Kevin Merritt, the research director at Wedbush Securities, joined Benzinga’s PreMarket Prep Wednesday to share the firm’s top bank picks, discuss opportunities in beaten-down names, and delve into the ongoing impact of Artificial Intelligence (AI) on various industries.
While AI has driven a rally in large-cap tech companies, Merritt emphasized that the AI landscape is complex and presents a ‘mixed bag’ in terms of winners and losers. He highlighted the debate surrounding the impact of AI on IT services companies, noting that some, like Accenture, have faced challenges in recent quarters due to potential cannibalization and uncertainty about the opportunities AI presents. Despite this, Merritt believes that companies like Accenture will eventually benefit as more corporations adopt AI.
He highlighted Palantir Technologies Inc. (PLTR) as an example of a company that has already capitalized on AI growth. In contrast, he anticipates that Accenture Plc (ACN) and similar companies will take longer to realize revenue gains from AI adoption.
Beyond the tech and AI realm, Merritt pointed to the regional banking sector as a promising area to watch. Wedbush has recently shifted to a more bullish stance on the sector as economic conditions stabilize and the Federal Reserve (Fed) prepares to cut interest rates. Merritt explained that the firm had been cautious about regional and mid-cap banks for the past couple of years due to economic uncertainty. However, recent economic trends have led them to adopt a more balanced, neutral sector view, suggesting that the sector is poised for growth.
Merritt emphasized Western Alliance Bancorp (WAL) as a particular name that Wedbush analysts have recently selected for their ‘Best Ideas’ list. He also mentioned Comerica Inc (CMA) as a regional bank that Wedbush has upgraded.
Furthermore, Merritt and the PreMarket Prep hosts discussed beaten-down retail investor favorites like Starbucks Corp (SBUX), Nike Inc (NKE), and Celsius Holdings (CELH). While acknowledging the challenges facing Starbucks under its new CEO, Brian Niccol, Merritt believes there could be ‘strategic value’ in Celsius’s stock.
This insightful discussion provides valuable insights into Wedbush Securities’ top bank picks, the opportunities in beaten-down names, and the evolving landscape of AI and its potential to impact various industries. The discussion also emphasizes the importance of staying informed about economic trends and their potential implications for different sectors.
