Not all tech stocks stink right now.
Some of tech’s biggest giants are surprisingly market losers this month: from Facebook’s (FB) stock plummeting just under 19% last Thursday to Twitter (TWTR) taking a nearly 21% nosedive on Friday. Is there any sign of life left in tech? Are any stocks safe in the wake of a brutal earnings season?
Here, we turn to TipRanks’ Trending Stocks tool to get a sense of which stocks have earned three or more ratings from analysts in last few days, names that have experts buzzing.
Our findings point to three best-rated stocks stirring Wall Street attention. Each of these picks has received a “Strong Buy” consensus rating, so market sentiment is upbeat on prospects ahead.
PayPal Holdings (PYPL) has built a name in the world as a digital payment leader. How did the stock fare during a bleak round of tech earnings? The company’s second quarter print may have surpassed the Street’s expectations, but the third quarter revenue guide came up a bit shy. Expectations were scaled high, considering the stock has been such a robust market performer.
Paypal’s stock has dipped 6% since last Wednesday’s earnings show. That said, it’s a trending stock racking up buys right and left from sell-side analysts. The company kicked up its full-year guide, which is a bullish move even if it wasn’t high enough.
Consider that even with this 6% earnings downturn, the tech stock has still risen almost 16% this year. Against the S&P 500 ETF (SPY) and its under 6% increase in 2018, PayPal is still winning. PayPal has received 14 buy ratings since releasing earnings. Clearly, analysts still see this tech bet as one worth the portfolio add.
Craig-Hallum’s Bradley Berning not only reiterated a Buy on the stock, he bumped up his price target from $93 to $100 (17% upside potential). Berning dismisses the pullback as apprehension over the “quality of beat,” and recommends investors take advantage of weakness.
Cantor Fitzgerald’s Joseph Foresi likewise gets more positive on PayPal following the second quarter beat and full-year outlook hike. The analyst reiterates an Overweight rating while lifting the price target from $93 to $98 (15% upside potential). Worthy of note, Foresi is one of Wall Street’s best performing analysts; he’s earned an impressive ranking of #9 out of over 4,800 analysts.
“We are attracted to the company’s above-average industry growth rate and advantageous market positioning in eCommerce,” cheers Foresi, wagering that the company could even “grow at roughly double the market average.”
The ‘Strong Buy’ stock has 21 bulls in its corner. Consensus expectations land at an average price target of $97.22, reflecting almost 14% in upside potential ahead for PayPal.
Seattle-based software giant Microsoft (MSFT) is in the running to be the first ‘trillion-dollar baby’ on Wall Street, with hooks in a $827.3 billion market cap. A week and a half ago, the tech leader reported its fourth fiscal quarter print, which has one of Wall Street’s best performing analysts calling the showcase a “very strong finish to an impressive year.” When a stock giant gains 26% in 2018, analysts certainly pay attention.
Top 25 analyst Timothy Horan at Oppenheimer commends the company’s fierce revenue gains “across the board.” Revenue shot past $100 billion during the fiscal year. Look for encouraging trends to “continue,” says Horan.
Consider that Microsoft has a video game streaming platform in the works that Horan dubs “a la Netflix (NFLX) of gaming.” In fact, the analyst wagers Wall Street is underestimating the company’s gaming opportunity. Horan’s prediction: “As the gaming industry moves to a SaaS model, MSFT is well positioned because of its strong distribution capabilities through Xbox and the cloud and will likely gain share in the $100 billion market.”
In a nutshell, “Each business unit seems to be in a groove, and the intelligent edge will be a driver of growth for the next few years,” contends the analyst, who reiterates an Outperform rating on Microsoft with a $115 price target (7% upside potential).
The ‘Strong Buy’ stock has won over 22 buy ratings in 3 months, and over half of these bullish recommendations were issued after Microsoft’s fourth fiscal quarter results. Consensus expectations suggest healthy confidence circulates on the Street. The 12-month average price target stands at $120.36, marking close to 12% in upside potential.
Virtualization software specialist VMware (VMW) is a Dell subsidiary that is catching bullish fire on the Street. While the tech player has not released quarterly earnings yet (results are anticipated August 23), market sentiment approaching the print is high. The stock has already vaulted close to 16% in 2018 alone.
Four-star analyst Kash Rangan of Merrill Lynch recently reiterated a Buy rating on VMware while dialing up his price target to $190. In other words, Rangan spotlights almost 28% in return potential still in store for VMW shares.
The analyst highlights “increased confidence in sustained mid-teens billings growth.” Moreover, the analyst points to the tech player’s 32% operating margins that are stronger than rival Red Hat’s (RHT) 24% margins. Any overhang pressuring VMware’s stock has been lifted, thanks to the reverse merger at Dell. Likewise, the move is primed to boost the company’s valuation multiple down the line.
Ultimately, the ‘Strong Buy’ stock has received 14 buy ratings in three months. The bulls win out on VMware’s expectations as well. The 12-month average price target hits $166.50, suggesting analysts call for nearly 12% in upside potential.