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The Zacks Analyst Blog Highlights: Facebook, Activision Blizzard, Amazon.com and Intel

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For Immediate Release

Chicago, IL - November 06, 2015 - 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 the Facebook Inc. ( FB ), Activision Blizzard, Inc. ( ATVI ), Amazon.com, Inc. ( AMZN ) and Intel Corporation ( INTC ).

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Here are highlights from Thursday's Analyst Blog:

Facebook & 3 Other Tech Stocks to Buy on Q3 Beats

The third quarter earnings season is nearing its end with the majority of the S&P 500 companies having already reported their results. Though the overall scenario was challenging, the technology sector performed relatively well.

With results from 79% of the tech stocks (by market cap) in the S&P 500 index already out, total earnings for the sector are up 8.5% on 5% revenue growth, with 66.7% beating earnings per share (EPS) estimates and an above index average of 57.1% coming ahead of revenue estimates.

Tech Outperformers This Season

The results of the tech bellwethers were very impressive this season and the momentum is likely to continue in the coming periods. We bring you four such stocks that not only topped estimates this quarter but are likely to carry on with their good show, given significant opportunities.

Facebook Inc. ( FB )

Yesterday, social networking giant, Facebook posted better-than-expected numbers for the third quarter of 2015, sending shares up 4% to an all-time high of $107.85 in the aftermarket hours.

Adjusted earnings of 36 cents on revenues of $4,501 million easily topped the Zacks Consensus Estimate for earnings of 35 cents on revenues $4,386.7 million. The growth was driven by a significant upside in advertising revenues (up 45%), particularly mobile ad revenues (up 73% year over year).

Another key aspect of Facebook's earnings announcement was its user growth story. As of Sep 30, 2015, Facebook's Monthly Active Users (MAU) improved 14% year over year to 1.55 billion while Daily Active Users (DAU) grew 17% year over year and crossed the billion mark. Data for its video service was even more impressive. Facebook said that there are average 8 billion videos daily on Facebook with over 500 million users regularly watching it.

Facebook has gained significant traction in its mobile ad business within a very short span of time. Mobile monetization has increased with a higher number of marketers, continuing investment in new products and robust performance of its newsfeed ads. This combined with its massive user base and its ability to track personal details over time, make it a formidable force in the online ad market.

In addition, Instagram is doing well. Facebook is also propping up its other platforms like Messenger, Whatsapp and Oculus that can help it expand beyond the core business. Messenger boasts 700 million users while Whatsapp has a user base of 900 million and Instagram has 400 million users. The Internet.org initiative is also focused on boosting user growth in emerging economies like the sub-Saharan region.

At present, Facebook sports a Zacks Rank #1 (Strong Buy). The company's long-term EPS growth rate stands at 25.4% compared with the industry average of 14.1%. Its share price has increased 32.5% year-to-date.

Activision Blizzard, Inc. ( ATVI )

Video game giant, Activision Blizzard posted third quarter 2015 adjusted earnings of 18 cents on revenues $1.04 billion, which comfortably beat the Zacks Consensus Estimates of 13 cents and $947 million, respectively.

Simultaneously, the company announced the acquisition of Candy Crush maker King Digital Entertainment plc for $5.9 billion. The deal will help Activision Blizzard expand into the lucrative mobile gaming business, wherein it currently has a very limited presence.

Another key aspect of the deal is that Activision Blizzard, which has a strong male-gamer-dominated base, will now have a sizeable female user base. King Digital's iconic games Candy Crush and Candy Crush Soda are hugely popular with women. With the acquisition, Activision will boast over 500 million users in 196 countries.

As per Activision, the deal would make it the one of the global leaders in the interactive entertainment industry. The deal is likely to close in the spring of 2016. Meanwhile, ahead of the holiday season, we will have two important game releases from Activision. Call of Duty: Black Ops III is scheduled for a Nov 6 release while Deadpool is releasing on Nov 17.

At present, Activision sports a Zacks Rank #1. The company's long-term EPS growth rate stands at 7.5% while its share price has increased 86% year-to-date.

Amazon.com, Inc. ( AMZN )

Amazon surprised analysts after reporting a profit on a 23% sales gain. Shares went up 6.2% in response. The Zacks Consensus Estimate stood at a loss of 10 cents on revenues of $24.851 billion for the third quarter of 2015. In contrast, the company posted adjusted earnings per share of 17 cents on revenues of $25.4 billion.

Revenues were driven by strong sales in North America and explosive growth in its cloud computing business. Accounting for just 8% of revenues, Amazon Web Service or AWS comprised over 52% of the profits.

Apart from being a leading online retailer, Amazon has also become a primary provider of cloud infrastructure as a service to enterprise customers and has increased focus on the platform approach. We expect revenue growth and cash flows to remain strong and believe that its platform strategy and AWS will spur growth. Also, the company's investments are backed by a strong balance sheet.

The fourth quarter, which has the crucial holiday period, is the seasonally strongest quarter for retailers like Amazon. As a result, we expect to see the strong momentum in sales and earrings in the current quarter.

At present, Amazon carries a Zacks Rank #2 (Buy). The company's long-term EPS growth rate is 35.6% compared with the industry average of 16.4%. Share price has increased 107.7% year-to-date.

Intel Corporation ( INTC )

Another stock that might be an intriguing choice for investors right now is Intel Corporation. Intel reported third quarter 2015 adjusted earnings of 64 cents on revenues of $14.46 billion, easily surpassing the Zacks Consensus Estimates of 59 cents and $14.23 billion, respectively.

Though Intel took down its expectations for data center segment growth, citing continued weakness in enterprise spending as an offshoot to macroeconomic concerns, the business will still grow in double-digits this year. However, growth will be a few points short of 15% guided previously.

That said, the company remains totally focused on growing the data center/IoT/memory business and appears to be executing on the same lines. This bucket, which accounts for 38% of revenues, grew 5.4% sequentially and 12.4% year over year in the last quarter.

Intel has really cozied up with Chinese players, which may be expected to help both the data center and PC businesses as demand in mature markets moderates.

Also, the client business, of which PCs are a part, is looking up because Intel has started shipping a higher mix of latest generation products, which carry higher average selling price and higher margins. Another positive is the reduction in tablet subsidies, which have been coming down this year and management may be expected to reset expectations at the next earnings announcement. At present, Intel holds a Zacks Rank #2 and the company's long -term growth rate stands at 8.8%.

Conclusion

With humankind's desire and innovation to push the boundaries of science and technology, technology companies, will continue to present intriguing opportunities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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