With a 25% pop in Wall Street’s fear gauge, the VIX index, in the past week, it’s safe to say that a little bit of volatility is creeping back into the market after December’s Santa Claus rally. While it’s yet to develop into anything very serious, the tech-heavy Nasdaq index has almost fallen back to its October levels. For those of us looking to freshen up the tech exposure in our portfolio for the year ahead, picking quality is more important than ever.
Here are two well-known tech names that have just received a fresh vote of confidence from some of the Wall Street heavyweights.
Like many of its peers, shares of tech stalwart Intel rallied through the second half of December and gave investors a positive note to end the year on. Considering their shares were down 30% from their April high before the final push, it was much needed. But unlike many of their peers, Intel shares have continued to climb into the new year. One of the catalysts behind this strength has been a fresh upgrade from the team at Northland Capital Markets, who moved the semiconductor maker to a Buy rating earlier this week.
Analyst Gus Richard and his team are of the opinion that Intel is finally starting to “execute on a coherent strategy" but that the stock price has yet to reflect this. Their $62 price target suggests there’s a solid upside to be had in the region of 15%, and were shares to hit this in the coming months they’d be looking good to make a run for their multi-year high around $69.
If Intel can continue to “leverage its Simple Intel Platform capability and optimize its fab resources producing die that is best built on older technology", then Northland sees this as a fairly achievable goal for 2022. Intel’s 2.7% dividend yield also got the thumbs up, as did their price-to-earnings ratio of 10. It’s almost unheard of for a tech stock to have a PE ratio below 20, so investors getting involved around these levels can do so with the feeling that they’re getting in at a discount.
Also worth noting is that earlier this week, the team at Tigress Financial reiterated its buy rating on Intel, with the firm citing “continued investment in processor development and the upcoming spin-off of its Mobileye division which could be a significant upside catalyst."
Since IPO’ing last April it’s been a bumpy few months for shares of cryptocurrency exchange platform Coinbase. They went public with much fanfare and hype but their shares quickly experienced a 50% haircut that seems to almost be a rite of passage for headline-grabbing tech companies these days. They’ve chopped around a bit since the summer and are back trading near their lows since October’s 60% rally ran out of steam.
But the team at Bank of America thinks now could be the ideal time to get involved for the long-term play. Analyst Jason Kupferberg upgraded Coinbase to Buy from Neutral yesterday morning with the belief that the crypto exchange's revenue “is diversifying beyond retail crypto trading, a trend we think could accelerate in '22 and beyond."
Kupferberg also pointed out how their subscription and services revenue made up 12% of total net revenue in their Q3 earnings, an increase of 300% on the 4% figure for the segment in Q2. Bank of America is expecting this to continue moving towards the 16% mark in the months ahead. They also think that there’s “strong potential for significant upside to Coinbase's Q4 guidance as Coinbase app download growth, which strongly correlates with average revenue per user (ARPU), jumped to 312% vs. 127% in Q3 2021.” They upped their Q4 ARPU estimate to $45 from $30 and net revenue forecast to $1.4 billion from $958 million.
With Coinbase shares after falling as much as 20% in the past two weeks, you have to be thinking that there’s a lot going unnoticed about them right now. Considering the stock’s RSI is around the low 30s, the risk-reward profile is quite attractive here and it wouldn’t be surprising to see a few fresh upgrades alongside Bank of America’s in the near term.
