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Coronavirus outbreak remains a major factor while assessing the performance of upcoming technology stocks’ quarterly releases.
Weakness in automobile and PC verticals amid sluggish spending patterns and economic crisis is likely to have weighed on the business prospects of the technology companies in the first quarter. The coronavirus outbreak dampened sales with millions under lockdown.
Notably, both IBM and SAP witnessed lower adoption of software offerings in March due to the coronavirus-induced crisis.
In the first quarter, IBM reported Cognitive Applications revenues of $1.2 billion, down 3% year over year. Revenues from the Transaction Processing Software declined 15% on a year-over-year basis to $1.5 billion. Adoption of cognitive applications and transaction processing platforms was affected by the coronavirus outbreak in March. (Read more: IBM Beats on Q1 Earnings, Withdraws '20 View on Coronavirus Woes)
Further, SAP reported software licenses & support revenues of €451 million, which plunged 31% year over year. The downside can be attributed to impact of the coronavirus outbreak that intensified in March and led to postponement of new business. (Read more: SAP Earnings Miss Estimates in Q1, Revenues Increase Y/Y)
Per the latest Earnings Preview, tech sector’s first-quarter earnings are anticipated to be down 0.7% from the year-ago quarter.
Adoption of Digital Transformative Techniques Hold Promise
Although the impending quarterly results are likely to reflect the impact of coronavirus crisis-induced supply chain disruption, strong adoption of digital transformative techniques are expected to have benefited the technology companies in the quarter to be reported
Coronavirus-induced work-from-home wave is likely to have bolstered sales of processors utilized in enterprise laptops and data center servers, which in turn is expected to have benefited the technology sector in the to-be-reported quarter.
Markedly, Intel’s (INTC - Free Report) first-quarter results gained from growth in the data-centric businesses, driven by robust adoption of high-performance products that include Xeon Scalable processors. (Read more: Intel's Q1 Earnings Beat, DCG Growth Aids Revenues)
Moreover, work-from-home trend is likely to have benefited the companies offering video conferencing tools and workspace management offerings.
For instance, Citrix Systems' first-quarter results were driven by solid adoption of unified workspace solutions driven by coronavirus crisis-induced demand for secure work-from-home solutions. (Read more: Citrix Q1 Earnings Up on Work-From-Home Amid Coronavirus)
Further, stay-at-home wave is likely to have bolstered adoption of cloud computing solutions, including contactless payment, online education portals, cloud-gaming, social media platforms, and other leisure tools, which is expected to have acted as a tailwind.
Sneak Peek on Few Upcoming Releases
Given this mixed backdrop, investors interested in the tech sector companies keenly await quarterly reports from notable companies on Apr 29.
Our proven model predicts an earnings beat for ServiceNow (NOW - Free Report) in first-quarter 2020. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
ServiceNow has an Earnings ESP of +1.82% and a Zacks Rank #3.
The company’s first-quarter 2020 performance is expected to reflect robust demand for the company’s IT service management (ITSM) and IT operations management (ITOM) solutions amid digital transformation in the industry triggered by coronavirus crisis-led work-from-home wave.
Moreover, the company’s partnerships with Deloitte and Accenture are anticipated to have aided in acquiring more customers. This factor is likely to get reflected in ServiceNow’s first-quarter results. (Read More: Is a Beat in the Cards for ServiceNow in Q1 Earnings?)
Notably, the Zacks Consensus Estimate for first-quarter 2020 earnings has been steady at 96 cents in the past 30 days, which suggests growth of 43.3% from the year-ago reported figure.
Facebook's first-quarter results are likely to reflect continued subscriber growth. The company’s solid user base in the Asia Pacific, growth in Instagram Stories and Feed, and concerted efforts to improve privacy, transparency and authenticity of its platform are expected to have contributed to the to-be-reported quarter’s results.
Notably, the consensus mark for first-quarter earnings is currently pegged at $1.72 per share, following downward estimate revisions of 6% in the past 30 days. However, the figure suggests a significant improvement of 102.4% from the prior-year quarter.
Facebook has a Zacks Rank #3 and an Earnings ESP of -0.01%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Further, Azure’s increased availability in 58 regions globally, is expected to have strengthened Microsoft competitive position in the cloud computing market, dominated by Amazon’s (AMZN - Free Report) Amazon Web Services. (Read More: Will Azure & Teams Adoption Aid Microsoft’s Q3 Earnings?)
