Earnings season is just beginning and so far, the tone is bullish. “We are expecting another solid earnings season for S&P 500 companies with quarterly EPS reaching a record ~$33.75 in 3Q17 — a positive earnings surprise of ~4.5%,” writes Dubravko Lakos-Bujas, JPMorgan’s head of US equity strategy. Meanwhile CNBC calculates that the third quarter tends to post the best-gain of all four seasons.
With this in mind, we used TipRanks’ Earnings Calendar to see which hot stocks are due to report their earnings in the next five days. 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’ or ‘Moderate Buy’ analyst consensus rating- and also scanned for stock’s with notable upside potential from the current share price:
Now let’s delve deeper into these three top stocks:
1. Netflix (NASDAQ:NFLX)
Keep your eyes peeled for the Q3 earnings report from entertainment powerhouse Netflix, scheduled for Monday after market close. Analysts are growing increasingly optimistic on the stock’s outlook. Netflix boasts the ability to boost prices without losing customers- a very encouraging sign for future growth potential.
Goldman Sachs analyst Heath Terry is certainly feeling the heat. He has just boosted his NFLX target from $200 all the way to $235. Even factoring in NFLX’s current record-high share price of almost $200, Terry’s new price target still projects big upside potential of close to 18%. Terry explains why he is even more bullish than consensus:
“While high expectations, particularly in light of the price increase, could lead to volatility post results, we believe upward revisions to consensus estimates will ultimately drive further outperformance… Content remains the primary driver of subscriber growth and engagement (and the pricing power that comes with it).”
He is estimating an additional net 1.1 million U.S. and 4.3 million international subscribers in the third quarter, boosted by the success of hit shows such as the crime thriller Ozark. TipRanks reveals that Terry outperforms the market both generally and on NFLX stock specifically. Indeed, across his 17 NFLX ratings he has a very impressive 82% success rate and 59% average return.
2. Canadian Pacific (NYSE:CP)
Railway company Canadian Pacific is a top stock to track right now. Last year’s EPS for the same quarter came in at $2.1- this time around the consensus EPS forecast comes in at $2.32. CP is set to report its results on Tuesday.
Notably four-star JP Morgan analyst Brian Ossenbeck has just upgraded CP to ‘buy’ following a slew of new contract wins. His new rating comes with a very shiny price target of $262 (55% upside). He has also added the company to the “J.P. Morgan U.S. Analyst focus List” as a potential growth idea. Ossenbeck believes CP’s “seasoned sales team” can lead to stronger volume growth, and ultimately increase the stock’s “stubbornly low” share price.
Overall, CP has received only buy ratings from analysts in the last three months. These analysts are predicting upside for the stock of over 25% from the current share price. According to Ossenbeck, the company should show a 3.5% compounded annual volume growth rate through 2019, that should lead to a mid-to-single digit top-line growth rate and improved EPS acceleration.
3. Honeywell International (NYSE:HON)
A Fortune 100 company with $39.3B sales in 2016, this ‘Strong Buy’ stock is set to report its earnings on October 20. Top Oppenheimer analyst Christopher Glynn says that HON advised 3Q17 results should reflect ~5% organic growth vs. prior 2-4% guidance. He is predicting 3Q EPS of $1.69 and total 2017 EPS of $7.10
“We remain behind the shares as HON’s solid mix of secular drivers (capital allocation, key technologies, broad-based safety, productivity and energy efficiency exposures) and cyclical drivers (Performance Materials and Technology mix recovery) lends above-average multi-year compounding opportunities” says Glynn. His $155 price target translates into sweet upside potential of over 8%.
Note too that HON has just announced a spin off its non-core assets (including its dedicated auto business and homes businesses) effective late 2018. This will help the company streamline its core businesses comments Glynn. He has a very strong track record on HON stock with a 100% success rate and 16.3% average return across 49 recommendations.
As we can see from the screenshot below, Glynn’s price target is right on-line with the average analyst price target. Meanwhile, HON has received a very promising 8 buy ratings and just 1 hold rating in the last three months.
TipRanks tracks the activity of 4,600 analysts on over 5,000 stocks. We rank these analysts according to their success rate and average return so you know exactly which analysts to follow to generate the best returns.
