Tech stocks have been regaining momentum over the past couple of months following an extended sell-off earlier this year. Amid the rapid adoption of hybrid working structures and emergence of 5G, most companies are developing next-generation products with better storage space and high efficiency to improve customer satisfaction and gain market reach, thereby restoring investor optimism in the tech space.
This is evidenced by the iShares U.S. Technology ETF’s (IYW) 9% returns over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 3.2% gains. Also, the tech-heavy Nasdaq Composite gained 12.5% year-to-date to hit its 14,649.11 all-time high in the last trading session.
Given investors’ bullish outlook for the tech industry amid rapid digitization in almost every sector, Wall Street analysts expect popular tech stocks Uber Technologies, Inc. (UBER), Micron Technology, Inc. (MU), and Pure Storage, Inc. (PSTG) to gain more than 35% in the near-term.
Uber Technologies, Inc. (UBER)
UBER is a technology platform that offers multi-modal people transportation, ride sharing, restaurant food delivery, payment processing solutions and freight carrier and shipper connections worldwide.
On June 29, 2021, UBER partnered with TotalEnergies (TTE), a multinational integrated oil and gas company, to accelerate the transition of UBER’s drivers to electric mobility by providing support for vehicle conversion and easier access to charge points. TTE’s market reach in the provision of such services should help UBER achieve its target of reaching 50% electric vehicles by 2025 in France, an achievement it plans to extend to other European countries gradually.
In an announcement dated May 13, UBER and Nimble expanded their partnership and launched on-demand prescription delivery in Seattle. This enables UBER’s customers to receive their medications quickly from the UberEats app through Nimble’s network of quality neighborhood pharmacies.
For its fiscal first quarter, ended March 31, 2021, UBER’s revenue from its delivery segment increased 230.4% year-over-year to $1.74 billion, and its revenue from its freight segments increased 51.3% year-over-year to $301 million. The company’s gross bookings came in at $19.54 billion for the quarter, up 23.8% from the prior-year period. As of March 31, 2021, the company had $9.53 billion in cash and cash equivalents and restricted cash.
Analysts expect the company’s revenue to increase 38.6% for the current quarter, ending September 30, 2021, to $4.34 billion. The stock surpassed the Street’s EPS estimates in three of the trailing four quarters. UBER’s EPS is expected to grow at 65.5% rate per annum over the next five years. The stock has gained 68.6% over the past year and 37.1% over the past nine months to close Friday’s trading session at $51.71.
Of the 27 Street analysts that have rated the stock, 23 rated it a ‘Buy’ and four rated it a ‘Hold.’ Also, analysts expect the stock to hit $72.43 in the near term, which indicates a potential 40.1% upside.
Micron Technology, Inc. (MU)
MU designs, manufactures, and sells memory and storage products worldwide. The company operates through computer and networking, mobile, storage, and embedded business units. It sells dynamic random access memory chips (DRAMs), static random access memory chips (SRAMs), flash memory, semiconductor components, and memory modules to a variety of end markets.
On June 1, MU introduced new memory and storage products based on its industry-leading 176-layer NAND and 1-Alpha DRAM technology, as well as the industry’s first universal flash storage (UFS) 3.1 solution for automotive applications. Amid the high demand for memory and flash chips in the evolving data economy, MU’s portfolio additions should accelerate data-driven insights and enable new capabilities from the datacenter to the intelligent edge. With power-efficiency improvements for memory enabling longer battery life in consumer devices, MU expects to generate solid sales in the near-term.
On March 16, MU introduced updates to its data center portfolio strategy to address growing opportunities for memory and storage hierarchy innovation. MU will increase investment in Compute Express Link (CXL)-enabled memory products that will provide flexible connections between compute, memory and storage. MU plans to apply the knowledge it has gained from the breakthroughs achieved through its 3D XPoint initiative, as well as related engineering expertise and resources, to new types of memory-centric products.
MU’s revenue for its fiscal second quarter, ended March 4, 2021, increased 30% year-over-year to $6.24 billion. The company’s non-GAAP gross profit increased 46.9% year-over-year to $2.05 billion. Its non-GAAP operating income came in at $1.26 billion, up 131.9% from the prior-year period. Its non-GAAP net income is reported to be $1.13 billion for the quarter, which represents a 118.2% year-over-year improvement. And its non-GAAP EPS increased 117.8% year-over-year to $0.98. As of March 4, 2021, the company had $6.57 billion in cash, cash equivalents and restricted cash.
Analysts expect MU’s EPS to improve 115% year-over-year to $2.32 for its current quarter, ending August 31, 2021. The stock surpassed the Street’s EPS estimates in each of the trailing four quarters. A $8.19 billion consensus revenue estimate for the current quarter represents a 35.2% rise on a year-over-year basis. Analysts expect the stock’s EPS to grow at 63.6% per annum over the next five years. MU has rallied 72.6% over the past nine months and ended Friday’s trading session at $80.33.
Wall Street analysts expect the stock to hit $117.61 in the near term, which indicates a potential upside of 46.4%. Of the 21 Wall Street analysts that have rated the stock, 15 rated it a ‘Buy’ and six rated it ‘Hold.’
Pure Storage, Inc. (PSTG)
PSTG provides an enterprise data storage platform that is focused on delivering to customers software-defined all-flash solutions that are fast and cloud-capable. The company’s technology replaces storage systems designed for mechanical disks with all-flash systems optimized end-to-end for solid-state memory.
On June 16, 2021, PSTG announced that its modern data solutions were being used by an emerging class of managed service providers (MSPs), including UBX Cloud, ZeaCloud and ECS Biztech, delivering IT services over the cloud to the fast-growing micro-, small- and medium-enterprise (MSME) market. With more than 63 million MSME companies in India, PSTG’s provision of affordable and powerful IT services through MSPs will enable them to witness expanded market reach in the country.
On May 17, PSTG announced that Square Enix Holdings Co., Ltd., a Japanese video game holding company and entertainment conglomerate, introduced PSTG’s all-flash solution in its virtual desktop interface (VDI) to improve its environment for game development and operational efficiency. Square Enix’s expanding customer base and PSTG’s products should helpSquare Enix build stable and high performing IT infrastructure.
PSTG’s total revenues came in at $412.71 million for its fiscal first quarter, ended May 2, 2021, which represents a 12.4% improvement year-over-year. The company’s non-GAAP gross profit increased 6.8% year-over-year to $291.03 million. PSTG’s non-GAAP operating income is reported at $286,000 for the quarter, compared to a $5.36 million loss in the prior-year period. The company had $311.35 million in cash, cash equivalents and restricted cash.
A $0.08 consensus EPS estimate for the next quarter ending October 30, 2021, represents a 749.9% year-over-year improvement. Its $495.81 million revenue estimate for the next quarter, ending October 30, 2021, represents a 20.8% rise from the prior-year period. The stock’s EPS is expected to grow at a 57.4% rate per annum over the next five years. PSTG has gained 25.1% over the past year and 1.3% over the past month to close Friday’s trading session at $19.45.
Of seven Wall Street analysts that have rated the stock, five rated it a ‘Buy’ and two rated it ‘Hold.’ The average price target of $26.86 indicates a potential 38.1% upside.
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UBER shares were trading at $51.80 per share on Tuesday morning, up $0.09 (+0.17%). Year-to-date, UBER has gained 1.57%, versus a 16.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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