Technology

10 Tech Giants Receiving the Most Analyst Upgrades and Target Hikes Ahead of Earnings

Jon C. Ogg

Published: January 20, 2018 9:55 am

Last Updated: January 12, 2020 4:17 am

After the first three weeks of 2018, the stock market has risen to all-time highs. This raging bull market is now nearing nine years old, and many investors are looking at how to position themselves for 2018 and beyond. The technology sector has remained an area of interest for its growth, likely winning under tax reform and accelerated earnings growth, and because that’s where the future is. One theme that never seems to fail to entice investors is companies with earnings likely to beat expectations, and that is often the case when Wall Street analysts raise their ratings or price targets ahead of earnings.

No strategy comes without risks, and individual earnings reports can be deemed good or bad regardless of the business climate at the time. Still, it has been amazing to see how many large and well-known technology stocks have scored waves of analyst upgrades and big price target hikes going into this earnings reporting season.

24/7 Wall St. covers dozens of analyst reports on most trading days, and this ends up being hundreds of calls a week. When multiple analysts issue upgrades in their formal ratings or in their price targets, we generally refer to this as an analyst party. The flurry of activity after the calls is often enough to attract the attention of investors looking for new ideas.

Investors also need to consider several issues. The strength in many of the top stocks being chased by analysts has in some cases surpassed the consensus analyst price targets from Thomson Reuters. There is also the notion that having multiple analyst calls means “raising the bar” for companies, making it imperative that their earnings and guidance look good when they actually report. Also, companies that have poor reports or stumble in their guidance are likely to be punished. Tax reform is taking the corporate tax bracket to 21% from 35%, some companies have started announcing charges for repatriation overseas cash under a more territorial tax system, and many companies are set to win from the effect of immediate expensing against earnings.

The Dow Jones Industrial Average rose by 25% and the S&P 500 rose over 19% in 2017, and the 26,400 Dow target (and 2,855 target on the S&P 500) now look like very conservative baseline targets. It only took eight trading days for the Dow to rise to 26,000 from 25,000. Despite some choppiness seen in the third week of trading in 2018, many analysts have accelerated their earnings expectations. This would imply that some of the stocks either will see even more price targets hikes after earnings or they will need to take a serious breather.

24/7 Wall St. has identified 10 of the tech giants that still have earnings reports coming in the next couple of weeks or so in which there are big analyst parties taking place. We have included summaries on the calls and linked to them in more detail if covered individually. We also included consensus price target and consensus estimates from Thomson Reuters and the date when each company is expected to release earnings, with the caveat that all dates and estimates are subject to change.

Here are the 10 tech leaders that have seen multiple positive analyst calls during the first three weeks of 2018.

Alphabet: Now Way Beyond Just Google

Alphabet Inc. (NASDAQ: GOOGL) has recently hit new highs and it is up 8.5% so far in 2018. The online search, advertising and content giant is set to report earnings on February 1. These are some of the key Alphabet analyst upgrades and price target hikes seen since the start of the year:

• KeyBanc Capital Markets (Outperform) raised its target to $1,280 from $,1150 on January 19.
• MoffettNathanson raised its target price to $1,275 from $1,175 on January 17.
• SunTrust Robinson Humphrey (Buy) raised its target to $1,250 from $1,180 on January 12.
• Morgan Stanley (Overweight) raised its price target to $1,210 from $1,150 on January 12.
• Cowen (Outperform) raised its price target to $1,230 from $1,150 on January 4.

Alphabet shares were last seen at up $1,143.50, compared to a consensus target price of $1,211.05. That consensus target was closer to $1,178 just 30 days earlier and to $1,104 just 90 days ago. Alphabet now has a $792 billion market cap.

Amazon: Bezos Rides De Facto Holiday Winner Up and Up

Amazon.com Inc. (NASDAQ: AMZN) kept hitting new high after new high in 2018, and the analyst calls and higher targets all seemed to drive the shares each time. even if the calls were very similar. Amazon’s stock has risen 10.7% so far in 2018, and its market cap is now about $614 billion. These are some of the top analyst calls seen year to date:

• SunTrust Robinson Humphrey (Buy) raised its target to $1,400 from $1,270 on January 12.
• Stifel (Buy) raised its price objective to $1,425 from $1315 on January 11.
• Piper Jaffray (Overweight) raised its target price from $1,200 to $1,400 on January 9.
• UBS (Buy) raised its target price from $1,250 to $1,440.
• Oppenheimer (Outperform) raised its target price to $1,450 from $1,330.
• BMO Capital Markets (Outperform) raised its target to $1,600, above the prior street-high of $1,525.

