Technology

Deutsche Bank Has 4 Tech Stocks to Buy That Are Delivering Good Earnings

Lee Jackson

Published: October 27, 2016 10:05 am

Last Updated: January 13, 2020 1:51 am

With all the tech world focused on the so-so results from Apple, quietly other companies that are strong in their segments came in with solid earnings. In what has become a fully valued stock market on most metrics, finding companies that are not only delivering results but are positive on the upcoming quarter and next year are just what the doctor ordered.

A series of new Deutsche Bank research reports hone in on four companies that delivered or are expected to deliver solid results for the quarter, and that look poised to continue on a positive upward trajectory. For aggressive growth accounts, all make sense and look cheap, compared to other companies trading at higher valuation. All four are rated Buy at Deutsche Bank.

Akamai Technologies

This company posted outstanding third-quarter numbers, and Deutsche Bank sees growth reaccelerating. Akamai Technologies Inc. (NASDAQ: AKAM) provides cloud services for delivering, optimizing and securing content and business applications over the internet in the United States and internationally.

The company offers performance and security solutions designed to help websites and business applications operate while offering protection against security threats. It also provides media content delivery solutions that are designed to deliver movies, television shows, live events, games, social media, software downloads and other content on the internet in fixed-line and mobile networks; adaptive delivery solutions for streaming video content; and download delivery solution that offers accelerated distribution for large file downloads, including games, progressive media files, documents and other file-based content.

The company guided fourth-quarter numbers much better than expected, and the analysts noted that the focus on cloud security, which was 40% of the compounded annual growth rate, and enterprise security are potential growth drivers going forward.

Deutsche Bank raised its price target to $75 from $70. The Wall Street consensus price target is $60.22. Shares closed way above that on Wednesday at $67.70.

Corning

This was a huge player in the fiber build-outs in the 1990s and may be ready to ramp back up for new deployments. Corning Inc. (NYSE: GLW) is one of the world’s leading innovators in materials science. For more than 160 years, Corning has applied its unparalleled expertise in specialty glass, ceramics and optical physics.

Its products enable diverse industries such as consumer electronics, telecommunications, transportation and life sciences. They include damage-resistant cover glass for smartphones and tablets; precision glass for advanced displays; optical fiber, wireless technologies and connectivity solutions for high-speed communications networks; trusted products that accelerate drug discovery and manufacturing; and emissions-control products for cars, trucks and off-road vehicles.

Deutsche Bank sees the company being highly leveraged to large spending growth that they expect to see in data center optical connectivity. The firm also ranked Corning as its top pick in the space going into third-quarter earnings, which beat estimates. The report noted:

We were clearly wrong in our bullish view on Hyperscale Clouds as a “near-term” growth driver for Cornings Optical business. Fiber to the Home is clearly the primary near-term driver. Optical missed consensus, due to order timing issues (we believe) versus share loss.

Corning investors receive a 2.35% dividend. The Deutsche Bank price target was raised to $26 from $25, and the consensus target is $22.57. Shares closed Wednesday at $23.02.

Intuit

This company has been on a roll this year and hits all the metrics in the technology sector. Intuit Inc. (NASDAQ: INTU) loves income tax time as its TurboTax product is one of the most widely used, and sales are expected to be very solid once again this year. It is also well-known for the QuickBooks line of accounting software, which is used by firms big and small. Intuit announced earlier this year it is launching QuickBooks Online Self-Employed, a new product that makes it easy for the rapidly expanding population of freelancers and independent contractors to handle small business accounting. The company estimates 43% of workers will be self-employed by 2020.

Intuit has served small businesses and accountants with QuickBooks for more than 20 years. It was an early innovator in cloud accounting when it first launched QuickBooks Online in 2001. The company recently announced that QuickBooks Online has more than a million paying subscribers, cementing its market leadership as small businesses shift to the cloud.

Deutsche Bank noted in the report:

We attended Intuit’s third annual QuickBooks Connect user conference today at the San Jose Convention Center. With attendance at a record 5,000 (up from 4,000 attendees last year and 3,500 in 2014) and dozens of QBO partners in the exhibit hall (including Google this time), the conference appears to have evolved into a huge community event, complete with CEO Brad Smith sounding evangelical about the contributions of small business to the global economy and Intuit’s commitment to this segment. We come away more encouraged about Intuit’s prospects after several conversations with partners and customers in the ecosystem.

Investors are paid a 1.26% dividend, and the company will report its quarter next month. The Deutsche Bank price target is $130, and the consensus target is $114.81. The stock closed Wednesday at $107.82.

Yandex

This company is off the radar, but Deutsche Bank expects strong third-quarter results Thursday after the close. Yandex N.V. (NASDAQ: YNDX) operates an internet search engine in Russia and internationally. It offers search, location-based, personalized and mobile services that enable users to find information, to communicate and connect over the internet from desktops and mobile devices; and it offers localized homepages for specific geographic markets.

The company also provides Yandex.News, a news aggregation and information service; maps and location-based services, such as Yandex.Maps, Yandex.Navigator and Yandex.Transport; Yandex.Mail, which provides users access to their email accounts; Yandex.Disk, a cloud-based storage service that allows users to upload, store, read and share files in various formats and sizes; and Yandex.Weather, which allows users to monitor weather conditions. The company also provides text-based advertising and display advertising services.

The report noted:

We expect strong third quarter results from Yandex and see revenue and EBITDA upside to our estimates, though margin flow-through may be more muted in the second half by heavy investment in Taxi including market expansion. While comps get more difficult in the fourth quarter, we see 2016 guidance as conservative and likely to move higher. We view 2017 Street estimates as achievable but note initial guidance (in Feb) will likely be conservative.

Deutsche Bank has a $27 price target. The consensus target is $23.06. The stock closed most recently at $18.95.

These four solid companies are all posting good earnings and appear to have excellent prospects going forward. While only suitable for accounts with high risk tolerance, they all make good addition now.