Needham Sees at Least 30% Upside Potential for These three Tech Stocks
Out on Wall Street, who has been main the cost ahead? Tech. After the area’s key gamers dragged the market decrease in September as a result of overheated valuations, tech is as soon as once more on the helm.The rise in tech is smart. The pandemic helped speed up a transfer towards distant work and telecommuting, and this in flip has put a premium on tech merchandise. From the 5G rollout, to enhancements in semiconductor chips, to the growth of IoT and good gadget capabilities – tech is all over the place, and it’s rising quick.Bearing this in thoughts, we turned to Needham, which lands among the many high ten on TipRanks’ record of High Performing Analysis Corporations, for some inspiration. The agency’s analysts spotlight three tech stocks that seem particularly compelling, noting at the very least 30% upside potential might be in retailer for every.We’ve used the TipRanks database to tug the small print on these three tech picks, to seek out out what makes them such compelling alternatives.Silicon Movement (SIMO)Bringing in depth expertise to the desk, Silicon Movement gives high-performance storage options broadly utilized in smartphones, PCs, information facilities and industrial and industrial purposes. Following a bang-up quarter, Needham believes this tech identify has a vibrant future forward.Writing for the agency, analyst Rajvindra Gill tells shoppers that based mostly on SIMO’s preannouncement, Q3 gross sales are set to land 8% above his authentic forecast, with EPS additionally beating his estimate by $0.09.What was behind this strong exhibiting? A restoration in consumer SSDs. In Q2, SIMO’s consumer SSD enterprise, particularly the module maker element, declined as NAND flash makers allotted NAND capability away from consumer SSDs to hyperscalers, to help the spike in information consumption on the community. Nevertheless, the other occurred in Q3. Together with a pause in hyperscale spending, module prospects had been allotted extra NAND capability as NAND pricing declined quarter-over-quarter.To this finish, Gill thinks NAND pricing might decline one other 5-10% quarter-over-quarter in This autumn. He added, “We expect the decline in NAND pricing to further stimulate client SSD adoption in Q4 as this market is quiet price elastic, especially the channel markets.”To a lesser extent, a rebound in China handsets together with a continued ramp of 5G handsets contributed to SIMO’s robust efficiency, in Gill’s opinion.What’s extra, the analyst argues that next-generation gaming consoles and desktop gaming might additional enhance SSD demand. Gill factors out that based mostly on experiences from MSI, the board maker for Nvidia GPUs, demand for cheaper SSDs for higher-end gaming desktop computer systems is on the rise.Expounding on this, Gill acknowledged, “This could be potentially COVID-19 related demand as more people (of all ages) stay home and find more time to play video games. Moreover, we expect SIMO to participate in the next-generation gaming consoles (PS5, Xbox) coming out in the Fall. SIMO is shipping its PCIe SSD controllers into five out seven of the NAND makers sold into the game consoles; we believe two out of five could be SIMO’s suppliers.”If that wasn’t sufficient, despite the fact that the penetration charges for laptops stay comparatively excessive at 80-90%, Gill believes connect charges for SSDs within the desktop market might speed up, driving upside in CY21.Given the entire above, Gill stayed with the bulls. Together with a Purchase ranking, he retains a $55 price goal on the stock. Traders might be pocketing a acquire of 30%, ought to this goal be met within the twelve months forward. (To look at Gill’s observe document, click on right here)Turning to the remainder of the Street, the bulls have it on this one. With Four Buys and a lone Maintain, the phrase on the Street is that SIMO is a Sturdy Purchase. At $49.60, the typical price goal implies ~18% upside potential. (See SIMO stock evaluation on TipRanks)Domo (DOMO)As a enterprise cloud software program specialist, Domo helps its prospects combine information from any supply, flip information into stay visualizations and lengthen BI into apps. Based mostly on optimistic momentum in addition to new offers, Needham thinks that now could be the time to snap up shares.After the corporate reported spectacular fiscal Q2 2021 outcomes, 5-star analyst Jack Andrews stands squarely with the bulls. Income of $51.1 million blew each his and the consensus estimate out of the water. Moreover, subscription income, billings and non-GAAP EPS exceeded his expectations.