A new report by Pacific Crest Securities focuses on cloud computing, analytics and data infrastructure stocks. The report includes the most recent field checks and a breakdown of the most risky stocks in the space and the stocks with the strongest fundamentals.
Slow Start To 2015
According to the report, North American field checks at the end of Q1 confirmed analysts’ fears that enterprise demand for IT infrastructure, particularly enterprise PCs and storage, has been sluggish so far this year.
Analysts predict that both aggressive discounting and the weakness of the euro (down 27 percent year-over-year) could make it difficult for infrastructure suppliers to meet earnings estimates.
Despite the weakness, analysts point out that there is still reason for investors to consider names in the space.
“While we see the greatest risk to PC and storage suppliers, there remains pockets of strength across security, cloud and analytics,” analysts write.
Highest Risk
Analysts believe that traditional enterprise PC and storage names are most at risk from recent trends in budget priorities. The report lists EMC Corp EMC 0.46%, Hewlett-Packard Co HPQ 1.77% and NetApp Inc NTAP 0.76% as three stocks most likely to fall victim to the current environment.
All three stocks are down more than 12 percent year-to-date.
Strongest Fundamentals
The “pockets of strength” that analysts describe include stocks such as Tableau Software Inc DATA 0.48%, Hortonworks Inc HDP 1.69%, Splunk Inc SPLK 0.97% and Nimble Storage Inc NMBL 1.07%. Analysts point to strength in “modern, flash-based storage systems” and rate each of these four names Outperform.
Pacific Crest also has Outperform ratings on Qlik Technologies Inc QLIK 0.39%, F5 Networks Inc FFIV 1.96% and Arista Networks Inc ANET 0.58%.
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