Technology stocks are anticipated to display a sluggish third-quarter 2019, primarily owing to softness in the semiconductor space.
Per the latest Earnings Preview, tech sector’s third-quarter earnings are anticipated to be down 11.1% from the same period last year.
Continued impact of Huawei ban, higher tariffs and weak China market are likely to have affected third-quarter financials. Moreover, softness in NAND pricing and sluggishness in data center demand is anticipated to reflect in Technology companies’ results in the third quarter.
However, improving trend in PC shipments, increasing proliferation of IoT and growing clout of cloud-based applications are likely to have benefited the companies’ in the quarter under review.
Tech Stocks Commence Q3 on a Mixed Note
Prominent tech players, including, International Business Machines IBM, semiconductor companies like Texas Instruments TXN and Taiwan Semiconductor Manufacturing TSM and, software players like SAP and Cadence, among others, have already reported results.
Taiwan Semiconductor reported revenues of approximately $9.4 billion, up 12.6% year over year. The figure was also higher than the guided range of $9.1-$9.2 billion, on better-than-expected demand “from smartphone related applications.”
Meanwhile, Texas Instruments reported earnings of $1.49, which surpassed the Zacks Consensus Estimate by 5.7%. Meanwhile, revenues of approximately $3.77 billion lagged the Zacks Consensus Estimate by approximately 1%. Notably, this quarter marks the company’s fourth consecutive quarter of declining growth on a year-over-year basis. Weakening end-market conditions, owing to macro-economic headwinds and U.S.-China trade tensions, affected the top-line.
Moreover, IBM reported mixed third-quarter 2019 results, wherein earnings surpassed the Zacks Consensus Estimate while revenues missed the same. Headwinds from IBM Z product cycle and currency fluctuations weighed on top-line performance.
Furthermore, software companies, SAP and Cadence, provided impressive results with year-over-year growth in revenues and earnings. Robust demand for cloud-based applications aided financials.
In this backdrop, let’s take a sneak peek into four technology companies that are scheduled to report third-quarter 2019 earnings on Oct 24.
Citrix Systems CTXS is likely to deliver an earnings beat in the upcoming quarterly results, as it has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.
It has an Earnings ESP of +0.64% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Citrix Systems, Inc. Price and EPS Surprise
Citrix Systems, Inc. price-eps-surprise | Citrix Systems, Inc. Quote
Notably, the Zacks Consensus Estimate for earnings has been stable over the past 30 days at $1.24.
Citrix’s third-quarter performance is expected to reflect solid adoption of enterprise workspace productivity solutions and hybrid cloud offerings. Furthermore, traction witnessed by ShareFile deserves a special mention. (Read more: Citrix to Report Q3 Earnings: What's in the Cards?)
Intel’s INTC quarterly financials are expected to have benefited from robust adoption of latest processors and reflect improving trend in PC shipments. However, softness in NAND pricing and sluggishness in data center demand are likely to have negatively impacted third-quarter performance.
The chipmaker, currently carrying a Zacks Rank #3, is unlikely to deliver a positive earnings surprise because it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Intel Corporation Price and EPS Surprise
Intel Corporation price-eps-surprise | Intel Corporation Quote
Notably, the Zacks Consensus Estimate for earnings has been steady over the past 30 days at $1.24. (Read more: Intel to Report Q3 Earnings: What's in the Cards?)
Twitter’s TWTR efforts to make the platform more conversational are likely to have helped it expand and monetize user base in third-quarter 2019. Further, continued strong demand for video ad products like Video Website Cards and in-stream pre-roll is likely to have contributed to the top line.
Nevertheless, Twitter faces significant competition from the likes of Facebook, Google and Amazon for ad-dollars. This is likely to have negatively impacted the top line in the to-be-reported quarter.
Although Twitter has a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.
Markedly, the consensus mark for third-quarter earnings has been steady at 20 cents over the past 30 days. (Read more: Twitter to Report Q3 Earnings: What's in the Cards?)
Twitter, Inc. Price and EPS Surprise
Twitter, Inc. price-eps-surprise | Twitter, Inc. Quote
VeriSign’s VRSN growth in .com and .net domain name registrations is likely to have benefited the company’s performance in third-quarter 2019.
Additionally, the company’s renewal of the .com contract and price hikes for the .com and .net domain names is likely to have contributed to the top line.
However, increasing operating expenses related to research and development and sales and marketing are likely to get reflected in the company’s third-quarter top line.
This Zacks Rank #3 stock is unlikely to deliver a positive earnings surprise because it has an Earnings ESP of 0.00%.
VeriSign, Inc. Price and EPS Surprise
VeriSign, Inc. price-eps-surprise | VeriSign, Inc. Quote
Notably, the Zacks Consensus Estimate for third-quarter earnings has been steady at $1.31 over the past 30 days. (Read more: VeriSign to Report Q3 Earnings: What's in the Cards?)
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International Business Machines Corporation (IBM) : Free Stock Analysis Report
Twitter, Inc. (TWTR) : Free Stock Analysis Report
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Citrix Systems, Inc. (CTXS) : Free Stock Analysis Report
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
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Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
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