If you read the financial press and watch talking heads on financial networks, you would swear we were ready to roll into a recession. Toss in the fact that about $30 billion in outflows have fled the equity markets year to date, and it makes investors scratch their heads. Why such dire predictions when the possibility for a trade deal is real and Wall Street has a very low bar set for first-quarter earnings?
The fact that the rally for the quarter after the late December lows is the biggest in five years may have something to do with it and could be causing nervous investors to sell the strength. The team at Jefferies remains reasonably positive, and in the firm’s top growth stock calls for the week we found four tech stocks that are offering more aggressive accounts good entry points. All are rated Buy.
The huge social media leader’s stock has been incredibly volatile recently, but it posted outstanding results for the quarter. Facebook Inc. (NASDAQ: FB) is the largest social network with over 2.0 billion monthly active users and over 1.4 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to half of revenues in the United States and Canada and is expanding rapidly in international markets.
The company’s solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.
Facebook reported strong fourth-quarter upside and a pivot toward a “back to normal” focus on innovation, concentrating on projects that “can have a major improvement on people’s lives.” Several key product areas showed solid traction, most notably eCommerce/shopping products on Instagram. The Jefferies team said this:
We spent 3 days at Shoptalk in Las Vegas and Facebook emerged as a winner from those meetings and conversations with Instagram’s shopping capabilities receiving strong reviews from many retailers. Brands are looking for ways to circumvent the Amazon marketplace and go direct to consumer. So far, only about 10% of the current Instagram monthly active users base interacts with the shopping tabs, a number we expect to grow.
The Jefferies price target for the shares is $200, and the Wall Street consensus target is $195.52. The stock closed trading on Monday at $172.07 a share.
Palo Alto Networks
This continues to be one of the most dominant players in its industry. Palo Alto Networks Inc. (NASDAQ: PANW) is helping to lead a new era in cybersecurity by protecting thousands of enterprise, government and service provider networks from cyber threats. Unlike fragmented legacy products, its security platform safely enables business operations and delivers protection based on what matters most in today’s dynamic computing environments: applications, users and content.
Palo Alto Networks security platform has new features that were introduced to help security professionals overcome the distractions and time spent on problems caused by the overwhelming volume of alerts and manual processes associated with operating many discrete security products and, instead, expand breach prevention capabilities and boost operational efficiency.
Jefferies notes that the company has refreshed its entire product line in early 2017 and 2018, and as such it has benefited from those activities. Nonetheless, the company is expanding into the carrier market, which could serve to offset any softness.
Jefferies has a price target of $296, and the posted consensus price objective is $277.76. The shares closed at $240.88 on Monday.