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TechStock Radar
October 2018
Monday, October 15, 2018, 10:02 AM — by Rob DeFrancesco, TechStock Radar
Chinese Demand a Key Factor for Apple

Goldman Sachs calls out multiple signs of rapidly slowing consumer demand in China, which the firm thinks increases risk to demand for Apple (AAPL, $218.79) products. The firm says much of its view of Apple’s upside potential was centered on Chinese demand for larger screen sizes. 

While the offsetting positive trend of 6”+ phone conversions is helping, Goldman believes Apple’s potential to “beat and raise” is likely reduced should weak consumer demand persist in China.

Goldman maintains its AAPL price target of $240, but has a ‘Neutral’ rating on the shares.

Monday, October 15, 2018, 9:41 AM — by Rob DeFrancesco, TechStock Radar
Chart Watch: NVIDIA

Shares of NVIDIA (NVDA, $243.29) remain below the 200-day moving average of $246.69. 

Traders will be keeping an eye on last week’s low of $234.26. At that low, the stock had corrected 20% from the all-time high of $292.76 reached on October 2.

Monday, October 15, 2018, 9:05 AM — by Rob DeFrancesco, TechStock Radar
October Issue of TSP Available on Kindle

Download the new issue of Tech-Stock Prospector to your Kindle or Kindle reading app for iOS (iPad & iPhone) and Android. 

Order the latest issue of TSP here.

Here are some of the topics covered in the October 2018 issue:

*Winners in the next age of automation
*2 top growth sectors in robotics

*The future of robo-taxis

*ServiceNow helps automate IT
*Okta automates the identity lifecycle

*How NVIDIA dominates AI
*Teradyne benefiting from smart M&A

*Splunk expands its use cases

*Big deals move the needle at New Relic

*Why some smart investors like MongoDB

*Waymo can drive new growth at Alphabet
*Assessing the risk/reward on Facebook shares
*Pluralsight changes the game in IT training
*Trend Watch: Internet of Things expansion
*Twilio set to shake up the customer call center
*Salesforce expands its addressable market
*HubSpot has margin upside potential
*New analytics tools from Alteryx
*Valuation update on Talend
*Deal Report: Analysis of the Anaplan IPO

Friday, October 12, 2018, 10:28 AM — by Rob DeFrancesco, TechStock Radar
2 Bulls on Square

Canaccord upgrades Square (SQ, $72.85) to ‘Buy’ and raises its price target to $90 from $60, saying the recent pullback in the shares creates a long-term opportunity in a “truly disruptive and well-run company.”

The firm sees the departure of CFO Sarah Friar as more about her going to a promising company as CEO, not her walking away from a risk. 

Nomura Instinet agrees, telling investors to focus on the company’s results, not the CFO. The firm does not believes Friar’s departure will disrupt the “innovation engine” behind the company.

Nomura Instinet keeps its SQ price target at $125.

Friday, October 12, 2018, 9:58 AM — by Rob DeFrancesco, TechStock Radar
Macquarie Upgrades Microsoft

Macquarie upgrades Microsoft (MSFT, $108.51) to ‘Outperform’ with a price target of $121 based on ample higher-growth drivers, including public cloud and a gaming services platform.

The firm says Microsoft has been differentiating Azure in several critical ways, such as being both enterprise-friendly and aggressive in layering in unique/incremental services—including AI, Stack, Sphere and a broad focus on edge computing.

Friday, October 12, 2018, 9:44 AM — by Rob DeFrancesco, TechStock Radar
Daiwa Sets NVIDIA Target at $335

Daiwa restarts coverage of NVIDIA (NVDA, $246.09) at ‘Buy’ with a price target of $335, saying the company is “arguably the most attractive secular growth story” in semis. 

The firm believes NVIDIA is one of the best ways to play the expected robust end-market growth powered by autonomous driving, gaming, AI and high performance computing (HPC).

Daiwa expects revenue growth of 35% and 14% in FY’19 and FY’20, respectively.

Thursday, October 11, 2018, 10:23 AM — by Rob DeFrancesco, TechStock Radar
Chart Watch: Amazon

After falling below the 50-day moving average of $1,922 last week, Amazon (AMZN, $1,720) shares have picked up downside momentum. The RSI has dipped to 24.7. 

The next level to watch on the downside is the 200-day moving average, which is on the rise from $1,638. There’s support at $1,646 from June.

Amazon shares are off 16% from the all-time high of $2,050.50 reached on Sept. 4.

Thursday, October 11, 2018, 9:53 AM — by Rob DeFrancesco, TechStock Radar
Square Dips on CFO Exit

Morgan Stanley thinks the announced departure of Square (SQ, $73.25) CFO Sarah Friar will weigh on the stock near-term, saying she deserves credit for managing Wall Street expectations and helping the company deliver consistent beat-and-raise earnings reports. 

There’s uncertainty the new CFO will be able to match her track record, especially in light of the stock’s elevated valuation, says Morgan Stanley. The firm maintains its SQ price target of $75.

