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3 stocks that could still leap after earnings

Earnings season has now kicked off, and word on the Street is that it’s going to be very good. Overall S&P 500 profits are expected to soar by 11.2% in Q417 according to UBS strategist Keith Parker. He told CNBC that this would be the second-strongest earnings growth period since 2011. The economy has momentum and all sectors are expected to post increases.

With this bullish outlook in mind, we used TipRanks’ Earnings Calendar to see which hot stocks are due to report their earnings in the next couple of weeks. Crucially, the Earnings Calendar also displays the analyst consensus and average price target of each stock, so you can immediately assess the Street outlook going into the print.

Here we searched for only stocks that have a ‘Strong Buy’ analyst consensus rating- as well as scanning for stocks with notable upside potential from the current share price.

Now let’s delve deeper into these three top stocks:

Facebook (NASDAQ:FB)

Social media giant FB will report its Q4 results on January 31. For Q4:17, consensus currently stands at $12.51B Revenue, $8.48B Adjusted EBITDA, and $1.94 in GAAP EPS. “We view current Street December quarter estimates as reasonable, with upwards variance modestly more likely than downwards variance” says top RBC Capital analyst Mark Mahaney. “Facebook has continued to grow users at an impressively robust pace off a very large base. In Q4:17, we are estimating Y/Y MAU growth of 14% to 2.12B.”

RBC Capital’s recent survey of nearly 5,000 internet users backs up his bullish take on the stock. Core Facebook had the best overall penetration rate and current usage among the Social Media networks. But he “continues to wonder whether core Facebook (not Instagram) has reached “peak” penetration in the U.S” as the survey found a “slightly (more) negative bias towards expected time spent on the platform.”

Nonetheless, FB is still Mahaney’s Top Large Cap Long for 2018. He says the stock’s current low market shares – approximately 15% of Global Online Advertising– will help it maintain premium growth for a long time. Add in the fact that FB also offers one of the sector’s most attractive growth-adjusted valuation at 25X P/E for 30%+ EPS growth and it’s easy to see why Mahaney reiterated his Buy rating on FB with a $230 price target (29% upside).

TipRanks reveals that FB has received no less than 29 recent buy ratings vs just 1 sell rating. The average analyst price target of $218 indicates big upside potential of 22% from the current share price.

Starbucks Corp (NASDAQ:SBUX)

The inventor of the Pumpkin Spice Latte, Starbucks is set to report its earnings results on January 25 after the close. Analysts are expecting EPS $0.57 vs $0.52 cents the previous year. While shares have experienced some volatility over the year, in the last three months prices have steadily increased. The stock is now trading at over $60.

According to Robert W Baird’s David Tarantino, SBUX looks set to soar much higher. He is confident that SBUX can reach $72 (19% upside) in the coming months. Tarantino calls SBUX his Best Idea for 2018 and says: “We are confident SBUX can deliver F2018 comps at or above our +3% forecast based on sales-driving initiatives (unlocking throughput constraints, expanding mobile order/pay, innovating on food and beverages) and prospects for a better consumer spending backdrop (amid individual income tax cuts).”

Meanwhile Piper Jaffray’s Nicole Miller Reagan has also just released a report titled “‘The (2018) Year of the Restaurant’: SBUX Top Pick.” She believes that “highly attractive core business fundamentals support substantial future growth opportunities across its portfolio.” Plus, strong cash flow generation supports continued reinvestment into the business and capital allocation.

Given these bullish forecasts, it’s not surprising that Starbucks has a ‘Strong Buy’ analyst consensus rating on TipRanks. Indeed, in the last three months, it has received no less than 12 buy ratings and just 1 hold rating.

Abbott Laboratories (NYSE:ABT)

Multinational healthcare stock Abbott Laboratories is due to report results on January 24. The Street consensus for sales of $7.4 billion and EPS of 73 cents is up from the EPS this time last year of $65 cents. Over this time frame, shares are up almost $20 from $41 to the current share price of $59.

Top Morgan Stanley analyst David Lewis believes this price seriously undervalues Abbott’s potential. This is because ABT still trades in line with peers despite a premium growth profile. “As risks fade, we see an emerging picture of top-tier growth that is not captured in Street expectations for 2018,” explains Lewis. “We see multiple expansion on Abbott’s premium profile and improving leverage driving outperformance.”

Specifically, he believes Libre and Confirm can generate 5%-plus organic growth in 2018. Both Libre and Confirm use smartphone apps to help patients monitor their glucose and heartbeats more easily than ever before. As a result, Lewis upgraded the stock from Hold to Buy at the beginning of January. His $67 price target translates into 14% upside from the current share price.

In the last three months this ‘Strong Buy’ stock has received 10 buy ratings with only 1 analyst choosing to remain sidelined. Meanwhile the average analyst price target stands at $65 (11% upside potential).

Which hot earnings stocks are top analysts recommending right now? Find out here.

Harriet Lefton
Harriet Lefton, originally from the UK, began her career as a journalist specialising in the niche world of metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer. Now she has turned her attention to the world of financial blogging, covering US stocks, analysts and all manner of things finance-related.

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