The following previews include a brief history, a valuation note and an outlook for what lies ahead. Estimates and consensus price targets have been provided by Thomson Reuters.
eBay Inc. (NASDAQ: EBAY) is one that 24/7 Wall St. featured as a near value stock in its 2014 eBay outlook. Shares of the $70 billion market cap company have not traded like it is a bull market, with its $54.20 stock price comparing to a 52-week range of $48.06 to $58.04. eBay has refused to pay a dividend so far, something we think may need to change. The consensus analyst price target is all the way up at $62.00, and the highest analyst price target is $75.00.
eBay now trades at only about 17 times expected 2014 earnings per share. The company continues to move to a platform for commerce and business services as well, lowering its dependence on PayPal and the auctions platform. Earnings per share (EPS) estimates for eBay are as follows:
- Past quarter: $0.80 EPS (vs. $0.70 a year ago) and 13.6% revenue growth to $4.54 billion
- Current/next quarter: $0.72 EPS (vs. $0.63 a year ago) and revenue growth of 14.8% to $4.3 billion
- 2014: $3.12 EPS (vs. $2.70 prior) and 15% revenue growth to $18.5 billion
Netflix Inc. (NASDAQ: NFLX) is always interesting to watch around earnings. After all, a more than $300 a share stock can allow for lots of volatility. Be advised that Netflix shares results on its website rather than via a press release. Netflix is still growing in the United States, but opportunities in Europe and elsewhere likely remain the next exciting growth markets. At $330, it has a 52-week range of $97.02 to $389.16, and the consensus price target is $347.48. Options traders appear to be braced for a $35 move in either direction.
One key caution here, and that is on the overturning of net neutrality’s absolution. It may be years before an outcome is known, but this could handily drive up Netflix’s cost of delivering content to end-users. We expect that another 2 million net new subscribers were added in this past quarter. Estimates are as follows:
- Past quarter: $0.66 EPS (vs. $0.13 a year ago) and 23.3% revenue growth to $1.17 billion
- Current/next quarter: $0.77 EPS (versus $0.05 a year ago) on 20.7% revenue growth to $1.24 billion
- 2014: $3.99 EPS (versus $1.77 prior) on 19.4% revenue growth to $5.21 billion
SanDisk Corp. (NASDAQ: SNDK) is the king of flash memory. At $71.75, it has a 52-week range of $46.78 to $74.14. SanDisk’s consensus price target is not that much higher at $75.12, while the top analyst price target is up much higher at $95.00. Options traders appear to be braced for a move of only about $5 in either direction.
One issue that has helped SanDisk, and rival Micron, is that a fire took out the top competitor for longer than many analysts had originally expected. That being said, SanDisk’s stock chart shows it has had a hard time getting too much above $70, even if the stock broke through that level and stayed there in January. SanDisk trades at only about 13.5 times expected 2014 earnings estimates, but that is in part because of a history of big hits and big misses around earnings.
- Past quarter: $1.58 EPS (vs. $1.05 a year ago) and 10.5% revenue growth to $1.70 billion
- Current/next quarter: $1.28 EPS (versus $0.84 a year ago) on 13.4% revenue growth to $1.52 billion
- 2014: $5.83 EPS (versus $5.19 prior) on 9.2% revenue growth to $6.71 billion
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