In their latest note covering technology stocks, Oppenheimer analysts said investors have enough reasons to remain bullish on the sector. However, short-term oriented traders “should consider their positions carefully near-term,” the analysts warned.
“Specifically, while our coverage universe has had a modest start to 2024 (+1.6% average gain in January), several stocks within our coverage (CRWD, MDB, DDOG, ESTC, PANW, SNOW, TEAM, ZS) have seen strong appreciation since November (~45% average gain since 11/1/23),” the analysts wrote.
Oppenheimer’s analysis of five-year peak and trough patterns for these high-performing stocks reveals an average gain of approximately 112% from bottom to peak, indicating further potential for upward movement. This observation, combined with a favorable outlook on interest rates, reinforces the investment firm’s long-term bullish stance.
Still, investors who are focused on short-term moves should reassess their positions, “as periods of strong performance have been followed by average draw downs of ~30-50%,” the analysts noted.
Given the expectation of declining interest rates, as opposed to the increases seen in the past five years, the landscape might shift, Oppenheimer acknowledged.
However, investors with a short-term focus should remain vigilant.