Technology

Raymond James Has 5 Analyst Favorite Technology Picks With Massive Implied Upside

Lee Jackson

Published: October 31, 2019 7:00 am

Last Updated: January 30, 2020 1:46 pm

In 2019, for the first year in many, active managers are outperforming index funds. That should be a loud wake-up call to passive investors. After a 10-year plus bull market, the bull is tired, and although central banks are still providing a liquidity security blanket, and interest rates remain at generational lows, this looks to many on Wall Street like the proverbial “stock pickers” market.

With that being the case, and with many portfolio managers and investors looking for stocks that can outperform into year’s end and generate a little finish-line alpha, the analysts at Raymond James were all asked to submit their favorite stock pick. Analysts may only submit one “buy” idea (from their stocks under coverage rated Strong Buy or Outperform) on the list at any given time.

We screened the list for companies with big upside to the Raymond James price target and found five technology stocks that look like solid picks for the fourth quarter and into 2020. All these analyst favorite picks are rated Strong Buy.

Alibaba

This continues to be among the most bought tech stocks on Wall Street, as well as one of the most valuable brands in the world. Alibaba Group Holding Ltd. (NYSE: BABA) runs the largest retail marketplaces (Taobao, TMall) and leading B2B sites (Alibaba.com, 1688.com) in China and Lazada in Southeast Asia. It collects revenues mainly from commissions, marketing services, subscription fees, cloud computing and software, as well as other value-added services.

Alibaba has gone beyond e-commerce and developed into a sophisticated new type of conglomerate in the cyber-era with e-commerce as the base for the rest of the four businesses: logistics, finance, data-computing and cross-border infrastructure. Top analysts expect a whopping 24% compounded annual growth rate between now and 2020 for e-commerce in China.

The Raymond James price target for the stock is a stunning $280, and it compares with a $222.81 consensus target. The stock closed Wednesday’s trading at $177.53 a share.

Axon Enterprise

While this company is a somewhat off-the-radar technology play, there is strong upside potential to the Raymond James target. Axon Enterprise Inc. (NASDAQ: AAXN) engages in the development, manufacture and sale of conducted electrical weapons for personal defense.

The company operates through two segments. The TASER Weapons segment sells conducted electrical weapons, accessories and other related products and services. The Software and Sensors segment includes devices, wearables, applications, cloud and mobile products.

Axon recently announced that it is launching the industry’s first AI-powered system built from the ground up using an ethical design and privacy-centric framework. Axon will integrate Automated License Plate Recognition (ALPR) technology into its next-generation in-car video system.

Raymond James has a gigantic $79 price target, while the posted consensus target was last seen at $71. The shares traded at $52.53 apiece on Wednesday’s close.

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This is a top company that should continue to benefit big-time from Microsoft’s Azure division. Lumentum Holdings Inc. (NASDAQ: LITE) is a provider of optical and photonic products for a range of end-market applications, including data communications, telecommunications, networking and commercial lasers for manufacturing, inspection and life-science applications.

The company operates in two segments. Its OpComms products include a range of components, modules and subsystems to support and maintain customers in its two primary markets: telecom and datacom. Lumentum’s Commercial Lasers products serve customers in markets and applications, such as manufacturing, biotechnology, graphics and imaging, remote sensing, and precision machining, such as drilling in printed circuit boards, wafer singulation and solar cell scribing.

The $70 Raymond James price target compares with the $71.20 consensus price objective, as well as the most recent closing share price of $57.20.

Rapid 7

Investors may not be familiar with this company either, but its stock has huge upside potential to the analysts’ target prices. Rapid 7 Inc. (NASDAQ: RPD) engages in the provision of cybersecurity analytics and automation services. Its product includes insight platform, which offers InsightVM, InsightIDR, InsightAppSec and InsightConnect.

Rapid 7 is advancing security with visibility, analytics and automation delivered through its Insight cloud. The company’s solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks and automate routine tasks. Some 8,400 customers rely on Rapid7 technology, services and research to improve security outcomes and securely advance their organizations.

Raymond James has set its price target at a whopping $76. The posted consensus target is $71.20, and the last trade on Wednesday came in at $50.59.

Salesforce

This top company has reported solid fiscal 2019 results so far as billings have drastically improved, and this past quarter was no exception. Salesforce.com Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide. It also has one of the most valuable brands in the world.

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.

In addition, Salesforce announced earlier this month that it has completed its acquisition of Tableau Software, bringing together the world’s number one customer relationship management company with the world’s number one analytics platform.

The Raymond James price target for the shares is a strong $200. The consensus target price is lower at $186.97, and the stock closed most recently at $158.28 per share.

These five Raymond James analyst favorite technology stock picks have substantial upside potential to the price targets. While they are more suited for growth accounts with higher risk tolerance, they all would make good portfolio additions at current price levels.