Despite the fear and panic generated by the coronavirus outbreak, tech investors should take the long view, urged Wedbush analyst Dan Ives in a note on Sunday.
Such times of extreme anxiety and panic represent “golden buying opportunities” for the stocks and themes that wind up winning in the the long-term, according to Ives.
“Our long standing view during this last decade… is that we are in the midst of a unprecedented tech bull market with themes such as the enterprise move to cloud computing, a transformational 5G super cycle, EV auto demand inflection, streaming cord cutting paradigm shift, and cyber security all representing some of the major game changing trends poised to change the consumer and enterprise landscape for the next decade,” Ives wrote on Sunday.
Here are the top ten tech stocks Ives recommends owning in the current environment, along with his main reasons why:
“In a nutshell, Microsoft firmly remains our favorite cloud play for 2020 and beyond; despite the bad news from the PC/supply chain (which we view as temporary) this does not change our bullish thesis around Azure's growth and the longer-term prospects for Redmond over the coming years.”
“Our thesis since this coronavirus outbreak began is that it is primarily a timing issue for iPhone demand and ultimately once the supply chain gets back towards full capacity the Apple renaissance of iPhone growth story will resume.”
“The coronavirus outbreak naturally ruffles the feathers of the China Tesla thesis bulls, however we believe it represents a speed bump that will be short lived and could move out a handful of deliveries in the region from March to the June quarter. Tesla remains a leader in EV with an inflection in global demand on the horizon, as we believe Musk & Fremont are still in the early innings of capitalization on this transformational consumer growth trend for the next decade.”
“Adobe represents a defensive and offensive core SaaS software stalwart that is successfully moving from its consumer stronghold to the B2B landscape with success from Marketo and Magento. In our opinion, Adobe represents a company leading the digital transformation among both consumers and enterprises over the coming years…We also see negligible impact from the coronavirus outbreak for the company's business.”
“In our opinion, ZS is the best pure play in the cloud security arena, which we believe is still in the very early innings of taking off with overall hybrid cloud workloads poised to meaningfully accelerate over the coming years…While the coronavirus outbreak could cause some demand uncertainty around the edges, we do not believe this will markedly impact strong demand drivers for 2020 and beyond.”
“While the company has seen some speed bumps in the field over the past year from an execution perspective, we believe SAIL is still in the early innings of capitalizing on a high priority identity $10 billion+ security TAM which is being driven by the move to the cloud and a recently minted new CRO successfully leading the strategic vision in the field…While the coronavirus outbreak could cause some demand uncertainty around the edges we do not believe this will markedly impact strong demand drivers for 2020 and beyond.”
“We believe the underlying visibility increasing in NUAN's model from the key healthcare initiatives along with healthy profitability/cash flow lay the groundwork for a strategic organic growth reacceleration story over the coming years that should result in a further re-rating of the stock as the Street recognizes the 'new and improved Nuance' story…We view NUAN as a core healthcare cloud play for the coming years and ultimately coronavirus should have negligible impact on its business in our opinion, however this crisis/outbreak speaks to the next generation technology needs in healthcare in which Nuance plays into with its ACI and AI powered strategic initiatives looking ahead.”
“Our recent conversations with customers/partners in the field continue to reinforce our belief that DOCU is solidifying itself as the go-to-vendor among enterprises of all shapes and sizes for its proprietary solution, from small businesses to large Fortune 500 organizations, as customers are signing onto the DocuSign platform and the upselling momentum continues to drive revenue with its land and expand strategy…While coronavirus could cancel some conferences/partner summits for the company which might tangentially impact the pipeline/deal flow, we do not see this moving the needle on broader demand trends which remain robust from our vantage point with DOCU a core name to own for 2020 and beyond in our opinion.”
“We reiterate our belief that the transformation executed over the past few years has been exceptional from its call center roots with a mix of products/company projects, focused primarily on Fortune 1,000 with a suite of solutions, and a limited TAM, to a company that now boasts an open cloud platform as an enterprise software provider with top analytics, significant cloud scale, and expanding TAM with Customer Engagement growing to $12 billion and Financial Crime & Compliance possibly doubling from ~$2 billion today…We see a negligible impact from the coronavirus outbreak given the company's core customer base and healthy end markets.
“While Uber is clearly impacted by less travel globally due to the coronavirus that could negatively affect growth and take rates in the near-term, we are taking a forest through the trees approach on owning Uber here. The ridesharing industry has become one of the most transformational growth sectors of the consumer market over the past 5 years with Uber establishing itself as the clear #1 player and in our opinion is paving a similar road to what Amazon did to transform retail/ e-commerce.“