Merrill Lynch Has 4 Smaller Cap Tech Stocks With Big Upside Potential

Technology

Published: March 15, 2016 9:50 am

Last Updated: January 13, 2020 11:56 am

While almost every stock was nailed in the almost two month sell-off that started the year, some of the small and mid-cap software stocks were absolutely eviscerated. With far less liquidity than their larger capitalization counterparts, they were ripe for weak holders and short sellers to rip apart.

A new Merrill Lynch research report focuses on four companies that screen very well on sales leverage, and it also points out that the premium that was once present in the group has for the most part disappeared after the vicious selling. In all, four companies are looking good to the Merrill Lynch team, and all four are rated Buy.

Tableau Software

This was a red-hot stock that took a huge hit when it reported in early February. Tableau Software Inc. (NASDAQ: DATA) provides business analytics software products in the United States, Canada and elsewhere. The company offers Tableau Desktop, a self-service analytics environment that empowers people to access and analyze data independently, and Tableau Server and Tableau Public, a free cloud-based platform for analyzing and sharing public data. The company’s business intelligence platform with data management and scalability has the security to foster the sharing of data.

The company announced last year the launch of its Shanghai operations, Tableau (China), as the company expands in China to better serve customers and partners locally. With 1.3 billion people, a quickly expanding urban economy and exponential rates of Internet and smartphone penetration, China generates an immense amount of data annually. Tableau can help bring that data to life for corporations seeking to assimilate the huge data input.

The company reported inline fourth-quarter results, but it offered up fiscal year 2016 guidance that was way below what Wall Street expected and the stock was destroyed. Despite the poor guidance, many analysts have noted that it hardly changed the fact that the company’s competitive positioning remains very strong in its niche areas.

The Merrill Lynch price target is a strong $90, and the Thomson/First Call consensus figure is set at $67.94. The shares closed Monday at $43.81.