After the first three weeks of 2018, the stock market has risen to all-time highs. This raging bull market is now nearing nine years old, and many investors are looking at how to position themselves for 2018 and beyond. The technology sector has remained an area of interest for its growth, likely winning under tax reform and accelerated earnings growth, and because that’s where the future is. One theme that never seems to fail to entice investors is companies with earnings likely to beat expectations, and that is often the case when Wall Street analysts raise their ratings or price targets ahead of earnings.
No strategy comes without risks, and individual earnings reports can be deemed good or bad regardless of the business climate at the time. Still, it has been amazing to see how many large and well-known technology stocks have scored waves of analyst upgrades and big price target hikes going into this earnings reporting season.
24/7 Wall St. covers dozens of analyst reports on most trading days, and this ends up being hundreds of calls a week. When multiple analysts issue upgrades in their formal ratings or in their price targets, we generally refer to this as an analyst party. The flurry of activity after the calls is often enough to attract the attention of investors looking for new ideas.
Investors also need to consider several issues. The strength in many of the top stocks being chased by analysts has in some cases surpassed the consensus analyst price targets from Thomson Reuters. There is also the notion that having multiple analyst calls means “raising the bar” for companies, making it imperative that their earnings and guidance look good when they actually report. Also, companies that have poor reports or stumble in their guidance are likely to be punished. Tax reform is taking the corporate tax bracket to 21% from 35%, some companies have started announcing charges for repatriation overseas cash under a more territorial tax system, and many companies are set to win from the effect of immediate expensing against earnings.
The Dow Jones Industrial Average rose by 25% and the S&P 500 rose over 19% in 2017, and the 26,400 Dow target (and 2,855 target on the S&P 500) now look like very conservative baseline targets. It only took eight trading days for the Dow to rise to 26,000 from 25,000. Despite some choppiness seen in the third week of trading in 2018, many analysts have accelerated their earnings expectations. This would imply that some of the stocks either will see even more price targets hikes after earnings or they will need to take a serious breather.
24/7 Wall St. has identified 10 of the tech giants that still have earnings reports coming in the next couple of weeks or so in which there are big analyst parties taking place. We have included summaries on the calls and linked to them in more detail if covered individually. We also included consensus price target and consensus estimates from Thomson Reuters and the date when each company is expected to release earnings, with the caveat that all dates and estimates are subject to change.
Here are the 10 tech leaders that have seen multiple positive analyst calls during the first three weeks of 2018.
Alphabet: Now Way Beyond Just Google
Alphabet Inc. (NASDAQ: GOOGL) has recently hit new highs and it is up 8.5% so far in 2018. The online search, advertising and content giant is set to report earnings on February 1. These are some of the key Alphabet analyst upgrades and price target hikes seen since the start of the year:
- KeyBanc Capital Markets (Outperform) raised its target to $1,280 from $,1150 on January 19.
- MoffettNathanson raised its target price to $1,275 from $1,175 on January 17.
- SunTrust Robinson Humphrey (Buy) raised its target to $1,250 from $1,180 on January 12.
- Morgan Stanley (Overweight) raised its price target to $1,210 from $1,150 on January 12.
- Cowen (Outperform) raised its price target to $1,230 from $1,150 on January 4.
Alphabet shares were last seen at up $1,143.50, compared to a consensus target price of $1,211.05. That consensus target was closer to $1,178 just 30 days earlier and to $1,104 just 90 days ago. Alphabet now has a $792 billion market cap.
Amazon: Bezos Rides De Facto Holiday Winner Up and Up
Amazon.com Inc. (NASDAQ: AMZN) kept hitting new high after new high in 2018, and the analyst calls and higher targets all seemed to drive the shares each time. even if the calls were very similar. Amazon’s stock has risen 10.7% so far in 2018, and its market cap is now about $614 billion. These are some of the top analyst calls seen year to date:
- SunTrust Robinson Humphrey (Buy) raised its target to $1,400 from $1,270 on January 12.
- Stifel (Buy) raised its price objective to $1,425 from $1315 on January 11.
- Piper Jaffray (Overweight) raised its target price from $1,200 to $1,400 on January 9.
- UBS (Buy) raised its target price from $1,250 to $1,440.
- Oppenheimer (Outperform) raised its target price to $1,450 from $1,330.
- BMO Capital Markets (Outperform) raised its target to $1,600, above the prior street-high of $1,525.
Last trading at $1,294.58, Amazon has a consensus target price of $1,327.36, which was more than $50 lower just 30 days earlier and more than $100 lower 60 days earlier. Amazon is expected to report earnings on February 1.