Technology

Merrill Lynch Raises Price Targets on 3 Top Tech Stocks to Buy

Lee Jackson

Published: May 20, 2016 8:20 am

Last Updated: January 13, 2020 7:48 am

While the overall stock market appears to be teetering as the fears of a rate rise become more pronounced, one area that has suffered as investors piled into oil stocks and gold over the past three months has been technology. The fact of the matter is that companies in the right segments of technology are doing outstanding, and with the growth of cloud computing and storage seemingly unstoppable, there could be more positive news to come.

In a host of new reports, the analysts at Merrill Lynch update tech stocks rated Buy and they raise their price targets on three of them. All are well suited for more aggressive, risk-tolerant investors.

Analog Devices

This stock is still trading way below levels printed last summer. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide. It offers signal processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.

The company has faced some selling pressure as its exposure to Apple remains intact, as it supplies the processors that enable 3D Touch in Apple products. Analog Devices is reported to be the sole supplier for the 3D touch processor to Apple. The Merrill Lynch analysts cite the company’s strong core business-to-business trends as a positive.

Analog Devices investors receive a solid 3.05% dividend. The Merrill Lynch price target was lifted to $61 from $57. The Thomson/First Call consensus price target is $59.44. The stock closed most recently at $55.70.

Once again this tech powerhouse reported outstanding numbers and the stock took off. Salesforce.com Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide. It offers enterprise cloud computing applications and platform services, including Sales Cloud, which enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.

The company also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as connects their service agents with customers on various devices. Marketing Cloud enables companies to plan, personalize and optimize customer interactions.

The company blew away first-quarter earnings estimates with a large billings beat, and virtually every platform and product area the company has posted much higher numbers than almost anyone expected. In addition, the company raised guidance for the rest of the fiscal year.

The Merrill Lynch price target went to $100 from $90, and the consensus target is $90.60, but that almost assuredly will go higher as well. The stock closed Thursday at $81.09, up over 4% on the day.

Take-Two Interactive Software

This top video game producer has cashed in with some super-hot titles. Take-Two Interactive Software (NASDAQ: TTWO) offers its products under labels such as Rockstar Games and 2K. It develops and publishes action/adventure products under the Grand Theft Auto brand, as well as other franchises, including Civilization, Borderlands, Bioshock and Red Dead under the Rockstar Games label. The Grand Theft Auto franchise has been one of the best-selling video games ever released.

The company also reported outstanding earnings for the most recent quarter, but it did push guidance lower than current levels. The Merrill Lynch analysts are very bullish on the next Rockstar title, and the fact that the company raised its 2018 fiscal year estimates.

Merrill Lynch raised its target price to $44, and the consensus estimate is at $41.17. The stock closed trading on Thursday at $37.29.

While the market looks ready for a tumble, the stocks reporting good numbers still look very attractive. All three of these companies would be good additions to long-term aggressive growth accounts.