Good news is always welcome, and nowhere more so than in the stock market. And while the markets were choppy in August, they have turned around in September. Since August 23, when it hit bottom, the S&P 500 has gained 131 points, or 4.6%. Optimism being cumulative, momentum is gaining as we head into autumn.
Recent developments in the US-China tariff conflict may be contributing to the market’s upbeat outlook. President Trump initiated a new round of tariffs on September 1, and China retaliated in turn – this was after attempts to broker new talks broke down. Michael Hewson, chief market analyst from CMC Markets, summed up Wall Street’s take on the developments with wry humor: “Putting to one side the fact that these talks were supposed to be happening this month, and the fact that this has been a familiar pattern for two years now, markets still prefer to take an optimistic view.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Investors love to hear what’s going right, and for which stocks – it shows them where to put their money. One of the benefits TipRanks offers is a comprehensive database of top financial experts, including their latest stock reviews and ratings. We’ve dipped into that database, using the Trending Stocks tool to find three tech stocks that are generating buzz on recent positive news.” data-reactid=”13″>Investors love to hear what’s going right, and for which stocks – it shows them where to put their money. One of the benefits TipRanks offers is a comprehensive database of top financial experts, including their latest stock reviews and ratings. We’ve dipped into that database, using the Trending Stocks tool to find three tech stocks that are generating buzz on recent positive news.
<h4 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="AT&T, Inc. (T)” data-reactid=”14″>AT&T, Inc. (T)
This is an “old reliable” member of the NYSE. Historically a monopoly in the telephone business, AT&T was broken up in the early ‘80s under antitrust laws. In its current incarnation, the company remains a giant in the telecommunications industry, and is still the largest provider of landline and mobile phone services in the United States. T is also one of the market’s most reliable dividend stocks, with a high 5.52% yield and a long history of prioritizing shareholder returns.
With that background, and the prospects of increased income from content streaming, it’s no wonder that T would attract attention from top analysts – and hedge funds. Elliot Management, the seventh largest hedge at $35 billion in AUM, recently announced yesterday a $3.2 billion stake in AT&T. In a letter to the company, the fund said: “Elliott believes that through readily achievable initiatives — increased strategic focus, improved operational efficiency, a formal capital allocation framework, and enhanced leadership and oversight — AT&T can achieve $60+ per share of value by the end of 2021.” Should AT&T match Elliot’s performance expectations, that would be a 62% upside from the current share price.
The news from Elliot prompted a 1.4% jump in T’s share price. This came after the stock had risen 5.6% since August 23, the S&P 500’s most recent trough. The stock has outperformed the broader index’s 4.6% gains since that date.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="5-star analyst Colby Synesael, writing for Cowen on Sept 6, before Elliot’s announcement, noted, “AT&T shares have moved up roughly 24% this year but we believe there is more room to the upside as the company continues to execute against its 2019 guidance. Potential asset sales including some Latin American and tower portfolios could be used to pay down debt and further de-risk the story.” Synesael gives T shares a $40 price target, indicating confidence in an upside potential of 8.7%.” data-reactid=”26″>5-star analyst Colby Synesael, writing for Cowen on Sept 6, before Elliot’s announcement, noted, “AT&T shares have moved up roughly 24% this year but we believe there is more room to the upside as the company continues to execute against its 2019 guidance. Potential asset sales including some Latin American and tower portfolios could be used to pay down debt and further de-risk the story.” Synesael gives T shares a $40 price target, indicating confidence in an upside potential of 8.7%.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Citigroup analyst Michael Rollins agrees that T shows potential for mid-term gains. He raised his price target from $37 to $42, and said, “We expect AT&T to remain in transition throughout 2019… the recent investments in the wireless strategy are more likely to help its competitive positioning for 2020.” His new price target implies a 14% upside to the stock.” data-reactid=”27″>Citigroup analyst Michael Rollins agrees that T shows potential for mid-term gains. He raised his price target from $37 to $42, and said, “We expect AT&T to remain in transition throughout 2019… the recent investments in the wireless strategy are more likely to help its competitive positioning for 2020.” His new price target implies a 14% upside to the stock.
Overall, AT&T has a Strong Buy from the analyst consensus, based on 6 buy and 2 hold ratings given in the last three months. The recent share price gains have pushed T just above its average price target – but the most recent reviews show that the Street’s analysts are starting to revise that price target.
