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The Zacks Analyst Blog Highlights: Microsoft, Apple, Adobe, Nvidia and Salesforce

Zacks Equity Research

For Immediate Release

Chicago, IL – April 24, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Microsoft MSFT, Apple AAPL, Adobe ADBE, Nvidia NVDA and Salesforce CRM.

Here are highlights from Thursday’s Analyst Blog:

3 Blue-Chip Tech Stocks to Buy Right Now (Not Named Apple or Microsoft)

The S&P 500, the Dow, and the Nasdaq all climbed through morning trading Thursday despite the fact that another 4.4 million Americans filed for unemployment benefits last week.

Wall Street seems set to push stocks higher on the back of hope that global economies will start to reopen soon after weeks of social distancing and stay-at-home orders to help slow the spread of the coronavirus. The S&P 500 has jumped roughly 25% from its March 23 lows, after the historically quick selloff.

Meanwhile, our Zacks estimates call for overall S&P 500 earnings to fall over 14% in Q1, down from +4% projected in January. And things are expected to get worse in the second quarter (also read: Making Sense of the Earnings Picture During the Coronavirus).

Energy, transportation, autos, consumer discretionary, and other sectors look as though they will be hit the hardest. However, tech sector S&P 500 earnings are only expected to be slip -1.9% in the first quarter. Therefore, investors might want to focus in on tech stocks.

Blue-chip tech stocks such as Microsoft and Apple have helped drive the market for years, and even if stocks give up some of their recent gains, now might be time to invest in strong tech stocks that appear to be solid, longer-term buys…

Adobe

Adobe sells a variety of cloud-based offerings, including its suite of creative software such as Photoshop to subscription solutions for businesses, schools, and more. The San Jose, California-based firm breaks its revenue streams down into three general categories: Creative Cloud, Document Cloud, and Experience Cloud.

ADBE topped our Q1 fiscal 2020 earnings estimate in mid-March and posted record quarterly revenue of $3.09 billion, up 19%. Looking ahead, our Zacks estimates call for ADBE’s fiscal 2020 sales to jump 16.3%, with FY21 projected to climb another 15% higher. These would come on top of the cloud software firm’s roughly 24% revenue growth in the trailing three years.

Meanwhile, its adjusted earnings are projected to pop 24.4% and 13.5%, respectively over the next two fiscal years. Adobe’s bottom-line growth outlook is a great sign at a time when many firms are expected to see their EPS shrink. Adobe currently holds a Zacks Rank #3 (Hold), alongside “B” grades for Growth and Momentum in our Style Scores system.

ABDE stock is up around 3% in 2020 to crush the S&P 500’s 13% decline and has climbed 24% in the last 12 months. Yet the stock still rests 12% below its 52-week highs, which could give it more room to run.

The stock is also trading at its three-year median in terms of forward-12 month earnings. Adobe’s balance is also solid and it is part of an industry that rests in the top 19% of our more than 250 Zacks industries right now.

Nvidia

Nvidia is a GPU powerhouse that is poised to benefit from the continued growth of high-end video gaming, data centers, artificial intelligence, and more. NVDA beat our Q4 fiscal 2020 earnings and revenue estimates in February, and on March 24 updated investors on its outlook via a virtual meeting with analysts.

The chip maker said that overall demand remains strong from “hyperscale” cloud service providers that use Nvidia’s chips in their data centers, despite pandemic concerns. The firm also seemed pleased with its video game-focused space as millions of people are mostly confined to their homes.

Nvidia has been rewarded for its strength within the vital semiconductor industry, with its stock price up 52% in the last year and 24% in 2020, which crushes its industry’s 3% pop. Despite its strong price performance, NVDA stock hovers around 9% below its 52-week highs.

Investors should also note that Nvidia on April 16 announced that it received “approval from all necessary authorities” to complete its $6.9 billion acquisition of “high-performance interconnect technology” firm Mellanox. And Nvidia’s balance sheet can support what will be its biggest acquisition ever. NVDA ended fiscal 2020 with $10.89 billion in cash, cash equivalents, and marketable securities, against just $1.78 billion in total current liabilities and $1.99 billion in long-term debt.         

Looking ahead, NVDA, which is currently a Zacks Rank #3 (Hold) that sports “A” grade for Growth and Momentum, is projected to see its fiscal 2021 revenue jump 19.4%, with FY22 set to pop another 16% to hit $15.09 billion. At the bottom end of the income statement, NVDA’s adjusted earnings are expected to surge 31.4% and 20%, respectively over this same stretch. Along with this growth outlook, Nvidia also pays a dividend. 

Salesforce

Salesforce is one of the world’s largest enterprise-application-software companies by revenue. The firm’s cloud-based customer relationship management services offer customers a wide range of tools and applications to help run everything from sales and e-commerce to marketing and analytics. The San Francisco-based tech giant boasts over 150,000 customers and it has bolstered its offerings through AI and voice-controls.

Salesforce last summer completed its largest ever deal to buy Tableau to help grow its data analytics software business. The company topped our Q4 estimates in late February, with Q4 revenue up 35% to $4.85 billion. In Q3, CEO Marc Benioff said that CRM was “now on track to double our revenue in five years.”

Salesforce’s full-year revenue is projected to jump 21.8% and 18.5%, respectively in FY21 and FY22. Meanwhile, its adjusted earnings are expected to pop 4% and 22% over this stretch. CRM is currently a Zacks Rank #3 (Hold), like its peers on the list, that also rocks a “B” grade for Growth and an “A” for Momentum.

CRM looks set to expand for years to come as businesses big and small transform for the digital age. And longer-term investors can currently scoop up Salesforce stock roughly 23% below its 52-week highs.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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