These stocks are the names to know.
After a volatile and mostly disappointing start to 2018 from U.S. stocks, the upcoming first-quarter earnings season may be the most important in recent memory. The nine-year bull market is at a crossroads, and a slowdown in earnings growth may be all it takes to push stocks into bear market territory for the first time in nearly a decade. Earnings season is particularly high-stakes in the technology sector, after several large, popular tech stocks have struggled in recent weeks. Here’s a preview of what Bank of America analyst Justin Post is expecting from tech stocks this earnings season.
Alphabet stock is down 3 percent year-to-date, lagging the 11 percent overall gain for the technology sector. Investors are concerned about regulatory threats to Google’s advertising business. Post says investor sentiment, moderating traffic acquisition costs and clarity on new European data regulations could serve as bullish catalysts. Bank of America is calling for EPS of $12.36 on revenue of $24.857 billion, above consensus estimates of $12.08 and $24.326 billion, respectively. Alphabet is expected to report earnings after the market close on April 23. Bank of America has a “buy” rating and $1,360 price target for GOOGL stock.
Amazon.com (AMZN)
Amazon.com stock has taken a beating in the past two weeks after President Donald Trump repeatedly publicly criticized the company’s tax practices and its U.S. Postal Service shipping subsidies. Post says Amazon’s underlying business is strong, and Trump poses little threat to Amazon’s long-term trajectory. Bank of America is calling for EPS of $3.03 on revenue of $50.422 billion compared to consensus estimates of $3.10 and $49.942 billion, respectively. Amazon is expected to report earnings after the market close April 25. Bank of America has a “buy” rating and $1,650 price target for AMZN stock.
Booking Holdings (BKNG)
Booking Holdings continues to focus on controlling its spending and sacrificing bookings growth for margin improvements. If margins stabilize, Post says booking growth could accelerate in the second half of the year. Booking has also been working on building a reliable, long-term direct traffic business. Bank of America is calling for EPS of $10.62 on revenue of $2.837 billion compared to consensus estimates of $10.59 and $2.875 billion, respectively. Booking Holdings is expected to report earnings after the market close on May 7. Bank of America has a “buy” rating and $2,230 price target for BKNG stock.
eBay (EBAY)
Gross merchandise volume has been on the upswing for eBay, and Post says margins could stabilize this year. Bank of America is forecasting GMV growth to increase by 7.4 percent in 2018. Online retailer eBay has improved its user experience, launched guaranteed delivery and improved its marketing efficiency. Bank of America is calling for EPS of 54 cents on revenue of $2.605 billion compared to consensus estimates of 54 cents and $2.590 billion, respectively. The company is expected to report earnings after the market close on April 17. Bank of America has a “buy” rating and $52 price target for EBAY stock.
Expedia (EXPE)
On its fourth-quarter earnings call, Expedia management indicated that the first quarter got off to a strong start. However, Post says HomeAway losses, Trivago losses and cloud expenses will all weigh on earnings this quarter. Bank of America is calling for an EPS loss of 66 cents on revenue of $2.426 billion compared to consensus estimates of a 35-cent loss and $2.439 billion, respectively. Expedia is expected to report earnings after the market close on April 26. Bank of America has a “buy” rating and $134 price target for EXPE stock.
Facebook (FB)
Facebook may be the most intensely scrutinized stock of 2018 after the company’s Cambridge Analytica data scandal started grabbing headlines last month. Post says investors can expect further headline risk ahead of CEO Mark Zuckerberg’s upcoming congressional testimony, but advertisers appear to be staying loyal to Facebook. Bank of America is calling for EPS of $1.59 on revenue of $11.831 billion, above consensus estimates of $1.36 and $11.427 billion, respectively. Facebook is expected to report earnings after the market close on April 25. Bank of America has a “buy” rating and $210 price target for FB stock.
Fitbit (FIT)
Fitbit certainly has a low bar to clear this quarter after the company guided for a 15 to 20 percent revenue decline. Unfortunately, Post says the company may not even hit those depressed targets. Device sales rankings on Amazon are still declining. Bank of America is calling for an EPS loss of 20 cents on revenue of $247 million compared to consensus estimates of a 20-cent loss and $247 million, respectively. Fitbit is expected to report earnings after the market close on May 1. Bank of America has an “underperform” rating and $5 price target for FIT stock.
Netflix (NFLX)
Post says the Netflix quarter will be all about international subscriber growth. Post is calling for 4.95 million net international subscriber additions and 1.46 million net domestic ads. Netflix must come up with some impressive numbers to justify its stock’s 47 percent year-to-date gain. Bank of America is calling for EPS of 65 cents on revenue of $3.696 billion compared to consensus estimates of 71 cents and $3.698 billion, respectively. Netflix is expected to report earnings after the market close on April 16. Bank of America has a “buy” rating and $300 price target for NFLX stock.
Snap (SNAP)
The Snapchat app redesign was supposed to be a positive catalyst for SNAP stock, but it was met with harsh public criticism. Snap investors are also bracing for new data regulations that could negatively impact Snap’s advertising business. Bank of America is calling for an EPS loss of 15 cents on revenue of $248 million, above consensus estimates of a 17-cent loss and $244 million, respectively. Snap is expected to report earnings after the market close on May 8. Bank of America has a “buy” rating and $24 price target for SNAP stock.
Twitter (TWTR)
Twitter has finally shown some signs of stabilization in recent quarters, reporting year-over-year revenue growth and user engagement growth in the fourth quarter. Still, Post says Twitter’s sub-5 percent subscriber growth is nothing to get excited about, and the stock already seems to be fully valued. Bank of America is calling for EPS of 14 cents on revenue of $613 million, above consensus estimates of 11 cents and $605 million, respectively. Twitter is expected to report earnings before the market open on April 24. Bank of America has an “underperform” rating and $26 price target for TWTR stock.
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10 Earnings Reports to Watch From Big Tech Stocks originally appeared on usnews.com
