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The Best And Worst Recommendations In The Technology Sector

Published 05/26/2015, 09:51 AM
Updated 05/14/2017, 06:45 AM

The technology sector is one of the most popular among investors who are looking to to invest in the stock market. Analysts are always on the lookout for the next blockbuster company/stock, but making the right call at the right time is crucial. According toTipRanks, the most and least profitable recommendations in the technology sector within the past 12-months, were on Youku Tudou Inc (NYSE:YOKU), GT Advanced Technologies Inc (OTC:GTATQ), Borderfree Inc (NASDAQ:BRDR), and Textura Corp (NYSE:TXTR).:

Most Profitable Ratings:

  1. On February 17, 2015, analyst Michael Graham of Canaccord Genuity made the most profitable rating in the technology sector when he reiterated a Buy rating on Borderfree Inc . Graham made the rating the day that Borderfree released 4Q14 results, in which the e-commerce solutions company posted record quarterly revenue of $36.7 million. Borderfree shares were $6.07 when Graham made the rating.The stock shot up to $13.97 three months later following an announcement in early May that Borderfree would be acquired by Pitney Bowes Inc (NYSE:PBI) , valuing Borderfree at nearly $450 million. Investors who listened to Graham’s recommendation would have earned +129.40% profit over three months on BRDR. Graham has rated Borderfree 4 times since April 2014, earning a +58.1% average return per BRDR recommendation.

  2. The second most profitable rating in the technology sector went to the three analysts who recommended buying shares of Textura Corp (NYSE:TXTR). On May 8, 2014, Brian Schwartz of Oppenheimer; Jeff Houston of Barrington; and Michael Nemeroff of Credit Suisse all rated TXTR a Buy following the company’s first quarter earnings. The analysts shared the belief that the construction management software company would have increased profitability, organic growth, and large potential to penetrate the large commercial market. Though shares of Textura Corp were at a low of $14.83 on May 8 of last year, investors who listened to Schwartz, Houston, or Nemeroff would have made +105.20% profit over three months as TXTR shares rose to $29.20 by August 8. Brian Schwartz has earned a +34.2% average return on his three TXTR ratings; Jeff Houston has earned a +10.2% average return on his five TXTR ratings; and Michael Nemeroff has earned a +14.5% average return on his five TXTR ratings.

  3. Pavel Molchanov of Raymond James and Pierre Maccagno of Dougherty tied for the third most profitable recommendation of the past 12 months. Both analysts advised to Sell GT Advanced Technologies Inc on September 10, 2014, when shares were $12.78. Shares plummeted to less than one dollar shortly thereafter when news broke that Apple (NASDAQ:AAPL) would not be using GT Advanced Technology’s sapphire glass in iPhone 6 series. The company soon after declared bankruptcy. Investors who listened to Molchanov’s and Maccagno’s sell recommendation would have made +97.70% in profit over three months on GTATQ. Pavel Molchanov has rated GTATQ 12 times with a +46.8% average return, and Pierre Maccagnohas rated only rated GTATQ one time.

Least Profitable Ratings:

  1. The technology sector’s worst rating over the last 12-months came from Deutsche Bank analyst Vivian Hao. Hao initiated coverage on Chinese online television company Youku Tudou Inc on March 20 of this year, rating the stock a Sell after the company said it would spend more in order to make up for lost market share. Following a disappointing Q4 earnings report and news that the SEC was investigating certain aspects of Youku’s past accounting, Hao cited that it was “likely too late” for the company to make up lost market share in China’s extremely competitive Internet TV market. Shares of Youku Tudau were priced at $13.50 on the day of Hao’s Sell rating but have more than doubled since, last closing at $30.75 a share on May 22. Though the three-month position remains open, investors who listened to Hao’s recommendation would already have lost -127.77% of their investment on YOKU. This was the first and only time Vivian Hao rated YOKU.

  2. The second worst technology sector rating in the past 12-months came from Merrill Lynch analyst Krish Sankar. On September 10, 2014, Sankar maintained a Buy rating on GT Advanced Technology after news broke that Apple would not be using Sapphire in the iPhone 6 and iPhone 6 Plus. The analyst remained convinced that Apple would reverse the decision and re-adopt Sapphire into mobile phones, but this theory never panned out. GT Advance Technology was priced at $12.78 a share when Sankar recommended the stock. The company filed for bankruptcy in the beginning of October and trading of its stock was ultimately frozen until further notice. Investors who listened to Sankar’s recommendation would have had a -97.70% profit loss on GTATQ. The analyst has rated GTATQ four times with no success and a -96.3% average loss per recommendation.

  3. The third worst rating in the technology sector was from Cowen and Company analyst Jeff Osborne. Similar to Sankar, Osborne issued an Outperform rating on GT Advanced Technology on August 13, 2014. Osborne expected Apple to “ramp up [its] sapphire use” in comparison to competitors in the following quarters. GTATQ shares were priced at $16.59 on the day of Osborne’s recommendation and were frozen from trading barely two months later, resulting in a -97.50% profit loss on the rating. Osborne has only rated GTATQ one time.

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