Key points
- Technology results were mixed for the fourth quarter, with many stocks outperforming but offering soft guidance that caused their markets to implode.
- Overenthusiastic analysts and hopeful investors have gotten ahead of reality, leading to the market downturn, but the long-term outlook is still solid.
- Tech stock markets have been reset and are now poised to move higher and could sustain rallies through 2025.
- 5 stocks we like best from Palo Alto Networks
The first quarter reporting season brought mixed results from technology stocks for the fourth quarter. The end result is that digitalization continues, cloud growth accelerates, and artificial intelligence drives strong prospects. The problem was that greed led analysts and markets to overshoot reality and prices into every bit of growth possible before the market could mature.
The result is that many markets have been restored. The reset brought the prices of many technology stocks back to reasonable ranges and opened up interesting buying opportunities. Positioning opportunities for the second half of this year and into 2025. Here’s a look at the five most promising.
Palo Alto Networks invests in the future
Palo Alto Networks NASDAQ: PANW is the largest and leading cybersecurity company on the market and is investing in the future. The FQ2/CQ4 results highlighted a shift in focus that led to the stock price imploding. The change includes offering numerous free or reduced services to attract new customers and consolidate its position as a market leader.
The short-term outcome is that revenues, margins and profits will be impacted, while the long-term outcome is that growth will be sustained and margins will be expanded due to the services platform, increased customer base and greater penetration of services in a global context. increasingly dangerous cyber world.
There was some negative activity from analysts following Palo Alto’s announcement, but not enough to alter the community’s outlook. Consensus sentiment remained stable at Moderate Buy while the price target increased. The consensus target is up on twelve-, three- and one-month comparisons and is now 12% higher than the stock, in a position to push the share price higher.
ZScaler follows Palo Alto Networks into the Buy Zone
The one from Zscaler NASDAQ: HP the stock price started falling in parallel with PANW and accelerated after the release of fourth quarter results. The strong results included better guidance, but analysts and the market were secretly hoping for more. The result is that shares are down about 25% from their highs and are trading at a critical support target at the midpoint of a trading range.
As analysts remain bullish on the stock and post-release reviews are net positive, with the consensus target rising and 20% above current action, support should hold at this level. Zscaler’s next report is expected at the end of May. The thirty-three analysts covering the topic have all revised their targets upward, but they may still be underestimating the company, forecasting growth to slow to 28%.
MongoDB positioned for long-term growth in cloud and AI
MongoDB NASDAQ:MDB the price action fell due to its guidance, which fell short of consensus. However, forecasts remain solid, predicting double-digit growth that may understate company strength in 2024. Regardless, the company is well positioned to compete in the rapidly growing cloud industry and is a leader in AI-powered services and in services for artificial intelligence companies.
Analysts were not thrilled with the news and gave mixed reviews, but the net result was positive for investors. A downgrade to Sell was offset by an upgrade to Outperform and several price target increases, with the consensus rising from last month, last quarter and last year, nearly 100% up on the year previous.
UiPath is on track to complete a turnaround
UiPath NYSE: PATH stocks are falling following his report, but the move is tepid and in line with the budding uptrend. Assuming the market maintains support at current levels, it should recover soon. In this scenario, the market would confirm a reversal that began last year and prepare to sustain a rally this year and next. Analysts were impressed with the results and guidance and issued more than a dozen positive revisions that advanced the low, mid, and high end of the range. The lower end of the analyst range assumes a single-digit upside, while the consensus is closer to 22%.
The snowflake falls to the ground
The snowflake one NYSE: SNOW the stock price fell more than 30%, helped by Palo Alto’s implosion, weaker-than-expected guidance and an unexpected CEO change. The most concerning news is that CEO Frank Slootman is retiring. However, he will remain chairman of the board and new CEO Sridhar Ramaswamy has extensive experience. He joined the company in 2023 with the acquisition of Neeva and was head of Snowflakes’ AI division. Analyst revisions are off to a slow start, but the pace is picking up with numerous price targets and rating upgrades to offset fewer negative actions. Analysts rate this stock at Moderate Buy and see it advancing 25% to the consensus midpoint.
Before you consider Palo Alto Networks, you’ll want to hear this.
MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Palo Alto Networks wasn’t on the list.
While Palo Alto Networks currently has a “Moderate Buy” rating among analysts, top analysts believe these five stocks are better buys.
View the five stocks here
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