The Zacks Analyst Blog Highlights Aspen Technology, Camtek, WESCO International, DigitalOcean Holdings and Fastly
For Immediate Release
Chicago, IL – July 26, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Aspen Technology Inc. AZPN, Camtek Ltd. CAMT, WESCO International Inc. WCC, DigitalOcean Holdings Inc. DOCN and Fastly Inc. FSLY.
Here are highlights from Monday’s Analyst Blog:
Top 5 Technology Stocks Poised to Beat on Earnings
This will be the first major week of the second-quarter 2022 earnings season with as many as 892 companies slated to declare quarterly numbers. Most importantly, five big tech companies will report this week.
After the earnings release of banking behemoths, these technology giants will be the next lot that market participants will analyze. Each and every data as well as guidance of these companies will be studied minutely for an idea about the health of the industry, sector and the broader economy.
Aside from these technology bigwigs, several mid-cap tech firms will also report earnings results in the next couple of weeks. We have selected five such companies with a favorable Zacks Rank that are set to beat on earnings results. These are — Aspen Technology Inc., Camtek Ltd., WESCO International Inc., DigitalOcean Holdings Inc. and Fastly Inc.
Technology Sector in Q2 At a Glance
Like the first quarter of 2022, the technology sector suffered a big hit in the second quarter. The Technology Select Sector SPDR — one of the 11 broad sectors of the Wall Street benchmark the S&P 500 Index — tumbled 19.8% in second-quarter 2022.
Moreover, mounting inflation has compelled the Fed to significantly raise the benchmark interest rate from March this year. In the last quarter, the Fed Fund rate was elevated from 0.25-0.50% to 1.50-1.75%.
The central bank also imposed a tougher monetary control, sucking liquidity from the economy raising the market's risk-free returns. The yield on the benchmark 10-Year U.S. Treasury Note hovered around 3% most of the time last quarter.
A higher interest rate is detrimental to the growth sectors like technology. A higher discount rate reduces future income from investment in growth stocks. Moreover, growth companies depend on easy access to cheap credit for expanding their businesses.
Q2 Earnings Results So Far
As of Jul 22, 106 companies within the S&P 500 Index reported their financial numbers. Total earnings of these companies are down 6.9% year over year on 7.2% higher revenues, with 71.7% beating EPS estimates and 63.2% beating revenue estimates. Our latest projection is that for the second quarter as a whole, total earnings of the S&P 500 Index will rise 3.7% year over year on 10.2% higher revenues.
Our Top Picks
Five technology companies will report earnings results within the next couple of weeks. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today's Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings releases. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Camtek designs, develops, manufactures, and markets automatic optical inspection systems and related products. CAMT's automatic inspection systems are used to enhance both production processes and yield for manufacturers in the printed circuit board industry, the high density interconnect substrate industry and the semiconductor manufacturing and packaging industry.
Camtek has an Earnings ESP of +1.12%. It has an expected earnings growth rate of 12% for the current year. The Zacks Consensus Estimate for current-year earnings improved 3.5% over the last 90 days.
Zacks Rank #2 CAMT recorded earnings surprises in the last four reported quarters, with an average beat of 5%. The company is set to release earnings results on Jul 27, before the opening bell.
Fastly operates an edge cloud platform for processing, serving, and securing its customer's applications in the United States, the Asia Pacific, Europe, and internationally. FSLY offers cloud computing, image optimization, security, edge computer technology and streaming solutions.
Fastly has an Earnings ESP of +8.40%. The Zacks Consensus Estimate for current-year earnings improved 0.1% over the last 90 days. Zacks Rank #2 FSLY recorded earnings surprises in three out of the last four reported quarters, with an average beat of 21.1%. The company is set to release earnings results on Aug 3, after the closing bell.
WESCO is benefiting from a strong performance by all three business units – Electrical and Electronic Solutions (EES), Communications and Security Solutions (CSS) and Utility and Broadband Solutions (UBS). Additionally, contributions from expanded product and service offerings are driving top-line growth.
Further, solid momentum across non-residential construction, original equipment manufacturer and industrial businesses is driving EES revenues of WCC. Additionally, well-performing security solutions & network infrastructure businesses are supporting the CSS segment. Further, robust utility, broadband and integrated supply businesses are aiding the UBS segment.
WESCO has an Earnings ESP of +3.62%. It has an expected earnings growth rate of 47.7% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.7% over the last 30 days.
Zacks Rank #1 WCC recorded earnings surprises in the last four reported quarters, with an average beat of 32.9%. The company is set to release earnings results on Aug 4, before the opening bell.
Aspen Technology's performance is gaining from improving customer demand. AZPN's diversified product portfolio especially its asset optimization and management software solutions and Asset Performance Management suite is witnessing healthy momentum.
The rapid adoption of cloud-based solutions, the proliferation of big data analytics and Internet of Things technologies, along with higher spend on software, will likely drive Aspen Technology's top line in the long haul. Strategic acquisitions are likely to boost top-line going forward. The integration with Emerson's OSI Inc and the Geological Simulation Software business bodes well in the long haul.
AZPN has an Earnings ESP of +1.40% for fourth-quarter fiscal 2022. It has an expected earnings growth rate of 13.8% for the current year (ending June 2023). The Zacks Consensus Estimate for current-year earnings improved 8.7% over the last 60 days.
Zacks Rank #2 Aspen Technology recorded earnings surprises in the last three out of four reported quarters, with an average beat of 4.1%. The company is set to release earnings results on Aug 8, after the closing bell.
DigitalOcean operates a cloud computing platform in North America, Europe, Asia, and internationally. DOCN helps developers, startups and small and medium-sized businesses rapidly build, deploy and scale applications to accelerate innovation and increase productivity and agility.
DigitalOcean has an Earnings ESP of +6.94%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.3% over the last 60 days.
Zacks Rank #2 DOCN recorded earnings surprises in three out of the last four reported quarters, with an average beat of 20.2%. The company is set to release earnings results on Aug 8, after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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WESCO International, Inc. (WCC) : Free Stock Analysis Report
Camtek Ltd. (CAMT) : Free Stock Analysis Report
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Fastly, Inc. (FSLY) : Free Stock Analysis Report
DigitalOcean Holdings, Inc. (DOCN) : Free Stock Analysis Report
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