Like we have said recently, as the aging bull market continues to grind higher, the only way for companies to continue to sustain the big market moves is with solid earnings that meet or exceed expectations and with positive forward guidance. With most of third-quarter results in the books, some big-time winners are emerging, and four of them are tech and gaming giants.
In a series of new reports, Jefferies crunches through the third-quarter numbers and is extremely positive on four major stocks that should continue to excel the rest of this year and well into 2018. All four are rated Buy, and make good sense for aggressive accounts that have big risk tolerance.
This remains a top pick on Wall Street and Jefferies says to buy the shares now. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide. It develops and publishes interactive entertainment software products through retail channels or digital downloads and downloadable content to a range of gamers.
The company reported outstanding results that the beat estimates and raised forward guidance. Top Wall Street analysts agree the company guidance is conservative and, with multiple game releases coming the rest of this year, the stock remains a top buy. The Jefferies report noted this:
The Company reported a strong third quarter beat and raise last week. As our analysis suggested, 50%+ of Destiny units were downloaded, the highest of any new console game we have tracked. In addition, Activision Blizzard generated a record $1 billion in high-margin in-game spending throughout the quarter. The results support our thesis that the company is evolving into a more recurring, profitable business. Blizzcon and the Call of Duty: WWII November 3rd launch both happened last. We think the biggest announcement could be a World of Warcraft expansion. We take estimates and price target higher. Our fourth quarter 2017 estimate is $1.03, Street looks for $0.89.
The Jefferies price target for the shares is $82, and the Wall Street consensus target is $70.04. The stock traded early Monday at $63.40.
This high-profile old-school software company has been posting 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 marketing automation product, which has become huge. Adobe also a partnership with Microsoft, which Jefferies feels is expanding, and it also has Facebook and Google as partners in the ad cloud.
Jefferies has a $190 price target, and the consensus target is $178.86. The shares traded Friday morning at $181.20.