Chicago, IL – January 15, 2025 – 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: Vertiv Holdings Co. VRT, The Goldman Sachs Group GS, ResMed RMD, Ralph Lauren Corp. RL and Amazon.com AMZN.
The fourth-quarter 2024 earnings season will kick off this week, with banking sector players due to report numbers. The overall picture ahead of this reporting cycle is one of continued resilience and a steadily improving outlook.
While most of the stocks are expected to outperform this earnings season, we have zeroed in on the best stocks of the sectors that have a high chance of surprising in their upcoming releases. These stocks — Vertiv Holdings Co., The Goldman Sachs Group, ResMed, Ralph Lauren Corp. and Amazon.com — could make great plays as the earnings season unfolds and will likely move higher in the days to come.
According to the latest Earnings Trends report, total S&P 500 earnings are expected to be up 7.4% from the year-ago period on 4.8% higher revenues. Estimates have steadily increased since the start of the period but the magnitude of estimate cuts is significantly lower than in comparable recent quarters.
Of the 16 Zacks sectors, nine are expected to post significant earnings growth in the fourth quarter, with the strongest gains in the Technology sector (14.9%), followed by Finance (12.7%), Medical (12.3%), Consumer Discretionary (8.1%), Retail (7.2%) and Business Services (7.2%).
The Technology sector has been a significant growth driver in recent quarters, and the trend is expected to continue in the fourth quarter and beyond. Technology sector fourth-quarter earnings are expected to be up 14.9% from the same period last year on 10.4% higher revenues. This will represent the sixth consecutive quarter of double-digit earnings growth.
Fourth-quarter earnings of the “Magnificent 7,” which now represents a large part of the S&P 500 Index, are expected to be up 20.9% from the same period last year on 12.3% higher revenues.
An earnings beat will definitely inspire investors’ confidence and propel the price of stocks higher. Picking the star performers would be easy if we go by our proprietary methodology that selects stocks with a combination of a positive Earnings ESP and a favorable Zacks Rank — Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst revisions. This is done because if an analyst reevaluates their estimate right before an earnings release, it means that they have fresh information that could potentially be more accurate than what analysts thought about a company two or three months ago.
Stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 or better produced an earnings surprise 70% of the time. Best of all, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10-year backtest. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Technology
Vertiv Holdings provides digital infrastructure and continuity solutions. It offers hardware, software, analytics and ongoing services. The stock has an Earnings ESP of +1.60% and a Zacks Rank #2.
Vertiv Holdings is a prominent player in the data center equipment industry, holding a substantial market share in power and cooling solutions. Artificial intelligence growth is boosting data centers’ demand for Vertiv’s offerings. Key growth drivers include Vertiv’s strong partnerships with chip manufacturers and its role in advancing technology to address the increasing energy density of server racks.
Analysts are bullish about the company’s growth prospects with an average brokerage recommendation (ABR) of 1.25 made by 16 brokerage firms. Out of them, 14 are Strong Buy, representing 87.5% of all recommendations. The average price target for Vertiv is $145.07, ranging from a low of $131.00 to a high of $161.00. Currently, shares of VTV are trading below the low average target price, representing a 5.3% discount. This suggests a solid entry point ahead of earnings.
The Zacks Consensus Estimate for the yet-to-be-reported quarter has been revised upward by a penny over the past seven days, implying growth of 50%. Revenues are expected to increase 15.2% from the year-ago quarter. Vertiv delivered an earnings surprise of 10.13% on average in the last four quarters. It is scheduled to report earnings on Feb. 19.
Vertiv Holdings Co. price-consensus-eps-surprise-chart | Vertiv Holdings Co. Quote
Finance
Goldman Sachs is a leading global financial holding company that provides IB, securities, investment management, and consumer banking services to a diversified client base. Its Earnings ESP is +1.98% and it has a Zacks Rank #2.
The stock is up about 6% over the past three months, driven by strong institutional client activity and improving fee income. Lower rates seem to have provided ample benefit to the company’s margin. The Fed has slashed interest rates by 100 bps since September. This will likely stabilize the funding/deposit costs.
Goldman has an ABR of 1.91, up from 1.83 a month ago. Of the 23 brokerage firms, 12 are Strong Buy and one is Buy. Strong Buy and Buy, respectively, account for 52.17% and 4.35% of all recommendations. The average Wall Street target price stands at $616.45, ranging from a low of $491.00 to a high of $736.00.
