5 Stocks That Could Make Huge Earnings Moves This Week

Stacey Gilbert of Susquehanna Research and Eddy Elfenbein of Crossing Wall Street were recently featured on CNBC’s Trading Nation, during which they discussed four stocks that could be primed for big moves this week after the release of their latest quarterly results.

In this article we’ll take a look at their picks, which were Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Groupon Inc. (NASDAQ:GRPN), and C R Bard Inc (NYSE:BCR), and also share a pick of our own, which is Akamai Technologies, Inc. (NASDAQ:AKAM). In addition, we’ll see how hedge funds have traded these stocks recently.

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Can Amazon.com, Inc. (NASDAQ:AMZN) Deliver Another Positive Surprise?

Amazon.com, Inc. (NASDAQ:AMZN)‘s becoming an old hat when it comes to releasing positive earnings results, with the success of Amazon Web Services helping drive unexpectedly impressive bottom-line results in recent quarters. Can the success continue, or will Amazon finally run up against heightened expectations?

Gilbert stated that options activity suggests a 7% move in Amazon’s stock following its earnings, which would be slightly below the stock’s 8.8% post-earnings average movement from the last eight quarters, but higher than the 6% average movement over the past four quarters. Those moves have typically been positive ones, with five of its past six earnings reports generating a positive move for the stock during the next trading session.

There are conflicting opinions as to whether or not Amazon can do it again. M Science recently slashed its estimates for the company’s third quarter results and believes that they will miss Wall Street’s estimates, citing a deceleration in average order value and customer growth. On the other hand, analysts at Pacific Crest and Credit Suisse have each issued bullish commentary in recent days and hiked their price targets on the stock. Billionaire Ken Fisher’s Fisher Asset Management largely maintained its huge stake in Amazon during the third quarter, trimming it by 1% to 1.98 million shares.

Apple Inc. (NASDAQ:AAPL) Bulls Expect Momentum To Continue

Apple Inc. (NASDAQ:AAPL) has not been nearly as fortuitous as Amazon in recent quarters, as its shares have suffered a post-earnings decline in four of the past five quarters.  However, Apple’s momentum appears to be shifting thanks to Samsung’s Note 7 woes (and the ultimate discontinuation of the device), which is anticipated to help the iPhone sell millions of units more than originally expected this year.

While Apple did already release earnings guidance last month, Gilbert believes the stock could nonetheless have a noteworthy movement in store, with a 4% implied movement, while its recent average movement after earnings has been about 6%. Cowen analyst Timothy Arcuri believes that Apple will beat estimates this quarter, in addition to guiding at least in-line with estimates. However, recent reports out of China suggest that Apple continues to lose ground in that important market, with UBS claiming that the iPhone 7 has been performing worse than the iPhone 6 did there, as domestic brands take more market share away from Apple.

Of the five funds in our database which have declared long positions in Apple as of the September 30 13F reporting period, four of them lowered their stake in the company during the third quarter, though two were only marginal decreases. For more on Apple, check out the 7 Best Music Making Apps for iOS.

We’ll check out three more stocks that could be huge movers this week on the next page.

Groupon Inc. (NASDAQ:GRPN) An Extremely Volatile Earnings Stock

Based on their historical performance, Groupon Inc. (NASDAQ:GRPN) shares are likely to make a large move this week, and Ms. Gilbert stated that options activity is implying another monster move, of 19%. That would be nearly in-line with the stock’s 18% average earnings day move over the past eight quarters, though less than its 26% average move over the past four quarters. Among the options activity, there is a lot of open interest on bullish call options with a strike price of $6.00, or nearly 20% gains, which expire a couple of days after Groupon’s earnings release.

Groupon has had a couple of huge earnings-fueled jumps over the past three quarters, and Wedbush is forecasting that the company’s third quarter results will beat estimates. It raised its rating on the stock to ‘Outperform’ from ‘Neutral’ last Monday, citing third-party data which estimated a 40% year-over-year increase in traffic on Groupon’s site during the third quarter. Groupon was held by 23 of the hedge funds in our database on June 30, up from 18 on March 31.

Was C R Bard Inc (NYSE:BCR)’s Guidance Overly Conservative?

C R Bard Inc (NYSE:BCR) was Eddy Elfenbein’s pick. Elfenbein believes that the stock, which is held in his fund, will benefit from low-ball third quarter guidance issued by the company, suggesting that it could earn $2.60 per share for the quarter, while C R Bard guided for $2.51-to-$2.55. Elfenbein believes that the expected beat, coupled with the stock’s 10% pullback since July, could have it set up for a strong earnings surge.

Most analysts appear to agree, with Citi analyst Amit Hazan calling that pullback a rare buying opportunity. He has a bullish $265 price target on the stock. Evercore recently initiated coverage of C R Bard with a ‘Buy’ rating as well, while Wells Fargo upgraded it to ‘Outperform’ from ‘Market Perform’, with expectations of double-digit EPS growth in 2017. Donald Yacktman’s Yacktman Asset Management cut its C R Bard stake by 37% during the second quarter, to 806,300 shares.

Akamai Technologies, Inc. (NASDAQ:AKAM) Could Go Big Either Way

Akamai Technologies, Inc. (NASDAQ:AKAM) is our own stock to watch out for this week. The stock has been a big mover on earnings day over the past four quarters, suffering two steep losses and one sharp gain during that time. On average, the stock has moved by 14% on the day of Akamai’s past four earnings announcements.

Call options activity is strong at the $60 strike point, or about a 4% gain, while put options activity is muted. However, given the lingering concerns over Akamai’s loss of its two largest CDN customers, it’s possible an earnings miss could trigger another sell-off of the stock. Akamai’s CEO Frank Thomson Leighton downplayed those concerns during the company’s second-quarter earnings call, stating that most of its customers are incapable of building a CDN that can rival what Akamai can offer them in terms of security and scalability. Leighton has also put his money where his mouth is, buying 18,276 Akamai shares on October 17. While the purchase was conducted through a 10b5-1 trading plan, that plan was adopted on July 28, the same day the company released its second quarter earnings and shares slid by 13% on those customer retention fears. David Blood and Al Gore’s Generation Investment Management held 5.10 million shares of Akamai on June 30.

Which stock(s) with earnings this week are you expecting big things from? Let us know in the comments. Thanks for reading and good luck with your trades or positions this week.

Disclosure: None