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Analysts See 10 Companies Beating Expectations This Earnings Season
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With earnings starting to really snowball next week, and a market that seems to be teetering somewhat due to high valuations and some messy geopolitical issues, it makes sense for investors to look for companies that are candidates to beat the current expectations. The only thing better than beating expectations is beating them and adding some positive forward guidance for the second quarter and/or the full year.
We screened some recent reports from our Wall Street research database and some recent 24/7 Wall St. posts for companies that top analysts on Wall Street think are the candidates to beat expectations. These stocks make good sense for growth portfolios that have some risk tolerance.
Here are 10 companies that may beat earnings expectations
The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused around key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products. It generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play, as well as hardware products. The company provides its products and services in more than 100 languages and in 190 countries, regions and territories.
Alphabet offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
Merrill Lynch is above Wall Street estimates on this technology giant. The Merrill Lynch price target for the stock is $1,025, and the Wall Street consensus price objective is $965.81 The shares traded Thursday at $842.70.
This company had a record 2016, and 2017 looks very promising as well. CME Group Inc. (NASDAQ: CME) exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options. CME Group brings buyers and sellers together through its Globex electronic trading platform and its trading facilities in New York and Chicago.
The company also operates CME clearing, one of the world’s leading central counterparty clearing providers, which offers clearing and settlement services across asset classes for exchange traded contracts and over-the-counter derivatives transactions.
The company’s non-U.S. business is growing, and with West Texas Intermediate oil increasing relevance as a global benchmark, that is another positive for the trading giant. There is a solid chance they could come in above estimates.
CME investors receive a 2.12% dividend. Deutsche Bank has a $136 price target, and the consensus target is$129.33. Shares traded on Thursday at $116.70.
This online travel leader is poised for a potential big first quarter. Expedia Inc. (NASDAQ: EXPE) is the leading internet travel pure-play with exposure to online travel in the United States, Europe and Asia. The company’s portfolio of brands includes Expedia, Orbitz, HomeAway, Travelocity, Hotels.com, Trivago, Egencia, Hotwire, Wotif, Venere and Classic Vacations.
Top analysts see it as a story of improving execution, and they also think that the company is starting to finally match Priceline’s growth metrics. The company has raised its dividend and is buying back stock, both shareholder friendly actions. Merrill Lynch is above Wall Street estimates on this company as well.
Investors receive a 0.9% dividend. Merrill Lynch has a $146 target price for the stock. The consensus target is $142.72, and shares traded Thursday at $129.10.
The huge social media leader has continued to post gigantic numbers and is on the Merrill Lynch US 1 list. Facebook Inc. (NASDAQ: FB) operates as a mobile application and website that enables people to connect, share, discover and communicate each other on mobile devices and personal computers worldwide.
Its solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.
The analysts think it’s a good bet the company beats earnings estimates again this quarter. The towering $165 Merrill Lynch price target compares with the consensus target of $160.17. Shares traded Thursday at $140.25.
This stock trades at an astounding multiple of less than seven times estimated 2017 estimated profits. Gilead Sciences Inc. (NASDAQ: GILD) discovers, develops and commercializes medicines in areas of unmet medical need in North America, South America, Europe and the Asia-Pacific. Its products include Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva, Tybost and Vitekta for the treatment of human immunodeficiency virus (HIV) infection in adults; and Harvoni, Sovaldi, Viread and Hepsera products for the treatment of liver disease.
Jefferies analysts think that Gilead can come in and beat top-line expectations. Investors receive a 3.12% dividend. The Jefferies price target is $82. The consensus figure is set at $79.06, and shares traded Thursday at $66.70.
This top mid-cap is rumored to be in the sights of a larger biotech company. Incyte Corp. (NASDAQ: INCY) has a current validated approach in hematology-oncology, and there’s reason to believe the three wholly owned clinical-stage assets the company has could drive several billion in revenue, something important for an acquiring company looking to acquire assets. Many on Wall Street are bullish on the company’s rich pipeline of small molecule therapies in all stages of development, and they see the company as a key player in the cancer space.
