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August 12, 2013

4 Stocks Oppenheimer Likes

By Nelson Hem for Benzinga

Ciena (NASDAQ: CIEN), Cisco Systems (NASDAQ: CSCO), Juniper Networks (NYSE: JNPR) and Qualcomm (NASDAQ: QCOM) were among the communications equipment makers recommended in a recent research report from the Institutional Portfolio analysts at Oppenheimer.
The analysts see these companies as poised to outperform, with limited downside risk, in the second half of the year. Below, we take a quick look at how these four stocks have fared and what analysts expect from them.

Note that other companies in the industry that Oppenheimer analysts favor include ADTRAN (NASDAQ: ADTN), Arris Enterprises (NASDAQ: ARRS) and F5 Networks (NASDAQ: FFIV).

Ciena
This communications networking company beat consensus estimates on both the top and bottom lines in its most recent quarterly report. Ciena sports a market capitalization of more than $2 billion. The long-term earnings per share (EPS) growth forecast is more than 17 percent. Note that short interest is about 20 percent of the float.

The consensus recommendation of the analysts surveyed by Thomson/First Call who follow this stock has been to buy Ciena shares for at least three months. Yet, the mean price target, or where analysts expect the share price to go, is less than the current share price. The analysts see no upside potential at this time.
Shares of Ciena have faced resistance near $23 since mid-July, but the share price is up more than 36 percent year-to-date. Over the past six months, the stock has outperformed the broader markets, as well and competitors Cisco Systems and Ericsson (NASDAQ: ERIC).

Cisco Systems

This San Jose, California-based communications and information technology company has focused recently on Internet connectivity in automobiles. It has a dividend yield of about 2.6 percent and a market cap of more than $140 billion. Its return on equity is more than 17 percent, and the operating margin is higher than the industry average.

Of the 42 analysts polled, 10 rate the stock at Strong Buy and another 19 also recommend buying shares. Note, though, that the share price has overrun the analysts' mean price target, meaning they see no upside potential at this time. The highest individual price target suggests about 18 percent potential upside.

The share price reached a new multiyear high Wednesday, after rising more than 28 percent since the beginning of the year. Over the past six months, this stock has outperformed Juniper Networks and the broader markets, but it has underperformed Hewlett-Packard (NYSE: HPQ).

Juniper Networks

This network infrastructure company also topped EPS expectations in its recent quarterly report. Its market cap is about $11 billion, but it does not offer a dividend. The long-term EPS growth forecast is about 14 percent, but the return on equity is less than five percent. Short interest is less than three percent.

The consensus recommendation of the surveyed analysts has been to hold shares for at least three months. Here too, the share price is higher than the consensus price target. However, the street-high price target is about 18 percent higher than the share price.

The share price is about 40 percent higher than the 52-week low in April and approaching the 52-week high reached in January. Note that the stock has underperformed competitors Alcatel-Lucent (NYSE: ALU) and Cisco Systems, as well as the broader markets, over the past six months.

Qualcomm

This provider of telecommunications products and services recently announced a joint venture with Alcatel-Lucent. Qualcomm has a nearly $12 billion market cap and a dividend yield near 2.1 percent. The long-term EPS growth forecast is more than 16 percent. The return on equity is more than 18 percent.

Out of 43 surveyed analysts, 13 rate the stock at Strong Buy and another 23 also recommend buying shares. The analysts feel shares have some room to run, as their mean price target is about 12 percent higher than the current share price. The share price has not been in that neighborhood since 2000.
The share price has risen more than nine percent in the past month, but shares are trading near the same price as six months ago. The stock has underperformed the likes of Alcatel-Lucent and Cisco Systems, as well as the broader markets, over the past six months.

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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Item Reviewed: 4 Stocks Oppenheimer Likes Rating: 5 Reviewed By: Econ Matters