Stocks to Watch as Earnings Reports Approach
Historically, some stocks tend to exceed revenue expectations and outperform the market shortly after announcing their earnings. Recently, analysts have noted that second-quarter revenues have been impressive, with most S&P 500 companies reporting positive earnings and revenue surprises. Next week is set to bring reports from notable companies like Microsoft, MasterCard, Lam Research, Spotify, and UnitedHealth Group.
Strong revenue figures have contributed to broader market gains, with the S&P 500 reaching a new all-time high this month. To identify potential winners, CNBC Pro analyzed data from Bespoke Investment Group focusing on stocks that typically exceed analysts’ consensus forecasts the following trading day. Some of the companies have an outstanding track record of exceeding earnings per share forecasts, showing an average increase of at least 1% post-announcement.
For instance, MasterCard is scheduled to report on Thursday. Historically, the credit card processor often surpasses analyst revenue estimates. This year, MasterCard shares have appreciated around 7%. Of the 40 analysts covering the stock, 30 have recommended it as a strong buy. Analyst Nate Svensson from Deutsche Bank is particularly optimistic, setting a price target of $650, stating that MasterCard stands out as one of the top “high-quality compounds” in payment processing.
Another company, Reservation Holdings, consistently beats revenue expectations 90% of the time, frequently seeing an average 2% rise post-reporting. The travel agency plans to announce its results next Tuesday. Barclays analyst Trevor Young noted that stocks for Priceline and Opentable have increased more than 13% this year, with current booking rates appearing significantly higher than the long-term average. He mentioned that while the full rating might impact Q2 results, he still views BKNG as the highest-quality name in the sector.
Additionally, semiconductor firms like LAM Research and Monolithic Power Systems also fit the criteria for stocks that could outperform expectations. These companies show a propensity for gains of 1.3% and 2.5% on the next trading day after their revenue announcements, respectively.