Deutsche Bank doesn’t expect Square’s momentum to change. The firm looks for a smooth transition given the company’s “deep” management bench and “history of solid execution.”

Square shares this morning are down more than 5% on news of the CFO’s exit.

Wednesday, October 10, 2018, 9:50 AM — by Rob DeFrancesco, TechStock Radar
JP Morgan Remains Bullish on Dropbox

JP Morgan adds Dropbox (DBX, $23.30) to the Analyst List, maintaining its price target of $35. While not convinced the “seven-day-old growth tech sell-off is over,” the firm sees an improving risk/reward balance on Dropbox shares and potential for 30% to 50% outperformance.

JP Morgan believes investors are “underestimating the stability and consistency of the Dropbox engine” and are overlooking the launch and adoption of the company’s Premium plans.

Dropbox shares are down sharply from the post-IPO high of $43.50 reached in June.

Wednesday, October 10, 2018, 9:45 AM — by Rob DeFrancesco, TechStock Radar
A Setback for SaaS Stocks

KeyBanc says a “Big Chill” has set in during the first nine days of October for the 55 largest SaaS stocks. The group is down 11% so far this month and is off 21% from the highs, on average, says the firm.

KeyBanc notes the group had an incredible run through the end of Q3, with multiple expansion levels—as measured by forward EV/S—increasing by two full turns above the five-year average.

Among the high quality SaaS stocks the firm would buy on the October pullback: Shopify (SHOP, $138), Salesforce (CRM, $144), Twilio (TWLO, $73.70), BlackLine (BL, $45.15) and Zendesk (ZEN, $62.18).

Tuesday, October 9, 2018, 10:49 AM — by Rob DeFrancesco, TechStock Radar
Davidson Bullish on Trade Desk

DA Davidson starts The Trade Desk (TTD, $134.24)—provider of a software platform used to manage digital ad campaigns—at ‘Buy’ with a price target of $158, calling out two “compelling” near-term strategic growth opportunities for the company:

1-Growing ad spend and available programmatic ad inventory for online video and connected TV content

2-Helping brands access fragmented, multi-device audiences in more efficient and data-driven ways

Trade Desk shares hit a new all-time high of $161.50 in late September.

Tuesday, October 9, 2018, 10:01 AM — by Rob DeFrancesco, TechStock Radar
Chart Watch: Okta

Shares of Okta (OKTA, $60.53) yesterday closed below the 50-day moving average of $62.63. The RSI is falling from 35.1. 

The stock is now down 20% from the all-time high of $75.49 reached on Sept. 11.

There is short-term support at $57.72.

Monday, October 8, 2018, 9:33 AM — by Rob DeFrancesco, TechStock Radar
Goldman Lifts Square PT to $108

Goldman Sachs raises its Square (SQ, $91.08) price target to $108 from $77 based on raised revenue estimates through 2020, saying the company is sustaining 50%+ top-line growth while simultaneously delivering substantial margin expansion. The firm is modeling Square at 2.5x faster growth than PayPal (PYPL).

Monday, October 8, 2018, 9:14 AM — by Rob DeFrancesco, TechStock Radar
Citi Hikes Apple Target to $265

Citi raises its Apple (AAPL, $224.29) price target to $265 from $230 based on higher ASPs and stronger gross margin given the consumer preference for higher memory configurations of iPhones coupled with the new falling memory prices.

Friday, October 5, 2018, 10:36 AM — by Rob DeFrancesco, TechStock Radar
OpCo Still Positive on Facebook

Headed into Q3 results, Oppenheimer remains upbeat on Facebook (FB, $159.82), maintaining its price target of $200. 

Given the current overwhelming negative sentiment surrounding the company, the firm says it sees a low bar for Q3, even if OpEx is higher than Wall Street expectations. OpCo adds engagement levels and monetization appear strong enough.

Friday, October 5, 2018, 10:12 AM — by Rob DeFrancesco, TechStock Radar
2 Bulls on FireEye

Goldman Sachs remains upbeat on FireEye (FEYE, $17.27) after attending the company’s annual Cyber Defense Summit, which the firm says saw the strongest showing in three years.

The firm maintains its price target of $22, while arguing FireEye shares could double if the company can gain just 200 basis points of market share in the endpoint and SIEM markets. 

Goldman says FireEye would need to improve its Helix business with on-prem integration as well as provide “better messaging to the channel.” The firm expects FireEye to move forward with a renewed scale push next year once the integration is complete.

Oppenheimer likes FireEye’s longer-term product strategy with Helix as well as the existing opportunity with “spoke” products such as Endpoint and Email Security, where the company has continued to expand capabilities up the stack. OpCo maintains its FEYE price target of $22.

Thursday, October 4, 2018, 10:32 AM — by Rob DeFrancesco, TechStock Radar
Morgan Stanley Downgrades Atlassian

Morgan Stanley downgrades Atlassian (TEAM, $87.50) to ‘Equal Weight’ based on valuation, noting the roughly 100% YTD move in the stock. 

