In a recent research note, analysts at Citi looked into the IT hardware industry. They noted that overall IT spending is anticipated to remain lukewarm at approximately +3 percent in constant currency terms, with mobile, cloud and big data, expected to be the main growth drivers.
The upgrade cycle of enterprise infrastructure is still going on, they added. However, the cycle “has been disrupted by economic wild cards; some spending pushed off into 2016 as corporations struggle to fully develop their Cloud strategy as well as geo political pushback from some countries,” which the experts anticipate to continue.
Moreover, they went on, while Apple Inc. AAPL iPhone comps will likely remain troubled in the first half of the year, they anticipate investors will quickly move their focus toward the iPhone 7 launch in September.
Finally, they pointed out that most companies in the space should continue to face FX headwinds next year.
Top Picks
The report then went into Citi’s top picks in the industry. The firm suggested buying Cisco’s stock and selling F5 Networks; and buying Apple, Electronics For Imaging, Inc. EFII, SYNNEX Corporation SNX, Arrow Electronics, Inc. ARW, Avnet, Inc. AVT and Ingram Micro Inc. IM.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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