Typically the best time to buy technology stocks is either right before earnings when you think the company has a chance to beat the Wall Street estimates, or after a so-so quarter in which a company perhaps just hits the numbers or slightly misses guidance estimates. Top performing technology stocks often can have an uneven quarter, and that scares momentum investors but gives long-term investors a great opportunity.
A series of new research reports from Oppenheimer focus on three quality tech stocks. One they expect to beat numbers and raise estimates, another they feel Wall Street doesn’t appreciate the potential, and a third came in in-line with estimates but was hit hard by sellers. All are rated Outperform and make good buys for aggressive growth accounts.
This combined entity was formerly known as Avago and Broadcom. Broadcom Ltd. (NASDAQ: AVGO) is a leading designer, developer and global supplier of a broad range of analog and digital semiconductor connectivity solutions. Its extensive product portfolio serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial and other.
Applications for the company’s products in these end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and displays.
The company produces radio frequency (RF) front-end for LTE-enabled Apple products. Wall Street estimates that the company does 15% of its total business with Apple. Additional estimates are that the company has between a 13% and 17% revenue exposure to Apple in the wireless communications segment, which was guided up 10% or more quarter over quarter for the third quarter. Customer diversity and content for Samsung could be more than enough to offset slower Apple business.
Top Wall Street analysts like the leadership in the mobile, data center and broadband markets, and especially in the RF arena. Many on Wall Street see a cyclical rebound in industrial and communications demand. Oppenheimer believes the company will beat estimates and raise guidance when it reports. The report said:
We see Broadcom’s storage segment rebounding seasonally in the fiscal fourth quarter supported by stable end markets in Wired. With Broadcom one of the group’s best self-help stories, we see multiple levers at mgmt’s disposal to fuel earnings-per-share and free-cash-flow growth and upside. Longer term, we like Broadcom for its dominant/diversified semiconductor portfolio and significant free-cash-flow potential.
Broadcom investors are paid a 1.13% dividend. Oppenheimer raised its price target for the stock to $190 from $180. The Wall Street consensus price target is $195.22. Shares traded Thursday at $175.41.
Palo Alto Networks
This company was a momentum trader’s dream before crashing back to earth. Palo Alto Networks Inc. (NASDAQ: PANW) is helping to lead a new era in cybersecurity by protecting thousands of enterprise, government and service provider networks from cyber-threats, and it boasted staggering year-over-year billing growth.