Goldman Sachs Points to Four Stocks Poised for Growth During Earnings Season

Goldman Sachs analysts have identified a select group of companies they believe are primed for significant growth as the upcoming earnings season unfolds. Their bullish outlook encompasses diverse sectors, highlighting companies experiencing strong momentum and positive market sentiment. These recommendations present compelling investment opportunities for those seeking substantial returns, but investors should always conduct their own thorough due diligence before making any investment decisions.

Key Takeaways: Goldman Sachs’ Top Picks

• Spotify (SPOT): Goldman Sachs predicts continued **user growth**, increased **engagement**, and **stronger pricing power**, leading to improved margins and a potentially more consistent shareholder return policy.
• TKO Group (UFC parent company): Strong demand for live events and robust competition for sports rights position TKO for continued success, despite potential for slightly below-consensus quarterly results.
• LivaNova (LIVN): The firm initiates coverage with a buy rating, citing **clear growth drivers**, enhanced **margin profiles**, and the potential for **upside from new products** and pipeline opportunities.
• ServiceNow (NOW): Goldman Sachs projects ServiceNow to exceed its FY24 revenue guidance and grow its market share in a large total addressable market (TAM), forecasting an impressive **20%+ growth rate** for the long term.

Spotify: A Global Audio Leader with Strong Growth Prospects

Goldman Sachs analyst Eric Sheridan views Spotify (SPOT) as the undisputed leader in the global audio streaming market. His bullish outlook is grounded in several key factors contributing to his positive forecast. Sheridan projects that Spotify will benefit from “compounded user growth, rising engagement across multiple format structure & pricing power.” This translates into a robust financial outlook, with the analyst explicitly mentioning the expectation of improved margins. Sheridan notes that the company is finally seeing its long-awaited goals materialize. The appointment of Christian Luiga as Chief Financial Officer in April is also a factor influencing the firm’s positive assessment. Investors are keen to hear about a more “consistent shareholder return policy” aligning with its global technology peers, according to Sheridan. The stock’s performance is impressive, with nearly 99% growth in 2024, underscoring market confidence.

Spotify’s Future Trajectory

Sheridan’s analysis underscores a significant shift for Spotify towards stability and sustained growth after years of navigating the complexities of the streaming market. The firm believes the company is poised to capitalize on its established market leadership position, translating to higher revenues and potentially increased profitability. The success of its various initiatives, including its podcast strategy and artist development programs, is expected to continue driving growth and engagement. In summary, Spotify’s strong position in the global audio landscape, combined with the potential for improved shareholder returns, is driving Goldman Sachs’ confident outlook.

TKO Group: Riding the Wave of High Demand for Live Sports Entertainment

Goldman Sachs analyst Stephen Laszczyk exudes optimism about TKO Group, the parent company of the UFC, heading into its November earnings report. Laszczyk highlights a significant improvement in investor sentiment, citing “markedly improved” attitudes in recent weeks. This positive shift is fueled by several factors. Crucially, Laszczyk underscores the fact that demand for mixed martial arts (MMA) events, particularly UFC fights, remains remarkably high. This is a crucial element underpinning his bullish case for TKO’s continued growth. Furthermore, he believes that the robust competition for sports rights is beneficial to TKO, positioning the company in a advantageous location for negotiations. The analyst’s “checks show no signs of a consumer slowdown,” adding another positive factor to his assessment. A key caveat is that the firm acknowledges that quarterly results might be slightly below consensus expectations but maintains their buy rating.

TKO Group’s Resilience Amidst Market Fluctuations

Despite the acknowledged possibility of slightly below-consensus quarterly results, Goldman Sachs remains strongly positive on TKO’s prospects. This confidence stems from the sustained demand for live sports, which appears impervious to broader macroeconomic headwinds and consumer spending concerns. The UFC’s continued popularity, combined with its strong position in a competitive landscape, suggests consistent future growth, making TKO a potentially attractive investment despite near-term uncertainty.

LivaNova: A Medical Device Company on the Cusp of Growth

Goldman Sachs analyst David Roman and his team initiated coverage on LivaNova (LIVN) with a buy rating, recommending investors capitalize on any potential dips in the stock price. The key to their bullish thesis lies in LivaNova’s expected transformation. Roman states, “As the business produces consistent results and the margin profile is enhanced, we think this period of underperformance fades into the rear view mirror.” The firm expects LivaNova to enter a period of “clear and more visible baseline growth drivers, augmented by potential revenue and [earnings per share] upside” resulting from “new product cycles and pipeline optionality.” Roman concludes, “Positive earnings revisions and continued business momentum represent the core of our thesis and our view that the stock’s [price-earnings] can re-rate higher over the next 12-months“. The company is poised to report earnings in late October.

LivaNova’s Strategic Growth Initiatives

The combination of consistent results, improved margins, and the anticipated boost from new product launches and pipeline opportunities supports Goldman Sachs’ buy rating and reinforces their outlook of positive revenue and earnings per share growth. This positive outlook is based on a solid understanding of the company’s strategic direction and the potential for market share expansion alongside the success of new technologies and treatment procedures.

ServiceNow: A Leader in a Massive Market Expected to Grow Market Share

Goldman Sachs expresses substantial confidence in ServiceNow (NOW), projecting the company’s ability to not only meet but exceed expectations. The firm states, “we believe ServiceNow is well positioned to execute against its FY24 Subscription revenue guidance and grow its share in a $275bn TAM [total addressable market].” Looking ahead, Goldman Sachs projects ServiceNow to grow 20%+ sustainably with high-quality unit economics. This strongly optimistic outlook paints a picture of aggressive growth and is significantly higher than management’s already ambitious targets, “we are 5% above management’s target for $15bn+ in revenue by FY27, as we believe steady execution and impressive innovation velocity position the company well“.

ServiceNow’s Robust Growth Trajectory

Goldman Sachs’ extremely positive forecast underlines the firm’s belief in ServiceNow’s ability to dominate its sector. This confidence hinges on the company’s continuous innovation, strong execution of its strategies, and ability to tap into a vast and expanding market. The significant divergence from management’s own projections underscores the analysts’ high conviction and bullish outlook for the company’s long-term prospects. The firm believes ServiceNow is well-positioned to achieve, and may perhaps surpass, even their already ambitious goals in the years to come.