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Jefferies Top Stock Picks for Tech, Media, Telecom Ahead of TMT Conference

Wall Street firms have a tradition of hosting conferences to highlight market sectors in which they specialize in research coverage. Next week, May 7 through May 9, Jefferies will host its annual Global Technology, Media and Telecom conference in New York City at the Westin Hotel. With 240 participating companies and more than 1,500 attendees, the conference will feature an extensive range of public and private companies across the TMT landscape.

With keynote speakers ranging from Ajay Banga, the CEO of MasterCard Inc. (NYSE: MA) to Bill Smith, president of AT&T Inc. (NYSE: T) Network Operations, every aspect of technology, media and telecom will be open for discussion.

Jefferies has asked all of its TMT analysts to present one controversial stock or theme ahead of the conference. It requested stocks or themes where the analysts felt that information or data presented at the conference may have an impact. It makes sense to keep an eye on the stocks mentioned during next week’s conference, as any catalyst may move the stocks one way or another.

We present the stocks from the Jefferies analysts by sector.

Semiconductors: Micron Technology Inc. (NASDAQ: MU) will be the featured stock. It is always volatile, as DRAM chip pricing tends to fluctuate, and Jefferies sees capacity restraint translating into long-term pricing stability. The Jefferies price target for this stock to buy is $15. The Thomson/First Call consensus estimate is $12.

Computer Services and IT Consulting: Cognizant Technology Solutions Corp. (NASDAQ: CTSH) is one of the focus stocks in this category. Cognizant provides information technology (IT), consulting and business process outsourcing services worldwide. The issue to be discussed will be an immigration bill proposed in the Senate that could affect work visas for offshore hiring. The Jefferies price target for this stock to buy is $80. The consensus target is even higher at $86.

Workday Inc. (NYSE: WDAY) had a recent and highly successful initial public offering, and it is on the radar at Jefferies. The interest at the conference will be in the corporate switch from old line HR companies like Automatic Data Processing Inc. (NASDAQ: ADP) handling HR/payroll outsourcing to new cloud-based competitors like Workday. Jefferies has an Underperform rating on ADP and a $55 price target. The consensus is $63. Workday is a stock to buy, with a $76 price target. The consensus is much lower at $60. This could be an interesting pair trade.

Technology Software: Red Hat Inc. (NYSE: RHT) is another stock that will be looked at closely. The market fears that Red Hat’s strong growth rate may be slowing. Look for management to outline the strength of current bookings and discuss how Linux workloads are outperforming Windows workloads. The Jefferies price target for the stock is $65. The consensus target is lower at $59.

Technology Communication Equipment: Investors are concerned about the current pace of carrier capital spending, particularly in North America. Jefferies expects a relatively positive backdrop for communication infrastructure as carriers globally (particularly in North America, China and Germany) increase their spending on routing, optical and wireless infrastructure. Expected to benefit are JDS Uniphase Corp. (NASDAQ: JDSU), Juniper Networks Inc. (NYSE: JNPR) and Infinera Corp. (NASDAQ: INFN). All three are stocks to buy at Jefferies, but we did not have price targets.

Other Wall Street firms have been known to stake out observers at competitors’ conferences to gain access to information. You can be sure also that there will be lots of media coverage via CNBC and financial websites. Stocks in the past have shown movement either up and down over conference commentary, so investors may want to keep an eye on these stocks and see if they react.