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Will Tessera Miss in 1Q?

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Tessera Tech. Inc. is set to report first quarter 2013 results on Apr 25. Last quarter it reported in-line results. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Tessera posted weak results due to softness in both the Intellectual Property and Digital Optics segments. Tessera continues to invest in the business, which resulted in escalating costs and weaker margins.

However, management is positive about its partnership with Hynix (an 8-year contract) and STATS ChipPAC (5-year contract) which is likely to boost its revenue in the future. It is also developing other licensable technology beyond the traditional packaging area which may translate to additional revenue going forward.

Earnings Whispers?

Our proven model does not conclusively show that Tessera 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.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 27 cents. This is a difference of 0.00%.

Zacks Rank #2 (Buy): Tessera’s Zacks Rank #2 (Buy) when combined with an ESP of 0.00% 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)
  • (AMZN - Free Report) , Earnings ESP of +100.0% and Zacks Rank #3 (Hold)

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