Buy top stocks like Apple ahead of their results, Bank of America says
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There’s still plenty of buying opportunities among technology stocks, according to Bank of America. The investment bank says stocks like Apple are table-pounding buys ahead of quarterly results this week. CNBC Pro combed through Bank of America research to find buy-rated tech stocks with more room to run. They include: Microsoft, Apple , Micron Technology, Shopify and Sea Limited. Apple Bank of America recently raised its price target on the iPhone maker to $256 from $230. Analyst Wamsi Mohan said Apple is firing on all cylinders ahead of what he says is a “refresh(ed) iPhone cycle.” Recent survey checks by the bank indicate that Apple’s iPhone user base is poised to upgrade to products containing AI features. Brand loyalty is paramount, according to the bank. “14% of respondents in the U.S. reported that they are planning on buying the Apple Vision Pro,” Mohan wrote. Apple is scheduled to report earnings next Thursday, August 1. “We reiterate our Buy rating based on an expected multi-year iPhone cycle driven by GenAI, strong services growth and margin expansion,” he said. Shares are up 13.2% this year. Shopify Time to buy shares of the Canadian provider of websites for businesses, according to Bank of America. Analyst Brad Sills recently upgraded Shopify to buy from neutral as a “more balanced growth & margin profile” take hold. The company’s transformation under a new chief financial officer is underway, too, Sills said, as quarterly results loom large in early August. “Revenue growth and disciplined spending point to healthy margin expansion going forward,” he wrote. Sills sees Shopify with many competitive advantages that portend well for big share gains down the road. “Shopify appears well positioned to continue capturing share of the eCommerce market, while achieving better scale and [free-cash flow] conversion,” he went on. Shares are down 23% in the U.S. this year. Sea Limited Shares of the Singapore-based tech internet company are up 61% this year, but have more upside, Bank of America said. Analyst Sachin Salgaonkar urged clients to remain calm as trends are showing improvement in the company’s gaming and Shopee divisions. Shopee is Sea’s Southeast Asia e-commerce platform. “In our view it is placed well to ride e-com boom in SE Asia given its increasingly dominant online marketplace (Shopee), while its expansion into Brazil offers further long term growth potential,” he wrote. The bank says losses are bottoming while also acknowledging that the competition arrayed against Sea is real. Still, the Wall Street firm reiterated its buy rating, urging clients to own shares for the long term. “We see stable competition trends in the region and expect take rates to improve,” he added. Sea is expected to report quarterly earnings in August. Micron “AI driving strong pricing, mix, edge opportunity ahead. We were pleased to host Micron CFO Mark Murphy, CVP Satya Kumar and IR Samir Patodia for well attended investor meetings in Boston and New York. Key message very bullish re: pricing, visibility, supply discipline and mix improvement towards differentiated AI computing and enterprise storage products.” Microsoft “We believe that MSFT is well positioned to generate sustained low double digit growth in the coming 3-5 years, led by continued adoption of Azure cloud infrastructure platform, cloud based Office 365 productivity suite & more profitable Games & Game Pass revenue in Xbox.” Sea Limited “”In our view it is placed well to ride e-com boom in SE Asia given its increasingly dominant online marketplace (Shopee), while its expansion into Brazil offers further long term growth potential. … We see stable competition trends in the region and expect take rates to improve.” Apple “Strong multi-year iPhone refresh cycle with aging installed base; PO to $256. … .We reiterate our Buy rating based on an expected multi-year iPhone cycle driven by GenAI, strong services growth, and margin expansion. … 14% of respondents in the U.S. reported that they are planning on buying the Apple Vision Pro.” Shopify “Revenue growth and disciplined spending point to healthy margin expansion going forward. … Shopify appears well positioned to continue capturing share of the eCommerce market, while achieving better scale and FCF conversion. … More balanced growth & margin profile.”
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