sales multiple (a premium relative to our precision oncology peers given NTRA’s strong growth profile and market leadership) and represents a change in our methodology focus on valuing stocks primarily on sales multiples with DCF-backed peers, rather than primarily on DCF,” said Natera. Cadence Design Systems “We believe there is a good chance of further guidance increases this quarter, which we believe is largely appreciated by the market…We expect solid margin/revenue recovery from trading consolidation next year, as well as early physical AI momentum…Agential AI is key to their moat.” Grab “Grab is scheduled to announce its second quarter results on August 4th. We recognize the upside risk… We also have scope for further buybacks and believe the risk reward is very attractive… Second quarter revenue +22%, adjusted We expect a strong quarter with post-EBITDA of USD 166 million…Demand trends remain stable, supported by more diversified platforms (multiple price points, GrabMart, etc.) and a reasonable competitive environment.” “We are seeing fundamental business re-acceleration with improved monetization. ▪The online regulatory environment appears to be easing. We see Alibaba as a key beneficiary as a Chinese distributor. ▪Possible spin-off of its own chip business, T-Head, could unlock value… ▪Strong cash flow generation capabilities, dividends, and continued share buybacks could provide downside support.” Apple “Apple’s fundamentals remain very strong, but with the stock trading near all-time highs, the need for zero blemishes across the board makes the tactical setup for earnings neutral/tougher. We continue to believe that Apple’s fundamentals are very strong, and the myriad price increases are likely to drive revenue and EPS up over the next 6-18 months.”
