Microsoft And Other Stocks That Surged Following the Nasdaq Freeze (ADSK, MSFT, TNGO)
On Friday, the Nasdaq ended the day up 0.5 percent, just one day after the mysterious freeze that halted trading for about three hours.
Without warning, all quotes and trades stopped mid-day Thursday, only to resume shortly before the end of the session. There has been little explanation of what the problem was. Nasdaq ended the week 1.5 percent higher.
Among the Nasdaq stocks that surged on Friday, on unusually high volume, were Autodesk (NASDAQ: AADSK), Microsoft (NASDAQ: MSFT) and Tangoe (NASDAQ: TNGO). Below we take a look at how these three stocks have fared and what analysts expect from them.
This design software developer posted mixed second-quarter results on Friday but also saw an analyst upgrade. The San Rafael, California-based company sports a market capitalization of more than $8.5 billion but does not offer a dividend. The long-term earnings per share (EPS) growth forecast is more than 13 percent.
The number of shares sold short in Autodesk represented less than two percent of the float as of the July 31 settlement date, after rising marginally from the previous period. The peak short interest so far this year came in mid-June. Days to cover rose to two in July for the first time this year.
The consensus recommendation of the analysts surveyed by Thomson/First Call who follow the stock is to hold shares. Their mean price target, or where the analysts think the share price will go, is less than three percent higher than the current share price. That target is less than the 52-week high reached back in March.
The share price is more than five percent lower than the 52-week high, but it is still up more than five percent year-to-date. Over the past six months, the stock has underperformed competitors such as Adobe Systems (NASDAQ: ADBE) and the Nasdaq.
Microsoft shares rose more than seven percent, helping to boost the broader markets, after the announcement that CEO Steve Ballmer will step down. Microsoft has a market cap of almost $290 billion. Its return on equity is more than 29 percent and its price-to-earnings (P/E) ratio is less than that of Oracle (NASDAQ: ORCL).
The short interest in this Redmond, Washington-based tech giant was less than one percent of the total float at the end of July. That was the smallest number of shares sold short in at least a year, almost half of the peak short interest back in mid-April. Days to cover is less than one.
Here too the consensus recommendation of the analysts is to hold shares, and it has been for at least three months. After the surge in the share price, the mean price target now suggests only marginal upside potential. That could change if analysts raise their targets or the shares retreat again.
If Friday's surge holds, that will mean that the share price has largely recovered from an 11 percent plunge back in July, following disappointing quarterly results. Over the past six months, the stock has outperformed the likes of Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) and Oracle.
This business asset management software firm recently was placed in the "Visionaries" quadrant of the Gartner 2013 Magic Quadrant for Managed Mobility Services. Tangoe is headquartered in Orange, Connecticut, and it has a market cap of more than $760 million. The long-term EPS growth forecast is almost 34 percent.
Note that the number of shares sold short as of the most recent settlement date represented almost 20 percent of the total float. That was the second highest short interest in the past year, and the days to cover jumped from more than 16 in the previous period to more than 23.
However, all of the six analysts surveyed recommend buying Tangoe shares, with two of them rating the stock at Strong Buy. The analysts' mean price target indicates that they still see more than 23 percent potential upside. That consensus target would be a new multiyear high.
The share price reached a new 52-week high on Friday, and it is up about 59 percent from the beginning of the year. Tangoe has outperformed competitors Amdocs (NYSE: DOX) and CSG Systems (NASDAQ: CSGS), as well as the Nasdaq, over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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