5 Stocks To Watch this Week 10/17: NFLX, ISRG, INTC, EBAY, MCD
Estimize | Oct 17, 2016 09:13AM ET
Monday, October 17
Tuesday, October 18
Wednesday, October 19
Friday, October 21
Netflix (NASDAQ:NFLX)
Consumer Discretionary - Internet & Catalog Retail | Reports October 17, after the close.
The Estimize consensus is looking for earnings per share of 8 cents, two cents higher than Wall Street and up 8% from the same period last year. That estimate has increased 3% since NFLX’s most recent report. Revenue is anticipated to increase 31% YoY to $2.28 billion. Netflix beat earnings expectations in the first two quarters of the year, but after a huge plunge in the stock in the beginning of the year, shares are still down 11% YTD.
Get The News You Want
What to Watch: As is always the case with Netflix, investors will be closely watching subscription growth numbers for the quarter. In the second quarter Netflix added 1.7 million subscribers, well below its own expectations of 2.5 million. A majority of the 1.7 million subscribers came internationally, where management has begun to shift its focus. This large discrepancy between actuals and expected results was blamed on greater churn after monthly rates were raised. Tenured members were also un-grandfathered from cheaper plans into the new more expensive service. This should continue to be a problem, conceivably until the end of the year.
On a positive note, Netflix continues to gain mainstream media attention from its original content. Its most recent series, Luke Cage, was in such high demand its opening week that it crashed servers. Meanwhile, new partnerships and ongoing global expansion will help boost earnings if domestic problems continue. Netflix will now be featured in Comcast (NASDAQ:CMCSA) X1 set top boxes and is making its way to the big screen through a deal with iPic.
More importantly, Netflix is gaining more attention as a potential takeover target. In early October, new rumors surfaced that both Apple (NASDAQ:AAPL) and Walt Disney Company (NYSE:DIS) were thinking about making a bid for the video streaming platform. An acquisition may turn out to be a good thing for Netflix as it tries to stave off competitive headwinds from Amazon (NASDAQ:AMZN) and similar platforms.
Intuitive Surgical (NASDAQ:ISRG)
Health Care - Health Care Equipment & Supplies | Reports October 18, after the close.
The Estimize consensus is looking for earnings of $5.32 per share on $655 million in revenue, 20 cents higher than Wall Street on the bottom line and $7.5 million higher on the top. Compared to a year earlier, earnings are expected to grow 1% with revenue increasing 11%. EPS estimates have been lifted by 4% since the last quarterly report, and revenue estimates have come up 1%. The stock is up 31% YTD.
What to Watch: Intuitive Surgical has been fortunate to have found success with its da Vinci surgical systems. In each of the past 3 quarters, the company has posted double digit gains on both the top and bottom line. Q2 in particular saw worldwide da Vinci procedures grow by 16% compared to the second quarter of 2015. This was primarily driven by an increase in general surgery and urologic procedures in the U.S. Shipments of its flagship product also rose to 130 systems compared to 118 in the second quarter of 2015.
Minimally invasive robotic surgeries are still in their early stages, leaving Intuitive Surgical with a lot room to run. The company makes its biggest margins from new accessories such as the Xi Vessel Sealer, Xi Firefly and Xi Stapler. If system wide sales continue to grow at their current pace and Intuitive Surgical can capitalize on global expansion, then sky’s the limit for earnings potential. Health Care equipment in general is expected to do well in Q3, with earnings anticipated to increase 8.5% YoY. With 20 million more Americans insured in the US thanks to the Affordable Care Act, demand for health care services is picking up.
Intel (NASDAQ:INTC)
Information Technology - Software | Reports October 18, after the close.
The Estimize consensus is looking for earnings per share of $0.73 on $15.5 billion in revenue, in-line with Wall Street on both the top and the bottom-line. Compared to a year earlier, this reflects a 12% increase in earnings and a 7% increase on sales. Earnings and revenue estimates have increased 14% and 5%, respectively, since the last quarterly report. The stock is up 9% since the beginning of the year.
