This year has not been great for stocks so far, especially technology stocks. Tech stocks have faced a tough path in light of international geopolitical tensions and the prospect of multiple interest rate hikes in the coming year. Not to mention the S&P 500 has now firmly entered correction territory. The other major averages are down on the year as well, but one thing is for sure: an environment like this is a stock pickers’ market.
As it stands now, most tech companies are waiting out what could be a year of rising interest rates, at the behest of the Federal Reserve, and downside risk is a tough call at this point in the cycle. Analysts are making their pitches for the bulls and bears, but it is yet to be seen how this will play out. The question is if these stocks are in a deep value position or they could stand to sink lower, or even worse.
24/7 Wall St. is taking a closer look at a few recent bullish analyst reports across the tech sector. Although these particular companies do not make up a significant portion of the sector (like the big names of Alphabet, Apple or Microsoft), investors still could still see significant gains in playing these stocks.
Akamai Technologies
RBC Capital reiterated an Overweight rating Akamai Technologies Inc. (NASDAQ: AKAM), and its $140 price target implies upside of 39% from the most recent closing price of $100.44. The main reason for this upgrade was the acquisition of Linode, announced a week ago. RBC notes that the upside implied in the call reflects the value proposition of Linode as an end-to-end platform and a question of the scaling and vision.
The stock was trading at $100.70 in Wednesday’s premarket, and it has a 52-week range of $92.64 to $120.68. The stock is down around 14% year to date.
AMD
Advanced Micro Devices Inc. (NASDAQ: AMD) was upgraded to Outperform from Market Perform at Bernstein, which has a $150 price target. That signals upside of 30% from the most recent closing price of $115.65.
Bernstein was quick to note that it has been almost 10 years since it held an Outperform rating on AMD, and the firm calls it “an omission mostly emotional in nature.” Also, the analyst said that this is not the AMD of a decade ago. The combination of continued stellar execution, increasingly bankable earnings power and a recent sizable pullback makes the valuation downright attractive.
AMD stock has a 52-week trading range of $72.50 to $164.46, and it traded at $118.25 in the premarket. Shares are down nearly 20% year to date.
Datadog
Goldman Sachs added Datadog Inc. (NASDAQ: DDOG) to its Conviction List and reiterated a Buy rating with a $250 price target. The implied upside from the most recent closing price of $158.94 is 57%. The investment house is incrementally positive, as it believes that growth at Datadog can continue to outpace overall observability market as cloud adoption remains nascent. Also, the analyst sees the company as well positioned to succeed outside of its core products, particularly in security, which can expand the company’s total addressable market by $20 billion longer term.
Datadog stock was trading at $157.95, and it has a 52-week trading range of $69.73 to $199.68. The share price is down nearly 11% year to date.
Palo Alto Networks
JMP Securities reiterated an Outperform rating and has a $620 price target on Palo Alto Networks Inc. (NASDAQ: PANW). The implied upside here is 30%, from the closing price of $475.51. The analyst noted that this company is a powerhouse of the cybersecurity industry, leveraging its leading position in the network security domain to build a diverse product platform to address key use cases across the network, endpoint and cloud security fields.
The stock was trading at $508.40, and it has a 52-week trading range of $311.56 to $572.67. Palo Alto Networks stock is down over 14% year to date.
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