Analysts are anticipating earning reports from many big-name stocks this week, namely Cisco Systems, Inc. (NASDAQ:CSCO), salesforce.com, inc. (NYSE:CRM) Wal-Mart Stores, Inc. (NYSE:WMT) and Applied Materials, Inc. (NASDAQ:AMAT). Here is what to watch as each company posts earnings this week:
Cisco Systems, Inc.
Cisco Systems, Inc. is expected to post Q3:2016 earnings Tuesday, May 18, after market close. Analysts expect the multinational technology company to post EPS of $0.55, and revenue of $11.97 billion. In the same quarter of the previous year, Cisco posted revenue of $12.1 billion which was a 5% increase y/y, and EPS of $0.47.
Though Cisco shares dropped over 3% on weakness in enterprise firms, analysts remain bullish on the premise that the company will be able to offset slowdown by growth in security software, specifically, its SourceFire products.
Additionally, investors will be paying attention to CSCO’s Meraki WiFi, which is significantly improving company shares. Lately, Meraki WiFi has been selling more software products and generating steady revenue for the company. These factors allow Cisco to be shielded from macro economic slowdown and declining enterprise spending on hardware.
Contributing to bullish outlooks, Drexel Hamilton analyst Brian White reiterated a Buy rating on CSCO on May 13, 2016 with a price target of $34.00. White explained his optimistic expectations are due to Cisco’s above-par product and company implementation, noting, “We expect Cisco’s strong execution and product cycle to provide a buffer in a soft spending environment (especially in the enterprise market).” White is ranked #261 out of 3,907 analysts. He has a success rate of 48% with an average return of 6.2%.
According to TipRanks, the average analyst consensus for the company is Moderate Buy, with 71% of analysts bullish, 24% of analysts neutral, and 6% of analysts bearish on Cisco. The average price target for the stock is $29.69 with an upside of 11.91%.
Salesforce.com, inc. is expected to report Q1:17 earnings on May, 5, 2016 after market close. Analysts expect the cloud computing company to post EPS of $0.23, and revenue of $1.89 billion. These analyst consensuses are quite ambitious relative to the same quarter of last year, when the company posted a loss per share of ($0.04). Revenue for the same quarter of last year was $1.81 billion showing a 25% increase y/y.
In the previous quarter, Salesforce saw a substantial growth in both its top and bottom line year-over-year. Analysts speculate this growth may likely be attributed to the company’s cloud-based solutions, specifically, an increased demand for the company’s ExactTarget Marketing Cloud platform. In more good news for stockholders, the growth seems to be steadily improving and analysts are expecting this trend to continue in the upcoming quarter.
Analysts are expecting upcoming earnings to witness yet another boost due to beneficial geographical contributions as well as a higher number of successful deals. One factor that may hinder growth, however, is increasing competition from other semiconductor companies IBM, Oracle Corp, and SAP AG. Also notable impediments for CRM are currency fluctuations and more investment towards international expansion.
The minor obstacles the company faces hasn’t effected analyst opinion too negatively. Oppenheimer analyst Brian Schwartz shared his earnings predictions for CRM on May 13, 2016, reiterating a Buy rating on the stock with a price target of $88.00. He comments, “We think our marketing software industry update and annual Marketing Cloud customer survey can be a quality indicator of category spending conditions and priorities over the next six months, and somewhat of a proxy for SaaS spending trends.”
He further mentions, “Overall, we interpret the latest results as indicating CRM’s installed base spending trends and growing importance and leadership position in the marketing space remain healthy, which strengthens our confidence in the name. Bottom Line: We expect positive business momentum to continue for salesforce.com with increasing comfort in CRM’s growth trajectory and long-term potential ahead of 1Q results.”
According to TipRanks, Salesforce.com currently holds a Strong Buy average analyst consensus with a whopping 94% of analysts bullish, and only 6% of analysts neutral on the stock. The average price target is currently $90.82 with an upside of 18.92%.
Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. is expected to report Q1:17 earnings Thursday, May 19 2016 before market open. The analyst consensus for the upcoming quarter’s EPS is $0.89, with revenue estimated at 113.14 billion. In the same quarter of the previous year, EPS was $1.03, and revenue was at $114.8 billion.
Wal-Mart expects the its upcoming quarter earnings to be impacted more so on a year-over-year basis as opposed to in its subsequent quarters due to the timing of wage investments. Further, the company notes the possibility of more negatively impacted net sales as a result of currency exchange rate fluctuations, as well as the impact from global store closures and strengthening of the U.S. dollar.
UBS analyst Michael Lasser gave some input on the multinational retail corporation’s expected earnings release, and reiterated a Hold rating with a price target of $67.00 on May 13, 2016. Lasser explains his neutral rating, mentioning, “Given WMT’s size & complexity, along with the macro pressures it is facing, we think any payoff from its investments will accrue over a long horizon. Thus, WMT probably saw more of the same in 1Q. We forecast that its WMT US business comped up 0.5% driven by a moderate traffic increase of 0.5%, combined with flat ticket spending. The ticket was surely affected by food deflation, which we calculate was a ~100-150 bps comp headwind during 1Q.”
The analyst additionally comments, “The drag from falling prices might only intensify in the coming months as WMT puts in place the ‘billions of dollars of price investments’ it has discussed. At this point, it’s probably too early for it to communicate about any unit lift it might be seeing from the early tests of this initiative. But, we think the outcome of this strategy will be pivotal in its investment case debate moving forward.”
According to TipRanks, the analyst rating consensus for Wal-Mart is Hold, with 1% of analysts bullish, 7% neutral, and 2% of analysts bearish. The average price target for the stock is $66.67 with an upside of 2.66%.
Applied Materials, Inc.
Applied Materials is expected to report Q2:16 earnings on Thursday, May 19 after market close. Analysts expect the manufacturing equipment company to post EPS of $0.32, and revenue of $2.42 billion. The consensus remains somewhat in-line with results from the same quarter of last year, when the company posted EPS of $0.29 and revenue of $2.44 billion which showed a 4% increase y/y.
As a whole, the semiconductor industry has been victim to slowed demand growth and shrinking profit margins. In an optimistic approach, Applied Materials is priding itself with exceptionalism. The company is banking on positive changes deriving from implementation of technology with better memory storage, as well as company expansion in China.
Chinese companies use AMAT supplies in many of their electronic products, including smartphone maker Xiaomi. Applied Materials is planning to further expand the China market through investments and projects worth $616 million during the upcoming few years.
In light of these approaches from AMAT, investors can expect more bullish outlooks from analysts. UBS analyst Stephen Chin reiterated a Buy rating on Applied Materials on April 25, 2016 with a price target of $26.00. The analyst notes, “We reiterate our Buy rating as our China tracker shows 4 of the big incumbent China fabs are buying semicap equipment now.”
Chin further exemplifies positive predictions for the upcoming quarters, mentioning, “Our proprietary China tracker found Intel’s China fab’s semicap purchases last month finally ramped up to $160M. We believe most of this was for litho tools but estimate etchers were $20M and implanters were $15M. Our tracker also found Intel’s China fab purchases of raw wafers dropped to only 3k versus a 20k average recently. This low number suggests Intel may have temporarily shut down its China fab to prep for a multi-quarter semicap installation. We believe Applied will have solid visibility shipping to Intel’s China fab over the next 2-3 quarters.”
According to TipRanks, AMAT holds an average analyst consensus of Moderate Buy, with 51% of analysts bullish, and 43% of analyst neutral. The average price target for the stock is $21.96 with an upside of 11.98%.