IQVIA Holdings, Lam Research, and SVB Financial Group are among the companies that outperform analyst expectations more than 90% of the time.
IQVIA, a health information technology and clinical research company, set a new 52-week high of $217.63 on Thursday. IQVIA shares have risen more than 130 percent since Oct. 19, the day before the company’s third-quarter earnings report.
According to Mitch Steves of RBC Capital, who spoke to CNBC on Monday, Lam Research and other semiconductor equipment makers may benefit from increased demand amid a global chip shortage.
In a report released on April 12, Bank of America’s Ebrahim Poonawala identified SVB Financial Group and Signature Bank as two of several U.S. mid-cap banks best positioned to outperform in the first quarter.
“We see SIVB as very well positioned to capitalize on the global economy’s and the banking sector’s digitization,” Poonawala said of SVB Financial Group in the report.
As cryptocurrency gains traction, investor interest in Signature Bank’s digital asset banking strategy and its real-time blockchain-based payments platform “Signet” has increased. Coinbase went public on Wednesday, marking a “watershed” moment in the cryptocurrency industry, according to investors.
Snap-earnings on’s report comes as President Joe Biden attempts to pass a $2 trillion infrastructure plan.
Valero Energy said the company expects a net loss to investors in the first quarter amid higher-than-expected costs due to Winter Storm Uri.
The only company on the list with an average daily move of more than 3% following earnings is Intuitive Surgical.
According to Bank of America’s proprietary analysis, IQVIA and SVB Financial Group are among the stocks most likely to outperform expectations this earnings season. Companies also on the Bank of America list reporting next week include Tractor Supply Company and Union Pacific Corporation. Other stock picks on the list, including tech behemoths Amazon, Facebook, and Twitter, are set to report in the coming weeks.
The “unexpected” candidates
“Recent data from the options market and investment flows indicate that investors are positioning themselves for upside asymmetry this quarter. While our analysts expect an unusually high number of stocks to outperform the market, we are more selective than usual in buying calls ahead of earnings,” Goldman said in the note.
The firm compiled a list of stocks where Goldman analysts expect significant earnings beats in the next two weeks, potentially making those stocks attractive options plays. These stocks could be played with call options, with investors purchasing the right to buy shares at a predetermined price in the hope that the stock will rise above that level.
Goldman analysts have given all of the names on the list a buy rating.
Chipotle Mexican Grill and e-commerce platform Shopify are two consumer-facing names on the list. These firms will report on April 21 and 28, respectively.
Both stocks have struggled in recent months, with Chipotle still trading below where it closed on Feb. 9 following a sell-off later that month. Meanwhile, Shopify has only recently begun to recover from its brief peak in mid-February.
Shopify has one of the highest potential earnings surprises, with Goldman Sachs analysts projecting earnings per share that are more than 20% higher than the Wall Street consensus.
Blackstone and Boston Beer, both of which are scheduled to report earnings on April 22, are also on the list with nearly 20% earnings upside.
Goldman Sachs stands out as a bull in both of those stocks, despite the fact that Wall Street analysts are generally bearish on them. According to FactSet, 53 percent of Blackstone’s analysts rate the company as buy or outperform, with the rest rating it as hold or neutral.
According to FactSet, Boston Beer has positive ratings from 50% of its analysts, with 14% advising investors to sell the stock.
The Netflix case
“Despite increased competition, the long-term growth story remains intact,” according to Nat Schindler, a Bank of America analyst.
According to the firm, the streaming giant’s efforts to expand globally will likely be sufficient to overcome any investor concerns about price increases.
“We also see recent price increases as further evidence that Netflix is in a strong position despite increased competition, and we see upside potential to revenue and EPS estimates,” he added.
At Loop Capital, the sentiment was similar.
According to analyst Rob Sanderson, the investment firm predicted Netflix would add more subscribers than the Street predicted.
“The company’s financial position continues to improve, and margins should expand as each incremental sub requires less content investment,” he wrote.
And in a recent note to clients UBS analyst Eric Sheridan reiterated his buy rating but warned the stock may be volatile in the near term.
Nonetheless, Sheridan referred to Netflix as a “long-term winner in streaming media.”
Others, such as Baird analyst Will Power, believe that the end of the coronavirus will have little effect on Netflix.
“While recent price increases and increased competition have raised some investor concerns, we believe NFLX remains well positioned in the near and long term,” Power said.
Even Wedbush analyst Michael Pachter, who is bullish on the stock, admitted that there were some things he didn’t like about it.
But he wasn’t quite ready to change his underperform rating.
“While we are far more constructive about Netflix than we have been at any point in nearly a decade, we continue to question its valuation,” Pachter wrote.