Microsoft: Riding the Cloud Endlessly Higher
Microsoft Corp. (NASDAQ: MSFT) has been riding the cloud higher and higher ahead of its January 31 earnings report. Multiple target hikes have been seen since the start of 2018. At $90.00 a share, its stock is up 5.2% so far in 2018, and its market cap is about $686 billion.
Microsoft was given huge marks by Credit Suisse when the firm reiterated its Outperform rating but raised its target price to $115 from $95. This higher target is now among the most aggressive Microsoft price targets on Wall Street, and it went above the former “blue sky” scenario. Other key analyst calls were seen as well:
- KeyBanc Capital Market (Outperform) raised its target to $106 from $94 on January 12.
- Barclays (Overweight) raised its price target from $89 to $95 on January 12.
- Wells Fargo (Outperform) raised its price target to $100 from $90 on January 12.
- Oppenheimer (Outperform) raised its target price to $115 from $110 on January 9.
Microsoft now has a consensus target price of $96.00, which was closer to $93.22 just a week earlier. The consensus target was all the way down at $81.28 right before its prior earnings report in October. Microsoft also has a dividend yield of almost 1.9%.
Netflix: What Higher Content Costs?
Netflix Inc. (NASDAQ: NFLX) is the first of these tech and media giants to have earnings, with its report coming on January 22. It has a new David Letterman show, and Netflix scored two positive calls on the first trading day of 2018. Loop Capital raised its target price to $241 from $237, and while that’s a small gain, the firm now says that Netflix is its best idea in the space for 2018. Macquarie also jumped in with an upgrade to Outperform from Neutral and raised its target to $220 from $200.
Netflix managed a gain of 2.1% at $209.99 on Friday, after an increase of almost 9.4% for the first week of 2018 alone. Netflix is now up 14.8% so far in 2018, and its market cap has reached $95 billion.
Meanwhile, Wedbush Securities panned Netflix yet again with its big Underperform rating on January 19. The firm even still kept its $93 price target, which would imply more than 50% downside, based on higher content cost pressures and unrealized cost recoveries.
Other key analyst calls so far in January:
- Deutsche Bank raised its target price to $210 from $200.
- KeyBanc Capital Markets (Overweight) raised its target to $270 from $230.
- Morgan Stanley (Overweight) raised its target from $235 to $255.
- Barclays started it as Overweight on January 11, with a $245 price target.
At $220.46 a share, Netflix has a consensus target price of $222.73, up from just $215.63 a week earlier.
NVIDIA: Riding 2017 Gains Even Higher
NVIDIA Corp. (NASDAQ: NVDA) was the king of the chip stocks in 2017, and while analysts kept hiking their price targets at a fast rate, that was not fast enough to keep up with its big gains last year. Then came a brief pullback, but NVIDIA has seemed to be almost immune to the recent processor woes of AMD and Intel, and its stock has risen to new all-time highs. The share price is up over 18% so far in 2018.
NVIDIA is not due to report earnings until February 8. Its three big analyst calls were seen as follows:
- Merrill Lynch reiterated its Buy rating on January 19, but the firm raised its target to $275 from $251.
- Mizuho also reiterated it as Buy and raised the price target from $225 to $240 on January 16.
- RBC Capital Markets reiterated its Outperform rating and $240 target on January 9, but outlined how its upside case is really up at $300 or so.
NVIDIA shares closed on Friday at $230.11, with a consensus price target of $212.89. That consensus target has been more or less flat over the past 45 days, but it was all the way down at $169.55 just 90 days ago.
Qualcomm: Back From the Dead, Merger Saga Continues
Qualcomm Inc. (NASDAQ: QCOM) has seen a major recovery in 2018. While its earnings report is expected January 31, recent shareholder communications offered longer-term guidance in its effort to fend off Broadcom’s hostile takeover. The real interest here has been a trifecta of ongoing issues at Qualcomm: troubles with Apple, it wants to buy NXP in its own deal, while Broadcom wants to buy Qualcomm while it is down.
Now Qualcomm’s doldrums have turned back into a gain of 6.3% so far in 2018, and at $68.04 a share with a $100 billion market cap, its stock is up from about $50 from late October.
Three fresh calls were seen on January 17:
- Mizuho reiterated its Buy rating and raised its target to $75 from $65
- Canaccord Genuity reiterated its Buy rating and raised its target from $83 to $86.
- Macquarie reiterated its Neutral rating but raised its target to $70 from $55.
And on January 16, Instinet raised Qualcomm to Buy from Neutral.
Qualcomm has a consensus target price of $64.94, and that has risen handily since Broadcom began its pursuit of the company in the fourth quarter of 2017.