So far in 2017, technology has been the biggest and brightest sector in the S&P 500, and investors playing the momentum trade on it have not been disappointed. The Tech Sector Spider ETF (NYSEMKT: XLK) has grown about 20% year to date alone. Any way you cut it, that is a huge move, and analysts have been quick to weigh in on the prospect of where this sector stands to go.
24/7 Wall St. has put together a look at a few widely influential analyst calls over this past week on some of the biggest names in the sector.
To kick this off, MKM Partners reiterated a Buy rating on Amazon.com Inc. (NASDAQ: AMZN), and it was just back on August 8 that the firm raised its official Amazon price target to $1,275 from $1,095. That $1,275 price target remained the same for the September update.
According to MKM’s long-term call, the firm believes that Team Bezos will continue to dominate over the next decade in e-commerce and in cloud computing.
With a current market capitalization of about $465 billion, the stock is already up close to 30% so far in 2017. If MKM’s call is right, then Amazon could be worth more than $1 trillion in market capitalization down the road. The analyst even laid out a case where Amazon’s value could exceed $1.6 trillion over the next seven or eight years.
Shares of Amazon were last seen at $965.90, with a consensus analyst price target of $1,145.89 and a 52-week trading range of $710.10 to $1,083.31.
Stifel’s Patrick Ho picked out five especially attractive semiconductor stocks that stand to rally into the year-end. In a report he noted:
From a stock’s perspective, we were not surprised by the sideways trading in the names since Semicon West, where we saw a decline during earnings season in July and a recovery in mid-to-late August. We believe many names, particularly on the large cap end, remain very attractive on a valuation basis when using 2018 estimates. If anything, we would not be surprised to see some upside to our current 2018 WFE outlook and this would drive further upside to our estimates (and make valuations even more attractive.
All of these stocks were given a Buy rating by Ho and his team:
- Applied Materials Inc. (NASDAQ: AMAT) has a $61 price target, implying upside of 37.5% from the most recent closing price.
- KLA-Tencor Corp. (NASDAQ: KLAC) has a $106 price target, implying upside of 12.3%.
- Lam Research Corp. (NASDAQ: LRCX) has a $215 price target, implying upside of 29.7%.
- MKS Instruments Inc. (NASDAQ: MKSI) has a $98 price target, implying upside of 18.8%.
- Teradyne Inc. (NYSE: TER) has a $39 price target, implying upside of 11.1%.
JPMorgan issued a new research report this week focusing on internet stocks. Overall the report was very bullish. According to the firm, the internet group continues to benefit from what it believes is an accelerating trend in digital advertising, e-commerce and cord cutting. Also coming out of the second-quarter earnings, JPMorgan believes that investment spending will continue to ramp up for many names looking to drive future growth.
Facebook Inc. (NASDAQ: FB) was at the head of JPMorgan’s report. The firm feels that this social media giant’s long-term forecasts are more easily attainable, especially as the company continues to grow and employ new platforms for online advertising. JPMorgan team noted numerous positives in its report to watch for going forward.
JPMorgan has a Buy rating with a $210 price target for Facebook, implying upside of nearly 23% from the most recent close. Shares ended the week at $170.98, with a consensus price target of $192.62 and a 52-week range of $113.55 to $175.49.
Netflix Inc. (NASDAQ: NFLX) is another Wall Street darling, and the FANG constituent could offer solid upside, according to JPMorgan. Consumers continue to abandon cable and satellite programming, and millennials are helping to lead the charge in the cord-cutting.
JPMorgan feels the company likely will add more members this year than it did in 2016. The firm also notes the company’s strong original content line up, which includes “Narcos,” “Stranger Things,” “The Crown” and many others, as a huge positive driving subscriber growth.
The firm has a Buy rating for the stock with a $210 price target, implying upside of 19%. Shares of Netflix were last trading at $176.42, with a consensus price target of $185.49 and a 52-week range of $93.26 to $191.50.
Yelp Inc. (NASDAQ: YELP) is the third top internet play from JPMorgan report. The analysts are also bullish on the prospects for share buybacks, for which $200 million already has been authorized, and sales force growth, which is expected to be 15% or more this year, with a new sales office opening in 2018.
JPMorgan has a Buy rating and a $46 price target. Shares of Yelp ended the week at $43.75, with a consensus analyst price target of $39.76 and a 52-week range of $26.93 to $44.25.
Here are a few other contrarian stocks that could be huge winners for the rest of the year.
Ciena Corp. (NASDAQ: CIEN) is rated as a Buy at Stifel, but the firm recently lowered its price target to $30 from $32. The Wall Street consensus target is $29.29. The shares closed trading most recently at $21.72.
FireEye Inc. (NASDAQ: FEYE) is rated as Buy at Merrill Lynch with an $18 price objective. The posted consensus target is $16.68. The stock closed most recently at $16.01 apiece.
Hewlett Packard Enterprise Co. (NYSE: HPE) is rated as a Buy at UBS with a $21 price objective. The consensus target price is $15.74. The shares closed most recently at $13.12.
Seagate Technology PLC (NASDAQ: STX) is rating a Buy at Jefferies with a $40 price target. That compares with the posted consensus estimate of $38.48. The shares closed most recently at $31.99.