ISRG, TEAM, SFM Trade Well Below Highs With 30%+ Upside

The market has performed strongly over the past year, with the S&P 500 continuing to reach new all-time highs. Despite this, several well-known names are down big from their 52-week highs. Fortunately, there is reason to believe they can stage significant recoveries. Below, we’ll break down three of these stocks in which Wall Street sees 30% or more upside. All data is as of the September 19 close unless otherwise indicated.

Analysts Eye Big Time Upside in Healthcare Stalwart Intuitive Surgical

First up is the titan of the robotics-assisted surgery market, Intuitive Surgical (NASDAQ: ISRG). Intuitive has dominated this space for years, holding an approximately 60% share of a market expected to more than triple in size by 2034.

However, since reporting Q2 earnings on July 22, shares are down by over 14%. This comes even though every Wall Street analyst tracked by MarketBeat raised their price target on the stock after the results. Compared to its 52-week closing high reached in January, shares are down by 28%. But, this downturn may have created an opportunity.

The MarketBeat consensus price target on Intuitive now sits at approximately $596, implying almost 36% upside in shares. This target is nearly the same as the average target of $594 among analysts who updated their forecasts after Intuitive’s latest earnings.

Adding weight to the case for a recovery is that Intuitive’s forward price (P/E) to earnings ratio now trades at just 51x. That’s high compared to most stocks but not compared to Intuitive’s history. Over the past three years, the stock’s average forward P/E is 58x.

TEAM: Down Nearly 50% from High, +30% Recovery Is Possible

Next up is tech stock Atlassian (NASDAQ: TEAM). The company makes a variety of enterprise-grade productivity software that has allowed it to generate over $5.2 billion in revenue over the last 12 months. However, the stock has really been in a tailspin since notching a 52-week high in February.

Overall, shares have retreated by nearly 48% from their approximately $323 closing high this year.

Now, the MarketBeat consensus price target of over $255 implies a 51% share upside. Honing in on price targets updated after the company’s latest earnings report on August 7 paints a less bullish picture, but not overwhelmingly so. The average price target among those analysts using the latest data comes in at around $227.

That figure still implies that Atlassian shares could rise by more than 34%.

Furthermore, the company’s forward P/E ratio 40x is near rock-bottom levels. It compares to an average forward P/E of 76x over the past three years. However, since the company is only profitable on a non-adjusted basis, one could argue that the forward P/E ratio isn’t the best metric to value Atlassian by.

The forward enterprise value to sales (EV/S) ratio tells a similar story. At approximately 7x, it is substantially lower than the stock’s average EV/S ratio of 10.5x over the past three years.

SFM: After a 33% Drop, Forecasters See 50% Upside Potential

Finally, Sprouts Farmers Market (NASDAQ: SFM) is down substantially after going on a historic run over the past several years. Shares have provided a three-year return of 332%. That’s the highest among all large-cap U.S. stocks in the consumer staples distribution and retail industry in that time frame.

This comes as Sprouts has pulled off a difficult task: gaining widespread traction in the grocery industry traditionally dominated by a few key players. However, since reaching an all-time high closing price of nearly $180 early this year, Sprouts shares have fallen by 33%. Analysts expect the stock to stage a sizeable recovery.

The MarketBeat consensus price target on Sprouts of just under $174 implies 44% upside in shares. Targets updated since July 30, the day of Sprouts' last earnings release, are even more bullish. The average target among those analysts sits at $180, suggesting shares could rise by nearly 50%.

Sprout’s forward P/E ratio of around 21x is only slightly below its average figure of 22x during the past three years. Although this is a significantly smaller discount than ISRG and TEAM, it still provides a basis for the upside potential analysts see.

ISRG’s Discount Stands Out

Wall Street has high hopes for the three stocks listed above, expecting them to achieve significant gains going forward. Among this group, Intuitive Surgical particularly stands out. It’s one of the highest-quality companies in the world, trading at a big-time discount compared to the recent past.

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The article "ISRG, TEAM, SFM Trade Well Below Highs With 30%+ Upside" first appeared on MarketBeat.