7 Goldman Sachs Tech Stocks Still Standing

BOSTON (TheStreet) -- Goldman Sachs' (GS) latest list of "buy"-rated technology stocks include old reliables, such as iPad and iPhone maker Apple (AAPL) and data-storage company EMC (EMC). But it also includes transaction-management-services provider Synchronoss Technologies (SNCR).

Goldman analysts have been shaken up by the shift in investor sentiment, owing to slower-than-expected U.S. economic growth and a deep hole in European debt that's had some talking about a breakup of the European Union. The global investment bank said in an Aug. 15 research note that expectations for slower global growth and the possibility of a U.S. recession are "clouding our visibility on IT-services stocks as we shift into 2012." As a result, the bank trimmed earnings estimates on the companies in the sector by an average of 3% and cut price targets by an average of 10% to "reflect a more conservative view on 2012 growth."

That's primarily due to the weaknesses in the U.S. financial-services industry and the increasingly shaky outlook for European business demand.

"Specifically, we now believe that a more defensive stance into 2012 is warranted," Goldman analysts said. "But we do not want to lose sight of attractive secular growth investment vehicles and proven earnings per share defensive models that we believe can weather current macro headwinds."

The S&P 500 Index is down 4% this year after two years of gains.

Here is a summary of Goldman Sachs' highest-rated conviction "buy" list technology stocks in order of expected stock appreciation. The report was issued Sept. 12:

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Synchronoss Technologies ( SNCR) provides transaction-management solutions to communications-service providers. Its ConvergenceNow platform is used by many large U.S. wireless, wireline and cable providers to manage customer transactions, including billing and account changes. Its customers include most of the major players in the telecommunications industry.

The company had no long-term debt and $182 million in cash and equivalents at year-end.

Goldman gives its shares a $37 price target, a 46% premium to its current price.

Its shares are up 1.7% this year and 59% over the past 12 months, giving it a market valuation of $1 billion.


EMC ( EMC) is a leading provider of hardware, software and services for enterprise-network storage. Its revenue contribution by segment is data storage (75%), VMware (17%), information intelligence (4%) and security (4%).

Its outlook is also being boosted by its growing presence in the fast-growing Cloud computing, which is the remote access of computer systems by mobile computers.

EMC shares get a $29 price target from Goldman, a 27% premium.

Its shares are down 3.8% this year, but up 7% this year, giving it a market valuation of $47 billion.

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Apple ( AAPL), the maker of Macintosh computers as well as the iPod and iPhone, gets a $480 price target from Goldman over the next 12 months, a 22% premium.

That target is a $30 upward revision from the investment firm's target of just four months ago.

It comes at a tumultuous time for Apple as founder Steve Jobs announced his resignation from the chief executive post late last month for health reasons. But Goldman analysts said "that does not change the long-term fundamentals" and that "Apple's platform is now stronger than ever and can be successfully managed by (his successor) Tim Cook and Apple's deep bench."

It said in the Aug. 25 note that "the stock's current price-to-earnings ratio of 11.6 (times estimated earnings) is already a sizable discount to historical averages, and near the 10-year low of 10.6, while we see no direct risk to earnings from this news."

Apples shares are up 21% this year and 45% over the past 12 months, giving it a market valuation of $364 billion.


NCR ( NCR) is the largest global vendor of automated teller machines (ATMs) and point-of-sale terminals and self-service check-out systems for retail stores, and self-check-in kiosks for airlines and hotels.

Goldman analysts said in an Aug. 28 research note that the company's recent acquisition of Radiant should be accretive to earnings, and recently announced Brazil and China contracts "will help augment a healthy core model. Reflecting these transactions, our revised (earnings) estimates now stand at 24% and 18.5% above" other analysts' consensus estimates for 2012 and 2013 earnings.

Goldman analysts said in a research note that although the financial-services sector (56% of total revenue) and European customers (36%) are under financial duress, "we think NCR's solid order growth and backlog will insulate the model in the near-term."

It said NCR's management expects to see solid growth in its U.S. financial self-service business over the next three to five years as regional banks continue to adopt deposit automation technology and as national banks upgrade their automated ATMs.

Goldman gives NCR shares a $21 price target, a 14% premium. Shares have gained 16% this year and 27% over the past 12 months for a market valuation of $2.9 billion.

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Oracle ( ORCL) is the leader in the database-software industry. Its acquisition of Sun Microsystems a year ago is expected to further its strategy of providing complete IT solutions to its clients.

"We believe Oracle, with its maintenance stream and exceptional cost control, will be able to navigate the choppy waters and protect earnings per share better than any of its mega-cap peers against a challenging macro backdrop," Goldman analysts said in a note to clients.

Goldman put a price target of $33 on its shares, a 14% premium.

Oracle is scheduled to report its first quarter, 2012 results Sept. 20 after the market's close.

It shares are down 10% this year, but up 12% over the past 12 months, giving it a market valuation of $147 billion.


Qualcomm ( QCOM), a leader in the digital-wireless-telecommunications sector, gets a $61 price target from Goldman over the next year, a 13% premium.

The company owns more than 10,000 patents that make up the key components to wireless telecommunications that enables cell phone usage and connectivity and the growing use of smartphones. It's already one of the world's largest chipmakers and a key supplier to wireless handset makers.

In its most recent fiscal quarter, it reported that earnings rose 35% and revenue 34%.

Qualcomm's shares are up 8.5% this year and 31% over the past 12 months, giving it a market valuation of $90 billion.

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Visa ( V) acts as the payment processor for a group of global payment card brands, which it licenses to financial institutions that issue cards to their customers. Through its proprietary networks, Visa facilitates the authorization, clearing and settlement of credit-card transactions.

Goldman analysts said in a July 28 research note that "we remain firm in our view that Visa is well-positioned to benefit from the continued secular shift to electronic payments, the emerging market affluent/middle class, and robust capital stewardship."

Its continued growth will come from credit and debit card purchase volume and the number of transactions processed by Visa.

Goldman gives Visa a $96 price target, a 10% premium. Its shares are up 28% this year and 34% over the past 12 months, giving it a market valuation of $74 billion.

>>To see these stocks in action, visit the 7 Goldman Sachs Tech Stocks Still Standing portfolio on Stockpickr.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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