What to Watch: Intel’s earnings have consistently topped expectations while revenue is starting to show signs of weakness. Weak PC sales and IT spending have been the biggest headache that has pressured top line growth. Like many of its peers, Intel has shifted its focus away from its waning legacy business toward high growth markets such as AI, IoT Data Centers and Security. Last quarter the company saw these segments jump on a year over year basis with expectations to do the same on Tuesday. Client Computing was one of the lone sore spots in the second quarter report, declining 3% on a sequential and year over basis. While it’s safe to remain cautious about the PC market, management expects PC related sales to show some improvement this quarter.
Intel faces a number of imminent threats that could put pressure on earnings for multiple quarters. Google (NASDAQ:GOOGL), IBM (NYSE:IBM) and seven others have joined hands to take on Intel’s Data Center Group. The consortium includes many large well known companies and some smaller ones. Its impact on Intel remains to be seen but management would be wise to not take it lightly. Meanwhile, Apple is rumored to be replacing Intel chips in all of its Macbooks. This would be a near term blow but not one that would significantly cripple the company.
Currency headwinds and economic uncertainty in Europe are amongst the broader concerns facing the tech space, Intel included. Intel has a large presence worldwide which means they are susceptible to compressed earnings from the strong dollar.
eBay Inc (NASDAQ:EBAY)
Information Technology - Internet Software & Services | Reports October 19, after the close.
The Estimize consensus calls for EPS of $0.45, 1 cent higher than Wall Street’s consensus. Meanwhile, revenue expectations are nearly in-line with the sell-side, with the Estimize community expecting $2.19 billion, as compared to $2.18 billion. Expectations have stayed relatively flat since last quarter, putting YoY growth expectations at 4% for EPS and sales.
What to watch: After a rough second half of 2015 and first half of 2016, with both earnings and revenues falling significantly on a YoY basis, ecommerce pioneer eBay seems poised for a come back in Q3. The company struggled after the Q3 2015 spin-off of it’s profitable PayPal unit into it’s own publicly traded entity. Competition has also taken it’s toll, with the internet retailer making some major changes to compete with peers such as Amazon and WalMart, most notably by abandoning its core auction business in favor of “buy it now” options.
Last quarter saw strength in the Marketplace and Classified segments, with Classifieds showing robust growth in automotives and real estate, across regions such as Germany and Canada. Stubhub was also a bright spot, with revenues growing 40% YoY. EBay also recently announced they would be selling a majority of their stake in MercadoLibre Inc., Latin America’s largest online marketplace, and will use the $1B in proceeds for other growth initiatives.
McDonald’s Corporation (NYSE:MCD)
Consumer Discretionary - Hotels, Restaurants & Leisure | Reports October 21, before the open.
The Estimize consensus is looking for earnings per share of $1.50, one cent above the sell-side consensus and 6% higher than the same period a year earlier. That estimate has increased 4% since McDonald’s last quarterly report. Revenue is anticipated to decline 5% to $6.3 billion. The stock is down 4% since the beginning of the year.
What to Watch: After the implementation of a strategic turnaround plan last year, McDonald’s seems to be heading for its first road block in Q3. Despite 5 quarters of earnings growth, mostly brought about by share buybacks, revenue growth has been declining for 8 consecutive quarters. Popular menu introductions such as all day breakfast and the McPick 2 have lead to an increase in foot traffic, but not prolonged traffic, and they haven’t necessarily helped with the sales of other items. Another headwind may be a broader pullback in Europe after the Brexit ruling, and prolonged currency headwinds. McDonald’s has a huge presence in Europe with the region accounting for 37% of its total revenue.
One bright spot is the US consumer which remains healthy, with consumer sentiment and retail sales coming in strong for September. The consumer, however, has become very value focused, which could potentially help fast food restaurants like McDonald’s which continue to offer healthier options at value prices.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.