Despite market worries, one thing aggressive investors can count on is that technology innovation will not be slowed by market gyrations or Chinese currency devaluations. To put that into perspective, the age of the true smartphone was ushered in by the iPhone in 2007, less than 10 years ago. So the huge advances in just that short time frame are remarkable.
In a series of new research reports, Cowen has four top stocks to buy that are a combination of new and old-school technology. All of them look poised to go significantly higher between now and the end of the year, and all are rated Outperform.
This is the top mega-cap technology stock pick on Wall Street and perhaps a surprising defensive pick as well. Cisco Systems Inc. (NASDAQ: CSCO) posted outstanding earnings this week, and many on Wall Street, including the team at Cowen, are raising their price targets significantly higher. Cisco is also one of the 24/7 Wall St. top 10 stocks to own for the next decade.
Earlier this year, Cisco won an important contract for the Verizon build-out of the company’s next-generation 100G metro network. While Cisco’s optical business is small as a part of total revenue, this win is seen by Wall Street as a significant endorsement of the investments Cisco has made into its optics business.
Analysts across Wall Street point to an estimated double-digit bookings momentum for Cisco’s Meraki Cloud Services. Many think that Meraki is likely to be a $1 billion plus run-rate business this year, with an incredible 50% to 70% compounded annual growth rate. A jump from 40 GE to 100 GE data center switching and next generation security are also adding to the total sales profile and product mix.
Cowen remains confident that its current forward estimates, which are above consensus and the highest on Wall Street, are spot on, and points out that metrics at the tech giant are up across the board.
Cisco investors are paid a very solid 2.9% dividend. The Cowen price target for the stock is $37, and the Thomson/First Call consensus target is much lower at $31.17. Shares closed Thursday at $28.70, up almost 4%.
This stock has been hit hard this year, and could be offering aggressive tech investors an outstanding entry point. It is also rated as one of America’s best companies to work for. LinkedIn Corp. (NASDAQ: LNKD) continues to dominate the interconnecting of business professionals with over 300 million members worldwide. Uneven earnings and some corporate missteps have turned the stock into a volatility victim. An improving economy and demand for highly skilled workers have provided the impetus for earnings surprises.
The Cowen team recently met with company and learned that the new Sales Navigator product, which was launched last year, is doing well. LinkedIn has ramped sales, selling the product to well over 200 at this point, with field sales having an increasingly rising impact. Field sales accounted for almost 50% of bookings in the second quarter and almost 50% of revenue. Also, last year most of SN revenue and bookings were generated on a self-serve basis.
The analysts are looking for further updates from the company at the Sales Connect conference in Las Vegas in October. The Cowen price target is posted at $260, and the consensus target is $255.43. The stock closed Thursday at $188.82.
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