Not every corner of the technology sector is overvalued and ripe for a nasty pullback. Some of the less-covered technology firms have quietly delivered delightful earnings surprises in recent quarters. Such earnings beats are likely contributing factors behind major price target upgrades from big-name analysts on Wall Street. With the confidence of the analyst community (Strong Buy ratings), value seekers should give the following overlooked tech stocks — SQ, WDC, and GDDY — a closer look in the second quarter.
Therefore, let’s tune into TipRanks’ Comparison Tool below to see how the trio stacks up and which Strong Buy is the best bet for the year ahead.
Block (NASDAQ:SQ)
Block, the fintech firm behind Cash App and Square, saw its shares gain nearly 6% on Monday after investors had the full weekend to digest the company’s spectacular quarterly earnings results. Sales and earnings both came in well ahead of expectations. HSBC Global Research’s Saul Martinez thinks Block’s solid showing may be just the start, noting the “potential for more good news in the coming quarters.”
With solid newfound momentum to build off of, I’m inclined to stay bullish on SQ stock as CEO Jack Dorsey orchestrates his firm’s comeback.
Quarterly beats alongside upbeat guides have been the formula to push stocks higher this earnings season. For Q1, Block seemed to raise the intrigue level a bit further with a change to its Bitcoin (BTC-USD) investment strategy.
The company now plans to invest 10% of gross profits from its Bitcoin-related endeavors in the cryptocurrency itself. Indeed, dollar-cost averaging into Bitcoin could prove a wise way to remove the “timing” factor from the often-choppy asset. As Block’s Bitcoin-related businesses grow in size, so too will its commitment to the cryptocurrency. The move shows that Jack Dorsey is serious about Bitcoin.
What Is the Price Target for SQ Stock?
SQ stock is a Strong Buy, according to analysts, with 26 Buys and four Holds assigned in the past three months. The average SQ stock price target of $90.42 implies 26.8% upside potential.
Western Digital (NASDAQ:WDC)
Western Digital stock has been an incredible performer in 2024, now up around 37% year-to-date on the back of some impressive quarters. The hard drive disk (HDD) and solid-state drive (SSD) maker seems to be in the midst of a nice cyclical upswing and may have what it takes to follow an outstanding third-quarter showing with further strength. All considered, I’m staying bullish on the data storage titan as demand shows no signs of backing off.
For the third quarter, sales surged 23% year-over-year, with flash sales rocketing 31%. Its gross margin also jumped a whopping 1,400 basis points to 29%. Undoubtedly, given the cyclical nature of memory hardware, such double-digit growth and margin gains are simply not sustainable. That said, many analysts remain upbeat, primarily because there are no signs that the current cycle is about to reverse course.
At 11.5 times forward price-to-earnings (P/E), WDC stock remains way too cheap to pass up here. Even though previous past-decade booms have set the stage for devastating busts, the new age of AI-powered PCs may just be able to keep the good times rolling further for WDC stock.
What Is the Price Target for WDC Stock?
WDC stock is a Strong Buy, according to analysts, with 13 Buys and five Holds assigned in the past three months. The average WDC stock price target of $67.94 implies 5.5% downside potential.
GoDaddy (NYSE:GDDY)
Shares of web host and development software firm GoDaddy have been soaring recently, up more than 87% in the past year. Numerous analysts are upbeat about the stock as it builds on its impressive generative AI solutions. As GoDaddy looks to make its mark on the generative AI age, I find it hard to be anything but bullish.
Most notably, the company’s Airo AI (an AI tool to help enhance small business digital capabilities) stands out as a must-have for small businesses seeking to expand their digital presence. It’s really a tool that pays itself off in the form of sales and productivity gains. Reportedly, the AI tool helped small businesses generate 28% more sales during a study conducted last year.
Undoubtedly, it’s ambitious innovations like Airo, which can help small businesses even the playing field with the heavyweights in e-commerce, that I believe warrant a considerable multiple re-rating in the stock. After all, GoDaddy isn’t just a web host or domain registrar anymore.
At writing, shares go for 10.7 times trailing P/E. That’s not exactly an AI-esque multiple for an impressive innovator with the means to jolt earnings growth in the medium term with a value proposition its merchants may find too good to pass up.
What Is the Price Target for GDDY Stock?
GDDY stock is a Strong Buy, according to analysts, with 12 Buys and four Holds assigned in the past three months. The average GDDY stock price target of $133.28 implies 1.7% upside potential.
The Bottom Line
Block, Western Digital, and GoDaddy are standout technology stocks that rightfully deserve their Strong Buy ratings. It will be interesting to see if such lesser-loved names can win some love over the Magnificent Seven. Of the trio, analysts see the most upside in SQ stock (~27%).
