Market Overview

Shaken US Tech Stocks? Top Analysts Give Their Verdict


Tech stocks lost nearly $1 billion on Friday. Prices plunged following a bearish Goldman Sachs report suggesting a collapse is imminent. Analyst Robert Boroujerdi pointed to similarities between the market's five biggest tech stocks-  Apple, Microsoft, Alphabet, Amazon and Facebook- and the 1999/2000 tech bubble.

"The recent run in large-cap tech stocks has evoked memories (nightmares?) for some investors of the last euphoric NASDAQ run," said Boroujerdi. He says these stocks are not as profitable as stocks back in 2000, and have an oversized impact on the whole market. CNBC pointed out that the top five S&P 500 stocks by market cap (i.e. Apple, Microsoft, Alphabet, Amazon and Facebook) represent 12% to 13% of the index's overall weight.

However, stocks are already back in recovery as excited investors bought on the dip, sending the NASDAQ back up by 0.9% on Tuesday. We wanted to get the lowdown on these five critical stocks from the Street's best analysts- and find out what prices they are predicting for the next 12 months.

To track recommendations from only top analysts we turned to TipRanks stock analysis page and filtered the ratings to five-star analysts. This finds the analysts that have the highest success rate and average return while cutting out the advice of underperforming analysts.

Apple (AAPL)

The stock has a strong buy analyst consensus rating, with a $167 price target (indicating 14% upside potential from the current share price).

Five-star Drexel Hamilton analyst Brian White has not been deterred by Apple's 7% drop. White explains, "In our view, Friday's sell-off in Apple represents yet another buying opportunity as investors turn their focus to the iPhone 8 this fall, along with the company's raised capital distribution initiative, depressed valuation and new innovations. We continue to believe Apple remains among the most underappreciated stocks in the world."

He goes further: "In our view, comparing Apple to the mega-cap Internet players is… like comparing Apples to Oranges". White reiterated his buy rating on June 12 with a very bullish $202 price target.

In contrast unrated analyst Parthiv Varadarajan at Mizuho Securities downgraded AAPL because "The stock has meaningfully outperformed on a YTD (year-to-date) basis and we believe enthusiasm around the coming product cycle is fully captured at current levels, with limited upside to estimates from here on out."

Microsoft (MSFT)

Best performing analysts have a strong buy consensus for Windows giant Microsoft with 15 buy, 1 hold and 1 sell rating from top analysts in the last three months. The price target from these 17 analysts gives a more muted 5.5% upside potential. Shares in MSFT fell from $72 on June 9 to $68 on June 12 but are now back to $71.

As well as releasing its most powerful Xbox console yet, Microsoft has just announced that it will release much-needed security updates for older Windows versions to prevent a repeat of the global WannaCry cyber-attacks. Credit Suisse's Michael Nemeroff has an $80 price target on the stock and is hoping that enterprises will now accelerate upgrading to the latest operating system software.

Alphabet (GOOGL)

GOOGL has a strong buy analyst consensus rating from best-performing analysts and a strong 12-month upside potential of over 11%. The stock has already gained back over half of its recent losses.

Morgan Stanley's Brian Nowak believes the market is undervaluing GOOGL because it is ignoring the real value of Alphabet's self-driving unit Waymo, inventor of the now-retired prototype Firefly bubble car. "Waymo is a potential spin-out candidate (over time) and our scenario analysis shows how Waymo could be worth $70bn+…adding ~12%+ to GOOGL's current EV [enterprise value]," Nowak wrote. "We do not believe Waymo or any of the ‘Other Bets' are currently being reflected in GOOGL's share price."

Nowak has an impressive track record on GOOGL stock:

Amazon (AMZN)

The e-commerce giant has one of the strongest analyst consensus ratings. Over the last three months, 24 out of 26 top analysts have published a buy rating on the stock. These analysts are predicting just over 11% upside potential for AMZN.

Piper Jaffray's Michael Olson has just reiterated his support for Amazon, calling it "the best positioned large cap internet platform for the next 5+ years".

The analyst raised his price target to $1,200 on June 12, saying: "We believe strength in retail unit growth is being driven by share gains from Prime Now, continued tailwinds from Prime adoption, international expansion/penetration, and hardware tailwinds (Echo)."

Facebook (FB)

The vast majority of top analysts are very bullish on social media giant. The average analyst price target of $170 also paints a very positive picture as it is close to 13% upside from the current share price.

Even though FB dropped 3% on Friday, on a 2017 basis it is still up 30%. And RBC Capital's Mark Mahaney says: "I think [it] still gives you more than 20 percent upside between now and the year of the year…. I won't want to tell you to back up the truck on Facebook," Mahaney continued. "I think the risk-reward is interesting. But there's been more interesting entry points in the past.

As we can see the market may be buzzing about a correction, but the view from the Street has hardly faltered.

TipRanks has over 5,000 stocks in its data-bank.

How much upside potential are top analysts predicting for your shares? Find out now.

The post Shaken US tech stocks? Top Analysts Give Their Verdict appeared first on TipRanks Blog.

Latest Ratings for AAPL

Jan 2020MaintainsNeutral
Jan 2020MaintainsOverweight
Jan 2020MaintainsBuy

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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