Technology
Goldman Sachs Raises Price Targets on 4 Sizzling Technology Leaders
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With St. Patrick’s Day, Spring Break and March Madness right around the corner, and just a month left in the first quarter of 2021, many investors are looking past earnings season to next quarter and the rest of 2021 and starting to reset portfolios.
Many investors remain very nervous, especially given the massive fourth-quarter rally since the election that has pushed all the major indexes and the Russell 2000 to all-time highs. Yet, the overall take is one of slow but steady going forward, given the incredible run in the equity markets and the potential for a growing economy due to the COVID-19 vaccine being distributed nationally.
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In a series of new reports, Goldman Sachs raised and reiterated the price targets on stocks of some companies that delivered the goods in a big way during earnings season and still look to have some very solid upside potential. Here we spotlight four Buy-rated technology leaders on which the analysts lifted price targets significantly higher.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Analog Devices
This stock could very well continue to benefit from the increase in information technology and 5G spending. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal-processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide.
The company offers signal-processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.
Analog Devices has among the best end-market exposure, with high communications and aerospace/defense market exposure, in addition to offering investors a powerful 5G content growth story. Plus, acquisitions over the past few years like Linear Technology and Hittite Microwave should provide revenue and additional cost synergies that are still coming.
Investors receive a 1.79% dividend. The Goldman Sachs price target was raised to $186 from $169. The Wall Street consensus price target is $179.11, and Analog Devices stock closed on Tuesday at $154.29 a share.
Applied Materials
This is one of the premier semiconductor capital equipment stocks and a top pick across Wall Street. Applied Materials Inc. (NASDAQ: AMAT) provides manufacturing equipment, services and software to the semiconductor, display and related industries. It operates through three segments.
The Semiconductor Systems segment develops, manufactures and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching and selective deposition and removal, as well as metrology and inspection tools.
The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment and factory automation software for semiconductor, display and other products.
24/7 Wall St.The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays, organic light-emitting diodes and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smartphones and other consumer-oriented devices, as well as equipment for processing flexible substrates.
Applied Materials stock investors receive just a 0.75% dividend. Goldman Sachs raised its $118 price target to $133, in line with the consensus target of $133.75. The share price fell almost 4% on Tuesday to close at $117.50.
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Arista Networks
The analysts see this as an outstanding growth play for 2021, and it resides on the firm’s Conviction Buy List. Arista Networks Inc. (NYSE: ANET) develops high-performance cloud networking solutions, including switches, an advanced Software Defined Networking (SDN) operating system and SDN applications. The company’s low latency switches lower networking costs for high-frequency trading platforms, large internet companies and cloud service providers.
Arista reported solid fourth-quarter results above the Wall Street estimates. In addition, revenue and earnings guidance was also above consensus. The company expects 2021 revenues to grow 14% to 15%, while fourth-quarter revenues grew 17% year over year, mainly driven by Specialty Cloud and Cloud Provider (28% total) growth of 15% due to strength in Specialty Cloud. The analysts have remained bullish on Arista’s growth opportunities across the portfolio for years.
The $288 Goldman Sachs price target on Arista Networks stock was raised to a massive $411. The much lower $345.95 consensus target compares to Tuesday’s closing price of $284.30.
Cambium Networks
This off-the-radar idea could be ready for a huge move higher, and the stock recently was upgraded to Buy at Goldman Sachs. Cambium Networks Corp. (NASDAQ: CMBM) provides wireless broadband networking infrastructure products and solutions for network operators. Its wireless fabric includes intelligent radios, smart antennas, radio frequency (RF) algorithms, wireless-aware switches and network management software.
The company offers point-to-point solutions that are connected to high-speed, high-bandwidth wireline networks, and its wireless broadband backhaul to facilities or point-to-multipoint access points deployed throughout a network over distances of approximately 100 kilometers and at 2 gigabytes per second.
Its cnPilot and Xirrus Wi-Fi solution provides distributed access to individual users in indoor settings, such as office complexes, and outdoor settings, such as athletic stadiums. Its cnReach solutions offer narrow-band connectivity for sensors and devices, while embedded proprietary RF technology and software enables automated optimization of data flow at the outermost points in the network. The cnMatrix cloud-managed wireless-aware switching solution provides the interface between wireless and wired networks.
The Goldman Sachs price objective was raised to $56 from $18, and the consensus target is $50.58. The last trade on Tuesday hit the tape at $44.63, which was down over 4% for the day.
These four top tech companies are leaders in their respective silos, and they all posted solid quarterly results. While much better suited for aggressive growth investors, their stocks all make good additions to portfolios that may need a touch more technology exposure.
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