The Analyst Pour Love On The Tech Sector
The tech sector got a boost from the pandemic that will not soon dissipate. Trends in place for years have been accelerated to new highs and those gains will not only stick but be compounded by fresh gains in the years to come. The stocks on this list are well-positioned to benefit from those trends (social distancing, ecommerce, cloud) and the analysts are taking notice.
Teladoc Health Pops On Upgrade, Wait To Buy
Teladoc (NYSE:TDOC) operates as a B2B platform connecting doctors with patients in a virtual setting. The company has seen its revenue surge in the wake of the pandemic as more and more businesses and individuals turn to the web for services. Revenue growth had been decelerating for several quarters before the pandemic, to a tepid mid-20% range, and have only accelerated since. The post-pandemic revenue growth is not only accelerating but accelerated to triple digits in the most recently reported quarter and is expected to accelerate again in the current quarter, this year, and next year.
Shares of Teladoc popped 7% on a new buy-rating from BTIG. The firm says Teladoc’s revenue growth should not abate even after the pandemic is over and others on Wall Street agree. BTIG set a price target of $240, $10 above the consensus and upside of 8% but the high price target is just over $300. The average rating is a buy and there has been little movement in that regard over the past 90 days. The consensus price target has, however, been creeping steadily higher.
Stock Chart
Arista Networks Gains Marketshare
Arista Networks (NYSE:ANET) is a cloud-networking specialist and just received its second major upgrade this week. The upgrade is from Rosenblatt Securities and ups the stock from Neutral to Buy. The firm says there should be steady growth for Arista Networks this year with recent upgrades to the hyperscale cloud networking industry. Analyst Ryan Kuntz went so far as to suggest Arista Networks could take market share from Cisco (NASDAQ:CSCO) in the enterprise data center arena and that is not the only avenue for growth.
The average analysts rating on this stock has seen a big improvement over the past 90 days. The average rating has increased from a hold to a buy with a substantial increase in the consensus price target as well. The consensus target of $263 is up more than $40 or 18% in the last 3 months and is still lagging the price action. The most recent ratings, from Rosenblatt and Credit Suisse, have a midpoint of $343 or an upside of 18% versus the 10% downside implied by the current Wall Street consensus.
Arista Networks Stock Chart
Netflix Is The King Of Streaming
Netflix (NASDAQ:NFLX) received a price target increase from Cowen on improved pricing power. Cowen is expecting solid subscriber growth numbers when the company next reports and there is every reason to believe it will. Earlier in the week, Netflix announced that December and Christmas week, in particular, were record-setting in terms of viewership. Not only will the company see an uptick in revenue from new subscriptions but revenue growth and earnings will be leveraged when upcoming price hikes take effect.
The average rating on Netflix hasn’t changed much over the last 90 days but the consensus price target has. The consensus price target is up $50 or 10% and likely to track higher. Cowen’s target hike has the stock trading at $650 or an upside of 27% and they are not the only sell-siders to see things that way.
Netflix Stock Chart
NVIDIA Goes On Catalyst Watch
The average rating on NVIDIA (NASDAQ:NVDA) hasn’t budged over the last 90 days but the consensus target has. The consensus target of $545 is leading price action with a gain of $30 or about 6% but this figure is conservative. There are a growing number of analysts with targets above $600 with a few in the range of $625 to $645 implying an upside of 20% to 23%.
The most recent analyst action on NVIDIA is from Citigroup. Already rated a buy with a target of $600, the analyst there put the stock on catalyst watch ahead of the consumer electronics show next week. The firm thinks NVIDIA will come out with at least one market-moving announcement at the show, and that’s not counting the long-term growth outlook associated with hyperscale cloud solutions.
NVIDIA Stock Chart