Citigroup analysts have flagged three beaten-down technology stocks — Figma, Palantir Technologies and Microsoft — as candidates for a rebound as earnings season opens. The bank sees upside ranging from 61% on Microsoft to 77% on Palantir.
Citigroup analysts have named three beaten-down technology stocks they say may be ripe for a rebound as the earnings season kicks off. The bank points to Figma, Palantir Technologies and Microsoft as names that may be on the cusp of recovering.
Citi sees Figma jumping 76%
Figma has been in a free fall since its initial public offering in July last year. After soaring to $142, the stock has since dropped to $21, and Citi analysts believe it will climb to $36. Wells Fargo's Michael Turrin holds a similar target, higher than the consensus target of $32.
The view at both Citi and Wells Fargo is that Figma's business is still growing despite rising fears of AI disruption. Its recent earnings report showed revenue up 46% year over year to $333.4 million, with management guiding to 35% annual revenue growth and boosting guidance by $55 million.
Palantir may jump 77%
Palantir Technologies remains in a bear market, falling by nearly 40% from its all-time high. Despite the plunge, Citi analysts believe the stock will jump to $225, a 77% surge from the current level.
The company's revenue and profitability growth is accelerating this year. Its revenue jumped 85% in the first quarter to $1.63 billion, with the US figure growing 104%. Demand for its services is rising, as the company closed 206 deals worth $1 million and 72 worth at least $5 million.
Microsoft to rise 61%
Microsoft has dropped 30% from its all-time high as concerns about its capital spending mount. The company plans to spend over $190 billion in capex this year to build AI market share, and the stock has also been hit by SaaSpocalypse fears affecting other software companies.
Citigroup has a target of $620, 61% above the current level, arguing the company's growth has more room to run while its valuation has become cheap. Its forward P/E ratio has dropped to 22.2, below the technology sector average of 33 and its own five-year average of 30. Microsoft could also benefit from a potential rotation from memory companies to hyperscalers, according to Morgan Stanley's Mike Wilson.
Source: Benzinga
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