Goldman Sachs saw a positive earnings estimate revision of 3 cents for the yet-to-be-reported quarter in the past seven days. Its earnings and revenues are expected to grow 45.8% and 7.8%, respectively, for the to-be-reported quarter. Goldman Sachs beat estimates in five out of the last eight quarters. It delivered an earnings surprise of 29.33%, on average, for the past four quarters. GS is slated to release earnings on Jan. 21.
The Goldman Sachs Group, Inc. price-consensus-eps-surprise-chart | The Goldman Sachs Group, Inc. Quote
Healthcare
ResMed holds a major position as designer, manufacturer, as well as a distributor in the worldwide market for generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders. The stock has an Earnings ESP of +0.14% and a Zacks Rank #2.
ResMed is benefiting from robust mask sales, flourishing respiratory care products and a complete focus on international expansion. This optimism is expected to contribute further.
Analysts are moderately optimistic about the company’s growth prospects, as depicted by RMD’s ABR of 2.33. Of the 15 brokerage firms, six are Strong Buy, representing 40% of all recommendations. The average Wall Street target price stands at $253.10, ranging from a low of $190.00 to a high of $283.00.
The stock saw a positive earnings estimate revision of a couple of cents over the past 30 days for the yet-to-be-reported quarter, indicating growth of 21.8%. ResMed is expected to see revenue growth of 8.5% and has delivered an average earnings surprise of 6.41% in the past four quarters. The company is slated to release earnings on Jan. 30.
ResMed Inc. price-consensus-eps-surprise-chart | ResMed Inc. Quote
Consumer Discretionary
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia and internationally. It offers products in apparel, footwear, accessories, home furnishings, and other licensed product categories. The stock has an Earnings ESP of +0.30% and a Zacks Rank #2.
The company’s growth prospect is bolstered by its strong global brand portfolio and ongoing investments in business growth. Ralph Lauren is poised to exceed its revenue and profit targets under the Next Great Chapter: Accelerate Plan, a strategic initiative aimed at streamlining its global organizational structure and advancing technological capabilities. As part of this effort, Ralph Lauren transitioned its Chaps brand to a licensed business, completing a significant portfolio realignment.
The company’s emphasis on product elevation, personalized promotions, disciplined inventory management, and a favorable mix of channels and geographies positions it well for sustained growth. Ralph Lauren has an ABR of 1.69. Of the 16 brokerage firms, 11 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 68.75% and 6.25% of all recommendations. The average Wall Street target price stands at $245.44, ranging from a low of $150.00 to a high of $300.00.
Ralph Lauren has seen a positive earnings estimate revision of a penny for the yet-to-be-reported quarter in a week and has an expected growth rate of 7.4%. Its revenues are expected to grow by 4.37%. The company delivered an earnings surprise of 9.13% for the past four quarters on average. It is slated to release earnings on Feb. 13.
Ralph Lauren Corporation price-consensus-eps-surprise-chart | Ralph Lauren Corporation Quote
Retail
Amazon is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. It has an Earnings ESP of +13.45% and a Zacks Rank #1.
Amazon’s growth is being driven by its cloud computing and advertising businesses. Its AI business is already growing by triple-digit percentages. A strong holiday shopping season is expected to have driven fourth-quarter revenues and earnings. Amazon has been ramping up investments in data centers, chips and the power needed for AI workloads.
In the latest development, the e-commerce giant built an AI supercomputer made of its in-house Trainium chips and also a new server, which will be used by AI startup Anthropic. According to The Wall Street Journal, the move positions the company to take on AI darling NVIDIA (NVDA) in the lucrative graphics processing unit (GPU) chip market. Amazon recently invested an additional $4 billion in Anthropic, whose Claude chatbot is a rival to OpenAI's ChatGPT.
Analysts are bullish about the company’s growth prospects. The company has an ABR of 1.10. Out of the 50 brokerage firms, 46 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 92% and 6% of all recommendations. The average price target for Amazon comes to $248.12, ranging from a low of $197.00 to a high of $290.00.
The stock saw a positive earnings estimate revision of three cents over the past seven days for the to-be-reported quarter and has an expected earnings growth rate of 51.49%. Its revenues are expected to grow in double digits in the to-be-reported quarter. Amazon delivered an average earnings surprise of 25.85% for the last four quarters. The company is slated to release earnings on Feb. 6.
Amazon.com, Inc. price-consensus-eps-surprise-chart | Amazon.com, Inc. Quote
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