Goldman Sachs named a slew of top tech picks as earnings season begins to wind down. So far, 90% of the S & P 500’s market cap has reported results, and earnings are beating estimates by 6.6% with 73% of companies topping projections, according to Credit Suisse. CNBC Pro combed through top research from Goldman to find some of the firm’s favorite tech stocks exiting earnings. They include Bumble, ZoomInfo, Shift4 Payments , SciPlay and Fortinet . Bumble Shares of the dating app company have plenty more room to run, according to analyst Alexandra Steiger. She said Bumble continues to execute after its “solid” first-quarter report last week. “Specifically, in its Q1’23 earnings report, Bumble mgmt. struck on a few key themes: solid Q1 revenue growth and Adj. EBITDA margins that showed continued expansion as the company is focused on maintaining cost discipline,” Steiger said. The analyst said management continues to execute and make the most of its opportunities amid an uncertain macro. Monetization and new product opportunities continue to be priorities for the company, as well as user safety, according to Steiger. “Looking beyond the quarter, we remain constructive on Bumble’s 2023 & beyond growth opportunity and view the company as uniquely positioned within the online dating industry,” she said. Bumble shares are down 24% this year. ZoomInfo Goldman is betting on a big second half for ZoomInfo after its robust earnings report earlier this month. Analyst Kash Rangan said comps are easing, and guidance is now “de-risked” for the data provider. Shares are down nearly 32% this year, making the stock especially “compelling,” according to the firm. Demand trends are also looking up, despite some macro turbulence — which Rangan admitted has hurt the company. Still, he is standing by the stock for a few reasons. For one, ZoomInfo is a beneficiary of the artificial intelligence trend, which gives the company distinct competitive advantages, the firm said. In addition, sales productivity is increasing which shows growing “conviction” in ZoomInfo’s enterprise opportunity. “ZoomInfo continues to be a show-me story as investors build conviction around the de-risked CY23 guidance with the potential for a 2H recovery,” Rangan said. Shift4 Payments Shift4’s shares are down more than 9% this month, but analyst Will Nance is standing by the payment processing company. He said in a note to clients following Shift4’s earnings report that expectations were probably too high. “We think that against this setup, investors were underwhelmed by the guidance raise being less than the beat in the quarter,” he added. However, Nance praised Shift4’s management. He said there are signs of success in converting lower-end customers of the company’s payment gateway software to its full platform. “We also believe the commentary from FOUR around 50% of the growth coming from conversions is highly supportive, as this implies $15-20bn of annual gateway conversions, which was materially higher than we had previously assumed,” he said. This growth can power the stock, Nance said. Indeed, the firm upgraded the name in early January to outperform. “While FOUR is still early in this journey, with shares trading at ~11x 2024 EBITDA, we don’t think execution on this strategy is priced in and think that executing on the gateway conversion is likely more than enough to drive outperformance over time,” he said. SciPlay “Longer term, we see SCPL as levered to the rise of mobile gaming more broadly and more specifically within certain sub-verticals (e.g., casual) which should outgrow the overall gaming industry as mgmt balances growth, margin evolution and capital returns. We reiterate our Buy rating, adjust our operating estimates for this earnings report and mgmt forward commentary, and maintain our PT of $22.” Shift4 Payments “We think that against this setup, investors were underwhelmed by the guidance raise being less than the beat in the quarter. … We also believe commentary from FOUR around 50% of the growth coming from conversions is highly supportive, as this implies $15-20bn of annual gateway conversions, which was materially higher than we had previously assumed. While FOUR is still early in this journey, with shares trading at ~11x 2024 EBITDA, we don’t think execution on this strategy is priced in & think that executing on the gateway conversion is likely more than enough to drive outperformance over time.” ZoomInfo “Compelling set up for a 2H recovery as comps ease and guidance de-risked. … Management’s continued investment in hiring new sales reps shows conviction in the growing enterprise opportunity. … ZoomInfo continues to be a show-me story as investors build conviction around the de-risked CY23 guidance with the potential for a 2H recovery.” Bumble “Bumble reported a solid set of results as the company continues to execute against its four strategic pillars. … Specifically, in its Q1’23 earnings report, Bumble mgmt. struck on a few key themes: 1) solid Q1 revenue growth and Adj. EBITDA margins that showed continued expansion as the company is focused on maintaining cost discipline. … Looking beyond the quarter, we remain constructive on Bumble’s 2023 & beyond growth opportunity and view the company as uniquely positioned within the online dating industry.” Fortinet “Several drivers to medium term growth as networking and security products converge. … In our view, the key debate around the stock remains on the trajectory of normalized demand in 2023 and 2024 after a period of demand acceleration in 2021 and 2022. … We continue to see upside to Street estimates over the medium term, driven by Fortinet’s market share gains across firewalls, SD-WAN and other security products, and consistent with our customer conversations.”
