Earnings Previews: ASML, IBM, Netflix, NextEra, Verizon

Earnings reports arrive in bunches this week. Both the companies we profiled for Monday morning, Coca-Cola and Prologis, beat estimates on both the top and bottom lines.

Our coverage of stocks reporting Monday afternoon overlooked a big one, so we’re going to stitch that onto our coverage of stocks that report earnings Tuesday afternoon and Wednesday morning.

Our look at companies reporting earnings Monday afternoon and Tuesday morning was split into two reports. One covered Abbott Labs, Harley-Davidson, Steel Dynamics and United Airlines. The other previewed Johnson & Johnson, Lockheed Martin, Philip Morris and Procter & Gamble.

IBM

International Business Machines Corp. (NYSE: IBM) is probably being more closely watched for the coming spin-off of its managed information services business, recently dubbed Kyndryl. The company does not provide guidance but has said it expects 2021 revenues to be better than 2020’s and that adjusted cash flow for the fiscal year should be $11 to $12 billion. Over the past 12 months, IBM shares have added more than 17%.

Only seven of 25 analysts have Buy or Strong Buy ratings on the stock, while 15 rate the stock as a Hold. The consensus price target of $139.18 implies a potential gain of around 4.3% at a recent price of $133.50. At the high target of $165, the implied upside is 23.6%.

IBM is forecast to report first-quarter earnings per share (EPS) of $1.63 on revenue of $17.34 billion after markets close Monday. For the full year, analysts estimate EPS of $10.99, up by nearly 27% year over year. Revenue is forecast at $74.04 billion, up less than 1%.

The stock currently trades at around 12.2 times expected 2021 EPS, 11.1 times estimated 2022 earnings and 10.6 times estimated 2023 EPS. The stock’s 52-week trading range is $105.92 to $137.07. IBM pays an annual dividend of $6.52 (yield of 4.88%).

Netflix

After markets close on Tuesday, Netflix Inc. (NASDAQ: NFLX) is expected to report March-quarter results. As always, analysts are focused on subscriber numbers, given the number of competitors. Netflix projected net subscriber additions of 6 million for the quarter. The company’s outlook will also be sifted for the expected impact from theater reopenings. Shares have added nearly 30% in the past 12 months.

Of 41 analysts’ ratings, 25 are Buy or Strong Buy, with 14 Hold ratings and one each at Underperform and Sell. The consensus price target on the stock is $622.74, implying upside potential of about 13.6% at a recent trading price of $548.25. At the high target of $840, the upside potential is more than 53%.

In addition to a boost in subscribers, analysts expect EPS of $2.96, up 88% year over year for the quarter, on sales of $7.13 billion, up 23.6%. Estimates for the full year are EPS $9.89, nearly 63% higher year over year, on revenue of $30.03 billion, more than 20% higher.

Netflix stock trades at around 55.0 times expected 2021 EPS, 41.8 times estimated 2022 earnings and 31.1 times expected 2023 earnings. The stock’s 52-week range is $393.60 to $593.29. The company does not pay a dividend.

ASML

Semiconductor equipment maker ASML Holding N.V. (NASDAQ: ASML) reports first-quarter results before U.S. markets open Wednesday morning. Last year was a boomer for semiconductor equipment makers like ASML, Lam Research and KLA, all of which doubled their share prices. Netherlands-based ASML saw its share price rise by 113%. With semiconductor manufacturers like Taiwan Semiconductor and Intel planning for major growth, these equipment makers are looking good for future gains.

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