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Tech Stocks Earnings: Key Predictions for IBM, LRCX & More


The Q1 earnings season has commenced, with a number of tech companies slated to report quarterly numbers over the next few days. The industry serves as a driver, enabler and indicator of technological progress.

Per the latest Earnings Preview, Technology is one of the five sectors anticipated to report double-digit earnings growth this quarter. Per the report, total earnings for the tech sector are projected to be up 19.5% on 11.4% higher revenues.

We note that the technology sector has been a robust performer over the past year. The sector has been benefiting from the rising demand for cloud-based platforms, growing adoption of Artificial Intelligence (AI) solutions, Augmented/Virtual reality devices, autonomous cars, advanced driver assisted systems (ADAS) and Internet of Things (IoT) related software.

Not All Companies are Poised to Impress

Though the overall tech sector is poised to shine in the quarter to be reported, this does not ensure earnings beat for all companies in the space. It should be noted that a company’s earnings outperformance is dependent on the overall business environment as well as management’s ability to implement operating and strategic plans.

In other words, a company might perform poorly despite a favorable business environment if it fails to capitalize on the opportunities due to lack of execution.

Let’s See How IBM, LRCX, MLNX & BMI are Placed

International Business Machines Corporation IBM is set to report first-quarter fiscal 2018 results on Apr 17. The Zacks Consensus Estimate for the company’s revenues and earnings are pegged at $18.71 billion and $2.39 per share, respectively, for the quarter under review. The estimates, when compared with the year-ago quarter figures, represent 0.42% increase in earnings and 3.1% growth in revenues.

International Business Machines Corporation Price and Consensus

IBM is well poised to benefit from its growing presence in the enterprise AI market on an increasing clientele. Strength in cloud, security and analytics as well as cost savings are expected to drive company’s top and bottom-line. Further, expanding footprint in the rapidly growing blockchain market is a positive. The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another tech company Lam Research Corporation (LRCX) is expected to report fiscal , third-quarter 2018 results on Apr 17, 2018. The company continues to witness increased adoption rates for 3D NAND technology, FinFETs and multi-patterning. It has undertaken cost-reduction activities and density scaling for 3D NAND and new memory technologies. All these factors could positively impact the top-line figure of the company.

Lam Research Corporation Price and Consensus

The Zacks Consensus Estimate for the company’s revenues and earnings are pegged at $2.85 billion and $4.36 per share, respectively, for the quarter. The stock carries a Zacks Rank #2 (Buy).

Mellanox Technologies, Ltd. (MLNX), a supplier of high-performance, end-to-end interconnect solutions for data center servers and storage systems, is slated to report first-quarter fiscal 2018 results on Apr 17. The Zacks Consensus Estimate for the company’s revenues and earnings are pegged at $244.1 million and 83 cents, respectively, for the quarter. Estimates for revenues and earnings grew 29.4% and 186.2%, respectively, compared with the year-ago figure. The stock sports a Zacks Rank #1.

Mellanox Technologies, Ltd. Price and Consensus

We believe that strong demand for Mellanox’s InfiniBand solutions along with collaborations with the likes of NEC Corporation, Atos, VMware, Microsoft’s Azure and Hewlett Packard Enterprise are likely to act as catalysts.

Lastly, Badger Meter, Inc. (BMI) is scheduled to report first-quarter 2018 results on Apr 18. The Zacks Consensus Estimate for the company’s revenues and earnings is pegged at $108.6 million and 39 cents per share indicating growth of 6.9% and 30%, respectively, on a year-over-year basis. The stock carries a Zacks Rank #3.

Badger Meter, Inc. Price and Consensus

The company has been experiencing growing demand for its E-Series meters and ORION cellular endpoints. Further, focus on acquisitions, rebound in the Flow Instrumentation business and benefits of the U.S. tax reform are other vital growth drivers. Meanwhile, elevated expenses and rising copper costs remain concerns.

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