Two More Tech Stocks Get Bruised; Time to Hide in IBM (IBM)?

March 28, 2013 10:18 AM EDT
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Price: $170.55 +2.24%

Rating Summary:
    10 Buy, 21 Hold, 4 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Yesterday evening software solution provider Red Hat (RHT) reported disappointing Q4 results. IT distributor SYNNEX Corp. (NYSE: SNX) also reported weak results. Following poor earnings from Jabil (NYSE: JBL) and Oracle (Nasdaq: ORCL) last week, analyst Brian J. White of Topeka sees reason for concern.

"While this only represents four companies, we believe these results provide a flavor for the June quarter outlooks that will be provided in the coming weeks," said White.

He thinks weakness at Redhat could ripple across cloud-related stocks this morning, including VMware (NYSE: VMW) and F5 Networks (Nasdaq: FFIV).

In light of the weakness at Jabil last week and Synnex this week, he thinks there is more downside potential in EMS. Related stocks include Benchmark Electronics (NYSE: BHE), Celestica (NYSE: CLS), Flextronics (Nasdaq: FLEX) and Plexus (Nasdaq: PLXS).

"Although no company is completely immune to softening IT spending trends, we believe IBM's (NYSE: IBM) more defensive attributes are appealing in the current environment," added the analyst.

Topeka Capital has a Buy rating in IBM (NYSE: IBM) with a price target of $251.00

For an analyst ratings summary and ratings history on IBM (NYSE: IBM) click here. For more ratings news on IBM click here.

Shares of IBM closed at $210.89 yesterday.

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