Upgrading Snapchat's SNAP while Downgrading Google's Alphabet doesn't make sense (yet). We welcome you to the Bizarro Superman edition of the Samadhi Brief, where we break down a few choice tech sector coverage updates.

Snap initiated as a Buy

Analyst firm Monness, Crespi, Hardt & Co. (MCH) awarded Snap, Inc. (NYSE: SNAP) with its first Buy rating. MCH acknowledged "substantial execution risk," yet balanced that against the known efforts of SNAP's competitors and set a $25 price target. Drexel Hamilton jumped on the "Snapwagon" and upped MCH with a $30 price target.

Bottom line: In defense of its Buy rating, Drexel Hamilton cites SNAP's impressive penetration of the millennial user demographic and notes that SNAP is unique enough (as a camera company) that it "should not be pigeonholed in a particular industry."

While we agree that SNAP is somewhat unique, and dominates certain age groups (it owns over 70% of the US market for the 18 to 24-year-old bracket), we disagree on SNAP being unique enough to avoid direct competition. A recent study by RBC Capital Markets, for example, finds marketers achieving "little return" on Snapchat when compared to Instagram - which just eclipsed one million active advertisers - and, to a lesser extent, when compared to other Facebook (Nasdaq: FB) properties.

We agree with RBC, and believe SNAP has yet to prove it can significantly increase its ARPU (average revenue per user) to match the revenue potential of Facebook. We're still identifying the triggers that would make SNAP a compelling investment and will advise in future updates.

Pivotal Research Downgrades Alphabet from Buy to Hold

Citing potential issues with global brand quality associated with ads placed on YouTube content, Pivotal Research has downgraded Alphabet (Nasdaq: GOOG) (Nasdaq: GOOGL) from Buy to Hold and lowered its price target to $950 from $970.

Bottom line: GOOG has publicly apologized for allowing a series of objectionable paid advertisements to appear alongside YouTube content. These ads have led to a series of entities, including L'Oréal, McDonald's (NYSE:MDC), Honda (NYSE:HMC), Toyota (NYSE:TM), Havas (OTC:HVSYY), the British government, retailer Marks & Spencer (OTCQX:MAKSY), financial firm HSBC (NYSE:HSBC), Verizon (NYSE:VZ) and AT&T (NYSE:T) to suspend advertising campaigns from YouTube and/or non-search-related GOOG properties.

As the UK is GOOG's second largest non-US market, and the global brands participating in this "suspension" has grown, the issue has garnered significant media attention. However, we do not anticipate material long-term financial impact at this point for the following reasons:

• The GOOG advertising network is incredibly diverse and we believe there is sufficient demand to offset temporary declines in ad participation.

• The solution to this issue is one part policy and one part technology, and we believe GOOG has the interest and the ability to quickly resolve this issue.

• We believe existing advertisers find compelling value in GOOG and will move quickly back to the platform once the issue is resolved (and their initial "suspension" marketing value is achieved).

At this point, we are reiterating our OWN position on GOOG as a member of the Samadhi 4, our highest conviction category in the Samadhi Capital Client Portfolios.

Atlassian Reiterated as Outperform at William Blair

Less than two months after initiating coverage of Atlassian (Nasdaq: TEAM) as an Outperform, firm William Blair issued a defense of TEAM and reiterated its Outperform rating.

Bottom line: This announcement was in direct response to the launch of Microsoft Teams by Microsoft Corp. (Nasdaq: MSFT). At first glance, Teams appears to be competitive with TEAM's HipChat collaboration/chat tool. While we agree they play in the same market, we also believe that HipChat's significant installed base and TEAM's aggressive grassroots marketing strategy provide a reasonable moat, particularly as MSFT's Teams offering appears targeted up-market to the more business-oriented Office 365 community.

For competitors to HipChat, we believe Slack (which we use internally at Samadhi) is a much more reasonable comparison. What we are watching, however, is how Microsoft Teams might limit HipChat's ability to go up-market over time.

Lam Research Upgraded by Pacific Crest Securities

Citing positive NAND trends, Pacific Crest Securities has upgraded Lam Research (Nasdaq: LRCX) from Sector Weight to Overweight, increasing its price target from $124.17 to $163.

Bottom line: Though we don't normally comment on the opinions of the more traditional sell-side research, we have long followed Wes Twigg's analysis at Pac Crest and benefitted from his deep insight and intuition about the semi-cap equipment space - a segment that, because of its highly technological, almost esoteric nature and the difficulty in performing channel checks (at least ones with the only four or five customers that matter anymore), has traditionally proven to be a difficult area for even the tech-savvy investor.

