Back to top

Image: Bigstock

IT Services Stocks' May 12 Earnings Lineup: WIX, DT & DOX

Read MoreHide Full Article

The Zacks Computers-IT Services industry categorized companies' first-quarter 2021 results are likely to reflect gains from solid uptake of digital transformation solutions, courtesy of the ongoing momentum in work-from-home and learn-from-home trends triggered by the pandemic.

Ongoing momentum in cloud-computing solutions and Internet services, and growing proliferation of advanced technologies are expected to have benefited the companies in the IT Services industry.

IT Services companies are striving to enhance consulting and test automation capabilities in a bid to improve infrastructure management services. This, in turn, is expected to have sparked the adoption of cloud-based as-a-service offerings; and bolstered top-line growth in the quarter under review.

Moreover, the rapid uptick in AI, Machine Learning (“ML”), cloud products and service, data analytics, IoT, AR/VR, which are bolstering the engagement and enhancing customer experience, might have significantly benefited the IT Services companies in the quarter under review.

Incidentally, growing focus on strengthening digital strategy has resulted in strong demand for Financial Services solutions, which favored EPAM Systems’ (EPAM - Free Report) first-quarter performance to a great extent.

Also, robust gains across Public Services, Education, Government, Financial Services, Hi-Tech, Life Sciences and Healthcare domains, to meet increasing demand for advanced digital platforms and workflows, are likely to have acted as tailwinds.

In fact, EPAM Systems’ Life Science & Healthcare segment revenues surged 31% year over year in the first quarter.

Besides, growing clout of streaming services for entertainment, rising user penetration on social media platforms and online gaming craze might have aided the performance in the quarter under review.

Markedly, Infosys’ (INFY - Free Report) fourth-quarter fiscal 2021 top-line performance gained from growth in Digital revenues and rise in large deal wins.

Nevertheless, a slowdown in IT spending, and weakness across small and medium-sized businesses, due to disruptions caused by COVID-19, are likely to have weighed on the IT Services companies’ performance.

Also, a few companies aren’t witnessing as much growth due to normalizing demand for digital solutions.

This can be ascertained from ServiceNow’s (NOW - Free Report) first-quarter 2021 results. Although ServiceNow has been benefiting from rising adoption of its workflows by enterprises undergoing digital transformation, slowing down of growth in new customer acquisition remains a concern.

The company concluded first-quarter with 1,146 total customers having more than $1 million in ACV, up 23% year over year and up 53 sequentially. However, in December quarter, the customers increased by 82 on a sequential basis to 1,093.

Sneak Peek on Upcoming Releases

Given this interesting mix of factors, let’s see how the following IT Services stocks are poised ahead of their quarterly results slated to be reported on May 12.

Our quantitative model predicts an earnings beat for the company with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) as this combination increases the odds of a positive surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wix.com Ltd. (WIX - Free Report) first-quarter 2021 results are likely to reflect gains from continued momentum in uptake of digital services like Editor X, Wix Editor and Wix ADI amid e-commerce boom triggered by COVID-19.

Further, the company has been undertaking measures to expand subscriber base with new product roll outs and enhancement of existing portfolio of services amid coronavirus-crisis triggered digitalization. Wix has also been working on increasing monetization of existing users. These, in turn, might have contributed to the to-be-reported quarter’s top-line growth.

Our proven model predicts an earnings beat for Wix this time around. The company currently has an Earnings ESP of +65.58% and a Zacks Rank #3.

Wix.com Ltd. Price and EPS Surprise

Wix.com Ltd. Price and EPS Surprise

Wix.com Ltd. price-eps-surprise | Wix.com Ltd. Quote

The Zacks Consensus Estimate for first-quarter bottom line is pegged at a loss of 73 cents. This is narrower than seven days prior estimate of loss of 79 cents. (Read More: Subscriber Base Growth to Drive Wix.com's Q1 Earnings)

Dynatrace, Inc. (DT - Free Report) fiscal fourth-quarter 2021 results are expected to reflect robust adoption of its Application Performance Monitoring (APM) solutions, expansion of clientele and product portfolio, and a strong recurring revenue base.

Moreover, the coronavirus-led disruption has accelerated digital transformation among global enterprises. Dynatrace’s robust portfolio is anticipated to have helped it tap into this massive opportunity, thereby driving top-line growth in the fiscal fourth quarter.

Although Dynatrace carries a Zacks Rank #3, at present, an Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dynatrace, Inc. Price and EPS Surprise

Dynatrace, Inc. Price and EPS Surprise

Dynatrace, Inc. price-eps-surprise | Dynatrace, Inc. Quote

The Zacks Consensus Estimate for fiscal fourth-quarter earnings has remained steady at 14 cents per share over the past 30 days, suggesting growth of 27.3% from the year-ago quarter. (Read More: Dynatrace to Report Q4 Earnings: What's in the Cards?)

Amdocs Limited (DOX - Free Report) second-quarter fiscal 2021 performance is expected to have benefited from continued deal wins with major telecom companies.

Notably, demand for the company’s cloud-managed services has been on the rise from service provider customers as these try to enhance their technological transformations amid 5G advancements. This is expected to get reflected in the upcoming quarterly results.

Nevertheless, Amdocs currently has an Earnings ESP of 0.00% and a Zacks Rank #3.

Amdocs Limited Price and EPS Surprise

Amdocs Limited Price and EPS Surprise

Amdocs Limited price-eps-surprise | Amdocs Limited Quote

The Zacks Consensus Estimate for fiscal second-quarter earnings has remained unchanged at $1.14 per share per share in the past 30 days. This suggests an improvement of 5.6% from the prior-year quarter’s levels. (Read More: Amdocs to Report Q2 Earnings: What's in the Cards?)

Bitcoin, Like the Internet Itself, Could Change Everything

Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.

Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.

See 3 crypto-related stocks now >>