UBS Equity Focus List Changes Among High-Profile Tech Stocks

After a very rocky January start to the 2015 trading year, February got the tape rolling the right way as the indexes staged a midday turnaround Monday and ended nicely higher. With a volatile month in the rear-view mirror, many Wall Street firms we cover are making some adjustments to the list of top stocks to buy. A new report from UBS does just that, as the analysts shuffle some companies looking for the best opportunities.

SanDisk Corp. (NASDAQ: SNDK) was removed from the UBS list for February. The analysts cited the growth outlook for hard disk drive company is becoming more uncertain given continued problems adding new capacity to accommodate demand. One of the new additions is WhiteWave Foods Co. (NYSE: WWAV), a leading healthy beverage and food brands company with products include plant-based beverages (Silk), organic milk (Horizon), fresh packaged salad (Earthbound) and dairy creamers (International Delight).

The UBS team adds a major old-school tech player, and we scanned the February list for other tech names poised to rebound.

Cisco Systems Inc. (NASDAQ: CSCO) jumps onto the UBS Equity Focus list. One huge reason for the addition is the UBS team sees the stock as flat-out cheap, trading at less than 10 times (less cash) price-to-earnings. The networking giant also seems to have fought through numerous headwinds, including up and down demand from telecom carriers, weakness in emerging markets and threats to its very lucrative switching business, all of which the analysts feel are going away. Cisco also stands to benefit from a better corporate spending environment in Europe, as well as continued growth at home.

Cisco investors are paid a very solid 2.9% dividend. The UBS price target for the stock is $30. The Thomson/First Call consensus price target is $28.39. Shares closed Monday at $26.83.

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Apple Inc. (NASDAQ: AAPL) reported blow-out earnings, and the upcoming Chinese New Year may provide the tech giant with another huge sales windfall. The stock was recently re-initiated with an Outperform rating at UBS, with analysts stating flat-out that since the first introduction of the iPhone, Apple has transformed the world of mobility and totally re-morphed as a company. They point to what remains a very strong product cycle story, and basically call Apple a best-in-class technology story. With a huge $145 billion stockpile of cash, the UBS analysts expect new capital allocations strategies, and see the new Apple Pay as a source of solid recurring revenue.

Apple investors are paid a 1.6% dividend. The new UBS price target is $133. The consensus target is posted at $129.53. The shares closed trading Monday at $118.63.

Lam Research Corp. (NASDAQ: LRCX) is a top chip equipment pick on the list at UBS. The company 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. It also appears well positioned to gain share in the wafer fab equipment (WFE) market, driven by a strong focus on technology inflection spending over the next few years.

Lam Research investors are paid a 0.95% dividend, and the analysts say the company may increase dividends and share repurchases going forward. The UBS price target is $88, and the consensus is at $93.19. The stock closed at $76.66.

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Microsoft Corp. (NASDAQ: MSFT) remains a mega-cap favorite stock at UBS, and after posting an outstanding 2014 for shareholders, the iconic software giant started off the year in bad fashion. While reporting good numbers, the company also surprised analysts with weak Win Pro and Office trends. Also after strong product transitions, comparisons for Win Pro over the next two quarters are expected to be very difficult. Plus, the company’s guidance has forced firms to lower earnings expectations for the rest of the year. However, with shares down almost 20% from highs posted as recent as mid-November, now may be an excellent time for long-term investors to buy stock.

Microsoft shareholders are paid an outstanding 3.1% dividend. The UBS price target is set at $52 and the consensus target is $47.97, Microsoft closed at $41.28.

Qualcomm Inc. (NASDAQ: QCOM) got absolutely blasted last week when it reported solid earnings numbers that beat estimates but lowered its full-year earnings and revenue forecasts, as it lowered the sales outlook for its semiconductor business. Not what Wall Street was expecting. The stock is a Wall Street favorite, and many analysts are sticking to their guns, basically saying that trading at current levels, the stock is at 10 times earnings, minus cash, on the new guidance. Qualcomm is a quality tech company with recurring royalty revenue and a strong product footprint, so patient investors may fare very well.

Qualcomm investors are paid a 2.68% dividend. UBS resumes coverage of the stock at Outperform, with a price target of $80, above the consensus target of $74.09. Shares closed Monday at $65.53.

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Some of these battered tech names may make good additions to a portfolio as they pay decent dividends, should continue to buy stock back and should turn around the underperforming company segments as the year plays out.

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