Wunderlich Securities Upgrades Adobe to Buy

Wunderlich Securities, citing "ongoing high-level execution, sound market share, and unmatched mix of revenue expansion and profitability," has upgraded Adobe Systems (Nasdaq: ADBE) to a Buy. Its price target has been boosted from $115 to $145.

Bottom line: We're on the same page with Wunderlich, seeing solid long-term value in ADBE, particularly from its cloud-based initiatives and its ability to target the growing "marketing services" community (reinforced by its recent release of the Enterprise Cloud initiative). ADBE is a Samadhi 16 in the Samadhi Capital Client Portfolios.

Facebook Raised from $155 to $165 Target at UBS

UBS has increased its target price for FB due to expectations for 2016-2019 CAGR to register at 25%+ on the back of emerging business catalysts in the forms of Messenger, WhatsApp and Oculus.

Bottom line: FB continues to perform extremely well against most financial metrics (including FCF, as pointed out by Stock Market Sherpa here). We believe it continues to offer solid long-term value and is capable of maintaining a competitive edge against competition, such as Snap, Inc., while continuing to expand its service and product offerings. FB is a Samadhi 16 in the Samadhi Capital Client Portfolios.

Alarm.com Beats Earnings and Revenue

On 15 March 2017, Alarm.com (Nasdaq: ALRM) announced 4Q FY16 results. It posted EPS of $0.19, beating estimates by $0.06, and revenues of $69.8m (+22.6% y/y), beating by $5.84m.

Bottom line: We're reiterating our long position on ALRM, a Samadhi 16 in the Samadhi Capital Client Portfolios. Coupled with its recent acquisitions of Icontrol and ObjectVideo, we believe ALRM has long-term upside.

IN CASE YOU MISSED IT...

IBM Inks Chinese Cloud Deal with Wanda Group (a Cloud called Wanda?)

IBM has announced it is partnering with the Wanda Group to create a new company to bring IBM Cloud services to the Chinese market sometime during 2018.

Bottom line: It has long been known that the most effective mechanism to penetrate the semi-closed Chinese market is via partnership, and while this particular effort is not unique to IBM or others, it is a necessary step to counter the growing regional and global position of Chinese firms, such as Alibaba's (NYSE: BABA) Aliyun cloud service.

Vodafone Germany Launches BlackBerry Security Suite

Telecoms provider Vodafone Germany has launched all five editions of the BlackBerry (Nasdaq: BBRY) Enterprise Mobility Suite as part of its larger enterprise offering.

Bottom line: Further confirmation that BBRY is making progress in its effort to rebirth itself as a software provider and validate the value of its Mobility Suite. As Jonty Russell pointed out recently, BBRY is still valued as an aging hardware provider despite it making much more sense to view them as an emerging software provider (an insight we strongly agree with).

Nokia Hangs up on Head of Mobile Networks

In the midst of an ongoing management restructuring effort, Nokia (NYSE: NOK) has announced that it is parting ways with Samih Elhage, president of its Mobile Networks units since 2015.

Bottom line: This move comes as NOK has disclosed it will be splitting off a new Global Services unit from Mobile Networks. As restructuring efforts go (it is also adjusting the roles of chief innovation officer and chief operating officer, as well as modifying other executive responsibilities), we believe this one is on the right track. NOK has been able to cut expenses, but it is now facing - and will continue to face - declining revenue until the telcos crank up the substantial infrastructure investment necessary for them to upgrade their networks to 5G, likely beginning around 2020.

In the meantime, we believe NOK, which continues to be profitable, is making the right cost-cutting and organizational streamlining moves in advance of this upgrade cycle. NOK's financial position is quite strong with about 20% of its ~$30B market cap in net cash. We also like NOK's stock as we are rewarded with a 5% dividend yield while we wait to see how NOK fares worldwide during the 5G upgrade cycle. We reiterate our long position on NOK, a Samadhi 16, our high-conviction category, in the Samadhi Capital Client Portfolios.

EU Flexes Regulatory Muscle on US Technology Firms

US tech firms Facebook, Twitter (NYSE: TWTR), and Alphabet have been informed by the European consumer protection authorities that they have individually broken EU consumer protection laws and have one month to correct the issue to avoid facing potential fines.

Bottom line: This is an ongoing issue, and serves to highlight that rules and regulations regarding data privacy vary between different global markets. Our primary concern is an increase in costs associated with regulatory compliance, though we expect that most firms have seen this issue developing and have already prepared for this event through internal development/infrastructure plans. We do not foresee any significant difficulty for FB, TWTR, or GOOG at this time, but will continue to monitor this and other situations for revenue/earnings impact.