Wall Street Predicts These 3 Large-Cap Tech Stocks Will Plunge More Than 16%
Increasing data-center expansion, the 5G rollout, and the continuing digital transformation are fueling the tech industry’s growth. However, the pandemic-driven tech boom now appears to be slowing down, and the...
Increasing data-center expansion, the 5G rollout, and the continuing digital transformation are fueling the tech industry’s growth. However, the pandemic-driven tech boom now appears to be slowing down, and the industry is facing issues that include a semiconductor chip shortage and supply chain disruptions. Given this backdrop, Wall Street analysts expect Cloudflare (NET), Asana (ASAN), and ASE Technology (ASX) to plunge in price in the near term. So, let’s discuss these names.
COVID-19’s continuing spread should continue to drive the demand for tech products and solutions. Also, increasing spending on strengthening analytical capabilities makes the technology industry’s prospects bright. According to a Forrester report, the U.S. tech spending is expected to grow by 6% in 2021 and 6.8% in 2022. Furthermore, the expansion of data centers, the rollout of 5G, business automation, and remote lifestyles are also driving the technology market’s growth.
However, the pandemic-driven tech boom is gradually slowing down, and many companies in the sector face production delays due to semiconductor chip shortages and supply chain disruptions. Moreover, some industry participants are struggling to stay afloat due to increasingly intense competition to grab market share.
Therefore, Wall Street analysts expect the share prices of fundamentally weak large-cap stocks Cloudflare, Inc. (NET), Asana, Inc. (ASAN), and ASE Technology Holding Co., Ltd. (ASX) to decline by more than 16% in the near term.
Cloudflare, Inc. (NET)
NET is a San Francisco-based cloud service provider that delivers a range of network services to businesses worldwide. The company provides an integrated cloud-based security solution that includes software-as-a-service applications. Application Security and Application Performance are the company’s product categories. NET has a $64.35 billion market capitalization.
NET’s revenue for the third quarter, ended September 30, 2021, increased 51% year-over-year to $172.35 million. However, the company’s total operating expenses grew 48.8% from its year-ago value to $161.32 million. Its loss from operations rose 24.7% from the prior-year quarter to $26.49 million. And the company’s net loss increased 305.5% year-over-year to $107.34 million.
NET’s EPS is expected to decrease 100% in the current quarter and 50% in the next quarter. Closing the last trading session at $201.09, the $153.82 average analyst price target for its stock represents a 23.5% potential downside.
Asana, Inc. (ASAN)
With a 24.21 billion market capitalization, ASAN is a work management platform that enables individuals, team leads, and executives to organize work from daily tasks to cross-functional strategic initiatives. The San Francisco company enables its users to communicate, monitor status, and oversee work across projects to gain real-time insights. ASAN provides various features in its platform, including timeline, app integration, automation, and other features.
During its fiscal second quarter, ended July 31, 2021, ASAN’s revenues increased 72% year-over-year to $89.48 million. However, the company’s total operating expenses grew 77.7% from its year-ago value to $139.66 million. Its loss from operations rose 78.8% from the prior-year quarter to $60.05 million, and the net loss increased 66.5% year-over-year to $68.36 million.
ASAN’s EPS is expected to decrease 22.7% next quarter. Its stock price has declined 3% over the past five days. A $110.4 consensus price target represents a 16.2% potential decline from the last closing price of $131.67.
ASE Technology Holding Co., Ltd. (ASX)
Headquartered in Kaohsiung, Taiwan, ASX is a provider of semiconductor manufacturing services in assembly and test. The company offers complete turnkey solutions to front-end engineering tests, wafer probing, IC packaging, system, board-level integration, and electronic manufacturing services (EMS). ASX provides its services to the U.S., Taiwan, the rest of Asia, Europe, and internationally. The company has a $15.61 billion market capitalization.
During the third quarter, ended September 30, 2021, ASX’s total net revenues increased 22.3% year-over-year to NT$150.67 billion ($5.4 billion). However, the company’s total operating expenses grew 16.8% from its year-ago value to NT$12.36 billion ($443.28 million). Also, the company’s total operating expenses under the EMS segment rose 14.3% from the prior-year quarter to NT$3.23 billion ($115.68 million).
ASX’s stock has declined 23.5% in price over the past three months and 9.2% over the past six months. Closing its last trading session at $7.22, the $4.13 average analyst price target represents a potential 42.8% downside.
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NET shares were trading at $202.80 per share on Friday morning, up $1.71 (+0.85%). Year-to-date, NET has gained 166.88%, versus a 27.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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