Technology

Analysts See These 5 Top Tech Companies Beating Earnings Estimates

Lee Jackson

Published: April 22, 2017 9:20 am

Last Updated: January 12, 2020 12:45 pm

With earnings starting to really pick up last week, and a market that seems to be teetering somewhat due to high valuations and some messy geopolitical issues, it makes sense now 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 candidates to beat expectations. These stocks make good sense for growth portfolios that have some risk tolerance.

Here are five top tech companies that may beat earnings expectations.

Apple

This technology giant has been on a huge run, continues printing all-time highs and is the top large cap pick at RBC. Apple Inc. (NASDAQ: AAPL) revolutionized personal technology with the introduction of the Macintosh in 1984, and it is among the leaders in the world in innovation with the iPhone, iPad, Mac, Apple Watch and Apple TV.

Apple’s four software platforms — iOS, OS X, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services, including the App Store, Apple Music, Apple Pay and iCloud.

RBC thinks the iPhone 8 opportunities are solid, as the firm, like others, feels the product will have significant upgrades. Toss in the easier comparisons and the strong average selling prices, and the new phone is a distinct positive. While the firm does note higher commodity prices are a potential headwind from NAND and DRAM pricing, it sees service growth and acceleration as another distinct positive.

Apple investors receive a 1.6% dividend. The RBC price target for the stock is $157, and the Wall Street consensus target is $147.61. The stock closed trading on Friday at $142.27, and Apple is scheduled to report earnings on May 2.

Arris International

This stock has been an RBC favorite for some time and is the top small cap pick. Arris International PLC (NASDAQ: ARRS) provides media entertainment and data communications solutions in the United States and internationally. It operates through two segments. The Customer Premises Equipment segment offers various product solutions, including set-top boxes, gateways, digital subscriber lines and cable modems, and embedded multimedia terminal adapters and voice/data modems that enable service providers to offer voice, video and high-speed data services to residential and business subscribers.

The Network & Cloud segment provides cable modem termination system, converged cable access platform, multichannel video programming distributors, programmer equipment, ad insertion technologies and equipment in the ground or on transmission poles, as well as equipment used to initiate the distribution of content-carrying signals.

The $33 RBC price target is in line with the consensus target of $33.13. Shares closed most recently at $25.51. The earnings report is due on May 3.

Lumentum

This top company looks to benefit big-time from the Facebook Voyager project. Lumentum Holdings Inc. (NASDAQ: LITE) manufactures and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East and Africa. It operates in two segments, Optical Communications and Commercial Lasers.

The analysts at JPMorgan are very bullish on the company as it is working on several handset original equipment manufacturers for 3D sensing, and the CEO recently said he could see $100 million or more a quarter growing up to a $1 billion opportunity annually (last 12 month revenues were about $1 billion), which many believe could drive upside to current estimates.

JPMorgan has set its price target at $54, and the consensus target is $49.35. The stock closed most recently at $45.20. The company is expected to share its results on May 3.

Viavi Solutions

This smaller capitalization company has solid upside potential. Viavi Solutions Inc. (NASDAQ: VIAV) is a global provider of network test, monitoring and assurance solutions to communications service providers, enterprises and their ecosystems, supported by a worldwide channel community, including Viavi Velocity Solution Partners.

The company delivers end-to-end visibility across physical, virtual and hybrid networks, enabling customers to optimize connectivity, quality of experience and profitability. Viavi is also a leader in high-performance thin film optical coatings, providing light management solutions to anti-counterfeiting, consumer electronics, automotive, defense and instrumentation markets.

The JPMorgan analysts noted this in a recent report:

We continue to see material upside to Viavi’s earnings from 3D sensing in the new iPhone as well as ongoing restructuring. We also believe accretive consolidation deals are a possibility.

The $13 JPMorgan price target compares with the posted consensus target of $10.56. The stock closed Friday at $9.90 per share. The company is scheduled to report its fiscal third-quarter results on May 3.

Western Digital

This long-time innovator in the storage industry is a leader in the total addressable hard disk drive (HDD) market, and it posted a very positive earnings pre-announcement earlier this week. Western Digital Corp. (NASDAQ: WDC) is an industry-leading developer and manufacturer of storage solutions that help to create, manage, experience and preserve digital content.

Western Digital is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Its products are marketed under the HGST and WD brands to original equipment manufacturers, distributors, resellers, cloud infrastructure providers and consumers.

The most compelling news for 2017 and beyond is that the company made a stunning $19 billion purchase of SanDisk last year. This could be a strong addition to Western Digital’s current offerings, and the company could significantly benefit from SanDisk’s technology and portfolio leadership in the NAND flash semiconductor and enterprise flash systems market.

Shareholders are paid a solid 2.4% dividend. RBC has a $96 price target, and the consensus price objective is $93.37. Shares closed Friday at $83.11. The company is scheduled to report on Thursday.

Earnings at these five top tech companies could very well come in above consensus estimates. Given that reports are a binary event, investors may want to buy partial positions, just in the event of an earnings hiccup.