Chicago, IL – January 31, 2025 – Zacks Equity Research shares Virtu Financial VIRT as the Bull of the Day and Heineken HEINY as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Spotify Technology S.A. (SPOT), Broadridge Financial Solutions, Inc. BR and Coherent Corp. COHR.
Here is a synopsis of all five stocks:
The broad market has been rocking and rolling as of late. After the major risk event of the FOMC was on the books, investors have turned towards earnings. The good news is that there have been some fantastic reports coming from the Mag 7 stocks early on. It’s led to some huge returns for the riskiest of equities.
Amidst that backdrop, it can feel like any stock you pick is destined to skyrocket. But be careful, eventually what will matter is earnings. Stocks with the strongest earnings trends are in the best position to grow over the long-term. We find those stocks every day by leaning on the strength of the Zacks Rank. Stocks with the best Zacks Ranks have the most powerful earnings trends.
One such stock is today’s Bull of the Day, Virtu Financial. Virtu Financial operates as a financial services company in the United States, Asia Pacific, Canada, EMEA, Ireland, and internationally. The company operates through two segments, Market Making and Execution Services. Its product includes offerings in execution, liquidity sourcing, analytics and broker-neutral, capital markets, and multi-dealer platforms in workflow technology.
This company thrives when there is movement in financial markets. As a high-frequency trading firm, they love to see the volatility. It’s shown up in their earnings as well, and it’s a big reason why this is currently a Zacks Rank #1 (Strong Buy). Over the last sixty days, five analysts have increased their earnings estimates for the current year while three have followed suit for next year. The bullish moves have pushed up our Zacks Consensus Estimates for FY25 from $3.05 to $3.24 while next year’s number is up from $2.98 to $3.29.
The company is coming off a huge earnings beat with Q4 2024 EPS coming in at $1.14 versus expectations calling for just 86 cents. That 32% beat was the fourth consecutive quarterly beat for the company. A quick look at the Price, Consensus and Earnings Surprise Chart shows how earnings bottomed out at the start of 2024 and have skyrocketed since. The series of beats means that the company consistently under-promises and over-delivers. That’s what has delivered new all-time highs for the stock here to start 2025.
There have been some mega trends in the market that have been sort of interrupted here recently. Some stocks in downtrends have bounced mightily along with the broad market. Some of these stocks deserve the bounce while others may be experiencing some dead cat action. One way to sort out the good from the bad is by looking at the Zacks Rank. Stocks in the good graces of our Zacks Rank have strong earnings trends while those which are not have the weakest earnings trends.
Today’s Bear of the Day is Zacks Rank #5 (Strong Sell) Heineken. Heineken N.V. brews and sells beer and cider in the Americas, Europe, Africa, the Middle East, Eastern Europe, and the Asia Pacific. The company provides soft drinks and water. It offers its beers under the Heineken, Heineken Light, Orchard Thieves, Orchard Thieves Light, Birra Moretti, Coors, Murphy's and Beamish Stouts, Desperados, Tiger, Sol, and Foster's brand, as well as under regional and local brands.
The reason for the unfavorable rank is that several analysts on Wall Street have cut their earnings estimates. Over the last sixty days, three analysts have cut their estimates have dropped their numbers. The bearish moves have brought our Zacks Consensus Estimate for the current year down from $2.87 to $2.66 while next year’s number is off from $3.21 to $2.94.
Heineken is in the Beverages – Alcohol Peers industry which ranks in the Bottom 3% of our Zacks Industry Rank. There is one stock in that industry which is in the good graces of our Zacks Rank. That’s Zacks Rank #2 (Buy) Kirin (KNBWY). There are several Zacks Rank #3 (Hold) stocks including Molson Coors (TAP).
Spotify Technology S.A. is set to report its fourth-quarter 2024 results on Feb. 4, before the bell.
See Zacks Earnings Calendarto stay ahead of market-making news.
The Zacks Consensus Estimate for earnings in the to-be-reported quarter stands at $1.92 per share, indicating 592.3% year-over-year growth. The consensus mark for revenues is pegged at $4.35 billion, indicating year-over-year growth of 10%.
Two estimates for the to-be-reported quarter moved down over the past 30 days versus one upward revision. Over the same period, the Zacks Consensus Estimate for fourth-quarter 2024 earnings has decreased by 3%.
SPOT's earnings surprise history has not been impressive. Earnings lagged the Zacks Consensus Estimate in two of the four trailing quarters and surpassed twice, the average negative surprise being 74.4%.
Our proven model doesn't conclusively predict an earnings beat for Spotify this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Spotify has an Earnings ESP of -16.45% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here.
The growth of subscribers and monthly active users (MAU) is likely to have benefited the top line in the to-be-reported quarter, directly benefiting the bottom line as well.
The consensus estimate for total MAUs is pegged at 665.3 million, indicating year-over-year growth of 10.5%. The consensus estimate for total ad-supported MAUs stands at 420.2 million, indicating year-over-year growth of 11%. The consensus mark for premium subscribers stands at 260 billion, indicating year-over-year growth of 10%.
SPOT has rallied a massive 150% over the past year, 57% over the past six months and 20.4% in the past month. These price dynamics suggest that the stock is in a rally phase.
While SPOT's current growth prospects appear robust, potential investors should consider waiting as the stock may undergo a correction, especially when it does not seem poised for an earnings beat. SPOT's long-term growth potential remains strong, making it a compelling stock to watch for the right investment opportunity.
Here are a few stocks from the broader Business Services sector, which, according to our model, have the right combination of elements to beat on earnings this season.
Broadridge Financial Solutions, Inc.: The Zacks Consensus Estimate for the company's fourth-quarter 2024 revenues is pegged at $1.5 billion, indicating 9.8% year-over-year growth. The consensus mark for earnings stands at $1.4, suggesting 51.1% growth from the year-ago reported quarter. Earnings have surpassed the Zacks Consensus Estimate in two of the trailing four quarters and met in the other two, with an average earnings surprise of 1.3%.
BR has an Earnings ESP of +7.72% and a Zacks Rank of 2 at present. The company is scheduled to post its fourth-quarter results on Jan. 31.
Coherent Corp.: The Zacks Consensus Estimate for the company's second-quarter fiscal 2025 revenues is pegged at $1.4 billion, indicating a year-over-year increase of 21.6%. For earnings, the consensus mark is pegged at 70 cents per share, suggesting 94.4% growth from that reported in the year-ago quarter. The company beat the Zacks Consensus Estimate in all the past four quarters, with an average surprise of 25.5%.
COHR has an Earnings ESP of +7.48% and a Zacks Rank #2 at present. The company is scheduled to declare its fourth-quarter results on Feb. 5.
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Broadridge Financial Solutions, Inc. (BR) : Free Stock Analysis Report
Coherent Corp. (COHR) : Free Stock Analysis Report
Heineken NV (HEINY) : Free Stock Analysis Report
Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report
Spotify Technology (SPOT) : Free Stock Analysis Report
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