The majority of the first-quarter earnings reports are on the books, and more than a few companies have come in with outstanding earnings and guidance, not the least of which was Apple Inc. (NASDAQ: AAPL,) which absolutely crushed earnings expectations this week and presented very positive forward guidance. In a fully priced market, these are the kind of results needed to push stock prices higher.
The technology, media and telecom sector, or TMT as it is known on Wall Street, has been red-hot in 2019, with many of the leading companies posting solid first-quarter results. The analysts at SunTrust are raising price targets on three Buy-rated stocks in the firm’s TMT sector coverage universe that hit the earnings ball out of the park. All are suitable for aggressive growth accounts with higher risk tolerance.
Akamai Technologies
This stock has been volatile over the past year but is offering a very good entry point. Akamai Technologies Inc. (NASDAQ: AKAM | AKAM Price Prediction) 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 analysts like the setup for the shares and noted this after the solid first-quarter results:
Akamai’s 1Q19 report handily beating our and consensus expectations as well as guidance. Management’s 2Q19 guidance is in line to slightly better-than-expected and raised full-year 2019 guidance despite incremental FX headwinds. We believe 1Q19 improves confidence in the company’s growth profile. Despite some one-time investments this year and continued desire to invest for what they believe to be significant long-term potential of the security business, we believe AKAM remains well positioned to deliver significant cash flow supporting strategic M&A and share repurchases.
The SunTrust price target was raised to $95 from $82, and the Wall Street consensus target is $80.68. Shares closed trading on Wednesday at $81.04.
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Charter Communications
This top cable giant has been expanding services and product offerings for clients. Charter Communications Inc. (NASDAQ: CHTR) is a leading broadband communications company and the second-largest cable operator in the United States. It provides a full range of advanced broadband services, including Spectrum TV video entertainment programming, Spectrum Internet access and Spectrum Voice.
Spectrum Business similarly provides scalable, tailored and cost-effective broadband communications solutions to business organizations, such as business-to-business internet access, data networking, business telephone, video and music entertainment services and wireless backhaul.
The company made a huge investment in Time Warner Cable, and Charter is tracking well on its integration, which will enable all of its product offerings, pricing, packaging and service operations to be universal across its footprint. SunTrust likes the company’s progress and noted this:
We continue to see strong momentum and tailwinds in the company’s core high speed data internet product despite persistent headwinds from declining video subscribers and working capital needs to build wireless to scale. Ultimately, we believe these challenges remain manageable and the company is well-positioned to sustain leverage and drive meaningful cash flow for investors.
The $365 SunTrust price target was raised to $410. The consensus target is $389.26, and shares closed at $371.04 on Wednesday.
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NXP Semiconductors
This is still considered a top play for investors looking for a chip stock with Internet of Things exposure. NXP Semiconductors N.V. (NASDAQ: NXPI) became the fourth largest semiconductor company in the industry after it merged with Freescale in late 2015. It is also important to note that the combined company is the number one supplier in auto semiconductors with a 14% share, as well as the number one supplier in global microcontrollers and a dominant supplier in mobile payments.
NXP continues getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. Trading at a solid discount to peers, some Wall Street analysts are very positive on the faster earnings growth potential relative to its competition.
The recent SunTrust report pointed out:
NXPI beat first quarter expectations owing to a mix of communications infrastructure and handset sales upside, margin strength, and below-the-line benefits. More surprising, the company guided the second quarter not only above-consensus, but also above-normal seasonality.
SunTrust lifted its $106 price target to $123, much higher than the $104.47 consensus target. Shares were last seen trading at $104.99.
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These three top companies have delivered the goods on earnings for the quarter and have given Wall Street a very positive look forward. While the stories are all very positive, the market is fully valued, so investors need to tread carefully and remain nimble, with stop-losses in place.
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