“In our view, Domo appears to be benefiting from tailwinds related to the ongoing pandemic and improved sales execution (i.e. playbooks and an improving partner ecosystem) as it closed a notable amount of large deals within the quarter,” Andrews defined.In accordance with administration, demand for digitizing enterprise processes and real-time analytics is accelerating on account of the pandemic. It’s additionally seeing extra prospects allocate IT budgets to modernizing BI and gathering insights from darkish information. To this finish, DOMO finalized a number of over $100,000 offers in hard-hit industries like health and manufacturing. On high of this, it closed a multi-million greenback cope with one of many world’s largest retailers that started with the preliminary use case of making insights throughout its analytics stack, however now extends to new use circumstances akin to an utility for retailer restocking.Andrews additionally factors out that momentum from the state-level COVID monitoring continues to work within the firm’s favor, because the state of Iowa expanded considerably and prolonged its contract by two years. With the assistance of a associate, it inked a seven-figure contract to energy a public-facing web site to trace pandemic funding grants in early fiscal Q3 2021.What’s extra, Andrews highlights the “encouraging commentary” from administration on its path to cash circulate breakeven, which ought to “alleviate any remaining financial concerns.”To sum all of it up, Andrews acknowledged, “We believe Domo has created a unique platform levered to the future requirements of enterprise analytics (self-service and scalability) without the exorbitant costs of implementation. As management executes changes in its sales strategy, we believe Domo, which trades at an EV/revenue multiple discount, can close the relative valuation gap to its Big Data software peer group.”In step with his optimistic strategy, Andrews reiterated a Purchase ranking and $61 price goal. This goal places the upside potential at 46%. (To look at Andrews’ observe document, click on right here)In terms of different Wall Street analysts, opinions are cut up evenly. With three Buys and three Holds assigned within the final three months, DOMO earns a Reasonable Purchase consensus ranking. Clocking in at $47.17, the typical price goal implies 13% upside potential. (See Domo stock evaluation on TipRanks)Everspin Applied sciences (MRAM)Final however not least, we have now Everspin Applied sciences, which develops and manufactures discrete magnetoresistive RAM or magnetoresistive random-access reminiscence (MRAM) merchandise, together with Toggle MRAM and Spin-Switch Torque MRAM (STT-MRAM) product households. Whereas the corporate has confronted headwinds not too long ago, Needham believes that MRAM might be a long-term winner.Agency analyst Rajvindra Gill, who additionally covers SIMO, is a critical fan. According to the broader trade, information middle demand has been moderating, which coupled with COVID-19-related headwinds, resulted in Q3 gross sales steering that missed the mark.It needs to be famous that STT-MRAM is nearly fully information middle, whereas Toggle has some information middle publicity since Toggle is utilized in RAID controllers. Moreover, because of COVID-19, there was a surge in information middle demand within the first half of 2020, boding properly for MRAM. Nevertheless, by the tip of Q2, there was a rise in buyer stock.“While this increase is partially due to supply chain concerns, we believe the main reason is a potential peak and expected slowdown in data center demand… However, we view the data center inventory digestion as a temporary setback, with a recovery expected in Q4,” the analyst commented.Including to the excellent news, MRAM thought that COVID-19 would negatively affect its capacity to safe new design wins. That mentioned, design wins grew by 16% quarter-over-quarter in Q2, which is over thrice greater than the prior-year quarter. Gill talked about, “We expect growth to re-accelerate as the market recovers.”The corporate kicked off mass manufacturing shipments of 32Mb Toggle MRAM product to a rising set of shoppers, with it planning so as to add completely different package deal and temperature grades to broaden to new buyer purposes. If that wasn’t sufficient, the second pivotal design win for MRAM’s 1Gb STT-MRAM product is predicted to start out manufacturing shipments in Q3 “into a persistent memory application for an OEM that sells into data center.”Though gross margins had been briefly gentle for Toggle and STT-MRAM because of the work-from-home atmosphere, Gill argues that within the subsequent few quarters, margins for each are prone to recuperate, pushed by manufacturing efficiencies and decrease materials procurement prices.All the things that MRAM has going for it satisfied Gill to keep up his Purchase ranking. Along with the decision, he left the price goal at $10, suggesting 44% upside potential. Wanting on the consensus breakdown, it has been quiet relating to different analyst exercise. As Gill is the one analyst that has printed a assessment not too long ago, MRAM has a Reasonable Purchase consensus ranking. (See MRAM stock evaluation on TipRanks)To seek out good concepts for stocks buying and selling at enticing valuations, go to TipRanks’ Finest Stocks to Purchase, a newly launched instrument that unites all of TipRanks’ fairness insights.Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is rather vital to do your individual evaluation earlier than making any funding.