This week we saw things slow down for tech stocks the earnings calendar eased back a bit. Next earnings reports slow down again to only 58 names and a $1.2B market cap gets you in the top 20. Clearly, the big boys have all reported, so we are seeing some stragglers coming down the line. One strategy is to intentionally be a straggler, and end your quarter a month later (or really start your quarter a month later) and that allows you the chance to get in the spotlight.
I see several names that I want to talk about for next week, so I am just going to give some quick hits on each one. Let's start from the top and work our way down.
Broadcom (AVGO - Free Report) is the biggest company set to report next week and the Street is looking for $4.46B on top and $4.03 on bottom. The stock was weaker closing the previous Friday just below $245 and trading $240 that day. This past week has been rather good to the stock, running higher on Mondayand Tuesday and finally cooling off a little on Wednesday. Despite the potential for iPhone delays, this stock should still get a lot of attention as it hasn't missed on top or bottom in any quarter for the past two years.
Salesfore (CRM - Free Report) is the next largest tech stock set to report next week at $64B in market cap. Anlaysts are calling for sales of $2.52B and EPS of $0.32. CRM is also on a win streak, beating the bottom line number in each of the last five quarters while revenues have topped expectation in every quarter for the last two years. On August 1, Credit Suisse started coverage of the stock with an Outperform and $110 target. A few days later, Coatue Managment, an influential hedge fund noted in a 13F filing that they owned 1.09M shares of stock. This followed some comments back in late June that T Rowe Price held this stock as its biggest position in one of its funds with the Portfolio Manager coming on CNBC to say that he believes the stock could double from here.
HP Inc (HPQ) is further down the list but still a bellwether name in the tech space. Recently, Meg Whitman stepped down from the board as HP split in two. HPE is HP Enterprises and since the split shares have appreciated about 20%. HPQ on the other hand is down 30% since then, and the buzz around town is that she might jump shit to take over Uber. As much as I am really a numbers guy, this one is all about Meg as the stock could recover is she is removed.
Splunk (SPLK - Free Report) is a data center play and at $8B it is the 12th largest tech stock slated to report next week. Wall Street wants $268M on top and $0.06 down below. In June the stock was downgraded by Wedbush and upgraded by Guggenheim. Last quarter the in line report sent the stock lower by 7% or so, this time should be different.
Pure Storage (PSTG - Free Report) is a stock that I really like. Last quarter the stock rose 9.5% after a solid beat and continued to run after that. All told, for the week of earnings the stock was higher by nearly 30%. At the time, the options market was looking for a 12% move, and this time around, you guessed it, there is the same 12% implied move based on the price of a straddle about a week ahead of the report. It is likely that the implied price move continues higher into the print. Wall Street is looking for $218M on top and a loss of $0.14 on the bottom. Maxim recently lowered their rating on the stock to hold and slashed their price target from $20 to $15, they might have been looking for an increase in guidance at a recent analyst day event. I think this stock could be a big winner down the road.
The report that really surprised me was Extreme Networks (EXTR - Free Report) who posted a huge beat and raise. This came as the company is digesting two deals of significant size, so it was really hard for me to understand how the analysts didn't have any of the acquired businesses built into their models. Needham like this stock to roll to $13, but I think it goes much higher than that!
Beats And Raises
With fewer reports, the list of beat and raise stocks is down as well. Here is the list of stocks that need to be on your radar:
EXTR, A, SNPS
See you next week!