Without a doubt, one of the biggest technology stories over the last 10 years has been the migration to the cloud for computing, storage and a host of additional applications. Withstanding the complications from the pandemic, the case for the cloud is even stronger. Although the recent downturn can be attributed to market headwinds more than anything else.
Considering the powerful growth, and the continued need for the software that is made by the top companies in the industry, aggressive growth investors need to consider a position in some of these top stocks. And one Wall Street firm thinks it has picked a few winners.
Stifel issued a few calls recently on cloud stocks and the bullish prospects. Each call was fairly positive, forecasting solid upside in both the near-term and long-term—one of the reports even suggests over 75% upside.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Stifel reiterated a Buy rating on CrowdStrike Holdings Inc. (NASDAQ: CRWD) but lowered the $250 price target to $205. That still implies upside of 18% from the prior closing price of $174.02.
Brad Reback, the lead analyst on the call, he noted that though CrowdStrike delivered “solid” fiscal first-quarter results, its annual recurring revenue topped consensus estimates and management raised fiscal 2023 guidance. Reback’s lower target reflects recent multiple compression. However, he believes it will be extremely difficult for smaller, less advanced competitors to sustain the pace of investment that would be needed to close the technical/sales gap needed to catch CrowdStrike, given its operational efficiency.
CrowdStrike stock has a 52-week trading range of $130.00 to $298.48 per share, and it traded at $173 a share early Tuesday. The stock is down about 17% year to date.
Okta Inc. (NASDAQ: OKTA) noted in its earnings report that it is not seeing any signs of a slowdown in its business or pipeline and then raised fiscal year top-line guidance in line with its quarterly beat, despite macro fears. Adam Borg, the analyst on the call, also pointed out that management suggested no quantifiable impact from the security incident earlier this year. As a result, Stifel reiterated a Hold rating and cut the $195 price target to $115, which implies upside of 23% from the close at $93.68.
The stock was last seen trading near $95, in a 52-week range of $77.01 to $276.30. The dividend yield is 1.2%. Shares are down nearly 57% year to date.
On HashiCorp Inc. (NASDAQ: HCP), Stifel reiterated a Buy rating and cut the $60 price target to $51. The implied upside is 24% from the closing price of $41.27. Reback was on this call as well. He noted that this report had “a solid print” in its second quarter as a public company. A combination of growing enterprise hybrid-cloud adoption, Hashi’s expanding go-to-market strategy and growing consumption-based offering, should allow HashiCorp to sustain 30% top-line growth, according to Reback.
The 52-week trading range is $29.26 to $102.95, and shares traded near $35 Tuesday morning. Shares are down about 61% year to date.
Stifel reiterated a Buy rating with a $75 price target on ZoomInfo Technologies Inc. (NASDAQ: ZI). The implied upside from the closing price of $42.53 is 76%. J. Parker Lane was on the call and noted that ZoomInfo management pulled forward its $2 billion revenue run-rate target to late 2024 from the 2025 target it had outlined last year at the company’s analyst day last Thursday. Lane remains a believer in the value proposition of ZoomInfo’s platform and sees the company’s unique combination of high growth and profitability as an attractive point of differentiation.
ZoomInfo stock has a 52-week trading range of $33.79 to $79.17, and it traded at around $41 a share early Tuesday. The stock is down about 36% year to date.
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