The markets were looking strong on Tuesday ahead of earnings season. That said, the strength on Tuesday was far less broad than that seen on Monday. While some ongoing trade war concerns continue to weigh on investors, many analysts and investors alike are looking for the sweet spot in earnings, and Tuesday’s top analyst upgrades and downgrades included five major technology analyst calls that were having an impact on the shares.
24/7 Wall St. has identified each call with a brief synopsis and linked to more detailed sources if available. Consensus earnings and valuation data is from Thomson Reuters. We also recently discussed seven top tech stocks in which analysts and investors are looking for the companies to exceed consensus earnings expectations this earnings season, and it was surprising to see that there was no overlap with these calls.
Here were the top five technology calls from analysts on Tuesday, July 10, 2018.
Apple Inc. (NASDAQ: AAPL) was touted by Merrill Lynch as having the next wave of revenues helped along by augmented reality driving new smartphone sales. Merrill Lynch reiterated its Buy rating on Apple ahead of the company’s earnings report, and the firm’s Wamsi Mohan has raised his price target to $230 from $225. His view is that revenues for augmented reality are called a $6 billion to $8 billion opportunity, and the ARKit 2 and the iOS installed base are being viewed as attractive for developers.
Apple shares were hardly changed on the call, up just 0.1% at $190.75 on Tuesday, but perhaps the $937 billion market cap and the law of large numbers was in the way. Apple has a 52-week trading range of $144.38 to $194.20 a share, and the consensus analyst target price was $201.07 ahead of the call.
Casa Systems Inc. (NASDAQ: CASA), which provides software-centric broadband products, was trading sharply higher after Morgan Stanley raised it to Overweight from Equal Weight with a $23 price target on Tuesday. The firm said that the recent selling in Casa Systems shares puts it at a discount, when it has a strong customer base and has continued market expansion to look forward to.
Casa Systems shares closed down 2.5% at $16.38 on Monday, and the $13 IPO price compares with a high of $34.21. Its shares were last seen up almost 8% at $17.68 in fairly active trading, but the consensus target price was even higher at $28.00 ahead of this call.
Imperva Inc. (NASDAQ: IMPV), which is onto cybersecurity to protect data and applications across hybrid environments, was raised to Overweight from Sector Weight with a $65 price target at KeyBanc Capital Markets. Imperva was at $49.60 ahead of the call, but Tuesday’s early afternoon trading had the stock up 3.7% at $51.42 in relatively thin trading volume.
Imperva has a 52-week range of $37.17 to $53.95 and a consensus target price much lower than the KeyBanc target, as it is closer to $54.40. Imperva may be valued at more than 50 times expected 2018 earnings, but the high growth shows that expected earnings multiple compressing to 29 times consensus earnings expectations for 2019. This company’s earnings report is not due until July 26.
Micron Technology Inc. (NASDAQ: MU) may feel like a misplaced stock ahead of earnings season. After all, Micron already reported earnings. Still, it’s the first chip stock to report ahead of most chip peer companies. Micron is also moving beyond its ongoing China worries. JPMorgan was talking up the need for an almost endless need for DRAM chips in servers for data centers as the crunch for AI and other growth avenues take off.
The firm has an Overweight rating and a much higher $84 price target. Micron shares were last seen up 2.5% at $55.70, with a 52-week range of $26.85 to $64.66 and a pre-call consensus analyst target of $80.93.
Salesforce.com Inc. (NYSE: CRM) is one of the darlings of Wall Street, and also it will be a while before the next earnings report. No one ever seems to mind that it never trades at anything less than a mega-value-premium to most stocks in the technology space. JMP Securities has an Outperform rating and raised its target price to $163 from $140, after noting that the company is firing on all cylinders and has great relations with its customers.
Shares of Salesforce.com were last seen up 0.9% at $143.05, in a 52-week range of $87.26 to $143.51 and with a consensus target price of $148.75 ahead of this call. So what if it’s 62 times expected earnings—after all, you used to have to pay 100 times expected earnings.
Tuesday’s top analyst upgrades and downgrades included American Tower, AutoNation, Biogen, CarMax, Chipotle Mexican Grill, eBay, PG&E, Walgreens Boots Alliance, Zions Bancorp and more than a dozen others.