Last trading at $1,294.58, Amazon has a consensus target price of $1,327.36, which was more than $50 lower just 30 days earlier and more than $100 lower 60 days earlier. Amazon is expected to report earnings on February 1.

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Apple: Already Gave Repatriation and Reinvesting Plans

Apple Inc. (NASDAQ: AAPL) is expected to report earnings on February 1, and it seems to score higher targets almost daily. That said, some analysts have trimmed expectations in recent weeks after it hit so many highs and now that its market cap is the largest in the world at $916 billion. Its shares are up about 5.5% so far in 2018.

Apple has already outlined a $350 billion commitment to America, including a one-time $38 billion repatriation tax. Longbow decided to downgrade Apple to Neutral from Buy on January 17. Here are some of the other calls in the mighty Apple seen since the start of 2018:

• Mizuho maintained a Neutral rating on January 19, but raised its target to $175 from $160.
• Daiwa (Outperform) raised its price target to $188 from $160 on January 18.
• Merrill Lynch (Buy) raised its price objective from $180 to $220 on January 17.
• Maxim Group (Buy) raised its price target to $204 from $193 on January 12.
• Barclays raised its target price to $174 from $162 on January 5.

At $178.46 a share, Apple has a consensus target price of $189.22. That target was closer to $187.50 a month earlier and just under $175 just 90 days ago.

Cisco Systems: Wants Its Year 2,000 Dot-Com Bubble Back

Cisco Systems Inc. (NASDAQ: CSCO) has decided to get back into the bull market mode as well, with its shares up 7.8% so far in 2018. The networking giant has been changing its model, and its off-month quarterly cycle means that earnings will not come until mid-February. Three hikes have been seen so far in 2018:

• KeyBanc Capital Markets (Overweight) raised its target to $43 from $39 on January 19.
• Piper Jaffray resumed coverage as Overweight with a $44 target on January 10.
• Merrill Lynch raised it to Buy from Neutral with a $46 price objective on January 5, but the firm’s technical analysis team was even more bullish on a Cisco chart breakout.

At $41.29, Cisco’s stock recently reached its highest levels going back to the dot-com bubble in 2000, but Cisco shares are still nowhere close to those old highs. The consensus analyst target is $40.41, well above the $38.85 consensus from a week or two earlier. The consensus target was $35.73 just 90 days ago. Cisco has a dividend yield of almost 2.8% and a $204 billion market cap.

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Facebook: What Newsfeed Changes?

Facebook Inc. (NASDAQ: FB) is expected to report earnings on January 31, and it caught multiple target price hikes before it announced changes to the newsfeed policies. This announcement hurt shares, but most analysts did not reverse their target price hikes. Facebook shares were last seen up 2.7% so far in 2018, but now at $181.29 they are down from a 52-week and all-time high in the prior week of $188.90.

Here are the analyst calls seen so far in 2018:

• Citigroup reiterated its Buy rating and raised its price target to $215 from $210.
• Cowen reiterated its Outperform rating and raised its target from $200 to $220.
• Credit Suisse reiterated its Outperform rating and raised its target to $232 from $230.
• JPMorgan raises its price objective to $230 from $225.
• Morgan Stanley (Overweight) raised its target price to $215 from $200.
• SunTrust Robinson Humphrey reiterated its Buy rating and raised its target to $240 from $215.
• Wells Fargo reiterated its Outperform rating and raised its target from $215 to $230.

Facebook had a consensus target price of $212.52 on last look, up from $209.40 about 10 days earlier and even more from the $196.18 target 90 days ago. The social media giant has a $526 billion market cap.

F5 Networks: Earnings on Deck

F5 Networks Inc. (NASDAQ: FFIV) has seen targets and ratings hiked so far in 2018. At $138.76, its shares are up 5.75% so far in 2018, and its market cap is $8.9 billion. The company reports earnings on January 24 after the close.

At the start of 2018, F5 caught two analyst upgrades. On January 4, BMO Capital Markets raised the stock to Outperform from Market Perform and raised its price target to $156 from $122. Merrill Lynch raised F5 to Buy from Neutral with a $157 price objective on January 5. Also, Deutsche Bank raised its target price to $95 from $90 on January 5. On January 17, two firms raised targets: D.A. Davidson to $155 and Barclays to $125.

F5 shares have a consensus target price of $133.33, but that consensus price was just $127.80 at the start of 2018.

