According to Wedbush, Apple, Microsoft and Nuance Communications are among the top three technology purchases ahead of the reporting season.
In a note to clients on Wednesday, analyst Dan Ives said he believed tech stocks “are up 25-30% for the remainder of the year, despite lingering rotation concerns.”
The analyst outlined his preference for a “compelling risk-reward ratio” ahead of the reporting season. Apple, Microsoft and Nuance Communications topped the list.
On Wednesday, Ives called Apple his first very purchase and said the “supercycle thesis” for iPhone sales appears to be coming true.
While street statistics put iPhone sales at 220 million in fiscal 2021, Ives estimates the figure will reach 240 million or 250 million due to strong demand from China over the Chinese New Year.
Ives is rated “best of all” for Apple and has a target price of $ 175. This figure represents a potential 39% rise in share prices, based on Tuesday’s closing price of $ 126.21.
Ives’ second pick in the tech sector ahead of earnings season was Microsoft. The analyst said that based on the data from his team, he believes that “the trend of the cloud arms race is changing,” and Microsoft is gaining market share at the expense of Amazon Web Services.
The Redmond tech giant reported 50% growth in its cloud business on Azure in the most recent quarter, up from 28% growth for AWS.
Ives also described the hiring of Amazon CEO Andy Yassi as a pure positive, as it shows the company needs to double its AWS cloud services in the face of competition from Microsoft. The analyst said Microsoft’s cloud business “looks strong in the remainder of its 21st fiscal year.”
Wedbush is rated “Outperform” for Microsoft stock and has a target price of $ 300. Based on Tuesday’s closing price of $ 247.86, the target price represents a potential 21% jump in stock prices next year.
Finally, Ives said Nuance Communications is going to benefit from more “hospital-wide deployments” of its cloud and artificial intelligence technologies, which are “playing out and gaining ground based on our audits.”
The analyst added that Nuance has generated a growing and steady stream of revenue / profits, and cloud healthcare streams and transaction stream transformations “seem solid.”
Wedbush is rated “Best of All” by Nuance Communications and has an estimated price tag of $ 65. As of Tuesday’s closing price of $ 44.23, that target represents a potential 47% jump in the share price.