Technology

Analyst Says Buy 4 Technology Giants on Market Weakness

Lee Jackson

Published: February 8, 2018 8:50 am

Last Updated: January 12, 2020 3:37 am

Despite the gut-wrenching up and down moves of the market over the past week, there is one huge positive for patient investors, especially those who had some dry powder. Some of the best technology stocks have been meaningfully hit and are offering aggressive accounts some of the best entry points in the past six months. While the volatility may not be over, it makes sense to grab quality companies when they are put on sale.

In a new research report from Kash Rangan, the top-notch server and enterprise software analyst at Merrill Lynch, he cuts right to the chase and says investors should take advantage of the market weakness to initiate or add positions in four top large-cap stock ideas. All are rated Buy at Merrill Lynch.

Adobe Systems

This high-profile old-school software company has posted outstanding earnings. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content. The other segments are Digital Marketing and Print and Publishing.

Top Wall Street analysts see the company benefiting from artificial intelligence, predictive analytics, automation bots, speech recognition and natural language processing and image recognition. Some on Wall Street see earnings per share increasing a solid 30% or more for 2018.

The Merrill Lynch price target for the stock is $253, and the Wall Street consensus target is $216.30. The shares closed Wednesday at $192.34.

Salesforce

This top company reported solid fiscal 2018 second-quarter results as billings drastically improved, and it is on the Merrill Lynch US 1 list. 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 that 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 connect their service agents with customers on various devices; and Marketing Cloud, which enables companies to plan, personalize and optimize customer interactions.

Merrill Lynch has a $125 price target, while the consensus price objective is $122.40. The shares closed on Wednesday at $110.05.

Oracle

This top software stock was hit hard recently and is offering a very good entry point. Oracle Corp. (NYSE: ORCL) develops, manufactures, markets, sells, hosts and supports database and middleware software, application software, cloud infrastructure, hardware systems and related services worldwide.

The company licenses its Oracle Database software to customers, which is designed to enable reliable and secure storage, retrieval and manipulation of various forms of data. Its Oracle Fusion Middleware software aims to build, deploy, secure, access and integrate business applications, as well as automate their business processes.

Shareholders are paid a 1.56% dividend. The $62 Merrill Lynch price target compares with a consensus target of $56.02. The stock closed Wednesday at $48.87.

Microsoft

This top old-school technology stock has posted all-time highs this year and has a massive $121.79 billion sitting on the balance sheet. Microsoft Inc. (NASDAQ: MSFT) continues to find an increasing amount of support from portfolio managers, who have added the software giant to their holdings at an increasingly faster pace all of this year and last.

Numerous Wall Street analysts feel that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offering. Some have flagged Azure as a solid rival to Amazon’s AWS service. Analysts also maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users. The cloud was big in the recent earnings report, which was outstanding.

Microsoft shareholders receive a 1.87% dividend. Merrill Lynch recently raised the price target on the shares to $106 from $98. The consensus price objective for the software giant is posted at $103.42. The shares closed Wednesday at $89.61.

These four large-cap tech leaders are on sale for investors looking to add companies that have a bright future. The market may remain volatile for the short term, but for accounts with a long-term horizon and some risk tolerance, now may be a great time to buy shares.