We are now fast approaching a critical earnings season. Given the recent trade war volatility, investors are looking forward to a bullish earnings season to lift the markets. Luckily, hopes are high that companies are on track for a stellar earnings season with fundamentals remaining relatively strong. Indeed, earnings for companies in the S&P 500 are expected to grow 17.3% in the first quarter, with sales up 10%. These rates represent the fastest pace of growth since the first quarter of 2011.
With this 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’s outlook on the stock going into the print.
Here we searched for only stocks that have a ‘Strong Buy’ and ‘Moderate Buy’ analyst consensus rating. From the generated results, we scanned for stocks with notable upside from current prices. Go to the Earnings Calendar<<
Now let’s delve deeper into these five top stocks:
1. Zions Bancorp (NASDAQ:ZION)
Vining Sparks’ Marty Mosby is one of the Top 10 analysts on TipRanks for his stock picking ability. And in his first quarter earnings preview, Mosby upgraded Zions bank from ‘Buy’ to ‘Strong Buy.’ This rating comes with a $65 price target (24% upside potential).
“We believe that ZION should be able to generate stronger revenue per share growth than the market currently anticipates, as it should benefit from both rising interest rates and their respective strategic initiatives” cheers Mosby. He is bullish on Large Cap US banks in general- and spies multiple tailwinds for the sector from the recent tax reform and rate hikes to stable credit costs.
2. T-Mobile US (NYSE:TMUS)
T-Mobile US, Inc. is the third-largest wireless carrier in the US. The company is easily outpacing competitors down to: 1) a greatly improved network, and 2) targeted marketing for under-served urban and rural areas. In 2017, for example, TMUS opened 1,500 T-Mobile-branded stores and 1,300 MetroPCS-branded stores.
So it’s not surprising that top Oppenheimer analyst Timothy Horan is feeling confident ahead of earnings season. In his cloud 1Q18 earnings preview, he writes that TMUS is “about the only company doing well [in adding subscribers], capturing 100% wireless subscriber flow share.” As a result he concludes “We expect TMUS to deliver upbeat financial results following its better balance of sub growth and margins.”
Our data shows that TMUS scores straight As from the Street with 7 recent buy ratings. Moreover, the $76 average analyst price target translates into over 20% upside potential.
3. Gilead Sciences (NASDAQ:GILD)
Following a tough couple of years, Gilead is now looking much more promising. The company suffered on the rapid decline of its key hepatitis franchise- and share prices halved from 2015 to 2017. However, with the help of its fast-growing HIV franchise, Gilead is now set up for some of the biggest potential beats in the biotech sector.
This is according to top RBC Capital analyst Brian Abrahams. He is betting on “a strong 1Q for GILD, as the mix shift of HIV revenues continues to track more favorably for GILD’s long-term life cycle and the HCV market looks to be steady to slightly up.” As a result, Abrahams has a bullish $94 price target on GILD (26% upside potential).
4. Raytheon (NYSE:RTN)
Defense giant Raytheon is the world’s largest producer of guided missiles. “Raytheon is seeing strong demand in missiles, missile defense, and international markets, with strength in each of these niches likely continuing since last quarter” writes RBC Capital’s Matthew McConnell in his Q1 preview.
He sums up the stock’s setup into earnings here: “RTN is up +15.5% YTD, +660 bps vs peers as the defense environment remains solid and it is among the best-positioned of the defense primes for the Trump administration’s new National Defense Strategy.”
Plus improving visibility following the FY18 budget could lead to a 2018 guidance raise. McConnell’s $262 price target indicates 20% upside potential from current levels.
Encouragingly, TipRanks shows that Raytheon also scores a ‘Strong Buy’ analyst consensus rating. In the last three months, RTN has received 7 buy ratings vs only 1 hold rating. The average price target of these analysts works out at $235.
5. Amazon (NASDAQ:AMZN)
Goldman Sachs has picked Amazon as one of its top 7 stocks for this earnings season. The e-commerce giant is due to report its Q1 results on April 26. “We recommend investors focus on organic growth reflected in sales and pre-tax margins, rather than the tax cut-assisted EPS growth,” advises the firm. “Consensus forecasts double-digit sales growth in energy, information technology, and materials. Strong top-line growth is consistent with solid economic activity in the first quarter.”
Overall the Street is very bullish on Amazon right now. In the last three months, 37 out of 39 analysts have published ‘Buy’ ratings on the stock. Moreover, analysts (on average) are predicting further upside from current share prices of 18%. This is despite the fact that the stock is already trading above $1460.
Five-star RBC Capital analyst Mark Mahaney explains: “Even though AMZN has consistently traded at a premium valuation level (average forward P/E multiple of 35–40x+ since 2007), its sector-leading forward EPS growth outlook and its high EPS quality (very high FCF conversion) warrant, in our opinion, a considerable market multiple premium.”
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