Shares of ServiceNow (NOW, $222.70) today are surging more than 14% after the enterprise cloud-software provider delivered strong Q4 results and offered upbeat subscription revenue and subscription billings guidance for 2019.

In Q4, subscription billings rose 38% to $952 million, well above the high end of the guidance range of $900 million to $905 million. Growth accelerated from +35% in Q3.

ServiceNow is a core cloud-software holding in the Tech-Stock Prospector Vulture Portfolio, added in August 2014, when the stock was trading at $55.

Today, ServiceNow shares hit a new all-time high at $228.41.

Barclays raises its Facebook (FB, $150.42) price target to $210 from $180 after the company beat Q4 expectations on both the top and bottom lines. Revenue rose 30% to $16.91 billion, above the consensus estimate of $16.4 billion.

The firm says the Q4 results should start to restore confidence in the durability of Facebook’s business and bring investors back who abandoned the name in 2018. Barclays thinks 2019 estimates are “largely de-risked” and headed higher.

Goldman Sachs starts Electronic Arts (EA, $87.02) at ‘Neutral’ with a price target of $99. 

While the firm expects EA to benefit from a strong pipeline of non-sports releases in FY’19 and FY’20, the company likely will take a slower and measured approach following the issues surrounding "Star Wars: Battlefront 2" in-game monetization.

MKM Partners is more upbeat on EA (based mainly on positive industry tailwinds), but lowers its price target to $112 from $135. The firm thinks EA needs to deliver better execution and consistency with console titles beyond sports, and also reaccelerate the growth in its Live Services business.

Apple (AAPL, $162.28) shares this morning are experiencing a modest relief rally of 4.9%. Given the negative sentiment in the stock, last night’s FQ1 (Dec.) earnings report was good enough, even though top-line guidance for the March quarter came in lighter than expected.

In FQ1, Apple’s Services revenue growth of 19% couldn’t offset a sharp decline in iPhone sales in Greater China, a region that experienced an overall revenue decline of 26%.

Jefferies remains cautious, saying the hardware business is facing a number of issues that are unlikely to be fixed in the near-term—including the China macro environment, lengthening smartphone upgrade cycles and currency. The firm maintains its AAPL price target of $160.

Goldman Sacha keeps its ‘Neutral’ rating, saying it did not pick up any signs of either weakness or improvement in the underlying business trends for Apple.  The firm remains concerned that prolonged economic weakness in key markets like China could continue to hurt the company’s performance this year.

Raymond James upgrades Carbon Black (CBLK, $15.44) to ‘Strong Buy’ with a price target of $24, calling the company an under-appreciated growth story in security that trades at a discount.

A positive for Carbon Black, security spending is diversifying away from the core firewall segment toward newer growth areas—including next-gen endpoint, identity, cloud security and security analytics, says the firm. 

Raymond James believes the demand environment for next-gen endpoint security solutions remains solid, with Carbon Black positioned to take market share from legacy players.

Carbon Black shares on December 21 hit a new post-IPO low of $11.80. The company went public in May 2018 at $19 a share, with an opening trade at $24.70. The post-IPO high of $35 was reached in June.

Carbon Black shares this morning are rallying nearly 8%.

Canaccord reiterates its ‘Buy’ rating on Dropbox (DBX, $23.48) after the company announced the $230-million acquisition of HelloSign, an e-signature and document workflow platform provider with more than 80,000 customers.

The firm thinks the purchase signals that Dropbox’s aspirations are bigger than being just a nice UI for file, sync and share. Instead of being a high-churn consumer app, the company wants to evolve as a true platform play. 

Canaccord maintains its DBX price target of $24.

Morgan Stanley thinks the bar is set low for the upcoming Apple (AAPL, $157.76) earnings report. 

But the firm does say Apple needs to deliver a “better than feared” revenue outlook for the shares to recover further in the very near-term.

The stock has bounced back from the January 3 low of $142.

Current expectations regarding stretched iPhone replacement cycles and reduced ASPs are overly pessimistic, according to the firm. Morgan Stanley maintains its AAPL price target of $211.

Citi lowered its Intel (INTC, $47.04) price target to $50 from $54 after the company guided Q1 below consensus estimates. Macro weakness in China, cloud deceleration and a weaker NAND market were the culprits. The firm sees “substantial downside” to consensus estimates.

Needham thinks investors should move to the sidelines for now on Intel, citing decelerating demand and tough comps in the datacenter business over the next two to three quarters. 

Credit Suisse is more positive, maintaining its Intel price target of $58. The firm believes weakness in the datacenter unit was not related to market share or architectural shifts. 

