Weakness in the FAANG stocks (this morning’s Amazon spike following its Whole Foods acquisition notwithstanding) is trickling over to Canadian tech, creating some bargains investors should be taking advantage of, say Canaccord Genuity analysts Robert Young, Doug Taylor and Kevin Wright.
This morning, in a bi-weekly publication publication summarizing Canadian tech called #TECH, the trio of analysts looked at the U.S. tech scene and how rattled tech stocks have spilled over into some Canadian names. They says there are three names in particular they are watching closely.
“While whispers of a tech bubble have ratcheted up, we think that there are good reasons to own some of the high-flying stocks in our universe and as we have said in the past…buy on dips,” they say. “Kinaxis briefly fell below $80 for the first time in recent memory and Shopify is just north of $80. The reason for high sales multiples is a view that the addressable market is large, the company has won meaningful market share and can realistically achieve significant market share, a large portion of revenue is recurring, and in many cases management has under promised and over delivered. In short, we are buyers of Kinaxis, Shopify and Real Matters.”
Analyst Robert Young currently has a “Buy” rating and one-year price target of (C) $100.00 on Kinaxis, which Thursday closed at $83.68. He has a “Buy” and (U.S.) $90.00 target on Shopify, which closed the same day at $85.48. And Young has a “Buy” rating and one-year target of (C) $16.00 on Real Matters which Thursday closed at $11.60.
“Technology names in the US sparked a selloff that saw Shopify shed -6.5% and Kinaxis was down -2.1%; we consider both names as examples of high-quality SaaS companies that deserve a premium valuation on product and management execution,” added the analysts. “We recommend taking advantage of dips as buying opportunities given the predictable revenue profile and sizeable addressable markets.”
FANG is a financial business acronym for Facebook, Amazon, Netflix and Google. It was first coined by CNBC’s Mad Money host Jim Cramer. In the time since the term was coined, some have included Apple, to arrive at the acronym “FAANG”.