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Will Maxim Miss 3Q Earnings Estimates?

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Maxim Integrated Products (MXIM - Free Report) is set to report third quarter 2013 results on Apr 25. Last quarter it posted a 2% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Despite posting a year-over-year increase in the top line, primarily boosted by consumer and computing end markets; higher costs and resultant contraction in margins kept the lid on the company’s earnings.

However, management is positive about the automotive end market as it won several design wins in the last quarter. Steady growth in distributor design registrations also boosted revenues. Maxim also witnessed stronger demand for its femtocell offerings.

Maxim believes that its partnership with Avnet may result in new opportunities in industrial markets.

Earnings Whispers?

Our proven model does not conclusively show that Maxim is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: The Most Accurate estimate stands at 41 cents while the Zacks Consensus Estimate is at 42 cents. That is a difference of -2.38%.

Zacks Rank #2 (Buy): Maxim’s Zacks Rank #2 (Buy) when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

LinkedIn Corp., Earnings ESP of +300.0% and Zacks Rank #3 (Hold)

Intersil Corp., Earning ESP of +62.5% and Zacks Rank #3 (Hold) - Free Report) , Earnings ESP of +100.0% and Zacks Rank #3 (Hold)

In-Depth Zacks Research for the Tickers Above

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Maxim Integrated Products, Inc. (MXIM) - free report >>, Inc. (AMZN) - free report >>

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