Social media sentiment provides valuable insights for investors. Indeed, hedge funds and asset managers have long used “sentiment analysis” to trade on consumer feelings toward a company or asset. These computer-driven readings of the social media mood can analyze huge numbers of posts while sifting out unreliable information.
Here we take a closer look at three top tech stocks which all show Very Positive social media sentiment right now. And as we will see analysts also share this optimistic take on these three names. All three stock picks show a ‘Strong Buy’ Street consensus, based on all the ratings published on each stock over the last three months. Let’s take a closer look at what’s driving this sentiment now:
Salesforce is buzzing on social media right now. We can see that sentiment over the last 7 days is extremely positive compared to the sector average. That’s not surprising given the company’s deal making bonanza. On August 1 CRM completed its massive $15.7 billion Tableau acquisition. And now the company has surprised investors by revealing that it has also snapped up field service software company ClickSoftware for a cool $1.35 billion.
“Our acquisition of ClickSoftware will not only accelerate the growth of Service Cloud, but drive further innovation with Field Service Lightning to better meet the needs of our customers,” explained EVP Bill Patterson in a statement. Indeed, the company’s fast-growing Service Cloud segment has just crossed the $1 billion revenue mark- and now with ClickSoftware on board, CRM is hoping to keep these numbers rising.
Meanwhile Tableau will bring to CRM an intuitive platform that enables customers to bring data to life by visualizing it- even if they don’t have specific data skills. Bear in mind, it’s not so long ago that CRM also splashed out billions of dollars on MuleSoft to get at backend data sources.
It’s not just the social sentiment that’s bullish on CRM and its acquisition strategy. The Street also has a very positive outlook on the stock right now, with a Strong Buy analyst consensus. In the last three months, 23 out of 24 analysts have rated Salesforce a buy. That’s with an average price target of $183 (27% upside potential).
“We would note the market for field service management software is estimated to be approximately $3.5bn in CY19, growing at ~17%” cheers five-star Evercore ISI analyst Kirk Materne. He notes Salesforce will provide updated guidance during its upcoming earnings call (August 22nd).
“In the near-term, investors will likely need to remain patient as the full weight of the Tableau, and ClickSoftware transactions are fully integrated into our/Street estimates. As we have stated in the past when it comes to Salesforce’s M&A history, deal-related pullbacks have generally represented good entry points, and while the deal will create some ‘noise in the numbers,’ the long-term risk/reward remains favorable” he concludes.
LivePerson is all about using technology to help businesses communicate with customers. It has created an AI-powered conversational platform to enable consumers to buy products and get answers to questions via everything from WhatsApp to Facebook Messenger.
Year-to-date the stock has put on a tremendous performance- more than doubling since the start of the year thanks to consistently strong revenue growth. And social media reflects this with many investors singing the stock’s praises.
Luckily the Street believes LivePerson has what it takes for continued growth. In the last three months LPSN has received no less than 10 consecutive buy ratings. So no hold or sell ratings here. “Raising target to $37 from $33 as LPSN posted nine 7-figure deals in 2Q, and increased deal count 50%” enthused Northland Securities’ analyst Michael Latimore following the company’s stellar earnings report.
Highlights included expanding pipelines, healthy big deal momentum and overall deal volume. As a result, Latimore writes “Pipeline and demand is clearly there, and LPSN is accelerating investments to capture it. Demand is for more channels, use cases and AI/automation; and for sales in addition to customer service.”
Similarly Oppenheimer’s Koji Ikeda boosted his price target from $35 to $41 citing the company’s higher growth guidance for 2019. “We believe management's reputation as good operators is increasing, and the business is positioned to continue the accelerating growth trend, which should help catalyze a rerating of LPSN's multiple higher to coincide with the improving growth profile” enthused Ikeda.
Q2 Holdings Inc (QTWO)
Texas-based Q2 Holdings is a leading provider of secure, cloud-based virtual banking solutions. After the close on August 7, QTWO released a 2Q19 report featuring top- and bottom-line beats while boosting its FY19 revenue forecast.
What’s more, QTWO also revealed that during 2Q19 it signed three Tier 1 banks (including a $26bn bank holding company), as well as digital lending contracts with two current clients. The news sparked a wave of positive social media sentiment for the stock, which is now trading up 75% year-to-date.
Following earnings, SunTrust Robinson analyst Terry Tillman reiterated his bullish call on QTWO. Most tellingly, he also ramped up his price target from $84 to $100 (15% upside potential) citing ‘strong execution.’ Encouragingly, this Top 10 analyst has a very strong track record with his QTWO recommendations (86% success rate and 28% average return per rating).
Meanwhile RBC Capital’s Matthew Hedberg also significantly boosted his price target on the stock from $79 to $94. “We believe the company is in the early innings of penetrating a multi-billion-dollar market that includes fragmented competition” explained the analyst.
“Through an acquire-retain-and-expand strategy, we believe Q2 has the opportunity to generate strong financial growth for several years while continuing to innovate new technologies that leverage its core platform.” In addition, he also sees the company as an attractive acquisition target for larger vendors seeking exposure to innovative solutions.
Overall this ‘Strong Buy’ stock has racked up 5 buy ratings in the last three months vs just 1 hold rating. The average analyst price target currently works out at $91.