It's been a volatile couple of months for the investing community. Both the benchmark S&P 500 and iconic Dow Jones Industrial Average shed more than 10% of their value during the first quarter, while the tech-heavy Nasdaq Composite underwent a decline of 22% between mid-November and mid-March.
Things have been equally difficult for the predominantly growth-focused Nasdaq 100. This index, which is comprised of 100 of the largest nonfinancial stocks listed on the Nasdaq exchange, briefly entered bear market territory in March.
But where's there are stock market corrections and bear markets, there's often opportunity. According to the highest published 12-month price targets from three Wall Street analysts, the following Nasdaq 100 stocks offer upside ranging from 102% to as much as 206%.
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Meta Platforms: Implied upside of 102%
The first high-growth Nasdaq 100 stock with incredible upside potential is Meta Platforms (META 1.54%), the company previously known as Facebook. According to analyst James Lee of Mizuho, Meta can reach $425 a share over the next year. This would represent a 102% increase from where the company's shares closed out this past week.
Although Lee was disappointed with the company's first-quarter guidance, his research note pointed out that Meta has previously gone through two successful platform transitions. The current push to short-video platform Reels should be an eventual success, with Lee noting at the time of his note in early February that shares were at a "compelling level."
Lately, we've been hearing endless chatter about the company's metaverse ambitions. The metaverse is the next iteration of the internet, which allows connected users to interact with each other and their surroundings in a 3D virtual environment. But these ambitions shouldn't hide the fact that Meta remains a social media maven.
As of the end of 2021, Meta's family of apps, which includes Facebook, WhatsApp, Instagram, and Facebook Messenger, tallied 3.59 billion monthly active people. That's more than half of the world's adult population visiting a Meta-owned asset each month. Advertisers are well aware that they can't reach a broader audience anywhere else, which is why Meta's average price per ad rose by a sizzling 24% last year.
Something else to note is that Meta hasn't even meaningfully monetized all of its core social media assets. Although it brought in nearly $115 billion in ad revenue last year, almost all of these sales originated from Facebook and Instagram. The company hasn't depressed the accelerator on WhatsApp or Facebook Messenger as of yet, which means there's still plenty of opportunity for Meta to pull growth levers.
Considering that Meta Platforms is still growing by a double-digit percentage, yet can be scooped up by investors for less than 15 times Wall Street's forward-year earnings forecast, it does look "compelling." While a 102% increase in shares over the next 12 months is probably asking a bit much, I see no reason why $425 can't be reached at some point in the future.
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PayPal Holdings: Implied upside of 139%
A second Nasdaq 100 stock that offers big-time upside, at least according to Wall Street, is fintech company PayPal Holdings (PYPL -1.83%). Evercore ISI analyst David Togut foresees PayPal shares hitting $245, which implies an increase of 139%.
Despite Togut lowering his firms' price target to $245 following PayPal's less-than-stellar first-quarter guidance, he sees the company successfully pivoting its focus to improve customer engagement. Once global supply chain issues and inflationary pressure on low-income consumers pass, Togut believes PayPal will return to growing its profits by 20% or more on an annual basis.
It's certainly hard to disagree with Togut's analysis when a number of PayPal's key performance indicators continue to head in the right direction. Even in the face of higher inflation and some consumers reducing their spending, the company expects total payment volume (TPV) to come in around $1.5 trillion in 2022. That would be up from $1.25 trillion in TPV in 2021.
More importantly, existing users are increasingly relying on digital payments. This is a company that recorded 19.3 billion digital payments last year across 426 million active accounts. Dividing the former into the latter works out to an average of more than 45 transactions per active account. During the previous year, active accounts conducted an average of fewer than 41 transactions. Boosting existing user engagement is the key to PayPal lifting its operating margin.
Investors should also be exciting about PayPal's push into buy now, pay later. Last year, it acquired Japan's Paidy for $2.7 billion. Giving users the ability to finance larger purchases and creating a closed financial ecosystem represents one of the many ways PayPal can remain a financial solutions leader for a long time to come.
Over the past five years, PayPal has averaged a forward-year price-to-earnings multiple of 38. Opportunistic investors can scoop up shares right now for below 18 times Wall Street's forecast earnings for 2023. That's quite the bargain -- even if $245 turns out to be a bit too aggressive a price target for the next 12 months.
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Moderna: Implied upside of 206%
However, the juiciest upside opportunity in the Nasdaq 100 might just be biotech stock Moderna (MRNA -1.39%). Analyst Leah Cann of Brookline Capital Markets has a lofty price target of $506 on shares of the company, implying upside of 206%.
Cann believes Wall Street and investors are undervaluing the company's COVID-19 franchise. She's also of the opinion that Moderna's late-stage preclinical pipeline can add significant value that isn't being accurately recognized by the investing community.
Most folks are probably familiar with the Moderna name due to the company's success in developing Spivevax (mRNA-1273). This is one of only a small number of COVID-19 vaccines that yielded a vaccine efficacy (VE) of higher than 90% (94.1% for Moderna's Spikevax) in clinical trials. This high VE is what made Spikevax such a popular choice during the initial inoculation and booster process in developed markets like the U.S.
Although we look to be moving past the absolute worst of the COVID-19 pandemic, the mutability of the SARS-CoV-2 virus that causes COVID-19 should sustain a steady stream of sales for Moderna. The need for regular booster shots, variant-specific boosters, and potentially combination vaccines, should allow Moderna to remain relevant and profitable.
Unfortunately, competition continues to grow in the COVID-19 arena and Moderna's only approved therapeutic is its COVID-19 vaccine. Even though the company has $19 billion in advanced purchase agreements in place for 2022, revenue is likely to recede in 2023 and beyond.
Furthermore, Moderna's pipeline is likely years away from generating significant revenue beyond Spikevax. This combination of increased competition and a young pipeline makes it extremely difficult to support Modern's nearly $67 billion market cap -- let alone Cann's target, which would take Moderna's valuation to around $200 billion. This is one Wall Street price target I don't see coming to fruition.
