Analysts at major Wall Street research firms on Thursday published positive notes concerning two of the Club’s technology holdings. We also got new details on Apple ‘s (AAPL) long-rumored mixed reality headset. Here’s a breakdown of the news, and how the headlines impact our investment approaches to the companies. Morgan Stanley likes PANW PANW YTD mountain Palo Alto Networks’ year-to-date stock performance. The news: The recent weakness in Palo Alto Networks (PANW) shares is an opportunity to buy, Morgan Stanley analysts told clients Thursday. Over the past month, the cybersecurity stock declined about 5%, the firm noted, compared with a roughly 3% advance in the tech-heavy Nasdaq . Analysts said Palo Alto’s underperformance is likely due to a wary investor base ahead of its fiscal third-quarter earnings, set to be released after the close Tuesday. However, Morgan Stanley is less cautious about the results, saying industry checks “have been largely positive with the vast majority of PANW partners in line or above plan … and a competitive positioning that continues to get stronger.” Despite concerns around overall tech spending, Morgan Stanley said that companies still want to streamline their cybersecurity spending. “Demand for vendor consolidation in security is higher than ever and PANW is a leading beneficiary.” Morgan Stanley maintains a $255-per-share price target and overweight (buy) rating. Some Wall Street research Thursday struck a more cautious tone toward Palo Alto. Mizuho said its industry checks were “mixed” for the first time in “many quarters.” The analysts there lowered their price target to $220 per share from $235, accordingly. While Jefferies analysts maintained their long-term optimism, they said near-term upside for PANW may be limited, citing tougher year-over-year comparisons and macroeconomic uncertainty. The Club’s take: We share Morgan Stanley’s optimism around Palo Alto Networks and view this recent pullback in the stock has immaterial in the big picture, given the company’s resilient fundamentals and other looming catalysts, such as potential inclusion in the S & P 500 now that it’s been profitable for more than 12 months in a row. We wish we had a bigger position in Palo Alto Networks, but, as Jim Cramer explained Wednesday during our May edition of the “Monthly Meeting,” the stock continues to trade above our cost basis of $177.68. In our minds, the best course of action is to wait for Palo Alto’s quarter — and, if the stock gets hit, potentially use that further decline to buy . Citi calls META a top pick META YTD mountain Meta Platforms’ year-to-date performance. The news: Meta Platforms (META) is the best-positioned company in the online advertising world, Citi analysts said in a note to clients Thursday, naming the Facebook and Instagram parent their “top pick” in the industry. With signs of stabilization present in online ads following a rough 2022, Citi said companies delivering innovation in the market, like Meta, “should continue to outperform.” Meta shares have doubled already year to date, trading around their 52-week high at about $244 each Thursday. Citi has a $315-per-share price target and buy rating on Meta shares. Meta’s 7% constant currency ad growth in the first quarter, which was released in April , was the best among peers, such as Alphabet ‘s Google Search, Pinterest and Snap , according to Citi. “We look for ad growth to continue to accelerate throughout 2023,” the analysts added. Citi said that tailwinds in Meta’s favor include improving engagement on its platforms, led by Reels, as well as embracing artificial intelligence and click-to-message ads that make it easier for customers to contact businesses. The Club’s take: Meta CEO Mark Zuckerberg has wisely been spending a lot of his time on Reels — the short-form video feature and TikTok competitor — and the fruits of those efforts are now appearing. With AI being used to improve Reels engagement and monetization, we expect Meta’s ad business to improve in the coming quarters — in line with Citi’s thinking. Meta’s stock has, of course, been on a tear since bottoming under $89 per share back in November. But it still only trades around 19 times forward earnings, below its five-year average of 21, according to FactSet. Meta’s earnings power continues to be strengthened, as all of the cost cuts in its “year of efficiency” filter through the business. Put it all together, and the case for sticking with Meta is clear. It’s also worth pointing out that Montana became the first U.S. state to ban TikTok , which is owned by the Chinese company ByteDance. The controversial decision is likely to face legal challenges, but nevertheless reinforces how Meta stands to gain if American politicians toughen their stance on TikTok. AAPL YTD mountain Apple’s year-to-date stock performance. The news : Apple (AAPL) expects its long-rumored mixed reality headset to sell about 900,000 units per year in the early time after launch, Bloomberg reported Thursday . The company is reported to be looking at a June 5 unveiling at its developer conference. That 900,000 number is down from prior sales estimates of roughly 3 million per share, Bloomberg said in an extensive story on the headset project. For context, Apple shipped 72.3 million iPhones in the fourth quarter of 2022 alone , according to IDC. In general, Apple believes the headset — with a price tag around $3,000 — won’t be as influential as the iPhone launch, in 2007, Bloomberg reported. Instead, expectations peg its potential to be more like the iPad or Apple Watch. Bloomberg also said Apple CEO Tim Cook took a “distant” approach to the headset project, which carried an annual budget of around $1 billion. The Club’s take: If Apple does, in fact, officially announce a mixed-reality headset in the coming weeks, it would be a long time coming. We expect Apple to deliver a high-quality product, consistent with its track record. Apple is not always first to market, but history suggests when it does launch something new, it’s formidable. The headset will reportedly run on thousands of iPad apps to start . We expect tweaks and improvements to its functionality over time. However, we’re being very realistic about near-term adoption and sales trends, recognizing it’s still an immature market. Competing products already on the market include Meta’s Quest headset and Sony’s PlayStation VR2. At the same time, with rumors about this product swirling since at least late 2017 , we simply look forward to seeing it for real. In the coming years, a mixed-reality headset taking off would be great, but Apple’s mounting traction with the iPhone in emerging markets, such as India and the Philippines, and its expanding services business are expected to be the primary growth drivers. Our confidence in those efforts fortifies Apple an own-it, don’t-trade it stock for the Club. (Jim Cramer’s Charitable Trust is long PANW, META, GOOGL and AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. 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Analysts at major Wall Street research firms on Thursday published positive notes concerning two of the Club’s technology holdings. We also got new details on Apple
