On today’s episode of the Tech Talk Tuesday podcast, Ryan McQueeney discusses the start of earnings season and Q3 expectations for the technology sector. He also previews reports from three tech companies—Netflix, IBM, and PayPal—coming out this week.
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U.S. stocks were battered last week as a number of headwinds—including inflation concerns and rising bond yields—had investors selling in a hurry. Now, as Q3 earnings season starts to heat up, investors will be hoping that strong results can inspire a healthy rebound.
This battle will be especially important in previously-red-hot sectors like tech. A number of marquee tech stocks have lifted this bull market to all-time highs, but profit taking is always a threat—especially if Wall Street decides to cycle into less-risky groups as the aforementioned headwinds grow stronger.
This week of reports is still owned by the financials, although a few notable tech companies will release their results as well. The most headline worthy of the bunch is Netflix (NFLX - Free Report) , which will announce its latest quarterly earnings figures after the bell today.
Our consensus estimates have the video streaming company’s earnings and revenue at $0.68 per share and $3.99 billion, respectively. These results would represent year-over-year growth of 134.5% and 33.7%.
But as we know, Netflix typically trades based on its subscriber growth figures in the wake of its reports. The company itself expects to add 650,000 subscribers in the U.S. and 4.35 million internationally, bringing its total at the end of the quarter to 135.14 million subscribers. Our estimates are more robust, projecting that the firm will report growth of 669,450 U.S. subscribers and 4.40 million international members.
Elsewhere, IBM (IBM - Free Report) is also set to report this afternoon. IBM has recently started to grow its revenue recently thanks to catalysts like cloud computing, but our Zacks Consensus Estimate is currently calling for the tech giant’s top line to dip by about 0.3%.
Investors will be looking for IBM to top this estimate and maintain its revenue momentum. Meanwhile, our Zacks Consensus Estimate for earnings now sits at $3.40 per share, about 3.0% higher than the year-ago quarter.
The other major tech report this week will come from PayPal (PYPL - Free Report) . The digital payments pioneer had put together a strong 2018 until last month, when the stock began a correction. Shares have now tumbled nearly 20% from their 52-week highs.
Still, positive estimate revisions for upcoming fiscal periods have lifted the stock to a Zacks Rank #1 (Strong Buy). For the soon-to-be-reported quarter, earnings and revenue are expected to be up 17.4% and 13.2%, respectively.
Make sure to check out this week’s episode for Ryan’s full previews of all three reports!
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