Updated with Red Hat's first-quarter results.
NEW YORK (
) -- Six months ago
busted out its
top tech stocks for 2010
. Here's our mid-term report for three of them.
made our list of the year's top tech stocks after leaving rivals like
trailing in its wake. After successfully navigating the recession, Amazon was seen as one of the few large-cap tech companies capable of major growth.
Investors, however, have been
although the market's
good first-quarter results
were not enough to drive the company's stock upward, although disappointing guidance weighed on Amazon's shares. Overall, Amazon's share price has dipped 0.98% over the last six months.
There are certainly some big hurdles in Amazon's path. The strengthening dollar, for example, recently prompted
Barclays Capital to trim its Amazon price target and EPS estimates.
State taxation of Internet sales, the so-called Amazon Tax,
could also prove a headache for online retailers
Another threat looming on the horizon is
, touted as a potential Kindle-killer.
Still, there are plenty of positives in the Amazon story. As of last month, the retail giant had reportedly sold
3 million Kindle e-readers,
although exact figures have not yet been released. Amazon also clinched a recent deal to sell Kindles at retail giant
The company's acquisition of popular online shoe seller
was also a
that bodes well for the future, and
Thomas Weisel recently initiated its coverage of Amazon with a Market weight rating and $135 price target.
Amazon now holds a significant portion -- 12% -- of the total U.S. e-commerce market, according to the analyst firm.
Currently trading around $126.49, Amazon's share dip could still spell longer-term upside for investors.
Described as a "mini-Microsoft" because of its dominant position in the Linux market,
has enjoyed solid, if unspectacular, share gains this year.
The company's stock has risen 9.7% during the last six months and the software maker is still getting plenty of analyst love.
Lazard Capital Markets recently initiated coverage of Red Hat with a buy rating and $35 price target. "Red Hat is one of the best-positioned companies in mid-cap software," explained analyst Joel Fishbein, in a note released earlier this month. "In our view, Red Hat's recurring revenue model, high revenue visibility, and sticky customer base are under-appreciated."
The Raleigh, North Carolina-based firm beat analysts' sales estimate in its first-quarter results, released after market close. Red Hat reported revenue of $209.1 million, a 20% hike on the prior year's quarter, and above analysts' estimate of $202.89 million.
Excluding items, Red Hat earned 18 cents a share, up from 15 cents a share in the same period last year, and in line with Wall Street's estimate.
Red Hat, which competes with
, is seen as well-positioned to tap into some of tech's biggest trends. These include
a form of software that links different computer programs.
In March, the company posted strong fourth-quarter numbers, although its profit forecast fell short of analysts' estimates, bringing down Red Hat's stock.
M&A chatter also continues to swirl around the company, which is currently trading at around $31.90. There has been plenty of speculation about which firms might snap up Red Hat, with
and Oracle already touted as potential purchasers.
Lazard's Fishbein feels that the software maker remains an attractive M&A target, particularly given its share price. "Red Hat's unique technology and business model position the company as an ideal acquisition candidate at a significant premium to current trading multiple," he wrote, in his recent note.
is certainly living up to our call.
Buoyed by international sales and growing license revenue, VMware blew past analysts' estimates in its recent first quarter and
gave strong guidance
While there have been some fears about the stock's valuation, VMware shares have risen more than 72% in the last six months. It's currently trading around $71.72 and has plenty of fans.
"We continue to believe additional upside exists in VMware," explained Brian Marshall, an analyst at Gleacher & Company, in a recent note. Marshall, who reiterated his VMware buy rating, also raised the company's price target from $65 to $85, underlining the ongoing strength of virtualization technology.
Virtualization lets users divide physical hardware into multiple virtual chunks and has grown in popularity among users juggling a myriad of operating systems and applications. With companies also struggling with budget pressures, VMware and its rivals such as Microsoft and
are pushing virtualization as a way for firms to reduce the amount of server and storage hardware within their data centers.
by storage giant
, VMware is also expected to tap the
ongoing PC refresh
with its desktop virtualization software.
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