Upgrades Are Moving The Market, But Beware The High Hurdles
Among the biggest risks
to the market, today are the number of upgrades we're seeing. The consensus estimate for S&P 500 (NYSEARCA: SPY
) Q1 earnings has nearly doubled in the last six months and is likely to keep rising into the end of the reporting season. What this means for near-term market movement is upward price pressure. What it means for long-term market movement is yet to be determined but can be summed up like this; if the market fails to meet the expectations we could be in for a big correction. Results from companies like Fastenal (NASDAQ: FAST
) only highlight this view
. Fastenal reported exactly what the market was expecting, gave no guidance, and shares are moving lower because of it.
Microsoft Diversification Strategy Is Paying Off
Microsoft (NASDAQ: MSFT
) has been working hard to diversify itself for long-term sustainable growth
and those efforts seem to be paying off. The latest move was only announced in the last week and already garnering the attention of analysts. Microsoft announced a definitive agreement to acquire Nuance Communications in an effort to build out its business services. Nuance Communications is an AI company focused on the healthcare industry worth nearly $20 billion according to the terms of the deal.
"Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI," says Satya Nadella, CEO, Microsoft. "AI is technology's most important priority, and healthcare is its most urgent application."
Analyst Joseph Bonner of Argus sees Microsoft benefiting from reopening tailwinds in addition to its acquisitions growth worth another 17% to share prices. Argus maintained its Buy rating but raised the price target to $300 from $275. The target is 15% above the current consensus and reflects a growing trend. The trend of upwardly revised price targets and a consensus target that's been steadily rising over the past three months.
NVIDIA Guides The Market Higher
NVIDIA (NASDAQ: NVDA
) caught the analyst's attention on Mondy when it issued a pre-report on Q1 earnings. In it, the company guided the market to better than expected results that has shares up more than 7% in the last two days. At least three major sell-side firms have come out since the news to sing the company's praises and raise their price targets. Rosenblatt Securities was impressed with the breadth of the revenue strength, Deutsch Bank the "rich pipeline of opportunities", and Cowen the surprise Grace CPU announcement. The consensus among them is for shares of NVDA to trade near $675 versus the broader consensus of $600. Rosenblatt is the high-price holder of the group matching the Wall Street high price target of $800. NVIDIA is now trading at the all-time-high
Coinbase IPO Is Causing A Buzz
The Coinbase (NASDAQ: COIN
) IPO is slated for today and likely to cause a big stir
in the market. The latest valuations have it trading far above any comparable financial institution and are pricing in the robust growth we ourselves see for the cryptocurrency market. Analysts at MoffetNathanson are the first to officially initiate coverage of the company, even before the official direct listing, and have it rated a buy. In their view, this company will be trading around the $600 level in one year's time which is double the original listing price when the company listed on NASDAQ Private Markets. In our view, the $600 price target is a little on the low side considering this company is the #1 portal
to cryptocurrency and defi worldwide. This company will benefit from any and all advances in cryptocurrency technology including the digitization of traditional assets like stocks and bonds.
“We view Coinbase as a leading technology infrastructure provider for the cryptocurrency ecosystem, providing essential building blocks to facilitate the use of cryptocurrencies, including market-leading crypto storage and exchange capabilities,” MoffettNathanson wrote in a research note.
Featured Article: Why do analysts give a neutral rating?7 Cloud Computing Stocks to Lift Your Portfolio to New Heights
Cloud computing sounds complicated, and it has become more sophisticated as it evolves. However, the basic idea behind the cloud is the same. The “cloud” is a euphemistic term for the delivery of different services via the internet. In its early days, the cloud was used exclusively for data storage. Here’s an easy example of why this was important.
Back when the internet was cutting its teeth, I worked in marketing communications. The need to comply with Total Quality Control Systems (TQCS) for our largest clients meant we had to save every version of our files. Every. Single. One.
Now imagine that you’re producing a 120-page product catalog complete with photos and charts. Your hard drive is burning up just thinking about it. Yet that “data” had to be stored somewhere. And so we had a virtual server farm to try to warehouse all these graphic intensive (and memory sucking) files until we could archive them.
Other than the storage nightmare, consider that it was a pain to work remotely. You could copy a file from the server, but then were you working on the right file? I’m sure at least one person is reading this who remembers this pain.
The cloud takes that away. Cloud computing allows you to store files on a secure, remote server that everyone can access anywhere they have an internet connection. But it’s become so much more than that. Cloud computing now gives businesses a platform from which they can create applications and software. If that sounds confusing, I hope to simplify it in this presentation.
To help you understand which cloud computing stocks, you may want to add to your portfolio, and we’ve created this special presentation. These are seven of the cloud computing stocks that will continue to grow with the sector.
View the "7 Cloud Computing Stocks to Lift Your Portfolio to New Heights"
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