Tech Preview Ahead Of Earnings: Two Wall Street Firms Weigh In

Ahead of first quarter earnings calls, Brean Capital and Stifel provide previews for diverse industries in the tech segment.

Brean Capital looks into SaaS and Social Media stocks, from which they expect “less upside to reported numbers and guidance due to FX headwinds.” They also anticipate few or no guidance range boosts.

However, they believe that their top picks Facebook Inc FB (Buy rating, $96 price target) and ServiceNow Inc NOW (Buy rating, $97 price target) are both “benefiting from strong fundamentals that can help offset FX risks.”

Related Link: These 6 Social Media Stocks Have Important Days Coming Up

Brean’s report highlights a few key points to keep in mind:

• FX headwinds seem fairly well understood by investors. The firm expects all of the companies in its coverage universe with the exception of Paycom Software Inc PAYC (Buy rating, $45 price target) –- which only has U.S. customers -- to feel the impact of a deteriorating FX environment during the quarter.
• “Sentiment in social media is very bullish.” Heading into earnings, Brean maintains a Buy rating for Facebook and Twitter Inc TWTR, and a sell on LinkedIn Corp LNKD.
• “Sentiment in SaaS is more muted, with the exception of buy-rated ServiceNow, NetSuite Inc N...seeing incremental FX risk.”

For its part, Stifel takes a look at connectors and components stocks. The firm lowered its estimates on Amphenol Corporation APH  (Hold), Littelfuse, Inc. LFUS (Hold), TE Connectivity Ltd TEL (Buy) and Vishay Intertechnology VSH (Buy) ahead of earnings, to better reflect “further FX headwind as well as a continued sluggish demand environment.”

Although the firm trimmed estimates on most supplier stocks, it maintained projections for Sensata Technologies Holding N.V. ST (Buy), on the belief that “it should have minimal FX impact due to hedging, and should see good growth in its core sensor business on new program ramps.”

Stifel also raised its price target on the stock, from $62 to $65.