Analyst currently love these three tech stocks: TTWO, NTES, and ISRG, giving each of them a Strong Buy consensus rating. The tech stock rally has been incredibly rewarding to the contrarian investors who bought last year’s “tech wreck.” Indeed, investors who got in when it seemed most dangerous to do so ended up with a front-row seat to the ensuing rebound. It was quite remarkable that tech was able to move on, even as rates continued to climb.
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As the tech rally continues, there’s bound to be growing concern over swelling valuations and calls for some sort of correction. Nevertheless, investors late to the tech trade may still have an opportunity to enjoy some solid gains before someone or something takes the punch bowl away from the sector.
Therefore, in this piece, we’ll use TipRanks’ Comparison Tool to check out three tech stocks that still command “Strong Buy” consensus ratings from the analyst community.
Take-Two Interactive Software (NASDAQ:TTWO)
Game developer Take-Two has seen its shares heat up since bottoming last November. Since then, the stock has soared around 60%. Despite the recent pop, the stock’s still down around 29% from its early-2021 high.
Indeed, the broader basket of video game stocks fell into a rut after COVID-19 lockdowns were gradually lifted. Gaming stocks may have been pandemic beneficiaries, but they stand out as ones that will have the opportunity to see new highs again, perhaps within the next three years. Though the easy money’s already been made, I remain bullish on TTWO as we enter the next level of its rally.
As industry consolidation continues — think the proposed Microsoft (NASDAQ:MSFT) and Activision (NASDAQ:ATVI) deal — and the virtual reality (VR) hype looks to kick into high gear over the next three years, I think it’s tough to sleep on Take-Two. The $25.4 billion maker of Grand Theft Auto (GTA) is a crown jewel in the gaming industry and could fetch a much higher price tag if it’s ultimately acquired.
Even if no buyer steps forward, Take-Two has prized gaming assets that could help propel future growth for years to come. With blockbuster titles in the pipeline, a great sports franchise, and mobile gaming kingpin Zynga in its portfolio, you should expect to pay top dollar for the firm.
At 47.6 times forward price-to-earnings (P/E) multiple, TTWO is pricier than the electronic gaming and multimedia industry average of 38.25 times. I view the premium as well-deserved, given the blockbuster potential of its coming GTA VI game.
What is the Price Target for TTWO Stock?
Take-Two’s a Strong Buy on Wall Street, with 14 Buys and three Holds assigned in the past three months. The average TTWO stock price target of $155 implies 3.2% upside potential.
NetEase (NASDAQ:NTES)
NetEase is a Chinese technology company that boasts an impressive video game portfolio. The stock is up more than 90% since bottoming back in October 2022 but is still down about 20% from its peak.
Undoubtedly, there are additional risks associated with investing in any Chinese stock. Still, I do think the potential rewards could compensate for added risks taken on by U.S. investors. With a modest valuation and an impressive position in the online gaming space, I have to stay bullish on shares of NTES.
Last week, NetEase was touted as JPMorgan’s (NYSE:JPM) top pick in online gaming. JPM expects online game revenue growth for the company to surge to 14% and 23% year-over-year in the third and fourth quarters, respectively. The firm’s Justice Mobile and Racing Master titles could help fuel such an impressive second-growth growth surge. Despite the top-pick status, JPMorgan sports a $115 price target, implying a modest 5.5% upside potential from current levels.
At writing, the stock trades at 22.5 times trailing price-to-earnings, well below the gaming and multimedia industry average.
What is the Price Target for NTES Stock?
NetEase is a Strong Buy, with 12 unanimous Buy ratings. The average NTES stock price target of $115.50 implies 6% upside potential.
Intuitive Surgical (NASDAQ:ISRG)
Surgery robot maker Intuitive Surgical has been on an impressive recovery run this year, with shares now up over 21% year-to-date. The stock fell short of hitting a new all-time high, slipping nearly 9% from its 52-week highs of around $358 per share, following the release of a sound quarter.
Undoubtedly, expectations grew a tad too quickly such that a solid result (ISRG’s da Vinci system saw net income surge 18% in the latest quarter) wasn’t enough to prevent a steep drop in the share price. Fortunately, I view the post-earnings flop as more of a buying opportunity than any sort of red flag. As such, I’m staying bullish but do acknowledge that the valuation has become quite stretched of late.
Topping off a solid quarter, management hiked its 2023 procedure growth rate to 20-22%, up from 18-21%.
At 89.9 times trailing price-to-earnings, the stock’s far more expensive than its peers in the medical instruments and supplies industry average of 27.8 times. However, there’s really nothing like the da Vinci surgical robot, so some premium is warranted. At this juncture, many analysts think the current multiple isn’t expensive enough, given the company’s impressive footing in the robotic surgery space.
What is the Price Target for ISRG Stock?
Intuitive Surgical has a Strong Buy rating from analysts, with 11 Buys and two Holds. The average ISRG stock pirce target of $378.08 implies 14.8% upside potential.
Conclusion
Tech stocks still have legs, but investors should be careful where they put their money down. Of the above-listed Strong-Buy-rated names, ISRG stock holds the most upside potential, according to analysts.
