Tech stocks seem to be the ones to watch. Among companies reporting earnings next week are Applied Materials Inc. (NASDAQ: AMAT) and Agilent Technologies Inc. (NYSE: A), and here are quickie earnings previews for them.
Applied Materials' five-year earnings per share growth of 45.7 percent is better than the semiconductors industry average and the S&P 500. Applied Materials beat earnings expectations in the first three quarters of 2007. When it reported third quarter results back in August, earnings were 35 cents per share, three cents better than the consensus estimate of analysts surveyed by Thomson Financial, as well as the actual EPS in the same period of the previous year. For the fourth quarter, analysts expect only 29 cents per share, or $1.25 for the full year.
The analysts' consensus recommendation has been to buy Applied Materials for the past six months, but a closer look shows that most analysts are split between buy and hold. The share price has been slipping since reaching a 52-week high of $23.00 in August, almost falling during the week's Nasdaq volatility back to its 52-week low of $17.33 from a year ago.
For news about tech stocks that could influence Applied Materials' results, check out BloggingStocks' Applied Materials coverage.
MOST NOTEWORTHY: Viacom, Agilent, AudioCodes and Microsoft were today's noteworthy upgrades:
JP Morgan upgraded shares of Viacom (NYSE: VIA) to Overweight from Neutral as they believe contractual rate increases and distribution of the company's newer networks will drive higher earnings growth in 2008. The firm does not believe this growth is priced into shares.
JP Morgan also upgraded Agilent Technologies (NYSE: A) to Overweight from Neutral and added shares to its Focus List. Shares were upgraded based on its sum-of-the-parts valuation and sees further upside given that strategic buyers are back in the marketplace.
AudioCodes (NASDAQ: AUDC) was raised to Buy from Accumulate at Think Equities, as they expect the company to benefit from the newly acquired CTI squared business, the security gateway business, and traction in the SBC business, with Microsoft's OCS launch of a new driver today.
Goldman added Microsoft Corporation (NASDAQ: MSFT) to its Conviction Buy List, citing valuation and overwhelmingly negative sentiment, and expects shares to trade higher on a better Q1 report.
OTHER UPGRADES:
RBC Capital Markets upgraded Citrix Systems (NASDAQ: CTXS) to Outperform from Sector Perform.
Eaton Corporation (NYSE: ETN) was upgraded to Outperform from Market Perform at Friedman Billings.
MOST NOTEWORTHY: Orbitz Worldwide (OWW), Agilent (A), National Instruments (NATI) and Ametek (AME) were today's noteworthy initiations:
Orbitz Worldwide (NYSE: OWW) was initiated by a host of firms today:
Thomas Weisel and Morgan Stanley started Orbitz with an Overweight rating.
Pacific Crest and Piper Jaffray started shares with Overweight ratings, and $18 and $16 targets, respectively.
Stifel initiated Orbitz with a Buy rating and $16 target, while JP Morgan started shares with a Neutral rating.
Citigroup finds the valuation of Agilent (NYSE: A) attractive at current levels and started shares with a Buy rating, They expect a recovery in the company's Electronic Measurement business to drive shares to $43.
Citigroup initiated National Instruments (NASDAQ: NATI) with a Hold rating and $40 target, saying that shares could suffer if PMI decelerates in 3Q07 or negatively inflects in 1Q08.
Ametek (NYSE: AME) is is CIBC's top pick in the mid-cap Industrial Diversified area, due to the company's attractive asset portfolio and growth opportunities. CIBC initiated Ametek with a Sector Outperformer rating and $45 target...
OTHER INITIATIONS:
Jefferies initiated WNS Holdings (NYSE: WNS) with a Hold rating.
Bio-analytical business grew 15%, with particular strength in emerging markets
Going forward, it appears bio-analytics will remain strong and the opportunity for upside surprise is very possible considering improvements in electronics, particularly as it appears the communications business bottomed at the end of the quarter.
Electronic orders are up 8% and bio-analytics are up 14%. Signs the slowdown in wireless should end soon with an upswing expected for the back half of 2007.
I consider Agilent a must own stock, as all of its businesses are expected to be on a nice growth path in the second half of the year. Agilent has over $2.0 billion in cash, has a share repurchase program in place and is a big generator of free cash flow.
Agilent Technologies (NYSE: A), the tech equipment company that was spun-off from Hewlett-Packard Company (NYSE: HPQ), reported solid results yesterday. While they might not drive the stock higher, it is a good stock to keep up to date with and buy on a market correction.
Handset test measurement business was weak, which should not be a surprise since we have been blogging about weakness in the handset market for the past three or four months.
Bio-analytical business is doing very well, having a "blow-out" quarter. Revenue was up 22% year-over-year. Operating profit in this business was up 69%. Sales to China and India were up 33% and 38%, respectively.Many of the people who made HP into a great company decade after decade are with Agilent. The company is a strong product innovator and also is run increase shareholder value.
Keep an eye on Agilent and jump in during market sell-offs. Agilent has a strong balance sheet and good product innovation to be around for a long time.
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