Microsoft:  Riding the Cloud Endlessly Higher

Microsoft Corp. (NASDAQ: MSFT) has been riding the cloud higher and higher ahead of its January 31 earnings report. Multiple target hikes have been seen since the start of 2018. At $90.00 a share, its stock is up 5.2% so far in 2018, and its market cap is about $686 billion.

Microsoft was given huge marks by Credit Suisse when the firm reiterated its Outperform rating but raised its target price to $115 from $95. This higher target is now among the most aggressive Microsoft price targets on Wall Street, and it went above the former “blue sky” scenario. Other key analyst calls were seen as well:

• KeyBanc Capital Market (Outperform) raised its target to $106 from $94 on January 12.
• Barclays (Overweight) raised its price target from $89 to $95 on January 12.
• Wells Fargo (Outperform) raised its price target to $100 from $90 on January 12.
• Oppenheimer (Outperform) raised its target price to $115 from $110 on January 9.

Microsoft now has a consensus target price of $96.00, which was closer to $93.22 just a week earlier. The consensus target was all the way down at $81.28 right before its prior earnings report in October. Microsoft also has a dividend yield of almost 1.9%.

Netflix: What Higher Content Costs?

Netflix Inc. (NASDAQ: NFLX) is the first of these tech and media giants to have earnings, with its report coming on January 22. It has a new David Letterman show, and Netflix scored two positive calls on the first trading day of 2018. Loop Capital raised its target price to $241 from $237, and while that’s a small gain, the firm now says that Netflix is its best idea in the space for 2018. Macquarie also jumped in with an upgrade to Outperform from Neutral and raised its target to $220 from $200.

Netflix managed a gain of 2.1% at $209.99 on Friday, after an increase of almost 9.4% for the first week of 2018 alone. Netflix is now up 14.8% so far in 2018, and its market cap has reached $95 billion.

Meanwhile, Wedbush Securities panned Netflix yet again with its big Underperform rating on January 19. The firm even still kept its $93 price target, which would imply more than 50% downside, based on higher content cost pressures and unrealized cost recoveries.

Other key analyst calls so far in January:

• Deutsche Bank raised its target price to $210 from $200‍.
• KeyBanc Capital Markets (Overweight) raised its target to $270 from $230.
• Morgan Stanley (Overweight) raised its target from $235 to $255.
• Barclays started it as Overweight on January 11, with a $245 price target.

At $220.46 a share, Netflix has a consensus target price of $222.73, up from just $215.63 a week earlier.

NVIDIA: Riding 2017 Gains Even Higher

NVIDIA Corp. (NASDAQ: NVDA) was the king of the chip stocks in 2017, and while analysts kept hiking their price targets at a fast rate, that was not fast enough to keep up with its big gains last year. Then came a brief pullback, but NVIDIA has seemed to be almost immune to the recent processor woes of AMD and Intel, and its stock has risen to new all-time highs. The share price is up over 18% so far in 2018.

NVIDIA is not due to report earnings until February 8. Its three big analyst calls were seen as follows:

• Merrill Lynch reiterated its Buy rating on January 19, but the firm raised its target to $275 from $251.
• Mizuho also reiterated it as Buy and raised the price target from $225 to $240 on January 16.
• RBC Capital Markets reiterated its Outperform rating and $240 target on January 9, but outlined how its upside case is really up at $300 or so.

NVIDIA shares closed on Friday at $230.11, with a consensus price target of $212.89. That consensus target has been more or less flat over the past 45 days, but it was all the way down at $169.55 just 90 days ago.

Qualcomm: Back From the Dead, Merger Saga Continues

Qualcomm Inc. (NASDAQ: QCOM) has seen a major recovery in 2018. While its earnings report is expected January 31, recent shareholder communications offered longer-term guidance in its effort to fend off Broadcom’s hostile takeover. The real interest here has been a trifecta of ongoing issues at Qualcomm: troubles with Apple, it wants to buy NXP in its own deal, while Broadcom wants to buy Qualcomm while it is down.

Now Qualcomm’s doldrums have turned back into a gain of 6.3% so far in 2018, and at $68.04 a share with a $100 billion market cap, its stock is up from about $50 from late October.

Three fresh calls were seen on January 17:

• Mizuho reiterated its Buy rating and raised its target to $75 from $65
• Canaccord Genuity reiterated its Buy rating and raised its target from $83 to $86.
• Macquarie reiterated its Neutral rating but raised its target to $70 from $55.

And on January 16, Instinet raised Qualcomm to Buy from Neutral.

Qualcomm has a consensus target price of $64.94, and that has risen handily since Broadcom began its pursuit of the company in the fourth quarter of 2017.