If any sector has given investors whiplash over the past month it’s technology, and with good reason. Many stocks in the sector are overbought, and many portfolio managers are overweight, so when quantitative funds that use algorithms start selling, like we saw a couple of weeks ago, the monkey-see monkey-do effect comes into play and everybody starts to sell. To stay in the sector, you have to stay with the companies that are delivering earnings and guidance that justify the current multiple.
In a series of new reports, Stifel is raising not only the ratings on some top companies, but the price targets as well. These companies are posting outstanding results, and in some cases coming in with metrics and guidance above expectations. The following four are rated Buy at Stifel.
This high-profile old-school software company has posted outstanding earnings. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content. The other segments are Digital Marketing and Print and Publishing.
Top analysts feel there are an additional 11.7 million potential users, driven by growth in the creative community, student and teacher penetration and conversions from the piracy. Market and value expansion provide additional upside. The company posted outstanding second quarter numbers and the rest of the year looks very solid,
Adobe is also reasonably safe route for investors looking to own a company with a marketing automation product, which has become huge. Adobe has a partnership with Microsoft as well.
The Stifel price target was raised to $163 from $150, and the Wall Street consensus price target is $146.61. Shares closed on Wednesday at $144.24.
This stock spiked recently and has come back into a good buy range. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide. It offers signal processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.
The company recently introduced a highly integrated polyphase analog front end with power quality analysis designed to help extend the health and life of industrial equipment while saving developers significant time and cost over custom solutions. Achieving extremely accurate, high-performance power quality monitoring typically requires customized development, which can be expensive and time-consuming.
The analysts believe that the Linear Technology acquisition, which closed recently, is a big positive. In addition, many on Wall Street feel that corporate management ultimately will exceed its $150 million of targeted synergies. Toss in a very positive recent analysts day, and the signals look strong.
Analog Devices investors receive a 2.25% dividend. Stifel has a $97 price target, and the consensus target is $95.02. The stock closed most recently at $79.98.