The third-quarter 2024 earnings season is slowly gathering pace. The last two weeks of this month are crucial for market participants as six out of the “Magnificent 7” companies will report their quarterly financial numbers. Investors will closely monitor these results.
Aside from these companies, several corporate bigwigs will report this month. We have narrowed our search to three technology giants that are set to beat on Q3 earnings results. These companies are Cadence Design Systems Inc. CDNS, Uber Technologies Inc. UBER and Onto Innovation Inc. ONTO.
Moreover, these stocks have solid upside price potential. We believe that a favorable Zacks Rank and a possible earnings beat will further increase their price appreciation.
3 Tech Giants to Buy Ahead of Earnings This Month
We recommend three technology bigwigs set to report earnings results this month. Each of these stocks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better (Rank #1 or 2) 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 release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Cadence Design Systems Inc.
Cadence Design Systems has been benefiting from the increasing demand for differentiated solutions, strong bookings and a healthy backlog. CDNS’ latest hardware (Palladium Z3 and Protium X3 systems) solutions are likely to gain traction, notably by AI, hyperscale and automotive companies. Hardware sales are expected to be higher in the second half of 2024.
Rapid design activity owing to transformative generational trends (Gen AI, hyperscale computing, 5G and autonomous driving), is likely to propel the top line of CDNS in the long run. Though CDNS does not expect massive revenue growth in the Verification business in 2024, the segment should pick up pace from 2025.
CDNS has an Earnings ESP of +0.69%. The company will report on Oct. 28, after the closing bell. Cadence Design Systems has an expected revenue and earnings growth rate of 13.2% and 14.2%, respectively, for the current year. The Zacks Consensus Estimate for the next quarter and the current year has improved in the last 30 days.
Excellent Short-Term Price Upside for CDNS Stock
The average short-term price target of brokerage firms represents an increase of 21.2% from the last closing price of $258.52. The brokerage target price is currently in the range of $225-$355. This indicates a maximum upside of 37.3% and a maximum downside of 13%.
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Uber Technologies Inc.
Uber Technologies’ Delivery business benefits from robust online order volumes. UBER’s efforts to expand its delivery operations through successive acquisitions are encouraging. Continued recovery in Mobility operations is also aiding the company. For third-quarter 2024, UBER expects gross bookings of $40.25-$41.75 billion.
Apart from the recovery in Mobility operations and the strong performance of the Delivery unit, UBER’s focus on financial discipline is encouraging as well. For third-quarter 2024, adjusted EBITDA is estimated between $1.58 billion and $1.68 billion.
UBER has an Earnings ESP of +50.0%. The company will report on Oct 31, before the opening bell. Uber Technologies has expected revenue and earnings growth rate of 16.5% and 24.1%, respectively, for the current year. The Zacks Consensus Estimate for the current quarter, next quarter, current year and next year has improved in the last 30 days.
Strong Short-Term Price Upside for UBER Shares
The average short-term price target of brokerage firms represents an increase of 11.2% from the last closing price of $79.16. The brokerage target price is currently in the range of $102-$66. This indicates a maximum upside of 28.9% and a maximum downside of 16.6%.
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Onto Innovation Inc.
Onto Innovation is gaining from the rapid adoption of its Dragonfly inspection system. ONTO noted record sales of $164 million in the last reported quarter from specialty and advanced packaging customers, driven by rising demand from AI packaging customers. ONTO is focused on inventory reduction to improve cash flow.
The launch of the JetStep X500 lithography tool, designed for next-generation glass substrates used in panel-level packaging, is a plus. ONTO expects third-quarter revenues in the $245-$255 million band on robust investments by HBM manufacturers in advanced packaging capacity and new capabilities.
ONTO has an Earnings ESP of +2.74%. The company will report on Oct 31, after the closing bell. Onto Innovation has an expected revenue and earnings growth rate of 16.5% and 24.1%, respectively, for the current year. The Zacks Consensus Estimate for the current quarter, next quarter, current year and next year has improved in the last 30 days.
Impressive Short-Term Price Upside for ONTO Stock
The average short-term price target of brokerage firms represents an increase of 23.7% from the last closing price of $209.59. The brokerage target price is currently in the range of $280-$230. This indicates a maximum upside of 33.6% and a maximum downside of 9.7%.
Image Source: Zacks Investment Research
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report
Uber Technologies, Inc. (UBER) : Free Stock Analysis Report
Onto Innovation Inc. (ONTO) : Free Stock Analysis Report
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