<h4 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Roku, Inc. (ROKU)” data-reactid=”33″>Roku, Inc. (ROKU)
Roku, the online television streaming service, is riding high on the rapidly growing popularity of ad-free content streaming. The stock went public two years ago, and for 2019 is showing a whopping 425% year-to-date gain. ROKU’s recent performance has pushed share price to 23% above its average price target.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="That fast rise is getting notice from Wall Street’s top analysts. Writing from SunTrust Robinson yesterday, Matthew Thornton raised his firm’s price target on ROKU by 171%, more than doubling the outlook to $163. He wrote, “We remain positive on Roku’s execution, fundamentals, and strategic value, and our concern over the company’s 2019 outlook versus consensus has kept us incorrectly on the sidelines.” He does point to the stock’s high valuation, however, as a reason to delay buying. He gives the stock a Hold rating for now.” data-reactid=”35″>That fast rise is getting notice from Wall Street’s top analysts. Writing from SunTrust Robinson yesterday, Matthew Thornton raised his firm’s price target on ROKU by 171%, more than doubling the outlook to $163. He wrote, “We remain positive on Roku’s execution, fundamentals, and strategic value, and our concern over the company’s 2019 outlook versus consensus has kept us incorrectly on the sidelines.” He does point to the stock’s high valuation, however, as a reason to delay buying. He gives the stock a Hold rating for now.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Also writing on Roku yesterday was 5-star analyst Tom Forte, of D.A. Davidson. Forte reiterated his Buy on the stock, with a $185 price target indicating confidence in a 15% upside to the stock. In his comments, Forte specifically noted Roku’s licensing efforts with TV manufacturers, saying, “Roku works with 11 brands, as the company’s TV’s are manufactured and sold by Roku TV brand licensees, all running its operating system (OS), and leveraging its hardware reference design.”” data-reactid=”44″>Also writing on Roku yesterday was 5-star analyst Tom Forte, of D.A. Davidson. Forte reiterated his Buy on the stock, with a $185 price target indicating confidence in a 15% upside to the stock. In his comments, Forte specifically noted Roku’s licensing efforts with TV manufacturers, saying, “Roku works with 11 brands, as the company’s TV’s are manufactured and sold by Roku TV brand licensees, all running its operating system (OS), and leveraging its hardware reference design.”
Roku has a Moderate Buy rating from the analyst consensus, based on 7 buys, 5 holds, and 1 sell from the past three months. Concerns over the stock’s high valuation are cited as reasons to hold back, while optimism on the company’s prospects and overall performance underly the bulls. The current share price is $160. Roku is scheduled to report annual earnings on November 6.
<h4 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Activision Blizzard (ATVI)” data-reactid=”46″>Activision Blizzard (ATVI)
Activision has had a difficult time regaining traction in the stock markets after its sharp decline in the second half of 2018. The stock was essentially range-bound between $40 and $50 from November last year until this past August. However, the video game maker saw two recent pieces of good news and has popped 9% since September 2, double the S&P’s gains.
The first boost came on September 4, when BMO Capital upgraded its rating from Neutral to Buy. The second came yesterday, when Stifel placed ATVI shares on its “select list” of stocks to buy.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Writing for BMO, Gerrick Johnson set a $60, a 40% from his previous target of $43. In his comments, he said, “We are increasing our target owing to two main factors. First, we are increasing our 2020 earnings-per-share estimate to $3 from $2.50, based on a higher conviction level that investments in core games like Call of Duty and World of Warcraft will generate an improvement in performance.” data-reactid=”49″>Writing for BMO, Gerrick Johnson set a $60, a 40% from his previous target of $43. In his comments, he said, “We are increasing our target owing to two main factors. First, we are increasing our 2020 earnings-per-share estimate to $3 from $2.50, based on a higher conviction level that investments in core games like Call of Duty and World of Warcraft will generate an improvement in performance.
“Second, we are increasing the valuation multiple to 20x from 17x. As investors get more comfortable with the turnaround story and as new catalysts develop, we believe the company’s valuation multiple will expand.”
Johnson’s new price target suggests an upside of 8.7% from the current share price.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The next bump for Activision came when 5-star Stifel analyst Drew Crum, placed ATVI on his firm’s select list and said, “The stock currently trades at around 22 times forward earnings, above the five-year average. However, with improving fundamentals returning in 2020 (and beyond), valuations should start to look more reasonable. This year’s Call of Duty installment, along with the possibility of more exciting product news coming this fall, should help.” Crum’s price target of $65 implies an upside potential of 18%.” data-reactid=”52″>The next bump for Activision came when 5-star Stifel analyst Drew Crum, placed ATVI on his firm’s select list and said, “The stock currently trades at around 22 times forward earnings, above the five-year average. However, with improving fundamentals returning in 2020 (and beyond), valuations should start to look more reasonable. This year’s Call of Duty installment, along with the possibility of more exciting product news coming this fall, should help.” Crum’s price target of $65 implies an upside potential of 18%.
Overall, ATVI keeps a Strong Buy from the analyst consensus, based on 11 buys and 3 holds assigned in the last three months. Shares are priced at $55.10, and the average price target of $56.36 gives the stock a 2.2% upside potential. ATVI gained 1% in yesterday’s trading.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Visit the Trending Stocks page at TipRanks, to find out which stocks Wall Street’s top analysts are looking at now.” data-reactid=”62″>Visit the Trending Stocks page at TipRanks, to find out which stocks Wall Street’s top analysts are looking at now.
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