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The Zacks Analyst Blog Highlights: Shopify, Square, ANSYS, PayPal and CDW

Zacks Equity Research
·7 min read

For Immediate Release

Chicago, IL – May 6, 2020 – 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: Shopify Inc. SHOP, Square SQ, ANSYS ANSS, PayPal Holdings, Inc. PYPL and CDW Corporation’s CDW.

Here are highlights from Tuesday’s Analyst Blog:

Watch for These Tech Earnings Reports Today

Technology stocks’ first-quarter results are expected to reflect broad-based uptick in demand for cloud computing solutions and digital transformation techniques triggered by the coronavirus-pandemic.

However, weakness in automobile and PC verticals due to the coronavirus-induced economic crisis and supply chain disruption is likely to have weighed on the business prospects of the technology companies in the first quarter. The coronavirus outbreak has dampened sales with millions under lockdown. (Read More: PC Shipments Fall in Q1 on Coronavirus-Led Supply-Chain Woes)

Moreover, sluggishness in consultation and lower ad-spending amid slowdown in IT spending might have limited growth for the Internet-based tech companies in the first quarter. (Read More: Coronavirus-Led Slowdown to Hurt Corporate IT Spending – IDC)

Nevertheless, coronavirus-induced work-from-home wave is likely to have bolstered sales of processors utilized in enterprise laptops and data center servers. This, in turn, is expected to have benefited the technology sector in the to-be-reported quarter. Markedly, both AMD and Intel gained from robust adoption of high-performance processors in the first quarter.

Besides, work-from-home trend is likely to have benefited the companies offering video conferencing tools and workspace management offerings.

For instance, Microsoft's third-quarter fiscal 2020 results gained from momentum in Azure, impressive Teams user growth led by coronavirus-induced work-from-home wave and uptick in Surface devices. (Read more: Microsoft Q3 Earnings & Revenues Beat Estimates, Up Y/Y)

Further, stay-at-home wave is likely to have driven adoption of cloud computing solutions, including contactless payment, online education portals, cloud-gaming, social media platforms, and other leisure tools.

Glimpse on Few Upcoming Q1 Releases

Given this mixed backdrop, investors interested in the tech sector companies keenly await quarterly reports from notable companies slated to report on May 6.

Our proven model predicts an earnings beat for Shopify Inc. 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.

Shopify has an Earnings ESP of +23.41% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s first-quarter 2020 performance is anticipated to have benefited from increasing adoption of merchant-friendly applications and strong online sales triggered by the coronavirus outbreak.

Moreover, adoption of “multi-currency feature” aimed at enabling merchants to sell products in several currencies and receive payments in their respective local currency might have driven Shopify Plus revenues in the quarter to be reported. (Read More: Shopify to Report Q1 Earnings: Is a Beat in the Cards?)

The consensus for first-quarter earnings is pegged at loss of 18 cents per share, which narrowed from a loss of 19 cents in the past 30 days.

Square's first-quarter 2020 results are likely to reflect strength in product and services portfolio despite coronavirus woes.

Notably, Square has an Earnings ESP of +2.15% and a Zacks Rank #3.

The company’s strong product lines including Square Invoices, Instant Deposits, Cash Card, Square Point of Sale, Square Online Store, Square Reader, Square Photo Studio, Order Manager, Square Payroll and Square Stand are expected to have driven the first-quarter performance. (Read More: Square to Report Q1 Earnings: What's in the Offing?)

The Zacks Consensus Estimate for first-quarter earnings is pegged at 13 cents per share, which has been stable over the past seven days, suggesting an improvement of 18.2% year over year.

ANSYS' first-quarter 2020 results are likely to reflect gains from robust demand of its simulation solutions in the medical devices market. This trend is expected to have continued in the first quarter owing to large demand for medical devices due to the coronavirus pandemic.

Notably, ANSYS has an Earnings ESP of +2.14% and a Zacks Rank #3.

Moreover, strong synergies from its partnerships with Autodesk, Microsoft and Rockwell Automation are likely to have aided the company in acquiring more customers. This, in turn, is expected to have benefited first-quarter performance. (Read More: Is a Beat in the Cards for ANSYS in Q1 Earnings?)

The Zacks Consensus Estimate for first-quarter earnings is pegged at 78 cents per share, unchanged in the past 30 days.

PayPal Holdings, Inc. first-quarter 2020 results are likely to reflect gains from portfolio strength. Robust mobile checkout services of One Touch are expected to have contributed to the company’s total payment volume growth.

Further, Venmo’s improving monetization efforts are likely to have bolstered adoption rate and driven total active accounts in the first quarter.

However, coronavirus related uncertainties and disruptions are anticipated to get reflected in the company’s first-quarter results. (Read More: PayPal to Report Q1 Earnings: What's in the Offing?)

PayPal has an Earnings ESP of -3.16% and a Zacks Rank #3.

The Zacks Consensus Estimate for first-quarter earnings stands at 76 cents per share, unchanged in the past seven days.

CDW Corporation’s first-quarter 2020 results are likely to reflect declines in both enterprise storage and servers, which might have dampened data center hardware growth. Further, the passage of Windows 10 replacement cycle may have hindered growth.

However, strength across end markets, particularly small business, government and healthcare, and synergies from the Scalar acquisition deal to further fortify its footprint in Canada are expected to have limited the overall decline.

The company currently carries a Zacks Rank #4 (Sell).

The consensus for first-quarter earnings stands at $1.36 per share, unchanged in the past seven days.

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Zacks Investment Research

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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/performancefor information about the performance numbers displayed in this press release.

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ANSYS, Inc. (ANSS) : Free Stock Analysis Report
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PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
Square, Inc. (SQ) : Free Stock Analysis Report
Shopify Inc. (SHOP) : Free Stock Analysis Report
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