There are at least five stocks investors can keep an eye on in Tuesday's normal trading. These stocks will react to the company's September quarter earnings announcement and guidance for the fourth quarter. The stocks have either moved down or up based on the guidance, and witnessed hectic trading activities after the normal markets closed on Monday.
At least four stocks will see downside risks. Zillow (Z), Express Scripts Holding (ESRX), BroadSoft (BSFT) and ServiceSource International (SREV) have witnessed more than a 10% drop in the extended hours of trading on Monday. Investors were particularly harsh on Zillow and ServiceSource, as the stocks plunged over 25% and 17% respectively following their downbeat outlook.
For the upside rewards, Weight Watchers International (WTW) is worth watching. The stock advanced about 9% following its September quarter results and guidance. The company reported a profit of $67.4 million for Q3, down 16.5% from $80.7 million. However, EPS grew 10.5% to $1.20 from $1.09 due to lower share count. Revenues also rose 2.7% to $430.6 million from $428.4 million in the last year. Both EPS and revenues topped analysts' estimate of $1.07 and $418.68 million respectively.
Moving ahead, the company lowered its higher end of its 2012 EPS forecast to $4.00 - $4.10 from $4.00 - $4.20. Weight Watchers attributed this to investment costs being brought to Q4 to the extent of 5 cents and 2 to 3 cents estimated unfavorable impact from hurricane Sandy. The street expects the company to earn $4.07 EPS. The company seems to be benefiting from its business shift to an online service from in person meetings.
On the downside risks, Zillow is likely to be a hot selling stock on Tuesday. The stock plunged more than 25% at one point of time in Monday's extended hours trading after the company provided a weak outlook for Q4. The company earned a profit of $2.3 million or EPS of 7 cents compared to a net loss of $0.57 million or a loss of 2 cents a share. Revenues jumped 67.5% to $31.92 million from $19.06 million. While EPS came in line with estimations, revenues were slightly above Street predictions of $31.66 million.
For the fourth quarter, Zillow sees revenues of $30 - $31 million representing 53% year-over-year growth. Similarly, the company expects revenues of $113 million for the full year. Revenue guidance fell short of analyst estimations of $32.5 million and $114.76 million respectively.
ExpressScripts is another stock that witnessed an over 14% drop in after hours trading on Monday, after the company warned of a weak business climate for 2013 that will impact its results. The company also reported its net income of $391.4 million for Q3, up 20.5% from $324.7 million, while EPS dropped 28.8% to 47 cents from 66 cents. However, adjusted EPS increased 29% to $1.02 from $0.79. Revenues more than doubled to $27 billion from $11.57 billion, helped by the acquisition of Medco. While EPS came in above analysts' expectations of $0.99, revenues were shy of analysts' predictions of $27.49 billion.
The company boosted its bottom end of its earlier 2012 EPS outlook to $3.65 - $3.75 from $3.60 - $3.75. The midpoint of EPS is $3.70 and is in line with Street estimations. However, ExpressScripts forewarned about 2013 citing a weak business environment and the unemployment forecast. The company believes that analysts' estimate is "overly aggressive" for 2013. This will likely be the dragger for the stock.
Another company, BroadSoft, will also see downside pressures. The company's profit dipped more than half to $3.14 million or EPS of 11 cents from $7.35 million or EPS of 26 cents. On an adjusted basis also, profit slipped to $10.0 million or EPS of 35 cents from $10.7 million or EPS of 38 cents. Revenues grew 12.6% to $40.17 million from $35.68 million. While EPS was more than analysts' expectations of 32 cents, revenues were below than predictions of $41.5 million.
Going forward, the company sees EPS of 33 - 48 cents on revenues of $43 to $48 million in Q4. Street analysts are expecting the company to deliver EPS of 45 cents and revenues of $45.92 million. The midpoint of BroadSoft's EPS and revenue guidance are 40 cents and $45 million respectively.
One more stock, ServiceSource also dropped more than 16% in the extended hours of trading on Monday following the company's weak guidance. The company reported a net loss of $6.8 million, 17% wider than $5.8 million in the year-ago quarter, while loss per share widened to 5 cents from 4 cents. On an adjusted basis, net income fell to $0.94 million or EPS of one cent from $1.54 million or EPS of two cents. Net revenues grew 18% to $59.09 million from $50.09 million. Wall Street analysts were expecting the company to suffer a loss of one cent a share and revenues of $68.84 million.
Looking ahead, ServiceSource sees Q4 revenues to be $62 - $64 million and adjusted earnings to be breakeven to a penny and two cents. This is below analysts' expectations of EPS of 4 cents and revenues of $72.08 million. Similarly, the company guided below consensus for the full year. This is enough for the market to react unfavorably.