Analyst Loves These 4 Tech Stocks That Are Still Down in 2015

By Lee Jackson Updated Jun 9, 9:48AM EDT · Published Jun 9, 8:20AM EDT

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Technology has been a very solid sector this year, up 5.77% through last Friday, which ranks third in S&P sector performance. In spite of this strength, many of the top stocks to buy in the sector are actually down year-to-date. A new research report from Stifel highlights some of the top tech stocks in the firm’s research coverage universe that are actually down for the year, but carry a rating of Buy at the firm.

With the economy improving, and currency headwinds troubling some companies that do a high percentage of business outside the United States, there has been a perfect storm for top technology stocks to underperform. We screened the Stifel list for Buy-rated companies that are down year-to-date.

Cray

This company is down almost 9% so far this year but is Buy-rated at Stifel. Cray Inc. (NASDAQ: CRAY) provides innovative systems and solutions enabling scientists and engineers in industry, academia and government to meet existing and future simulation and analytics challenges. Leveraging more than 40 years of experience in developing and servicing the world’s most advanced supercomputers, Cray offers a comprehensive portfolio of supercomputers and big data storage and analytics solutions delivering unrivaled performance, efficiency and scalability. Cray’s Adaptive Supercomputing vision is focused on delivering innovative next-generation products that integrate diverse processing technologies into a unified architecture.

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The company recently announced that the Supercomputing Education and Research Center (SERC) at the Indian Institute of Science (IISc) in Bangalore, India, has put a new Cray XC40 supercomputer into production. With more than 1.4 petaflops of compute performance, the Cray supercomputer nicknamed “SahasraT” at SERC is the first petaflop system in India.

The Stifel price target for the stock is $40, the same as the Thomson/First Call consensus target. The stock closed on Monday at $31.08 per share.
CommVault Systems

This stock is down almost 14% this year. CommVault Systems Inc.’s (NASDAQ: CVLT) exclusive single-platform architecture gives companies unprecedented control over data growth, costs and risk. Commvault’s Simpana software suite of products was designed to work together seamlessly from the ground up, sharing a single code and common function set, to deliver superlative data protection, archive, replication, search and resource management capabilities.

The company recently announced numerous additions to its product portfolio that enable organizations to thrive in the next wave of cloud adoption by turning data residing in public and hybrid clouds into a powerful strategic information asset. With the release of CommVault Cloud Disaster Recovery, CommVault Cloud Development and Test, CommVault Cloud Gateway and CommVault Cloud Replication, the company is addressing several critical needs demanded by enterprises today.

The Stifel price target is $55, and the consensus target is at $52.08. Shares of the company closed Monday at $44.14 apiece.

EMC

This company is trading at an incredibly low 14.16 estimated adjusted 2015 earnings, versus 15.1 for 2014, and is down almost 9% year-to-date. EMC Corp. (NYSE: EMC) is the leader in storage, and the constant increase in data makes the stock a core holding for technology investors. With the company expected to buy back $3 billion of stock in 2015, and the lower VMware numbers baked into future calculations, now may be a good time to add shares of this outstanding technology stock. EMC owns 80% of the cloud software company, and activist investors have urged a spin-off, which does not seem likely in the near future.

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Some on Wall Street are not thrilled with the progress the company is making, and have said the stock was “dead money.” They argue that until numerous catalysts kick in, the stock will go nowhere. The company recently announced it plans to acquire global cloud service provider Virtustream in an all-cash transaction of approximately $1.2 billion. The transaction is expected to close in the third quarter of 2015. Early reaction to the deal is very positive.

EMC investors are paid a 1.7% dividend. The Stifel price target for the tech giant, which is also rated Buy, is $33, and consensus target is posted at $30.45. EMC closed Monday at $26.66.

Western Digital

This stock is down a whopping 15% this year. Western Digital Corp. (NASDAQ: WDC) is an industry-leading developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content. Its HGST and WD subsidiaries are long-time innovators in the storage industry. The company provides a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. The products are marketed under the HGST, WD and G-Technology brands to original equipment manufacturers, distributors, resellers, cloud infrastructure providers and consumers.

The stock is down from last year’s highs due to concerns over PC demand and the pickup in NAND adoption. Some analysts do think that cloud/Web 2.0 investments will increase hard disk drive demand (HDD) next year. The company is a leader in the total addressable HDD market at a very impressive 43%.

Western Digital investors are paid a 2.1% dividend. The Stifel price objective is $125, and the consensus target is $113.10. The stock closed Monday at $92.60.

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High-quality stocks at good prices are hard to come by after a multiyear market rally. The Stifel picks are designed for the long-term growth investors with the time and the capital to be patient as they recover.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.