The firm raises its price target to $94 from $75, but says the stock’s valuation already reflects durable growth of more than 30% and “substantial” margin improvement.

Atlassian shares on October 1 hit a new all-time high at $98.21.

Thursday, October 4, 2018, 9:28 AM — by Rob DeFrancesco, TechStock Radar
Merger Alert: Cloudera & Hortonworks

Cloudera (CLDR, $17.08) and Hortonworks (HDP, $21.88) last night announced an all-stock merger of equals in a deal valued at $5.2 billion. 

The transaction is intended to create a market-leading hybrid cloud data management platform that should be able to more effectively compete with solutions from hyper-scale vendors, says Stifel. 

The firm believes the deal makes “a lot of strategic sense,” and raises its price CLDR price target to $25 from $22.

Hortonworks shareholders will receive 1.305 common shares of Cloudera for each share owned. Cloudera stockholders will own about 60% of the equity of the combined company.

The combined company will have roughly $720 million in revenue (TTM), with more than 2,500 customers. The deal is expected to close in calendar Q1 2019.

JMP Securities thinks the merger “makes a ton of sense” and represents a situation where “one plus one can indeed be greater than two.” 

The firm maintains its CLDR target of $27, calling out the scale of the combined company and the potential for significant cost synergies.

For more on Cloudera, see TechStock Radar—Sept. 6, 2018.

Wednesday, October 3, 2018, 9:41 AM — by Rob DeFrancesco, TechStock Radar
Chart Watch: Intel

Shares of Intel (INTC, $49.54) have been rebounding off of the September low of $44.06, breaking the downtrend line from the June high. The RSI is rising from 63.3.

The stock has retaken both the 50-day moving average at $47.64 and the 200-day moving average at $49.21.

There is resistance from August at $50.60.

Wednesday, October 3, 2018, 9:20 AM — by Rob DeFrancesco, TechStock Radar
A New Growth Vector for Amazon

Bernstein believes Amazon (AMZN, $1,971) will be an accelerant of the disruption it sees coming to the healthcare sector. 

The firm thinks Amazon is developing a series of business strategies for entering segments of the healthcare market. Bernstein sees most disruption taking place in the online pharmacy and digital consumer healthcare niches. 

Tuesday, October 2, 2018, 10:02 AM — by Rob DeFrancesco, TechStock Radar
Canaccord Cuts Paycom to 'Hold'

Canaccord Genuity downgrades Paycom Software (PAYC, $150.83), a provider of cloud-based HCM software, to ‘Hold’ based on valuation. 

The firm thinks the stock has “shot out ahead of the fundamentals” and needs some time to “catch its breath.” 

But Canaccord remains bullish on the company’s fundamentals, raising its price target to $150 from $130.

Paycom shares in the middle of September hit a new all-time high at $164.08. The 2017 year-end close was $80.33.

Tuesday, October 2, 2018, 9:24 AM — by Rob DeFrancesco, TechStock Radar
Nomura Instinet Downgrades MongoDB

Nomura Instinet downgrades MongoDB (MDB, $78.86) to ‘Reduce,’ citing “extreme valuation.” 

The firm does raise its MDB price target to $63 from $43. Last month, the stock hit a new all-time high at $85.25.

Nomura Instinet believes MongoDB has a compelling multi-year opportunity, but says its faces “intense competition and deep-pocketed incumbency that won’t die easily.”

The current valuation assumes no risks for MongoDB. But the firm points out that in the last year alone, Microsoft’s Azure Cosmos DB offering went from zero to $100 million in revenue.

For more on MongoDB, see TechStock Radar—Sept. 18, 2018.

Monday, October 1, 2018, 10:01 AM — by Rob DeFrancesco, TechStock Radar
Strong Crosscurrents at Intel

Barclays downgrades Intel (INTC, $47.12) to ‘Underweight’ and lowers its price target to $38 from $53, citing increased competition from smaller rival AMD (AMD).

The firm says Intel has “squandered its manufacturing lead, “ forcing the company to face “a costly battle to retain share amidst a near-term slowing of its end market.”

RBC Capital says Intel is prioritizing the production of its Xeon and Core processors to maintain it position in the high-performance segments of the PC market. The firm expects solid growth in datacenter and IoT to help offset PC headwinds. 

RBC trims its Intel price target to $55 from $57.

Monday, October 1, 2018, 9:14 AM — by Rob DeFrancesco, TechStock Radar
Canaccord Cuts Veeva to 'Hold'

Canaccord Genuity downgrades Veeva Systems (VEEV, $108.87) to ‘Hold’ with a price target of $105 based on valuation, saying it’s moving to the sidelines “for a bit.”

The firm emphasizes that it has “zero qualms” about Veeva’s opportunity, execution or management team. 

Canaccord expects the stock to trade sideways for a period of time while the underlying business and metrics catch up with the valuation.

Last week, Veeva shares traded to a new all-time high of $109.05.

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