JPMorgan Says 2 Tech Heavyweights Are the Place to Be Now

By Lee Jackson Updated Sep 11, 12:43PM EDT · Published Sep 11, 10:45AM EDT

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Sometimes when a stock becomes a long-term winner, it becomes almost fashionable on Wall Street to be the company or analyst that doesn’t like the stock. In other words, there is some addition by subtraction in going the opposite way. In a new report from JPMorgan, they do just the opposite and have two tech stock giants to buy now.

While the markets may very well remain choppy, and the volatility index, or VIX, that hung in the low teens for seemingly years is poised to stay at heightened levels, perhaps in the 20s, the JPMorgan team continues to be very bullish on a mega-cap tech behemoth and a fast-rising star. Both are rated Overweight.

Apple

This company remains the world’s biggest and boldest technology company. Apple Inc. (NASDAQ: AAPL) has continually stayed in the limelight, and this week was no different as the Silicon Valley titan came out with a tons of new products for the Apple nation to embrace. In what is becoming a new trend, many of the bullish analysts on the stock yawned at the new offerings, saying that it was really “no big deal.”

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The JPMorgan team was anything but bored as they applauded a wide array of new products that the analyst feels can deliver about 3.1% of the firm’s estimated current year 2016 earnings estimates. They also noted that the new iPhone payment plan that was rolled out with the introduction of the iPhone 6s and 6s Plus can become a recurring revenue stream for the company.

The analysts also highlighted the iPad Pro with a new 12.9″ screen, which could pose a challenge to the Microsoft Surface tablet. This in tandem with the Apple Pencil and the physical smart keyboard rolled out for the iPad Pro is another in a string of new products that can generate new revenues for the company.

Lastly, an updated Apple TV was introduced, along with the Apple TV App store. This is Apple making a big bid to be part of the switch by many consumers to streaming media and detaching from huge bundled programming, much of which they have to pay for but have zero interest in. The new Apple TV hardware with the A8 chip in it is priced at $149 for a 32 GB version and $199 for the 64 GB version. The analysts feel that the higher pricing for the hardware, and the gaming apps that will be available, will continue to deliver earnings increases.

The bottom line is JPMorgan stands solidly behind Apple. Apple investors are paid a 1.85% dividend. The JPMorgan price target for the stock is $145. The Thomson/First Call consensus price target is $145.18. The stock closed Thursday at $112.57.

ALSO READ: 3 Cutting-Edge Tech Stocks to Buy as Huge Changes May Be Imminent
Palo Alto Networks

This company has been a momentum trader’s dream over the past two years, and we covered the love that analysts spread on the stock after the huge earnings surprise. Palo Alto Networks Inc. (NASDAQ: PANW) is helping to lead a new era in cybersecurity by protecting thousands of enterprise, government and service provider networks from cyber threats, and it boasted a staggering year-over-year billing growth. Unlike fragmented legacy products, their security platform safely enables business operations and delivers protection based on what matters most in today’s dynamic computing environments: applications, users and content.

Palo Alto Networks security platform has new features that were recently introduced to help security professionals overcome the distractions and time spent on problems caused by the overwhelming volume of alerts and manual processes associated with operating many discrete security products, and, instead, expand breach prevention capabilities and boost operational efficiency.

The company blew away earnings this week and JPMorgan feels that any macro sector concerns that investors and Wall Street may have harbored about vendors and security were sent packing as the company produced yet another impressive beat-and-raise quarter. Billings revenue smashed JPMorgan’s estimates and the Wall Street numbers as well. Huge topline numbers and stellar gross margins were the reason for the big upside in earnings per share.

The best thing for investors is this was against already tough comparisons, and with the demand for security continuing almost unabated, the company could be poised for years of incredible growth. Palo Alto Networks continues to be ranked the highest with the Wildfire product, which has been the favorite in the advanced persistent threat space among the value added resellers who carry and sell the product. Toss in 20% upside in billings for the quarter, and the story is a killer going forward.

Lastly, other analysts on Wall Street have made it clear that the feedback they got from the professionals at recent security conferences was the most bullish on Palo Alto, and the company is gaining real traction with larger data center’s firewalls.

JPMorgan has a $216 price target for, and the consensus target is $193.20. The stock closed Tuesday at $177.40, up over 7%.

ALSO READ: How Yahoo Can Lighten Its Tax Load: Be More Like Apple and Google

Sometimes the old adage of “go big or go home” is true. In this case, JPMorgan is sticking with the big boys in their respective arenas. For long-term aggressive growth investors, there may not be two stocks better to own now.

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.