RBC Capital: 5 Tech Giants To Buy/Sell Ahead Of Earnings

As we approach earnings season for some of the big tech giants, we take a look at RBC’s cheat sheet to gain a better understanding of how these stocks are set to perform. Here we include words of wisdom from RBC Capital’s Mark Mahaney as well as the bigger picture from the Street. Which ‘Strong Buy’ stocks make the most compelling opportunities right now, and which risky stocks should you think twice about before investing?

Our key mantra is ‘know who to trust’. That is why we rate analysts and rank them according to their success rate and average return. Mahaney, for example, is one of the top 25 analysts on TipRanks (out of 4,700 tracked analysts)- with a 76% success rate and 25% average return. By following only the best-rated analysts you can optimize your investing decisions and consistently outperform the market.

Now let’s take a closer look at how these five key tech stocks are shaping up:

Least Risk: Facebook (NASDAQ:FB)

Out of all the large-cap internet stocks, Mahaney is most “near-term constructive” on FB. This is the stock with the least risk and “clearly strengthening trends” advertiser trends. He sums up: “17 straight quarters of 50%+ Y/Y Ad Revenue Growth and mid to-high-teens MAU growth (off massive scale) is unprecedented and speaks volumes about FB’s value proposition to both advertisers & consumers. Our recent Marketer survey also Bullish. And FB still has several new large revenue growth drivers (Instagram, Video, Messaging).”

For earning results on November 1, RBC is expecting Revenue, Adjusted EBITDA, and GAAP EPS of $10.05B, $6.21B, and $1.30 which comes in slightly above consensus of $9.84B, $6.18B, and $1.27. Keep an eye out for user growth and engagement, says Mahaney, estimating robust year over year MAU (monthly active user) growth of 14% to 2.04 billion.

This Strong Buy stock has top marks from the Street. In the last three months analysts have published 31 buy, 2 hold and 1 sell rating on FB. With an average analyst price target of just under $200, analysts believe this stock still has upside potential of over 13%.