As earnings season comes to a close, investors remain laser focused on the market. With this month marking week five of third quarter earnings season, 81% of S&P 500 companies have already posted Q3 numbers. According to Merrill Lynch, these results have surpassed the consensus estimate by 3% and have caused significant reactions within the market.
“Stock reactions following earnings have been slightly bigger than usual this earnings season in both directions,” Savita Subramanian wrote in a note to clients.
What does this mean for the companies that have yet to report earnings results? To find the answer to this question, we turned to TipRanks, a Financial Accountability Engine that measures and ranks analysts based on their performance.
Using the TipRanks' Stock Screener tool, we were able to take a closer look at stocks ahead of their third quarter earnings releases. As a result, we found 3 tickers that have been given Wall Street’s blessing going into their November 6 earnings releases (after market closes). In addition, each has amassed enough bullish recommendations over the last three months to earn a “Strong Buy” consensus rating.
So here are the three 'Strong Buy' stocks to watch this Wednesday:
IAC is a media and internet company that’s made up of more than 150 different brands and products, with well-known names including Angie’s List, Dotdash and Vimeo. It should also be noted that the company currently owns 80.5% of the outstanding equity and 97.5% of the total voting power of Match Group (MTCH), Tinder’s parent company. With its strong momentum expected to continue through the second half of 2019, it’s no wonder the Street is picking IAC ahead of its Q3 earnings release.
SunTrust Robinson’s Youssef Squali tells investors that he expects the results to fall in-line with consensus estimates. This amounts to a 12%-plus year-over-year revenue gain and about 21% margin, driven by revenue from MTCH and ANGI Homeservices (ANGI).
That being said, the five-star analyst is excited about the potential of both DotDash and Vimeo to fuel substantial gains. IAC has supported both of these brands with its recent acquisitions, Liquor.com for Dotdash and Magisto for Vimeo. Not to mention the proposed Match spinoff would see all of the $1.7 billion worth of exchangeable debt move away from IAC to MTCH, according to the analyst.
Squali adds, “Given its strong balance sheet, IAC is well-positioned for opportunistic M&A to bolster existing businesses and/or expand into new verticals, in our view”. All of the above factors played into his conclusion that IAC is still a Buy. At his $265 price target, shares could surge 18% over the next twelve months. (To watch Squali’s track record, click here)
Based on the 15 Buy ratings vs no Holds or Sells assigned in the last three months, other Wall Street analysts agree that this ‘Strong Buy’ is a solid bet. It also doesn’t hurt that its $302 average price target implies 34% upside potential. (See IAC stock analysis on TipRanks)
EOG Resources (EOG)
Unlike the other names on our list, this stock is on Wall Street’s radar as a result of emerging regulatory challenges rather than its upcoming third quarter earnings release.
Investor focus has locked in on determining how the oil producer will navigate potential regulatory changes as a result of the 2020 Presidential election in the U.S. The oil company has been feeling the heat following a tweet from Senator Elizabeth Warren that stated she would sign an executive order to put a total moratorium on all new fossil fuel leases for drilling offshore and on public lands as well as a frack ban in place if she is elected. This would not bode well for EOG as about 50% of its assets in the Delaware Basin and 60% of its acreage in the Powder River Basin are on federal lands.
Nonetheless, J.P. Morgan analyst Arun Jayaram argues that now is not the time to panic. “We think EOG will emphasize the flexibility that exists within its multi-basin portfolio and ability to pivot its development activity to private leasehold should a ‘worst case’ scenario occur. We also expect the company to highlight its strong environmental track record and meaningful financial support that the industry provides states such as New Mexico through oil and gas taxes and capital investments,” he wrote in a note to clients.
It should also be noted that even though oil volumes and cash flow are forecasted to fall slightly below consensus estimates, productivity in the Delaware Basin has been much stronger than previously expected.
With this in mind, Jayaram maintained his bullish thesis. In addition to his Buy rating, his $100 price target suggests 36% upside from the current share price. (To watch Jayaram’s track record, click here)
In general, Wall Street is optimistic when it comes to EOG. 9 Buy ratings and 3 Holds received in the last three months add up to a ‘Strong Buy’ analyst consensus. Adding to the good news, its $98 average price target puts the upside potential at 33%. (See EOG Resources stock analysis on TipRanks)
Hologic is best known as a medical technology company specializing in women’s health. Its products enable earlier and more accurate results for diagnosis and intervention, as well as provide surgical and medical aesthetics solutions. That being said, one top analyst is highlighting HOLX based on the huge upside potential from its molecular diagnostics business.
Piper Jaffray’s William Quirk points out that when looking at the rolling two year average, he sees 3%-5.5% potential upside, which amounts to $4.2-$8.2 million, assuming prevailing growth trends hold up. “Considering the growing viral business in the U.S., we believe this is a good candidate for near-term upside,” he opined.
Meanwhile, the GynSurg segment is also a must-watch area of the business thanks to the comp plan change back in October 2018 that has led to its reinvigoration.
With its Breast Health business also expected to exceed guidance, Quirk sees big things in store for the med tech company. “Accordingly, we believe HOLX shares can keep moving higher on 4Q19 upside. We see limited risk heading into 2020 guidance given current Street expectations,” the analyst explained.
As a result, Quirk kept his Buy rating and $59 price target. At this target, the upside potential lands at 21%. (To watch Quirk’s track record, click here)
Due to the fact that only bullish calls have been published in the last three months, the word on the Street is that HOLX is a ‘Strong Buy’. On top of this, its $58 average price target indicates 19% upside potential. (See Hologic stock analysis on TipRanks)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.