UBS trimmed its target to $58 from $60. With the company still looking for a new CEO, the firm believes the narrative around Intel could change significantly under fresh leadership.

Shares of chipmaker Xilinx (XLNX, $106.85) are surging 19% today after the company issued upbeat guidance, with growth driven by early 5G builds and AI. The stock hit a new all-time high at $107.65.

Credit Suisse raises its XLNX price target to $110 from $100, saying the company remains well positioned to benefit from 5G infrastructure build-outs and an accelerating Compute TAM driven by AI and data analytics. 

MKM Partners is taking a more cautious tone, raising its price target to $95 from $85, but maintaining its ‘Neutral’ rating, saying it think the company’s high medium-term expectations are already priced into the stock.

Wedbush upgrades Palo Alto Networks (PANW, $212.10) to ‘Outperform’ and lifts its price target to $265 from $225, saying it has incremental confidence in the company’s growth story over the next 12 to 18 months following a round of positive field checks and customer/partner conversations.

While Wedbush says Palo Alto needs to be laser focused on emerging cloud competitors, it believes consensus estimates for the year ahead are too conservative. Wall Street is still underestimating the magnitude of the tailwind from the current firewall refresh cycle, argues the firm.

In the December 2018 issue of Tech-Stock Prospector (TSP #202), we said long-term investors could use recent weakness in Palo Alto shares (then trading around $175.10) to build a position, writing: “With the valuation now at a more reasonable level relative to growth, the risk/reward set-up is attractive.” 

KeyBanc upgrades Q2 Holdings (QTWO, $54.74) to ‘Overweight’ with a price target of $74, saying recent weakness provides an attractive entry point for the shares.

The firm expects continued TAM expansion thanks to product enhancements and M&A. Q2 is driving customer adoption with a broader client set, while the company’s operational discipline should continue to help with margin expansion, says KeyBanc.

For more on Q2, see the January 2019 issue of Tech-Stock Prospector (TSP #203).

In the January 2019 issue of Tech-Stock Prospector (TSP #203), we pointed out a valuation discrepancy in the security space between shares of Tenable (TENB, $25.25) and Qualys (QLYS, $81.15). 

At the time, Tenable shares were trading at $21.17. Since then, the valuation gap (based on EV/Fwd Rev) has contracted a bit, with Tenable shares gaining 19.3% and Qualys shares up 9.2%.

UBS upgrades Palo Alto Networks (PANW, $203) to ‘Buy’ and lifts its price target to $250 from $232, saying the company’s main headwinds are dissipating, making the stock’s “discounted” valuation look attractive.

The firm says its field work suggests stable to improving demand trends. UBS believes the current risk/reward balance on the stock is attractive.

Nomura Instinet upgrades Arista Networks (ANET, $232.10) to ‘Buy’ with a price target of $260, saying it views the recent pullback in the shares as a buying opportunity. 

The firm expects Arista to report strong Q4 results and deliver robust growth in 2019. 

Nomura Instinet says Arista’s web-scale business remains healthy, and it looks for continued market-share gains in routing and enterprise.

Following the release of strong December quarter results last night, shares of enterprise software provider Atlassian (TEAM, $90.65) this morning initially ran up to a new all-time high of $100. 

But then investors took a second look at the valuation at that level—20 times forward revenue—and sold off the stock, which is now down more than 2% for the session.

In FQ2, Atlassian’s revenue growth of 39% accelerated from +37% in FQ1, driven by 56% growth in subscription (cloud) revenue (representing 51% of total revenue). EPS of 25 cents topped the consensus by four cents. 

Deferred revenue jumped 14% sequentially to $416.8 million.

Including the OpsGenie acquisition (closed on October 1), Atlassian in FQ2 added 6,551 new accounts. The company’s total customer count of 138,235 includes more than 100K cloud customers.

For FQ3, Atlassian forecasts revenue of $303 million to $305 million (growth of 35% to 36%), vs. the consensus of $300.7 million.

William Blair downgrades F5 Networks (FFIV, $156.27) to ‘Market Perform’ based on recent checks that showed “stagnant demand” in the company’s enterprise business. The firm also calls out increasing competition in cloud-native ADCs.

F5 shares have rebounded off of the December 26 low of $149.87.

Morgan Stanley says its latest surveys show IT hardware spending plans downticking more than any other technology category across U.S. and European CIOs. 

