Technology companies have displayed resilience so far this earnings season, despite coronavirus-related headwinds prevailing in the market.
The sector has benefited from strength in the data center market and growing adoption of cloud-based applications, courtesy of digital transformation across all major industries.
Markedly, Intel’s first-quarter 2020 revenues reflected strength in its data-centric businesses while Microsoft MSFT Azure and Amazon’s cloud computing division — Amazon Web Services (AWS) — gained solid traction among healthcare workers and medical researchers. Also, Microsoft’s cloud-based communication platform — Teams — witnessed robust growth due to the coronavirus-led work-from-home, and online learning wave. (Read More: Microsoft Q3 Earnings & Revenues Beat Estimates, Up Y/Y)
However, supply chain disruptions due to COVID-19 induced lockdowns as well as weakness in automobile and PC spending have affected results. Notably, ON Semiconductor witnessed a decline in first-quarter revenues due to the closure of factories globally and weak demand caused by the pandemic.
Nevertheless, online connectivity solutions have witnessed robust traction due to COVID-19 induced lockdowns. Additionally, internet-based platforms benefited from COVID-19 induced lockdowns as more merchants moved their operations online. The pandemic has also led to higher Internet traffic. For instance, Shopify SHOP witnessed a solid growth in revenues driven by strong performance of the Shopify app and Shopify Plus platform. (Read More: Shopify Q1 Earnings Surpass Estimates, Shares Up)
Yet, lower spend on advertising negatively impacted the performance of Microsoft’s LinkedIn, and other social media companies like Facebook and Twitter.
Insight Into Key Releases
Given this mixed backdrop, investors interested in the tech sector companies eagerly await quarterly reports from notable companies set to report on May 14.
Our proven model predicts an earnings beat for Wix.com WIX in first-quarter 2020. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Wix.com has an Earnings ESP of +100.00% and a Zacks Rank #3.
The company’s first-quarter 2020 performance is expected to have benefited from robust adoption of its innovative digital services like Wix ADI and Wix Payments as well as new products like Editor X.
Moreover, the company has noted that growth in stay-at-home trends due to COVID-19 induced lockdowns has increased the number of new registered users, premium subscriptions and cohort collections in the to be reported quarter. (Read More: Wix.com to Report Q1 Earnings: Is a Beat in the Cards?)
The Zacks Consensus Estimate for first-quarter earnings is pegged at a loss of 2 cents, unchanged over the last 30 days.
Wixcom Ltd Price and EPS Surprise
Wixcom Ltd price-eps-surprise | Wixcom Ltd Quote
Covetrus Inc. CVET has a Zacks Rank #3 and an Earnings ESP of +41.67%, a combination which increases the possibility of a beat.
The company’s first-quarter 2020 results are expected to reflect the impact of strong momentum in the Vet’s First Choice business. Moreover, in a business update released on Apr 22, the company noted growth in the prescription management platform and customer stocking activity due to COVID-19 in March. However, this was partially offset by a decline in net sales in the last two weeks of March.
Moreover, company stated a preliminary net sales figure of $1.07 billion for the first quarter, which indicates growth of 13% year over year. The Zacks Consensus Estimate for revenues is currently pegged at $1.07 billion.
Notably, the consensus mark for first-quarter 2020 earnings is pegged at 12 cents per share, up 33.3% in the past 30 days.
Covetrus Inc Price and EPS Surprise
Covetrus Inc price-eps-surprise | Covetrus Inc Quote
New Relic, Inc.’s NEWR fourth-quarter fiscal 2020 results are likely to reflect the expansion of installed base driven by increased usage, expanded application coverage and cross-selling opportunities.
The company has an Earnings ESP of +11.11% and a Zacks Rank #3.
Moreover, the additions of new features like New Relic logs, serverless, metrics, traces and programmability are expected to have boosted adoption of its unified New Relic One platform that enables customers to derive meaningful insights from complex data, and accelerate business processes.
In the past 30 days, the Zacks Consensus Estimate for fiscal fourth-quarter earnings remained unchanged at 4 cents per share.
New Relic Inc Price and EPS Surprise
New Relic Inc price-eps-surprise | New Relic Inc Quote
Globant S.A’s GLOB first-quarter 2020 results are likely to reflect the impact of expanded client base driven by digital transformation taking place across all major industries. Moreover, the new intelligent enterprise and conversational interfaces studios which launched in the first quarter are expected to have witnessed solid adoption. These studios create better experiences for customers by leveraging advanced AI and ERP capabilities.
On Apr 15, the company raised its revenue guidance for first quarter 2020 to $190 million from the previous guidance of $188 million. The Zacks Consensus Estimate for revenues is currently pegged at $189.7 million.
The company also reaffirmed its previous earnings guidance of at least 62 cents per share.
The Zacks Consensus Estimate for earnings is at 63 cents per share, which is unchanged over the past 30 days.
Globant has a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Globant SA Price and EPS Surprise
Globant SA price-eps-surprise | Globant SA Quote
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