Avid Technology AVID is set to report first-quarter 2019 results on May 6.
The company’s earnings missed the Zacks Consensus Estimate in two of the trailing four quarters, the average negative surprise being 17.4%.
In the last reported quarter, Avid reported earnings of 29 cents per share that beat the Zacks Consensus Estimate by 14 cents. Moreover, revenues of $113 million beat the consensus mark of $111 million.
Software revenues from subscriptions increased 77% year over year to more than $10 million in the quarter. Revenues from the company’s e-commerce activities jumped 50% year over year.
For first-quarter 2019, Avid expects revenues between $96 million and $104 million. The company expects to maintain year-over-year growth. However, the first quarter is seasonally lower than the fourth quarter. Hence, sequentially, revenue growth is anticipated to decline.
The Zacks Consensus Estimate for revenues currently stands at $101.4 million, suggesting growth of 3.5% from the figure reported in the year-ago quarter.
Avid Technology, Inc. Price and EPS Surprise
Avid Technology, Inc. Price and EPS Surprise | Avid Technology, Inc. Quote
Meanwhile, the consensus mark for earnings has remained steady at 7 cents over the past 30 days, indicating growth of 200% from the year-ago quarter’s reported figure.
Let’s see how things are shaping up for this announcement.
Key Factors to Consider
Avid Technology’s first-quarter 2019 results are expected to benefit from increasing recurring revenues, driven by growth in subscriptions and long-term agreements already signed.
The company is focusing on achieving better margins on large deals, for which it is negotiating hard. Two deals, which were expected to be signed in fourth quarter 2018, couldn’t get completed due to this reason.
One of the deals was signed in first-quarter 2019, which is expected to boost bookings and Annual Contract Value (ACV). Avid expects to complete the other deal in the near term.
Moreover, solid demand for Integrated Solutions is expected to drive e-commerce and subscriptions revenues.
Further, Avid Technology’s expanding paid subscriber base is a key catalyst. Growing adoption of creative tools, driven by strong demand for the Avid First product family, is expected drive the top line in the soon-to-be-reported quarter.
Moreover, the company targets to save $20 million annually from initiatives to improve operational efficiency. This is expected to have a positive impact on first-quarter 2019’s profitability.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Avid Technology has a Zacks Rank #1 and 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.
Stocks That Warrant a Look
Here are three stocks you may want to consider, as our model suggests that these have the right combination of elements to deliver an earnings beat this earnings season.
FUJIFILM FUJIY has an Earnings ESP of +20.55% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agilent Technologies A has an Earnings ESP of +1.39% and a Zacks Rank #2.
Intuit INTU has an Earnings ESP of +0.78% and a Zacks Rank #2.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Avid Technology, Inc. (AVID) : Free Stock Analysis Report
Intuit Inc. (INTU) : Free Stock Analysis Report
Fujifilm Holdings Corp. (FUJIY) : Free Stock Analysis Report
Agilent Technologies, Inc. (A) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research