Incyte focuses on the discovery, development and commercialization of proprietary therapeutics in oncology. It offers Jakafi for the treatment of myelofibrosis and polycythemia vera cancers. Its clinical stage products include ruxolitinib cream, which is in Phase 2 clinical trial for the treatment of alopecia areata; and INCB52793, which is in Phase 1/2 for the treatment of advanced malignancies. The company’s clinical stage products also comprise baricitinib, which is in Phase 3 trial for rheumatoid arthritis, as well as a completed Phase 2 trial for psoriasis and diabetic nephropathy.
Jefferies thinks the company can beat expectations and has a price target of $165. The consensus price objective is $149. The stock traded Thursday at $141.60.
This is a top aerospace and defense stock to buy, and many on Wall Street are expecting a very solid continuation of U.S. and foreign defense spending. Lockheed Martin Corp. (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates and sustains advanced technology systems, products and services. It also provides a wide range of defense electronics products and IT services.
Being the Pentagon’s prime contractor, Lockheed Martin offers a diverse portfolio of global aerospace, defense, security and advanced technologies. Its leveraged presence in the Army, Air Force, Navy and IT programs guarantees a steady inflow of follow-on orders, not only from the U.S. government but also from a large number of foreign allies of the nation.
The analysts at Deutsche Bank may come in above expectations. Shareholders receive a 2.71% dividend. The Deutsche Bank price objective is posted at $295. The consensus target price is $282.68, and shares traded on Thursday at $269.70.
This Wall Street darling and FANG constituent could offer solid upside. Netflix Inc. (NASDAQ: NFLX) is the world’s leading internet television network, with more than 70 million members in over 190 countries enjoying more than 125 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments.
Netflix is available on virtually any device with an internet connection, including personal computers, tablets, smartphones, smart TVs and game consoles, and it automatically provides the best possible streaming quality based on available bandwidth. Many titles, including Netflix original series and films, are available in high-definition with Dolby Digital Plus 5.1 surround sound and some in Ultra HD 4K. Advanced recommendation technologies with up to five user profiles help members discover entertainment they’ll love.
Merrill Lynch feels that this entertainment giant may beat earnings expectations, and the firm has set its price target at $154, while the consensus target is $151.60. The shares traded Thursday at $143.90.
This internet travel leader took off late last summer and hasn’t really looked back. Priceline Group Inc. (NASDAQ: PCLN) is an online travel business offering price disclosed and opaque airline tickets, hotel rooms, rental cars, vacation packages and cruises. The company generates over 85% of gross profit from its international brands. Priceline operates Priceline.com, Booking.com, Kayak.com, Agoda.com, Rentalcars.com and OpenTable.
China is a key growth market for the company over the next 10 years, and Priceline has a multipart strategy to capture growing travel demand. The Merrill Lynch analysts see stock as attractive at 20 times 2018 earnings per share versus 15% two-year earnings growth. They also think the company will exceed Wall Street estimates for the first quarter.
The $1,920 Merrill Lynch price target compares with the consensus target of $1894.14. The shares traded recently at $1,754.35.
Deutsche Bank is very positive going into earnings and cites the closure of the B/E Aerospace deal as a catalyst. Rockwell Collins Inc. (NYSE: COL) is a leader in providing design, production, integration and support of communications and aviation electronics for military and commercial customers worldwide. The company’s products include avionics suites for business and commercial aircraft, radios, GPS navigation and IFE systems.
Rockwell Collins agreed last fall to pay $6.4 billion to buy B/E Aerospace in a deal that will unite two of the biggest suppliers to airlines and plane makers. The arbitrage accounts that were long B/E and short Rockwell should be clearing those positions with the deal expected to close soon.
Shareholders receive a 1.34% dividend. Deutsche Bank has a $115 price target, while the consensus is set at $104.35. The stock traded Thursday at $97.90.
These are just 10 top companies that some on Wall Street feel could beat the current earnings expectations. This also provides a nice smorgasbord of different companies, some more aggressive than others. One thing is for sure, better to go with the companies that analysts feel can beat than take flyers in a pricey market like we have now.
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