Apple, Microsoft, and Nuance Communications are the top 3 tech stocks heading into earnings season, Wedbush says

Reuters / Brendan McDermid

Tech stocks have a 25%-30% upward move ahead, according to Wedbush analyst Dan Ives.
Ives says Apple, Microsoft, and Nuance Communications offer "compelling risk/reward" for investors.
Based on Wedbush’s price targets, all three top tech buys have a potential double-digit jump ahead.
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Apple, Microsoft, and Nuance Communications are the top three tech buys heading into earnings season, according to Wedbush.
In a note to clients on Wednesday, analyst Dan Ives said that he believes tech stocks have "an upward 25%-30% move in the cards the rest of the year despite lingering rotation fears."
The analyst laid out his top picks for a "compelling risk/reward" heading into earnings season. Apple, Microsoft, and Nuance Communications topped the list.
Ives highlighted Apple as his first top buy on Wednesday and said that the "supercycle thesis" for iPhone sales looks to be playing out.
While the street estimates iPhone sales will hit 220 million for the fiscal year 2021, Ives sees that number reaching 240 or 250 million due to strong demand from China coming out of the Chinese New Year.
Ives holds an "outperform" rating for Apple and a $175 price target. That figure represents a potential 39% jump in share prices based on Tuesday’s closing price of $126.21.
Ives’ second pick for a tech sector buy heading into earnings season was Microsoft. The analyst said that based on his teams’ data he believes "the tide is shifting in the cloud arms race" and Microsoft is gaining market share from Amazon Web Services.
The Redmond-based tech giant posted 50% growth in its Azure cloud business in the latest quarter compared to AWS’ 28% figure.
Ives also highlighted Amazon’s hiring of CEO Andy Jassy as a net positive as it shows the company’s need to double down on AWS cloud services amid competition from Microsoft. The analyst said deal flow for Microsoft’s cloud business "looks strong heading into the rest of FY21" as well.
Wedbush holds an "outperform" rating on shares of Microsoft and a $300 price target. Based on Tuesday’s closing price of $247.86 the price target represents a potential 21% jump in share prices over the next year.
Finally, Ives said Nuance Communications is set to benefit from more "hospital-wide deployments" of its cloud and AI technology which are "playing out and gaining further momentum based on our checks."
The analyst added that Nuance has built a growing and sustainable revenue/earnings stream and the company’s cloud healthcare pipeline and deal flow conversion "appear to be robust."
Wedbush holds an "outperform" rating for Nuance Communications and a $65 price target. As of Tuesday’s $44.23 closing price that target represents a potential 47% jump in share price.
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