With the first-quarter earnings reporting more than half over, the numbers for the most part are continuing to come in reasonably solid. Many of the top firms on Wall Street that we cover are making some target price adjustments based on the reports, while others are upping their expectations for some companies in front of their earnings print.
In a series of recent research reports, JPMorgan has highlighted earnings results and also has stocks the firm is bullish on in front of numbers. We found three of its Analysts Focus List favorites, all rated Overweight, that have posted first-quarter results.
Alphabet
The technology giant remains a top technology pick across Wall Street. Alphabet Inc. (NASDAQ: GOOGL), through its subsidiaries, builds technology products and provides services to organize the information. The company offers Google Search that provides information online; Google Now that offers information to users when they need it; AdWords, an auction-based advertising program; AdSense, which enables websites that are part of the Google network to deliver ads; DoubleClick Ad Exchange, a marketplace for the trading display ad space; and other advertising platforms, such as AdExchange and AdMob.
It also provides YouTube, which offers video, interactive and other ad formats; Android, an open source mobile software platform; hardware products, including Chromebook, Chrome OS devices, Chromecast and Nexus devices; Google Play, a cloud-based digital entertainment store for apps, music, books and movies; Google Drive, a place for users to create, share, collaborate and keep their stuff; and Google Wallet, a virtual wallet for in-store contactless payments.
Many Wall Street analysts have lauded the numerous upcoming catalysts and point out that the company showed consistent revenue growth, margin stabilization and finally gave cash back in the form of a $5.1 billion stock buyback last year. Last, but certainly not least, the company remains one of the best overall portfolio plays that focuses on the biggest Internet trends: The mobile/multiscreen shift, wearable devices, video, the Internet of Things and much more. Alphabet delivers investors the full package.
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The company reported results for the quarter that were below expectations, but overall the JPMorgan team called it a “good quarter.” Despite missing expectations, the results overall were still very good, with +23% currency and hedging neutral (FXHN) revenue, and non-GAAP operating income growing 21% year over year on 1% margin expansion.
The JPMorgan price target was lowered to $925, and the Thomson/First Call consensus price target is $911.07. Shares closed Friday at $737.77, down 5.4% on the day.
General Motors
This company is in the automobile sector, and shares look to be very inexpensive at current levels. Despite all the recall troubles and litigation issues, hedge funds and mutual funds are continuing to stick with General Motors Co. (NYSE: GM), as many view the stock as very undervalued. GM trades just below ad incredible 5.75 times estimated 2016 earnings. The company, like competitor Ford, has benefited from incredible sales in China to boost revenue. GM invested heavily in China decades ago, and it grabbed a big chunk of what is now the world’s largest auto market.
With the company facing continued possible punitive damages over ignition switches, there will continue to be a headline risk cloud over the stock. Long-term patient investors that can look beyond current issues may stand to make outstanding money on the auto giant, especially as the oil price plummet and low gasoline prices continue to push new buyers into showrooms.
The company reported very solid first-quarter earnings last week, and with gas prices staying at the lowest levels in years, and GM producing some of the best new models in years, the future for the battered stock looks very good.
GM investors are paid an outstanding 4.72% dividend. JPMorgan has a $45 price target on the stock. The consensus price target is much lower at $37.71. The stock closed Friday at $30.82 per share.
Schlumberger
This top oil services company came in with results that beat expectations. Schlumberger Ltd. (NYSE: SLB) remains the largest oilfield services company in the world for now, with far-reaching operations all around the globe, and it could be poised for years of solid growth despite the huge turn down in oil pricing. Top Wall Street analysts think the company will continue to drive margins on execution, technologies and efficiencies. Russia, Saudi Arabia, Iraq and China are expected by some to be the strongest markets, if geopolitical concerns remain somewhat in check.
The company announced last August a deal to buy oil field services giant Cameron International, which is expected to cost about $12.7 billion in cash and stock. Wall Street analysts note what they term the company’s “drive to disrupt the status quo,” which includes transformation initiatives like the gigantic purchase of Cameron. Also, trading at a low 6.6 times the firm’s normalized EBITDA estimates, the stock looks cheap.
The company reported solid first-quarter earnings, and revenues come in slightly above Wall Street estimates. Recent reports have indicated the company may be looking to buy back its former Iranian unit. The report also noted that Schlumberger sold Well Services of Iran to Nima Energy, a Hong-Kong based holding company, when it left Iran, and the sales-agreement reportedly included a provision that could give the oil services giant “First right to buy back the company when sanctions were lifted,” per Dow Jones news.
Schlumberger investors receive a solid 2.5% dividend. The $70 JPMorgan price objective is much lower than the consensus target of $84.23. The shares closed Friday at $79.93.
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With earnings behind these top stocks, investors can feel better about buying shares. With the market trading within range of all-time highs, it make sense now to scale buys some shares with a partial position and leave some fresh powder for a potential dip lower.
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