Tech stocks suffered a major sell-off in this year’s market. But Bank of America thinks there may be opportunities for some obscure names. CNBC Pro highlights four top picks from the bank. The tech sector has borne the brunt of a market rotation out of growth and into value names, as the likelihood of a steep rate hiking cycle — which makes growth stocks’ future earnings less attractive — hit home. The sector is still nervous after disappointing first quarter earnings by Netflix, Google’s parent Alphabet, and other companies. Although investors are likely to be more focused on the well-known companies, Bank of America sees opportunities in small and mid-cap technology stocks. These companies are not looking good, though. Inflation, rising rates and other concerns about growth may continue to be a concern for these companies in the short term. Jill Carey Hall and other analysts stated that on June. Jill Carey Hall, an analyst said that there is “limited” risk in the sector’s positioning and it has momentum inflows. Hall noted that this sector also sees more upgrades than decreases from the bank. Hall noted that although small-cap technology is “broadly costly”, it’s still cheaper than the high quality tech boom of the late 90s. In contrast to the time of the tech boom, smaller-captech stocks are more profitable now than ever. She said that 70% of the sector’s profits are now profitable, as opposed to 50% in the period during the tech boom. Bank of America tops enterprise software sector stock picks GitLab, an open-source software firm that the bank calls a “category pioneer” is GitLab. We believe that the company can drive growth at an accelerated pace. [more than]Hall indicated that 50% of the rate will be maintained over the medium term. A price target has been set by the bank for $65, which is a possible upside of approximately 58.5% from its June closing price at around $41. 3. Bank of America’s number one pick in the semiconductor market is On Semiconductor. Bank of America likes On Semiconductor’s potential for turnaround and its exposure to “hypergrowth trends” in electric cars. Stock closed on June at $63, and the bank is targeting a price of $80. 3 represents a potential upside for 27%. Match is the top online dating service in a crisis scenario. Because of its high margins, the bank thinks that revenues from this company could be stronger in times of recession. The bank also stated that the stock’s free cash flow valuation is higher than those of its peer stocks. On the stock, $168 has been set by the bank as a target price. The stock closed at about $82 on June. 3 — an implied potential upside of 104.8%. Market share gains like DoorDash will outperform in risk-on scenarios, Hall stated. Hall noted that macro risks such inflation and rate rises have been key drivers of DoorDash’s valuation over nine months. A price target of $105 has been set by the bank for the stock. This implies that the stock could rise 54.4% from its closing price on June 28, which was $68. 3.
As she walks past a Bank of America branch on New York’s Times Square, a woman sees herself in a pool.
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Although tech stocks suffered a huge sell-off in this year’s market, Bank of AmericaBelieves there may be opportunities with some obscure names. CNBC Pro highlights four top stocks from the bank.
