Well, you knew it would happen one day. After an incredible multiyear run, Facebook Inc. (NASDAQ: FB) finally got the comeuppance many of the bears have howled about for years. The revenues missed, guidance was very bearish, user data and metrics were bad and shops across Wall Street dramatically slashed their price targets. While most of the damage is done, the uncharacteristic level of the miss will leave many very cautious on the stock going forward.
We decided to look for tech stocks with big upside potential. We screened the Merrill Lynch technology research database and found five that look like solid picks for the rest of 2018 and beyond. All are rated Buy.
The technology giant continues to expand, and while search is still king, the cloud presence is growing fast. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company is focused on key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products. It generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play, as well as hardware products. The company provides its products and services in more than 100 languages and in 190 countries, regions and territories.
Alphabet offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
The company blew out earnings numbers, and with a wide and bountiful silo of products and services, the stock remains almost unchallenged. It should be noted that traffic acquisition cost relief drove 20% gross profit growth despite heavy cloud infrastructure and YouTube content investment.
The Merrill Lynch price target for the stock is $1,390, and the Wall Street consensus target is $1,367.96. The shares closed trading Thursday at $1,285.50.
This top mega-cap technology company recently reported an outstanding quarter. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.
It provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
Cisco reported a 4.4% rise in quarterly revenue, more than expected by analysts, according to Thomson Reuters, and it was its second straight quarterly rise, driven by strong growth in its newer businesses, such as security. The company’s net income of $2.69 billion, or $0.56 per share, in the fiscal third quarter ended April 28 was higher year over year as well. Toss in a massive $25 billion share buyback plan and investors should be well rewarded going forward. Shareholders also receive a 3.03% dividend.
Merrill Lynch has a $53 target price, and the consensus target was last seen at $49.70. The stock closed Thursday at $43.53 a share.