- CNBC examined Wall Street research to find stocks analysts like ahead of earnings.
- Top picks include Netflix, Lyft, TE Connectivity, Guess, and Synaptics.
CNBC took a close look at the latest Wall Street research to find stocks to buy ahead of the release of their earnings reports.
This week, Wells Fargo raised its rating on TE Connectivity to overweight from equal weight. The company designs and manufactures connectivity and sensor products across a variety of sectors, including most notably the automobile industry.
The firm is banking on an improving global auto outlook to lead the company to better-than-expected earnings when it issues its first quarter report later this month.
"Given our comfort with incrementally stable to positive trends, we think TEL's 2H could outpace our prior/current consensus outlooks comfortably," Wells Fargo analyst Deepa Raghavan said.
The analyst said the stock isn't without risk, but it noted that the improving global outlook should help investors.
"Apart from autos, many other datapoints have stabilized vs last few months including industrial short cycle. Partial trade resolution and some easy comps have resulted in China PMI exceeding expectations," she said.
Shares of the company are up 1.8% on the week.
On the heels of a successful holiday season for many retailers, Guess is aiming to keep the momentum going according to Jefferies analyst Janine Stichter.
The firm had a chance to visit with management at Guess and came away impressed that the company appears to be firing on all cylinders. Guess makes jeans, watches, and other clothing accessories.
The analyst said she believes the company has big opportunities across logistics and the supply chain, and thinks e-commerce will be a "key driver" behind top-line growth.
Jefferies also said it expected that the company's double-digit margin target is "well-within reach."
"We continue to believe that GES has meaningful low-hanging fruit to drive margins across many areas of the business, and see much of this margin expansion unfolding over the next few years," she said.
Shares of the company are up over 2% on the week.
Many investors, customers, and analysts await the next generation of iPhones, and so do some companies.
Synaptics Inc. is one of them. It makes human interface hardware and software, including touchpads for computer laptops, and touch, display driver, and fingerprint biometrics technology for smartphones.
The company is expected to be a key supplier for the touch controller in some of the new iPhone models and according to KeyBanc, a key driver of earnings when the company reports in early February.
"Healthy iPhone 11 demand in conjunction with the ramp of the iPhone SE should drive upside to both near-term results and guidance," analyst John Vinh said.
The upcoming 5G cycle is also crucial, according to the firm.
"Within mobile, the initial rollout of 5G, healthy iPhone demand, and the ramp of the iPhone SE2 should drive near-term upside and better than normal seasonal guidance," they said.
The stock is up over 5% on the week.
Here's what else analysts are saying about stocks to watch into earnings season:
"We expect Netflix to report 4Q results well above and provide initial guidance for 1Q roughly in-line with FactSet Consensus with its 1/21 results. The content additions to the platform, in particular what we believe was Netflix's highest quality Original release slate to date, drove this outperformance, despite the lingering impact of last year's price increases and high profile competitive launches, and should continue to do so as these cash content investments pay off. While the stock has outperformed the broader market since 3Q results as investor expectations have largely converged toward company guidance, we continue to believe Netflix will exceed that guidance and consensus expectations for the year ahead, driving more share price outperformance."
"We continue to believe that LYFT is a strong #2 player in the large and growing U.S. Ridesharing industry, with industry-leading growth rates. We continue to believe that Lyft is beginning to prove out its path to profitability from competitive dynamics improving, long-term pricing power, insurance leverage, and expense leverage from scale advantages. ... We're most incrementally near-term constructive on LYFT – which we believe has a reasonable shot at upwards estimates revisions on the print given highly reasonable Street estimates for Revenue and EBITDA in Q4 and FY20."
"We are upgrading TEL to Overweight from Equal Weight on better auto outlooks (better recent datapoints plus upcoming risks well understood) and potential for outperformance vs. current c'sus expectations. ... We believe the company should return to beat and raise/upward earnings momentum driven by broad based stabilization encompassing autos, industrial, semi & China PMIs. Moreover, we believe risks to Europe and N.Am auto outlooks are by now largely well recognized, even if only partially reflected in stock. ... Given our comfort with incrementally stable to positive trends, we think TEL's 2H could outpace our prior/current c'sus outlooks comfortably.
We continue to believe that GES has meaningful low-hanging fruit to drive margins across many areas of the business, and see much of this margin expansion unfolding over the next few years. Even against a volatile macro backdrop, F'21 estimates may prove conservative as these initiatives are realized. ... DD% margin target is well-within reach. ... E-comm optimization is a key driver behind top-line growth."
Healthy iPhone 11 demand in conjunction with the ramp of the iPhone SE should drive upside to both near-term results and guidance. ... We expect beat and raise results driven by strong iPhone 11 sell-through and the ramp of the iPhone SE2 in the March quarter. In F21, we anticipate tailwinds from design wins in the 2020 Apple OLED iPhones with its touch controller due to its higher performance single-chip solution targeting Samsung's new Y-OCTA OLED display panel.