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Merrill Lynch Raises Price Targets on 4 White-Hot Momentum Stocks
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Sometimes you do have to go with the flow, especially when the flow is going higher. While trading and owning stocks that have a ton of momentum can be a very profitable strategy, it is always smart to stay with the top companies. Trading hot names from a penny stock list is not investing; it’s gambling, and that brings the biggest “buyer beware” caution label in the industry.
In a series of new reports, the analysts at Merrill Lynch have raised their price targets on four stock that not only have been moving higher recently, they have been moving higher for years in some cases. While only suitable for accounts that can live with big price swings, all four make good sense for long-term investors and are all rated Buy at Merrill Lynch.
Check Point Software Technologies
This remains one of the top tech stocks to buy on Wall Street for a security presence. Check Point Software Technologies Ltd. (NASDAQ: CHKP) is one of the best in helping customers protect against advanced persistent threats (APTs). The company is considered a worldwide leader in securing the internet, providing customers with uncompromised protection against all types of threats, reduces security complexity and lowering the total cost of ownership. Check Point first pioneered the industry with FireWall-1 and its patented stateful inspection technology.
The company’s revenue growth rate has slowed somewhat compared to years of massive quarter-over-quarter gains. However, many on Wall Street think that Check Point should see year-over-year accelerating growth in product licenses, particularly as the security firewall refresh appears to be in full-growth mode. The company is scheduled to report earnings on April 27.
The Merrill Lynch price target was raised to a mammoth $120, and the Wall Street consensus target is much lower at $97.89. The shares closed Wednesday at $102.82.
Intuitive Surgical
This company has been a momentum trader’s dream over the past few years. Intuitive Surgical Inc. (NASDAQ: ISRG) designs, manufactures and markets da Vinci surgical systems and related instruments and accessories. Its da Vinci surgical system translates a surgeon’s natural hand movements, which are performed on instrument controls at a console into corresponding micro-movements of instruments positioned inside the patient through small incisions or ports.
The company’s da Vinci surgical system include surgeon’s consoles, patient-side carts, 3-D vision systems, da Vinci skills simulators and Firefly fluorescence imaging products that enable surgeons to perform various surgical procedures, including gynecologic, urologic, general, cardiothoracic, and head and neck surgical procedures.
One of the biggest reasons Intuitive Surgical stock has jumped almost 90% since its 2014 lows is because of its success in hernia operations. While robotic assistance for that operation still seems to have a lot of room to grow, it’s important to remember that the market is a forward-looking machine. In addition, there are other procedures where the da Vinci robotic surgical system could add value, and the company has delighted investors with huge profit growth.
The company reported huge first-quarter results and its 2017 guidance for surgical procedures with its da Vinci surgical system was much higher than most Wall Street analysts had anticipated.
Merrill Lynch raised its price target to $900 from $800, and the consensus figure of $758.57 will surely be going higher as well. The shares closed on Wednesday at $807.70, up over 5% on the day.
Lam Research
This remains one of the top chip equipment picks across Wall Street. Lam Research Corp. (NASDAQ: LRCX) designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers plasma etch products that remove materials from the wafer to create the features and patterns of a device.
Many Wall Street analysts have highlighted the company and its peers as having a significant equipment opportunity from the NAND evolution as well. Lam Research also appears well positioned to gain share in the wafer fab equipment market, driven by a strong focus on technology inflection spending over the next few years.
Despite so-so foundry and logic spending over the past year, many on Wall Street think that Lam will also continue to benefit from technology transitions such as FinFET, 3D NAND, multi patterning and advanced packaging in 2016 and beyond. Many analysts believe it is the “cleanest” semi-cap story benefiting from cyclical tailwind, SAM expansion and share gains.
The analysts noted that Lam Research reported solid results and an impressive shipment outlook. The posted third-quarter fiscal 2017 non-GAAP earnings blew past the consensus estimate. Earnings were up 16% sequentially and 130.9% year over year.
Investors in Lam Research are paid a 1.33% dividend. The $140 Merrill Lynch price target jumped to $165. That compares with a consensus price objective of $134.10. The shares closed up over 5% on Wednesday at $136.17.
24/7 Wall St.Skyworks Solutions
This company has been on a roll since last summer. Skyworks Solutions Inc. (NASDAQ: SWKS) designs, develops, manufactures and markets proprietary semiconductor products, including intellectual property worldwide.
The product portfolio includes amplifiers, attenuators, battery chargers, circulators, DC/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrids, LED drivers, low noise amplifiers, mixers, modulators, optocouplers/optoisolators, phase shifters, phase locked loops, power dividers/combiners, receivers, switches, synthesizers, technical ceramics, VCOS/synthesizers and voltage regulators.
Last year there was some hot chatter that the company made an offer to buy Microsemi, which offers a comprehensive portfolio of semiconductor and system solutions for communications, defense and security, aerospace and industrial markets. The results of the potential deal remain to be seen.
Investors are currently paid a 1.13% dividend. The Merrill Lynch price objective was raised to $110 from $96, while the posted consensus target price is $101.42. Shares closed trading most recently at $99.24 apiece.
These four very hot momentum companies are just killing it on the earnings front, and making short-sellers hurt and hurt bad. While they have the possibility to go higher, buying partial positions at these levels makes sense, and see if they don’t come back in some in May and beyond.
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