It’s been a brutal year for tech stocks. History may not repeat itself, but this current market sell-off does resemble some characteristics of the 2000 tech bust. However, as companies improve their profitability prospects and efficiencies, there are reasons to believe that a wide range of hard-hit tech companies can march higher, even if interest rates were to stay at these heights. In this piece, we’ll compare three capable tech companies, UBER, TSM, and TTWO, that analysts think can get back up on their feet under their own power.
First up, Uber is a ride-hailer that lost around 64% of its value from peak to trough. Despite rough losses, the company has a plan to move into profitability. As demand remains relatively robust going into a recession, I view Uber as one of the many “show-me stories” that could show investors sooner rather than later.
CNBC‘s Jim Cramer stated that he believes Uber will be “the last man standing.” I think he’s right. Uber has what it takes to give its competitors a squeeze and a management team that can continue pushing to profitability, even in a recession year.
With a strong third-quarter revenue beat in the books (mind the wider-than-expected loss) and upbeat guidance, Uber seems well on its way to becoming a mature (and profitable) company. At this pace, I think it’s just a matter of time before Uber joins the likes of big tech.
As we move into 2023, we’ll get a gauge of just how recession-resilient Uber’s business model is. Indeed, taking the bus or train beats Ubering in most cases. However, regarding time saved, I view Uber as an indispensable option for those who don’t own a vehicle. If anything, Ubering is more economical (and convenient) than owning your own car in the big city.
In 2023, I think Uber stock could surprise, regardless of what the Fed’s next move is.
What is the Price Target for UBER Stock?
Wall Street has stuck with Uber all the way down. The average UBER stock price target of $49.07 implies a massive 72.05% gain to be had over the year ahead! At just 2x sales, UBER stock is absurdly cheap for a company with a plan and potentially underrated recession resilience.
Taiwan Semiconductor (NYSE:TSM)
Taiwan Semiconductor is a very important chip foundry that made headlines recently after Berkshire Hathaway (NYSE:BRK.B) added a stake in the firm. Undoubtedly, Taiwan Semiconductor serves many of the tech giants we all know and love. Though the stock has hit a rough patch, the folks at Berkshire (possibly Warren Buffett) see value in the name at these depths.
The stock fell more than 55% from peak to trough. Today, shares are down around 42%. At 13.5x trailing earnings, the Taiwanese semiconductor kingpin trades at what seems to be a compelling discount. Such a discount, I think, factors in the risk that China will invade Taiwan. That’s a high-impact event that comes with a low probability of occurrence.
Only time will tell if Buffett made the purchase. Regardless, I think it’s tough to pass up the name after its violent crash. During the pandemic, we learned just how vital Taiwan Semiconductor is to the increasingly-digitized economy. Chips are in everything these days, and if there are supply-chain issues, there can be shortages of virtually everything.
What is the Price Target for TSM Stock?
All six Wall Street analysts covering the name have a Buy rating on Taiwan Semiconductor. The average TSM stock price target of $99.50 implies 20% upside potential from current levels. With a 1.15 beta, TSM stock is likely to be more volatile than the market.
Take-Two Interactive (NASDAQ:TTWO)
Take-Two Interactive is a video game maker behind Grand Theft Auto (GTA) and Red Dead Redemption. Unlike some of its peers, Take-Two leans too heavily on its triple-A blockbuster titles, which tend to take many years to develop. Once they do launch, though, gamers tend to keep playing and spending money on add-ons many years later. Indeed, Take-Two is the king of games that age well, like fine wines.
With Zynga aboard, Take-Two is also a powerful mobile gaming force. Despite this, management had to lower its Fiscal 2023 guidance. Shares of Take-Two sunk over 15% in a day following the news. Net bookings for Fiscal 2023 are expected to fall between $5.4 billion – $5.5 billion, down from $5.77 billion.
It wasn’t just consumer-spending changes that were weighing down Take-Two. The firm noted “shifts” in its “pipeline.” The longer-term impact isn’t yet clear. Regardless, Take-Two is a very capable company that’s down more than 50% from its peak.
Indeed, it’ll be a while before the next GTA is released. At these depths, I don’t think it needs a launch to drag its stock out of a multi-year funk. At 4.1x sales, shares are oversold. With so many great franchises, I think there’s too much “recency” bias factored in.
With a 0.79 beta, TTWO stock could be a compelling way to score less-correlated returns in the new year.
What is the Price Target for TTWO Stock?
Wall Street loves Take-Two based on 18 Buys and four Holds assigned in the past three months. The average TTWO stock price target of $137.10 implies 29.65% upside potential.
Conclusion: Analysts are Most Bullish on UBER Stock
UBER, TSM, and TTWO are Strong Buys, according to analysts. They’ll move on from their implosions in due time. Of the three, analysts expect the biggest gains from Uber stock.