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Upcoming Tech Earnings to Watch: NFLX, IBM, PYPL

Ryan McQueeney
Tech stocks were rebounding in morning trading Friday after suffering a brutal two-day stretch of selling. Will next week's tech earnings reports help inspire more rebounds?

Tech stocks were rebounding in morning trading Friday after suffering a brutal two-day stretch of selling. The bounce from multi-month lows also comes as the first wave of Q3 earnings reports are delivered, with big banks such as JPMorgan JPM, Citigroup C, and Wells Fargo WFC announcing their results this morning.

Investors will now hope that earnings results are strong enough for Wall Street to overlook a number of headwinds, including rising bond yields, concerns about inflation, and ongoing U.S-China trade disputes. This battle will be especially fierce in high-flying growth sectors like tech.

Reports will begin pouring in over the next few weeks, and investors should remember to use the Zacks Earnings Calendar during this busy stretch. This handy tool is your perfect one-stop-shop to properly prepare for earnings, dividend announcements, and other important financial releases.

Earnings in the Technology sector are expected to be nearly 15% higher than the previous year on 11.4% higher revenue.

But will any of the tech reports coming in the next few days have enough positive news to outweigh other headwinds? Let’s take a closer look at a few of the sector's marquee reports due during the week of October 15.

1. Netflix, Inc. NFLX

Video streaming behemoth Netflix is scheduled to release its latest quarterly earnings report after the market closes on October 16. Netflix is always the first of the FAANGs to report, and it could very well set the tone for the rest of the group. Shares of NFLX are up 60% so far this year, but that momentum has cooled as the stock is now down 20% from its July 52-week highs.

Netflix is holding a Zacks Rank #3 (Hold) ahead of its report. According to our latest Zacks Consensus Estimates, analysts expect the firm to report adjusted earnings of $0.68 per share and revenue of $3.99 billion. These results would represent year-over-year growth of 134.5% and 33.7%, respectively.


2. International Business Machines Corporation (IBM)

Enterprise computing behemoth IBM is slated to announce its quarterly financial results after the closing bell on October 16. IBM has finally started to grow its revenue consistently, although it continues to face stiff competition in key areas like cloud computing. Last quarter, investors were also skeptical about the company’s reliance on a new sales cycle for an outdated server technology.

Earnings estimates for IBM have come down in the past 60 days, earning the stock a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for profits now sits at $3.40 per share, about 3.0% higher than the year-ago quarter. Revenue is projected to be $19.10 billion, which would represent a dip of 0.3%. IBM will need to surprise on the top line to keep its newfound revenue growth momentum.


3. PayPal Holdings, Inc. (PYPL)

Digital and mobile payments giant PayPal is ready to post its most recent quarterly report after the market closes on October 18. PayPal had put together a strong 2018 until last month, when the stock began a correction. Shares have now tumbled nearly 18.5% from their 52-week highs.

Still, positive estimate revisions for upcoming fiscal periods have lifted the stock to a Zacks Rank #2 (Buy). For the soon-to-be-reported quarter, earnings and revenue are expected to be $0.54 per share and $3.67 billion, respectively. These Zacks Consensus Estimates indicate growth of 17.4% and 13.2%.


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