Next week brings big earnings reports from heavyweight financials and a couple other Wall Street favorites, some of which have strong forward earnings momentum ripe for investment. More than 40 companies in the S & P 500 are set to post results next week as second-quarter earnings gear up. For the quarterly period, the estimated year-over-year earnings growth rate for the broad market index is 8.8%, according to FactSet. If that comes out as the actual growth rate for the quarter, it will be the highest year-over-year earnings growth rate reported by the index since the first quarter of 2022, which saw a 9.4% growth rate, FactSet said. To find stocks that could see a postearnings bump next week, CNBC Pro screened FactSet for S & P 500 companies that have received at least 10 upside earnings-per-share revisions over the past three months. Then, CNBC Pro looked to see that earnings forecasts rose during the six-month period as well. Companies with strong earnings momentum often show revenue growth, improving margins or cost reductions, making the stocks look more attractive. Take a look at the stocks we found below: Netflix , which is set to report its results on Thursday, has strong earnings momentum, according to analysts. The streaming giant’s three- and six-month earnings estimates have risen 4.3% and 11.4%, respectively. Plus, the consensus price target, per FactSet, indicates a potential upside for the stock of 2.35% over the next 12 months. Shares have climbed about 35% this year. Earlier this week, TD Cowen analyst John Blackledge maintained his buy rating on Netflix and upped his price target by $50 to $775, which suggests shares could jump 14.4% from the stock’s Wednesday close. According to the analyst, Netflix’s upcoming print should reinforce the strong net subscriber additions and content slate ahead, with the expected release of new seasons of “Squid Game” and “Cobra Kai,” for example. The company’s paid-sharing initiatives and ad-supported subscription plan are other near-term catalysts, he said Tuesday. Regional bank names Northern Trust , Fifth Third and Regions Financial also made the cut. Of the group, Northern Trust has received the highest earnings estimate revisions over the past three and six months, at 6.7% and 15.1%, respectively. Although bank stocks have underperformed this year relative to the broader market, RBC Capital Markets said in a July 2 note that the “set-up looks very good for the banks” over the next 18 months. The firm cited its expectation for Federal Reserve interest rate cuts, accelerating net interest income growth and positive real GDP growth, which would spur loan growth, as catalysts for strong bank performance. RBC maintained an outperform rating on Regions and Fifth Third, and a sector perform rating on Morgan Stanley , another financial giant that passed the screener. United Airlines has had substantial earnings momentum heading into its quarterly print, which is set to release Wednesday. The airline’s earnings per share has been revised 3% higher over the past three and six months, after about 14 revisions. As of this past Wednesday’s close, shares of United Airlines were up 9.4% year to date, but the stock has slid more than 13% over the past month. Shares fell another 5.2% on Thursday after peer Delta Air Lines posted a significant drop in its net income . Although travel demand has been brisk, Delta said high costs for fuel and an excess of lower-tier seats weighed on its profits. That has sparked fears about what this means for United and rival carriers. Analysts polled by FactSet hold a consensus buy rating on United Airlines with a bullish price target of $71.16, which indicates 50.9% potential upside for the stock through Wednesday. — CNBC’s Chris Hayes contributed reporting.
https://image.cnbcfm.com/api/v1/image/108003567-1720565234661-gettyimages-2160760637-JAQUESILVA_09072024-4407.jpeg?v=1720801330&w=1920&h=1080
Source link
