Analyst's 3 Top Tech Stock Picks to Buy for Year-End Rally

Technology

Published: November 6, 2015 10:25 am

Last Updated: January 13, 2020 5:27 pm

As third-quarter earnings come to an end, we are starting to see some maneuvering among the top firms on Wall Street to get the right stock ideas in place so investors can take advantage of what has been called for years the “Santa Claus rally.” Typically November and December are among the strongest two months for the market, and analysts top picks could perform outstandingly over the next 50 days.

While watching the FireEye debacle Thursday, we decided to search through our analysts coverage for not only alternative cybersecurity stock picks, but other analysts favorites as well. Cowen’s very well-respected Gregg Moskowitz has three top stocks that are his top picks now. All are rated Outperform at Cowen.

Autodesk

This outstanding tech stock makes the list. Autodesk Inc. (NASDAQ: ADSK) operates as a design software and services company worldwide. Its Platform Solutions and Emerging Business segment offers AutoCAD software, a computer-aided design application for professional design, drafting, detailing and visualization, as well as AutoCAD LT, professional drafting and detailing software. The stock has sold off from highs printed in February and may be offering a stellar entry point.

Autodesk is beginning to benefit from the increased adoption of cloud-based services. Its software packages like Fusion 360, BIM 360 and PLM 360 are also gaining traction. However, in the near term, profitability remains under pressure due to investments in cloud-based infrastructure and marketing initiatives. The company reported so-so earnings in late August, and many feel any increase in construction, especially commercial, can help. The stock was up big Thursday as activist investor Sachem Head Capital Management disclosed a stake and said it wanted to start talks with the developer of design software.

The Cowen price target for the stock is $70. The Thomson/First Call consensus target is lower at $63.25. Shares closed Thursday at $63.49.

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Citrix Systems

This company came into the spotlight as a potential takeover candidate after the Dell and EMC deal was announced. Citrix Systems Inc. (NASDAQ: CTXS) is leading the transition to software defining the workplace, uniting virtualization, mobility management, networking and software as a service (SaaS) solutions to enable new ways for businesses and people to work better.

Citrix solutions power business mobility through secure, mobile workspaces that provide people with instant access to apps, desktops, data and communications on any device, over any network and cloud. With annual revenue in 2014 of $3.14 billion, Citrix solutions are in use at more than 400,000 organizations and by over 100 million users globally.

Some on Wall Street feel that the company’s position may depend on how much of VMware the combined Dell/EMC entity controls after the deal. Top analysts think that the more that VMware is controlled by the Dell/EMC tech giant, the more opportunities that could be available for Citrix to partner with other storage vendors. Conversely, if it owns less of VMware it could force Citrix to consider its own strategic alternatives.

The Cowen price target is $85, and the consensus target is $79.50. The stock closed most recently at $82.12.

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Palo Alto Networks

This has been a momentum trader’s dream over two years and may have more investors looking the company’s way after the FireEye implosion. Palo Alto Networks Inc. (NASDAQ: PANW) is helping to lead a new era in cybersecurity by protecting thousands of enterprise, government and service provider networks from cyberthreats, and it boasts staggering year-over-year billing growth. Unlike fragmented legacy products, its security platform safely enables business operations and delivers protection based on what matters most in today’s dynamic computing environments: applications, users and content.

Palo Alto Networks security platform has new features hat help security professionals overcome the distractions and time spent on problems caused by the overwhelming volume of alerts and manual processes associated with operating many discrete security products, and instead expand breach prevention capabilities and boost operational efficiency.

The company blew away fiscal fourth-quarter earnings and will report the first quarter on November 23. The best thing for investors is that last quarter’s numbers were against already tough comparisons, and with the demand for security continuing almost unabated, the company could be poised for years of incredible growth. Palo Alto continues to be ranked the highest with the Wildfire product, which has been the favorite in the Advanced Persistent Threat space among the value added resellers who carry and sell the product. Toss in 20% upside in billing for the quarter, and the story is a killer going forward.

Other analysts on Wall Street have made it clear that the feedback they got from the professionals at recent security conferences was the most bullish on Palo Alto, and the company is gaining real traction with larger data center firewalls.

The $210 Cowen price target is well above the consensus target of $201.63. The stock closed Thursday at $159.93.

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These top pick stocks are really only suitable for very aggressive growth accounts. With that in mind, they all have the potential to trade much higher, and it appears, at least on the surface, they all could be acquisition candidates.