Goldman Sachs Says Stay Away From These 2 Tech Stocks
Equities have continued their plunge into bear market territory, and none have been feeling it worse than tech stocks. While investors are looking for safe havens to ride out the bear market, it is equally important to avoid some industries that could be hit the hardest. Considering a potential recession is on the way (or already here), one major Wall Street firm believes it has found a couple of stocks that investors should completely avoid.
Goldman Sachs recently issued a couple of calls focused on tech stocks. The bottom line from this brokerage house is stay away from the following two stocks.
It is also important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Oracle
Goldman Sachs analyst Kash Rangan resumed coverage on Oracle Corp. (NYSE: ORCL) with a Sell rating and a $75 price target. That implies upside of 6% from the most recent closing price of $70.70. This call came following the close of the Cerner acquisition and the fourth-quarter earnings report.
Rangan remains cautious on the company’s ability to stem share losses in the database management system market. Oracle guided to more than 30% organic cloud revenue growth in fiscal 2023, though the momentum in strategic back-office applications could wane as recession concerns delay new license purchases and renewals.
The stock traded around $70 on Tuesday morning, in a 52-week range of $63.76 to $106.34. Shares are down over 19% year to date. The dividend yield is 1.9%.
Altair Engineering
Rangan was on the call again with a downgrade Altair Engineering Inc. (NASDAQ: ALTR) to Sell from Neutral. The $62 price target was slashed to $41, which implies downside of 26% from the most recent closing price of $55.73.
In the report, Rangan noted that he sees the potential for downside revisions to current fiscal 2022 revenue expectations in light of the macro backdrop and Altair’s recent performance. The steady deterioration of the macro environment since the company reported in early May, and in turn weaker operating conditions at its end customers, could add downside risk to Altair’s fiscal year software revenue guide.
Rangan believes the company’s Units model, in which customers purchase upfront capacity, drawdown said capacity and then renew annually, could be affected by budget tightening at customers and longer or delayed sales cycles.
Altair Engineering stock has a 52-week trading range of $48.50 to $82.96, and it traded near $52 a share early on Tuesday. The stock is down more than 33% year to date.
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