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5 Technology Stocks Poised to Beat Earnings Estimates in Q1
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Technology stocks are anticipated to see a sluggish first-quarter earnings season, primarily due to the outbreak of the coronavirus (COVID-19) pandemic. The imposition of lockdowns across the world in a bid to curb the spread of coronavirus has been taking a toll on the global economy for a while now.
The viral breakout in China already hit the U.S. technology stocks hard. The country accounts for a major market and is a supplier of tech products including semiconductor components.
Tech giants including Apple (AAPL - Free Report) and Microsoft (MSFT - Free Report) warned investors that the novel coronavirus will mar their business prospects.
On Feb 17, Apple announced that its quarterly revenue result might reflect missing expectations, which were issued on Jan 28. The company further noted that the coronavirus outbreak adversely impacted its global iPhone supply and thwarted demand growth in China. Moreover, Microsoft management alerted about a possible setback due to supply-chain disruption in the PC market.
In fact, per the latest IDC data, PC-shipments declined 9.8% year over year. The research firm pointed out that supply was on par with the last-year level this January. However, extended closure of factories in China this February and a slow resumption of production toward the end of the March quarter softened PC supplies. (Read More: PC Shipments Slide in Q1 as Coronavirus Disrupts Supply Chain)
Technology’s Resilience to Aid Earnings
Though the coronavirus affected all sectors, the technology space has been more resilient compared to others, primarily owing to the ongoing digital transformation and attractive prospects.
Tech companies are expected to benefit from the rapid adoption of cloud computing, AI, IoT, cloud-based gaming, wearables and drones.
Furthermore, a solid uptake of AI-infused virtual assistants continues to drive demand for smart speakers like Amazon Echo and Google Home.
Moreover, the increasing preference for online gaming, music and video-streaming services is a major lever. Further, the proliferation of IoT, which is facilitating connected devices and smart homes, is a key catalyst.
The accelerated deployment of 5G technology — the next-generation of wireless connectivity — is also likely to spur growth for tech companies this time around.
How to Make the Right Pick?
With the presence of several industry players, finding the technology stocks having the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks, which have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this apt combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Best Bets
Given below are five technology stocks that have the right combination of elements to beat on earnings this reporting cycle:
The company is scheduled to report first-quarter 2020 results on Apr 30. The Zacks Consensus Estimate for loss has stayed at 10 cents per share over the past 30 days.
Fort Lauderdale, FL-based Citrix Systems has a Zacks Rank of 2 and an Earnings ESP of +1.58%. The company is scheduled to report first-quarter 2020 results on Apr 23.
The Zacks Consensus Estimate for earnings has been unchanged at $1.17 per share over the past 30 days.
San Jose, CA-domiciled NETGEAR (NTGR - Free Report) currently has a Zacks Rank #3 and an Earnings ESP of +35.85%.
The company is set to report first-quarter 2020 results on Apr 22. The consensus mark for earnings has surged 38.5% to 18 cents per share over the past 30 days.
Santa Clara, CA-based ServiceNow (NOW - Free Report) is set to report first-quarter 2020 results on Apr 29. The company has an Earnings ESP of +1.47% and a Zacks Rank of 3.
The consensus estimate for earnings has been stable at 96 cents per share over the past 30 days.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
Image: Bigstock
5 Technology Stocks Poised to Beat Earnings Estimates in Q1
Technology stocks are anticipated to see a sluggish first-quarter earnings season, primarily due to the outbreak of the coronavirus (COVID-19) pandemic. The imposition of lockdowns across the world in a bid to curb the spread of coronavirus has been taking a toll on the global economy for a while now.
The viral breakout in China already hit the U.S. technology stocks hard. The country accounts for a major market and is a supplier of tech products including semiconductor components.
Tech giants including Apple (AAPL - Free Report) and Microsoft (MSFT - Free Report) warned investors that the novel coronavirus will mar their business prospects.
On Feb 17, Apple announced that its quarterly revenue result might reflect missing expectations, which were issued on Jan 28. The company further noted that the coronavirus outbreak adversely impacted its global iPhone supply and thwarted demand growth in China. Moreover, Microsoft management alerted about a possible setback due to supply-chain disruption in the PC market.
In fact, per the latest IDC data, PC-shipments declined 9.8% year over year. The research firm pointed out that supply was on par with the last-year level this January. However, extended closure of factories in China this February and a slow resumption of production toward the end of the March quarter softened PC supplies. (Read More: PC Shipments Slide in Q1 as Coronavirus Disrupts Supply Chain)
Technology’s Resilience to Aid Earnings
Though the coronavirus affected all sectors, the technology space has been more resilient compared to others, primarily owing to the ongoing digital transformation and attractive prospects.
Tech companies are expected to benefit from the rapid adoption of cloud computing, AI, IoT, cloud-based gaming, wearables and drones.
Furthermore, a solid uptake of AI-infused virtual assistants continues to drive demand for smart speakers like Amazon Echo and Google Home.
Moreover, the increasing preference for online gaming, music and video-streaming services is a major lever. Further, the proliferation of IoT, which is facilitating connected devices and smart homes, is a key catalyst.
The accelerated deployment of 5G technology — the next-generation of wireless connectivity — is also likely to spur growth for tech companies this time around.
How to Make the Right Pick?
With the presence of several industry players, finding the technology stocks having the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks, which have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this apt combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Best Bets
Given below are five technology stocks that have the right combination of elements to beat on earnings this reporting cycle:
San Jose, CA-based Pixelworks (PXLW - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to report first-quarter 2020 results on Apr 30. The Zacks Consensus Estimate for loss has stayed at 10 cents per share over the past 30 days.
Pixelworks, Inc. Price and EPS Surprise
Pixelworks, Inc. price-eps-surprise | Pixelworks, Inc. Quote
Scottsdale, AZ-based Limelight Networks is scheduled to report first-quarter 2020 results on Apr 23.
The company has a Zacks Rank #2 and has an Earnings ESP of +100.00%.
The Zacks Consensus Estimate for loss has been intact at 1 cent per share over the past month.
Limelight Networks, Inc. Price and EPS Surprise
Limelight Networks, Inc. price-eps-surprise | Limelight Networks, Inc. Quote
Fort Lauderdale, FL-based Citrix Systems has a Zacks Rank of 2 and an Earnings ESP of +1.58%. The company is scheduled to report first-quarter 2020 results on Apr 23.
The Zacks Consensus Estimate for earnings has been unchanged at $1.17 per share over the past 30 days.
Citrix Systems, Inc. Price and EPS Surprise
Citrix Systems, Inc. price-eps-surprise | Citrix Systems, Inc. Quote
San Jose, CA-domiciled NETGEAR (NTGR - Free Report) currently has a Zacks Rank #3 and an Earnings ESP of +35.85%.
The company is set to report first-quarter 2020 results on Apr 22. The consensus mark for earnings has surged 38.5% to 18 cents per share over the past 30 days.
NETGEAR, Inc. Price and EPS Surprise
NETGEAR, Inc. price-eps-surprise | NETGEAR, Inc. Quote
Santa Clara, CA-based ServiceNow (NOW - Free Report) is set to report first-quarter 2020 results on Apr 29. The company has an Earnings ESP of +1.47% and a Zacks Rank of 3.
The consensus estimate for earnings has been stable at 96 cents per share over the past 30 days.
ServiceNow, Inc. Price and EPS Surprise
ServiceNow, Inc. price-eps-surprise | ServiceNow, Inc. Quote
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>