However, deteriorating trend in PC shipments in the first quarter, due to coronavirus crisis-induced supply constraints, is likely to have weighed on the company’s More Personal Computing segmental performance in the to-be-reported quarter. (Read More: PC Shipments Fall in Q1 on Coronavirus-Led Supply-Chain Woes)
The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $1.27 per share, indicating an improvement of 11.4% from the year-ago reported figure. The estimates declined 1.6% over the past 30 days.
Microsoft has an Earnings ESP of -0.11% and a Zacks Rank #3.
Fair Isaac Corporation’s (FICO - Free Report) second-quarter fiscal 2020 results are likely to reflect solid adoption of its analytical solutions and data management products across finance, retail, and healthcare end-markets.
Strength in its Scores business, and special pricing initiatives and growth in its software business are likely to get reflected in the fiscal second-quarter results.
Notably, the Zacks Consensus Estimate for second quarter fiscal 2020 earnings declined by 1 cent to $1.80 over the past 30 days.
Fair Isaac Corporation has an Earnings ESP of -1.11% and a Zacks Rank #3.
CGI Inc. (GIB - Free Report) second-quarter fiscal 2020 performance is likely to have benefited from uptick in new managed services contract bookings. Moreover, positive trends in digital transformation in utility, healthcare and financial services are likely to have bolstered adoption of the company’s IT services enhanced with new business consulting capabilities. This, in turn, is likely to get reflected in the fiscal second-quarter results.
Notably, the Zacks Consensus Estimate for second-quarter fiscal 2020 earnings per share improved by 4.4% to 95 cents over the past seven days.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Tech Stocks' Apr 29 Earnings Lineup: NOW, FB, MSFT, FICO, GIB
Coronavirus outbreak remains a major factor while assessing the performance of upcoming technology stocks’ quarterly releases.
Weakness in automobile and PC verticals amid sluggish spending patterns and economic crisis is likely to have weighed on the business prospects of the technology companies in the first quarter. The coronavirus outbreak dampened sales with millions under lockdown.
Notably, both IBM and SAP witnessed lower adoption of software offerings in March due to the coronavirus-induced crisis.
In the first quarter, IBM reported Cognitive Applications revenues of $1.2 billion, down 3% year over year. Revenues from the Transaction Processing Software declined 15% on a year-over-year basis to $1.5 billion. Adoption of cognitive applications and transaction processing platforms was affected by the coronavirus outbreak in March. (Read more: IBM Beats on Q1 Earnings, Withdraws '20 View on Coronavirus Woes)
Further, SAP reported software licenses & support revenues of €451 million, which plunged 31% year over year. The downside can be attributed to impact of the coronavirus outbreak that intensified in March and led to postponement of new business. (Read more: SAP Earnings Miss Estimates in Q1, Revenues Increase Y/Y)
Per the latest Earnings Preview, tech sector’s first-quarter earnings are anticipated to be down 0.7% from the year-ago quarter.
Adoption of Digital Transformative Techniques Hold Promise
Although the impending quarterly results are likely to reflect the impact of coronavirus crisis-induced supply chain disruption, strong adoption of digital transformative techniques are expected to have benefited the technology companies in the quarter to be reported
Coronavirus-induced work-from-home wave is likely to have bolstered sales of processors utilized in enterprise laptops and data center servers, which in turn is expected to have benefited the technology sector in the to-be-reported quarter.
Markedly, Intel’s (INTC - Free Report) first-quarter results gained from growth in the data-centric businesses, driven by robust adoption of high-performance products that include Xeon Scalable processors. (Read more: Intel's Q1 Earnings Beat, DCG Growth Aids Revenues)
Moreover, work-from-home trend is likely to have benefited the companies offering video conferencing tools and workspace management offerings.
For instance, Citrix Systems' first-quarter results were driven by solid adoption of unified workspace solutions driven by coronavirus crisis-induced demand for secure work-from-home solutions. (Read more: Citrix Q1 Earnings Up on Work-From-Home Amid Coronavirus)
Further, stay-at-home wave is likely to have bolstered adoption of cloud computing solutions, including contactless payment, online education portals, cloud-gaming, social media platforms, and other leisure tools, which is expected to have acted as a tailwind.
Sneak Peek on Few Upcoming Releases
Given this mixed backdrop, investors interested in the tech sector companies keenly await quarterly reports from notable companies on Apr 29.
