Earnings and Apple Push Technology Sector to New Highs

Published on Thursday, 09 February 2012 15:06 Written by Christopher Lynn

New York, February 9^th (TradersHuddle.com) – Technology stocks were climbing during the session, outperforming the broad market index and helping the tech heavy NASDAQ move higher amid increased appetite for risk with the euro gaining on the Dollar following the ECB policy decision and news that Greece has reached a deal on a new package of austerity measures that will allow it to have access to a new round of bailout funds.

Better than expected weekly jobless claims data, supported the narrative that the jobs market in the U.S. is improving, which should help economic growth.

The Technology SPDR ETF (NYSE: XLK) was gaining 0.97% to $28.24 after posting a new 52-week high of $28.27. The sector was receiving a boost from better than expected earnings from Akamai (NASDAQ: AKAM) and Teradata (NYSE: TDC) and as Apple continues to function in all cylinders hitting new record highs on speculation over new products and analysts bumping estimates and price targets.

 The space also was benefiting from M&A, after Oracle (NASDAQ: ORCL) announced it had agreed to buy Taleo Corp. (NASDAQ: TLEO) for $1.9 billion. Oracle continued its string of acquisitions in the space, with shares climbing 0.3% in the session. Meanwhile, shares of the web-based recruitment software maker were surging more than 17%.

Teradata (NYSE: TDC), the data-warehousing provider, was rallying close to 10% and posting a new 52-week high at $64.97 after the company beat earnings expectations by $0.04 per share on revenues that were higher the consensus. Teradata issued upside revenue guidance for fiscal 2012 and announced a $300 million share buyback program. The stock was also moving higher due to the Taleo acquisition, which was helping Teradata to the top of the sector.

Akamai (NASDAQ: AKAM) was also gaining close to 10% after the company reported yesterday that its net income jumped 42% sequentially and 14% year over year to $0.33 per share. The stock was also upgraded at Credit Agricole following the solid earnings report.

Apple (NASDAQ: AAPL) was jumping 3.75% to $494.58 after posting a new all-time high of $496.75 on speculation the company will launch its iPad 3 in early March. Mizuho Initiated coverage on the stock with a Buy and a target price of $635, while Needham raised its target price to $620 from $520, citing the push the company is doing in the business market with its iPad and the halo effect it could have on Mac sales. Additionally, Canaccord Genuity bumped its target price to $665 from $650 on strong iPhone sales momentum.

Also helping the sector to new highs was Visa (NYSE: V). The retail electronic payments network operator was rallying 4.10% to $112.78 after posting a new all-time high of $114.90 following a solid earnings report. The company posted better than expected earnings on revenues that were higher than estimates. Visa raised its fiscal 2012 net revenues and EPS growth guidance, while authorizing a new $500 million share repurchase program.

Meanwhile, weighing and limiting the sector’s advance was Cisco Systems (NASDAQ: CSCO). The world’s largest networking equipment maker was falling more than 2% and posting the biggest percentage decline in the Dow Jones Industrial Average. The company reported better than expected earnings on revenues that beat consensus, however investors were somewhat disappointed over the Cisco’s guidance for the current quarter. The stock was downgraded to a Neutral from a Buy at the ISI Group, with the firm setting its target price at $22, as it cited a much balanced risk / reward profile.

Also in the blue chip index, Hewlett-Packard (NYSE: HPQ) was posting the second biggest decline, with shares losing more than 1%. Cisco guidance weighed on the stock. Mizuho also initiated coverage on HP with a Neutral and a target price of $30 per share.