Why Amazon.com, Inc. (AMZN), Fitbit Inc (FIT), and Alphabet Inc (GOOGL) Look Good Ahead of Earnings?
Amazon.com, Inc. (NASDAQ:AMZN), Fitbit Inc (NYSE:FIT), and Alphabet Inc (NASDAQ:GOOGL) look like early winners ahead of an earnings session that comes on the heels of one of the worst rout in the stock market. Investors’ expectation on earnings is at all-time lows, seen by a decline in average earnings estimates on Wall Street. Amidst the backdrop of investor’s expectations, the three stocks are emerging as potential overachievers on the earnings front.
Fitbit’s Improving Business Sentiments
Fitbit Inc (NYSE:FIT) is already down by nearly 50% this year, having come under pressure over Industry wide-softness concerns and declining wearable demand. However, things are finally looking up for the bracelet and wearable maker. The bleeding appears to be over, seen by recent positive ratings from analysts at Morgan Stanley and Citi.
Improved demand for Fitbit Inc (NYSE:FIT)’s fitness trackers Blaze and Alta are some of the positive news that have helped push the stock higher in the market. The company has already shipped over one million units of each tracker.
Given the strong demand for the trackers, Morgan Stanley expects Fitbit to post a 10-15% increase in revenue. Expansion of shelf space at retailers should also help Fitbit accrue some much-needed competitive edge in the business according to the analysts.
Stanley Kovler an analyst at Citi expect the wearable maker to beat its first quarter guidance and provide a positive outlook for the second quarter. Morgan Stanley analysts also share the same sentiments having reiterated optimism of a bump on Fitbit Inc (NYSE:FIT)’s full-year outlook. The research firm currently has an overweight rating on the stock with a price target of $32.
Google’s Solid Core Business
Unlike other stocks, Google continues to prove why it is a fortress for investors. The tech giant has successfully differentiated itself as one of the most delightful companies, unlike others that have only one phase of growth before their business matures. Given the company’s solid core business, Morgan Stanley’s Brian Nowak believes the stock could rise to highs of $900 a share.
Accelerated traffic growth and continued cost discipline are some of the factors that should help fuel the upside run according to the analyst. Given that the stock has underperformed broader sectors, RBC Capital Markets analyst, Mark Mahaney, expects it to rise to $1000 in future.
Even though other Internet stocks have been on a losing streak, Alphabet Inc (NASDAQ:GOOGL) has continued to generate consistent revenue growth as well as margin stabilization and expansion. Investment efficiencies coupled with other bets should help steer the stock higher going forward.
Amazon ‘Buy’ Case
Amazon.com, Inc. (NASDAQ:AMZN) remains a strong buy in the market having cleared the $603.34 mark from a double bottom. Given that it is trading 10% off its December 29, 2015, highs of $696.44 a share, the stock could edge higher on a positive earnings report.
Consensus estimates is that Amazon.com, Inc.(NASDAQ:AMZN) will announce earnings per share of 58 cents a share compared to a loss of 12 cents a share posted last year. The Street also expects revenues of $27.98 billion, an increase of 23.2% from last year’s sales.
The estimates all but suggest that Amazon.com, Inc. (NASDAQ:AMZN) is growing robustly which should lead to more profitability going forward. Improvement in fulfillment expenses, FX driven revenue beat, as well as a likely return of gross margin expansion, should help the e-commerce giant beat consensus estimates in the quarter.
Given that everything is going right for the tech giant, Mr. Nowak remains confident of the stock edging to highs of $800 a share.
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