After the close on Thursday, there were a lot of earnings that impact the tech stock market. Let’s review a few of the higher profile reports.
Amazon (AMZN - Free Report) is a Zacks Rank #5 (Strong Sell) and that is due to estimate revisions moving lower prior to the earnings report. Turns out the analysts didn’t lower numbers enough as they had a consensus number that was $0.99 too high. AMZN reported $0.40 in EPS when the consensus was $1.39, so that is a big miss. Revenues were $37.95B with the consensus at $37.18B.
The stock traded lower by about 3% in after hours trading. The company noted that they would not give any strategic update on the Whole Foods (WFM) acquisition because it hasn’t closed.
This was a surprise as the company has beaten the number in each of the last two-quarters. Maybe the size of the miss makes it feel like it is that much bigger, but in the end, with the stock down only slightly it looks like AMZN will again get a pass even though they disappointed on the bottom line. I am not looking for a big move today in the stock, thus those that wrote options against their positions will end up making out.
First Solar (FSLR - Free Report) is a Zacks Rank #2 (Buy) and crushed it last night. The company even asked for its stock to be halted since the news was so good. The company posted EPS of $0.64 when the consensus was looking for $0.04. Revenues were $623 when the expectation was calling for $591M.
The company raised guidance in a meaningful way. The company sees FY17 EPS coming in at $2.00 to $2.50 with the current estimate at $0.59. Margins are moving up and that should help burn the shorts.
The most recent reading on short interest showed that about 15% of the float was sold short, so this one is going to leave a mark.
Big short interest on this one after FSLR crushed the number. I see the stock up 11% in after-hours, but this stock probably rips higher than that tomorrow. Look for all the other solar stocks to benefit as well.
Ultra Clean Corp (UCTT - Free Report) is a Zacks Rank #1 (Strong Buy) and has been one of my favorite stocks of late. The company was profiled as the Bull of the Day back on May 12 (https://www.zacks.com/commentary/113606/bull-of-the-day-ultra-clean-holdings-uctt) and I noted that the valuation was very low at just 13x forward earnings.
Last night, the company reported EPS of $0.62 when $0.51 was expected. Revenues of $228M were up 75% from the prior year and well ahead of the $214M consensus estimate.
Guidance was jaw dropping. The company sees EPS for next quarter between $0.62-$0.68 with the consensus estimate at just $0.39. At the midpoint, the increase would work out to be 66% higher than expected. Let me repeat that, or say it another way. Analysts are likely to increase estimates for next quarter by about 66%.
The company noted that the CEO will be taking a 2-month absence to address a treatable medical condition.
I have like this stock for a long time and I continue to be rewarded by it. I see the stock up a paltry 8% in after-hours trading, but would not be surprised to see this stock up 20% or more tomorrow. Estimates are moving up and will do so in a big way which should make this a Zacks Rank #1 (Strong Buy) for some time to come.
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Tech Stock Update From Yesterday
Yesterday I called for $200 price targets for Facebook (FB - Free Report) and we got them. I noted that NetGear (NTGR - Free Report) still had meat on the bone. Finally, I called for Paypal (PYPL) to see price targets in the $70-$80 range and Monness Crespi Hardt put their target at $73. I would call that 3 for 3.