These 3 names that are about to report quarterly results have strong earnings momentum

Published Tue, Feb 20 20243:03 PM EST

The three major averages have started the holiday-shortened week with declines, but a trio of companies could sway the market as they prepare to issue earnings. A decline in tech stocks led the market lower on Tuesday . The losses follow a negative week for the major averages, spurred by renewed concerns over Federal Reserve interest rate cuts. About 80% of S & P 500 constituents have already reported, with more than three-quarters of these names beating earnings estimates, according to FactSet. Goldman Sachs chief U.S. equity strategist David Kostin noted Friday that companies are on pace to grow earnings at a 7% clip annually, easily surpassing analysts' forecasts of 3% growth when the reporting season began. CNBC Pro used FactSet data to screen for stocks that are posting quarterly results through the next week and that meet the following criteria. Shares have seen at least 5 upward earnings per share revisions in past three months. EPS estimates are up 1% or more in past three and six months. Average earnings per share estimates for artificial intelligence favorite Nvidia have climbed nearly 22% over the past three months, which is by far the largest upward revision on the list. Nvidia is set to report quarterly results on Wednesday after the closing bell. Nvidia has skyrocketed roughly 39% so far in 2024 after surging nearly 240% in the prior year. The company has been one of the primary beneficiaries in the explosion of interest and demand for artificial intelligence exposure. More than 90% of analysts polled by LSEG rate the stock a buy or strong buy, and their average price target of $712.49 implies about 4% upside moving forward. Shares of the chip giant slid more than 5% on Tuesday, but analysts at Raymond James said "any near-term pullback to be short-lived." On Tuesday, analyst Srini Pajjuri said the firm sees another strong quarter from Nvidia, calling for an 8% to 10% revenue beat and raise, and hiking the firm's price target to $850 from $700. Analysts are also raising estimates on semiconductor design firm Synopsys ahead of the company's fiscal first-quarter results on Wednesday. Average EPS estimates have increased nearly 13% over the past three months, per FactSet. Synopsys stock has climbed roughly 6% in 2024. The 14 analysts covering the stock rate it either a buy or a strong buy, with their average price target of $613.86 implying about 12% upside ahead, per LSEG. The company made headlines last month after it announced plans to acquire engineering and software design company Ansys in a $35 billion deal, which is expected to close in the first half of next year. Constellation Energy also made the list. Average earnings estimates on the power company have ticked up roughly 8% over the past three months, while shares have added about 12% in 2024. Analysts are also more split on Constellation Energy compared to peers on the momentum list. Seven of the 13 analysts covering the stock rate it a buy or a strong buy, but their average price target of $124.64 suggests downside of nearly 5%, per LSEG. Mizuho Securities is neutral on the stock, recently raising its price target to $132 from $116. "Constellation continues to be a lone star among [independent power producers] and utility corporates and seeks to differentiate itself from the respective peer groups," analyst Anthony Crowdell wrote. He estimates 2024 EPS of $5.99 and a roughly 7.6% compound annual growth rate through 2028. Constellation will report quarterly results on Feb. 27.