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We're finally halfway through our seasonal tour of the BMR universe and the trend is our friend. Once again, holding our stocks through their earnings has paid off in the aggregate. 

Now that the morning rush is behind us, we need to get you in position for the stocks that are announcing tonight and tomorrow before the market opens. First, however, we saw something today that makes us CRAZY. Absolutely crazy. While Shopify (SHOP: $172, flat) reported strong earnings, the Street took it to be a downer.

You be the judge: Revenue was up 54% to $344 million. Earnings for 4Q18 were $0.26 a share, up 73% from a year ago. A year earlier, Shopify earned $0.15 a share on sales of $223 million. Analysts expected earnings of $0.20 on sales of $328 million. Subscription revenue jumped 42% to $134 million, beating estimates of $130 million. For the March quarter, Shopify forecast revenue of $307.5 million, only a hair under estimates of $308 million. For full-year 2019, they expect revenue of $1.47 billion. Analysts had projected $1.48 billion.

Now that is what we call A GREAT QUARTER.  54% revenue growth for a $1 billion revenue company?  THAT IS PHENOMENAL. And guidance is roughly what everyone expected.

And yet here is one headline and comment we saw this morning:

Shopify stock falls after outlook disappoints

Shopify earnings and revenue for the fourth quarter easily beat analyst estimates early Tuesday. But Shopify stock fell before the open as revenue guidance for the March quarter and full-year 2019 disappointed.

Disappointed? Are you kidding? Look at the numbers above. They missed by 1/10th of an inch! And this is REVENUE GUIDANCE.  How in the world does a company know what they are going to sell in the next three months within $100?  Or within $1000? To within a PENNY?  This is just silly.


And if we had spare ammunition on the sidelines, we would be buying the stock like there is no tomorrow. 


Earnings Preview: Twilio (TWLO: $115, up 2% this week)

Earnings Date: Tuesday, 5:00 PM ET

Expectations: 4Q18
Revenue: $184 million
Net Profit: $4.8 million
EPS: $0.04

Year Ago Quarter Results
Revenue: $115 million
Net Loss: $2.6 million
EPS: (-$0.03)

Implied Revenue Growth: 60%
Implied EPS Growth: Flip from loss to profit.

Target: $130
Sell Price: $95
Date Added: October 11, 2016
BMR Performance: 120%

Key Things To Watch For in the Quarter

After Shopify's minuscule miss knocked that stock, we're braced to see a little wind come out of the Twilio sails unless the numbers come in perfect or better. On one hand, if any company can do it, this is the one. Our 60% revenue growth target doesn't look extreme in the historical context of 55% in 2Q18 and a breathtaking 69% in 3Q18.

While settling for 60% looks like deceleration, management has a habit of surprising us with stronger sales than we anticipated. Going into that 69% quarter, our models barely predicted 50% expansion, leaving us wide open to an actual number $19 million above our target. For a company that only booked its first $100 million quarter a year ago, that's still a whole lot of money. Maybe Twilio can do that for us again.

Either way, we're loving the flip to profitability, which ensures that any growth whatsoever will help take a little pressure off the multiples and prove to investors that the fundamentals are already ramping up fast to justify the price. The only real long-term questions are how fast that ramp takes Twilio to glory and where the growth curve eventually stops. In the short term, of course, the stock is up 12% since major customer Facebook reported its numbers two weeks ago. There could indeed be a pause in store here before a fresh wave of buyers pour in.


Earnings Preview: Akamai (AKAM: $69, up 6%)

Earnings Date: Tuesday, 5:00 PM ET

Expectations: 4Q18
Revenue: $703 million
Net Profit: $164 million
EPS: $0.99

Year Ago Quarter Results
Revenue: $663 million
Net Profit: $117 million
EPSS: $0.69

Implied Revenue Growth: 6%
Implied EPS Growth: 43%

Target: $100
Sell Price: $65
Date Added: June 8, 2018
BMR Performance: -11%

Key Things To Watch For in the Quarter

This looks like the moment Akamai proves to Wall Street that the last two quarters' aggregate 42% earnings growth was more than a fluke. If our forecasts are accurate, this company is only in the initial stages of a more sustained acceleration as emerging Data Security and other value-added businesses take over from the mature Web Content Caching operation. Yes, making Web pages load faster remains lucrative, but it's also vulnerable to price erosion as new technologies steal its commercial thunder.

We're watching those new businesses extremely carefully as the keys to future growth. Either way, expectations for 2019 are low enough that the outlook here could create a little upside surprise, contrary to the reaction more popular Technology companies have received so far this quarter. When Apple and Amazon are warning that stratospheric targets aren't going to be easy to achieve, more dependable performers like Akamai find themselves primed for the spotlight.


Earnings Preview: CBRE Group (CBRE: $48, up 4%)

Earnings Date: Wednesday, 8:00 AM ET

Expectations: 4Q18
Revenue: $5.9 billion
Net Profit: $387 million
EPS: $1.12

Year Ago Quarter Results
Revenue: $4.3 billion
Net Profit: $338 million
EPS: $0.99

Implied Revenue Growth: 37%
Implied EPS Growth: 13%

Target: $60
Sell Price: $44
Date Added: February 22, 2016
BMR Performance: 86%

Key Things To Watch For in the Quarter

CBRE remains one of our favorite stocks. Look at that revenue curve. Can you believe this isn't a Technology startup but a sprawling Real Estate service group instead? The company is still expanding nearly 40% a year.

And all we need on the guidance front to prove that CBRE is still on target is confirmation that management still sees earnings expanding 6% this year. That's not so bad. In fact, it's only a little better than our current outlook on the market as a whole. But since CBRE is still a little obscure, it doesn't even command a 14X multiple, compared to the S&P 500 closing in on 16X earnings. Where would you rather be?

One final note that might influence your answer. We first recommended CBRE only a few weeks after adding Apple to our list. Since then, this is the stock that outperformed the giant of Cupertino by 1% a year. Now that's quality.