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The Zacks Analyst Blog Highlights: Alphabet, Cadence Design Systems, Scientific Games and Logitech International

For Immediate Release

Chicago, IL – July 24, 2017 – 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 Alphabet Inc. (NASDAQ: GOOGL Free Report), Cadence Design Systems Inc. (NASDAQ: CDNS Free Report), Scientific Games Corporation (NASDAQ: SGMS Free Report) and Logitech International S.A. (NASDAQ: LOGI Free Report).

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Here are highlights from Friday’s Analyst Blog:

Tech Stock Earnings Due July 24: GOOGL, CDNS & More

The second-quarter reporting cycle has begun and 54 S&P 500 members, representing 16.9% of the index’s total market capitalization, have already reported their results.

Per the latest Earnings Trends, total earnings of these companies are up 11.9% on a year-over-year basis (79.6% of the companies beat EPS estimates) while total revenue is up 5.5% on a year-over-year basis (72.2% of the companies also beat top-line estimates).

Overall second-quarter earnings for S&P 500 companies are anticipated to be up 7.2% from the year-ago quarter on revenues that are estimated to increase 4.5%.

Technology Earnings Expectations

Technology is one of the five sectors projected to report the highest growth in the second quarter. The other four are Energy, Aerospace, Construction and Industrial Products.

We note that the technology sector has been a strong performer on a year-to-date basis. The sector is benefiting from increasing demand for cloud-based platforms, growing adoption of Artificial Intelligence (AI) solutions, Augmented/Virtual reality devices, autonomous cars, advanced driver assisted systems (ADAS) and Internet of Things (IoT) related software. Earnings for the technology sector are anticipated to be up 10.1%.

Let’s take a sneak peek into four technology companies that are set to report their quarterly earnings on Jul 24:

Alphabet Inc. (NASDAQ: GOOGL Free Report) is unlikely to beat second-quarter 2017 expectations as it has an unfavorable combination of a Zacks Rank #2 (Buy) and an Earnings ESP of -3.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

This is because, as per our proven model, a company needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) to deliver an earnings surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

However, we note that Alphabet beat the Zacks Consensus Estimate in three of the trailing four quarters, resulting in an average positive surprise of 5.74%.

We believe Alphabet’s strengths in mobile platform, YouTube and cloud will play important roles. On a cautionary note, Google’s troubles in the EU are mounting. (Read More: Alphabet Q2 Earnings: Is Disappointment in Store?)

Alphabet has outperformed the S&P 500 on a year-to-date basis. While the stock returned 25.2%, the index gained 12.5% over the same time frame.

Similarly, Cadence Design Systems Inc. (NASDAQ: CDNS Free Report) is unlikely to beat second-quarter 2017 estimates as it has an unfavorable combination of an Earnings ESP of 0.00% and a Zacks Rank #3.

Notably, the company has beaten the Zacks Consensus Estimate in two of the preceding four quarters. It has an average four-quarter positive surprise of 2.8%.

We believe opportunities in higher growth areas like automotive, cloud infrastructure, machine learning, and aerospace & defense are a positive for the company.

Cadence’s second-quarter guidance was unimpressive. Management noted increased variability in quarter to quarter results due to growing portion of hardware and IP in the business mix. (Read More: Cadence Set to Report Q2 Earnings: What's in Store?)

Notably, its shares have gained 38.9% on a year-to-date basis in contrast to its industry’s gain of 23.4%.

Scientific Games Corporation (NASDAQ: SGMS Free Report) is also not expected to beat second-quarter 2017 estimates as it has an unfavorable combination of an Earnings ESP of -24.32% and a Zacks Rank #2.

Notably, Scientific Games has missed the Zacks Consensus Estimate in two of the four preceding quarters with an average negative surprise of 2.9%.

Shares have gained a massive 91.8% on a year-to-date basis compared with the industry’s gain of 11.7%.

However, Logitech International S.A. (NASDAQ: LOGI Free Report) looks likely to beat first-quarter fiscal 2018 estimates as it has a favorable combination of a Zacks Rank #3 and an Earnings ESP of +11.77%.

Notably, Logitech has beaten the Zacks Consensus Estimate in each of the four preceding quarters with an average positive surprise of 94.1%.

Moreover, the company has outperformed the industry

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Alphabet Inc. (GOOGL): Free Stock Analysis Report
 
Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report
 
Scientific Games Corp (SGMS): Free Stock Analysis Report
 
Logitech International S.A. (LOGI): Free Stock Analysis Report
 
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