Our proven model predicts an earnings beat for ServiceNow (NOW - Free Report) in first-quarter 2020. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
ServiceNow has an Earnings ESP of +1.82% and a Zacks Rank #3.
The company’s first-quarter 2020 performance is expected to reflect robust demand for the company’s IT service management (ITSM) and IT operations management (ITOM) solutions amid digital transformation in the industry triggered by coronavirus crisis-led work-from-home wave.
Moreover, the company’s partnerships with Deloitte and Accenture are anticipated to have aided in acquiring more customers. This factor is likely to get reflected in ServiceNow’s first-quarter results. (Read More: Is a Beat in the Cards for ServiceNow in Q1 Earnings?)
ServiceNow, Inc. Price and EPS Surprise
ServiceNow, Inc. price-eps-surprise | ServiceNow, Inc. Quote
Notably, the Zacks Consensus Estimate for first-quarter 2020 earnings has been steady at 96 cents in the past 30 days, which suggests growth of 43.3% from the year-ago reported figure.
Facebook's first-quarter results are likely to reflect continued subscriber growth. The company’s solid user base in the Asia Pacific, growth in Instagram Stories and Feed, and concerted efforts to improve privacy, transparency and authenticity of its platform are expected to have contributed to the to-be-reported quarter’s results.
However, the coronavirus pandemic is likely to have eroded ad sales in the quarter to be reported. (Read More: Facebook to Report Q1 Earnings: What's in the Cards?)
Facebook, Inc. Price and EPS Surprise
Facebook, Inc. price-eps-surprise | Facebook, Inc. Quote
Notably, the consensus mark for first-quarter earnings is currently pegged at $1.72 per share, following downward estimate revisions of 6% in the past 30 days. However, the figure suggests a significant improvement of 102.4% from the prior-year quarter.
Facebook has a Zacks Rank #3 and an Earnings ESP of -0.01%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Microsoft's (MSFT - Free Report) fiscal third-quarter 2020 results are likely to reflect gains from strength in Azure and robust adoption of Teams triggered by coronavirus-induced work-from-home wave. (Read More: Microsoft to Report Q3 Results: What's in the Offing?)
Further, Azure’s increased availability in 58 regions globally, is expected to have strengthened Microsoft competitive position in the cloud computing market, dominated by Amazon’s (AMZN - Free Report) Amazon Web Services. (Read More: Will Azure & Teams Adoption Aid Microsoft’s Q3 Earnings?)
However, deteriorating trend in PC shipments in the first quarter, due to coronavirus crisis-induced supply constraints, is likely to have weighed on the company’s More Personal Computing segmental performance in the to-be-reported quarter. (Read More: PC Shipments Fall in Q1 on Coronavirus-Led Supply-Chain Woes)
Microsoft Corporation Price and EPS Surprise
Microsoft Corporation price-eps-surprise | Microsoft Corporation Quote
The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $1.27 per share, indicating an improvement of 11.4% from the year-ago reported figure. The estimates declined 1.6% over the past 30 days.
Microsoft has an Earnings ESP of -0.11% and a Zacks Rank #3.
Fair Isaac Corporation’s (FICO - Free Report) second-quarter fiscal 2020 results are likely to reflect solid adoption of its analytical solutions and data management products across finance, retail, and healthcare end-markets.
Strength in its Scores business, and special pricing initiatives and growth in its software business are likely to get reflected in the fiscal second-quarter results.
Fair Isaac Corporation Price and EPS Surprise
Fair Isaac Corporation price-eps-surprise | Fair Isaac Corporation Quote
Notably, the Zacks Consensus Estimate for second quarter fiscal 2020 earnings declined by 1 cent to $1.80 over the past 30 days.
Fair Isaac Corporation has an Earnings ESP of -1.11% and a Zacks Rank #3.
CGI Inc. (GIB - Free Report) second-quarter fiscal 2020 performance is likely to have benefited from uptick in new managed services contract bookings. Moreover, positive trends in digital transformation in utility, healthcare and financial services are likely to have bolstered adoption of the company’s IT services enhanced with new business consulting capabilities. This, in turn, is likely to get reflected in the fiscal second-quarter results.
Notably, the Zacks Consensus Estimate for second-quarter fiscal 2020 earnings per share improved by 4.4% to 95 cents over the past seven days.
CGI Group, Inc. Price and EPS Surprise
CGI Group, Inc. price-eps-surprise | CGI Group, Inc. Quote
CGI has an Earnings ESP of -0.58% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>