The firm has a preference for hardware stocks with a higher software mix. Thus, Morgan Stanley upgrades Nutanix (NTNX, $49.21) to ‘Overweight’ with a price target of $58, saying the company is gaining momentum as a hybrid cloud operating system provider as it adds cloud services.

Shares of Amazon (AMZN, $1,691) have rebounded 29% from the December 24 low of $1,307, pushing above the 50-day moving average at $1,598. The RSI is up to 60.3.

The stock is now testing the 200-day moving average at $1,706. There’s short-term resistance at $1,705 and $1,719.

Morgan Stanley upgrades DocuSign (DOCU, $44.30) to ‘Overweight’ with a price target of $53, saying it views the roughly 35% decline in the share price from the August high as presenting an attractive entry point.

The firm believes DocuSign has a long-term sustainable runway of profitable growth.

DocuSign shares have been rebounding off of the December 24 low of $36.25.

BTIG Research upgrades Rapid7 (RPD, $36.67) to ‘Buy’ with a price target of $42 based on steady expansion in the vulnerability management market, healthy dollar-based renewal rates and margin improvement. 

The firm says it has perceived an inflection point in multi-product adoption, which has made the company’s target of 30%+ annualized revenue growth through 2020 achievable. In Q3, Rapid7 saw cross-selling growth of more than 70%.

Evercore ISI raises its Xilinx (XLNX, $90.55) price target to $100 from $90. 

The firm is optimistic about Xilinx’s transformation into a platform company and the ability of management to execute consistently across the different business segments. 

For 2019, Xilinx is expected to do well in wireless, and outperform its broader industrial/auto semiconductor peers, according to Evercore ISI.

Shares of Nutanix (NTNX, $45.85) are running into short-term congestion in the $46.50 to $47 range after rebounding off of the December 24 low of $35.24.

The stock has held above the $35 level on three pullbacks since late October.

The 50-day moving average, now at $42.28, recently turned upward. Nutanix remains below its 200-day moving average of $49.46.

Stephens starts coverage of Electronic Arts (EA, $90.65) at ‘Overweight’ with a price target of $125. 

The firm believes EA’s sports IP makes the company the best-positioned videogame publisher for a subscription + streaming future.

EA shares have bounced back from the new 52-week low of $73.91 reached on December 26.

Shares of MongoDB (MDB, $75.67), provider of a next-generation database platform, today are down more than 12% on ramped-up competitive concerns. 

The AWS unit of Amazon (AMZN, $1,652) announced DocumentDB, a new managed cloud database that has similar API functionality to that of MongoDB.

Stifel does not expect the AWS offering to have a meaningful impact on MongoDB’s near-term business, citing the following reasons:

1-A lack of being able to access core MongoDB functionality within the database

2-Customers value MongoDB’s deployment optionality and lack of lock-in

3-MongoDB’s Atlas already offers many of the same features AWS is touting

Stifel maintains its MDB price target of $95. The stock hit an all-time high of $93.23 on December 7, before pulling back to a low of $70.10 later in the month.

JP Morgan names Amazon (AMZN, $1,657) a Best Idea for 2019, maintaining its price target of $2,100. 

The firm says the stock has a “more compelling” valuation following the recent sell-off. 

JP Morgan believes Amazon is well-positioned for 2019, with Q1 revenue growth re-acceleration likely.

In 2019, AWS and advertising will drive 80 basis points of operating margin expansion, to 6.0%, predicts the firm.

KeyBanc upgrades Akamai Technologies (AKAM, $63.12) to ‘Overweight’ with a price target of $73, saying its research suggests upside to Q4 revenue, decreasing the risk of a Q1 and 2019 guide-down.

The firm also believes consensus 2019 margin expectations are too low given potential cost-savings initiatives. 

Baird says a recent quarterly survey of Internet users showed stable engagement trends for Facebook (FB, $138.36). 

Response rates indicate engagement has stabilized for the third consecutive quarter following declines last summer.

The firm also says Instagram engagement growth is now on par with Facebook among the younger cohort, which is a positive trend. 

Baird reiterates its Facebook price target of $195.

Morgan Stanley upgrades Arista Networks (ANET, $210.38 to ‘Overweight’ with a price target of $250, saying the recent pullback in the shares presents an attractive opportunity. Arista traded to a low of $187.08 on December 24.

Arista’s Cloud Titans hyperscale customers are growing their cloud businesses at greater than 25% annually. The firm expects them to drive demand for Arista equipment at a similar rate.

Morgan Stanley sees a path over time to $12 in annual EPS and potential revenue growth re-acceleration. 

The latest 2019 consensus EPS estimate is $8.90, with a Street-high estimate of $9.68.