It’s that time of year again, when publicly traded companies have to live up to the ‘public’ part of that phrase – earnings season, in short, when investors get to see the nuts and bolts performance numbers of their favorite companies.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="So far, the early estimates are looking grim. Of the S&P 500 components that have released preliminary data, 80% have slashed their earnings forecasts. Three tech giants, however, are looking upbeat, and forecasting good reports for the just-ended fiscal quarter. We’ve dipped into the TipRanks database to get the latest analyst reviews on the largest names in high-tech.” data-reactid=”12″>So far, the early estimates are looking grim. Of the S&P 500 components that have released preliminary data, 80% have slashed their earnings forecasts. Three tech giants, however, are looking upbeat, and forecasting good reports for the just-ended fiscal quarter. We’ve dipped into the TipRanks database to get the latest analyst reviews on the largest names in high-tech.
<h4 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Microsoft Corporation (MSFT)” data-reactid=”13″>Microsoft Corporation (MSFT)
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Microsoft, the old boy in the tech industry, has gained more than 34% so far this year, nearly doubling the S&P 500’s own brisk 18% pace. This rapid growth has put Microsoft in an exclusive club: it is only the third publicly traded company to break $1 trillion in total market cap, a milestone it reached in mid-June. Microsoft now has a valuation just under $1.06 trillion, ahead of Amazon’s (AMZN) $960 billion and Apple’s (AAPL) $920 billion.” data-reactid=”14″>Microsoft, the old boy in the tech industry, has gained more than 34% so far this year, nearly doubling the S&P 500’s own brisk 18% pace. This rapid growth has put Microsoft in an exclusive club: it is only the third publicly traded company to break $1 trillion in total market cap, a milestone it reached in mid-June. Microsoft now has a valuation just under $1.06 trillion, ahead of Amazon’s (AMZN) $960 billion and Apple’s (AAPL) $920 billion.
The company’s success has come from solid performance in its various segments – legacy customers, Office 365, and Azure, combined with excitement over the upcoming public beta release of the new xCloud gaming service. Microsoft shows that a mega-cap company can combine the steady returns of a blue-chip stock with high-tech cutting-edge products and enthusiasm.
Microsoft reports fiscal Q4 earnings on July 18, and the general view is that the company will justify its sky-high valuation. EPS is expected at $1.21, a 7% gain from the year-ago quarter, with revenues to come in at $32.75 billion, 8.8% over last year’s Q4. While high, these gains represent a slowdown from Q3’s 14% growth, so any forecast beat will be welcomed by market watchers.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Mark Moerdler, writing from Bernstein, sees the cloud bringing MSFT $140 billion in long-term sales, a solid foundation for further growth. He says, “Microsoft has distinct advantages in portions of the market that should give the company the ability to reach, over time, revenue that is not that dissimilar to that of [Amazon Web Services].” Looking ahead to the future of cloud computing, Moerdler expects that Microsoft will emerge as one of two or three mega-cap companies dominating the sector. With that in mind, he gives MSFT a $152 price target and an 11% upside potential.” data-reactid=”25″>Mark Moerdler, writing from Bernstein, sees the cloud bringing MSFT $140 billion in long-term sales, a solid foundation for further growth. He says, “Microsoft has distinct advantages in portions of the market that should give the company the ability to reach, over time, revenue that is not that dissimilar to that of [Amazon Web Services].” Looking ahead to the future of cloud computing, Moerdler expects that Microsoft will emerge as one of two or three mega-cap companies dominating the sector. With that in mind, he gives MSFT a $152 price target and an 11% upside potential.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Wedbush analyst Daniel Ives describes Microsoft’s position for 2H19 and 2020 as “enviable,” saying that the company is “firing on all cylinders around its Office 365 and Azure strategic vision.” Ives adds, “The shift to cloud is a major secular trend that is significantly benefiting Microsoft in the field and should continue its momentum heading into the next 12-18 months.” With a price target of $155, he sees a 13% upside to MSFT.” data-reactid=”26″>Wedbush analyst Daniel Ives describes Microsoft’s position for 2H19 and 2020 as “enviable,” saying that the company is “firing on all cylinders around its Office 365 and Azure strategic vision.” Ives adds, “The shift to cloud is a major secular trend that is significantly benefiting Microsoft in the field and should continue its momentum heading into the next 12-18 months.” With a price target of $155, he sees a 13% upside to MSFT.
Microsoft’s analyst consensus rating is a strong buy; the company has 21 buys, 1 hold, and 1 sell assigned in the last three months. The average price target is $144, with an upside of 5.14%. MSFT shares are selling for $136.
At number two in total market cap, and the dominant player in online retail, Amazon is not worried about earnings, to be reported on July 25. The forecast calls for increases in both revenues and EPS. Revenues are predicted to come in 4.6% higher than last quarter, at $62.46 billion, while EPS is expected to show a higher gain, over 18%, with a bottom-line number of $5.58 per share. Last quarter, Amazon’s EPS of $7.09 represented a 35% beat of the forecast.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Wall Street’s top analysts are also confident of Amazon’s earnings success. From Cowen, John Blackledge gives the stock a $2,500 price target and 28% upside, saying, “The company’s move to Prime 1-day delivery will drive higher conversion rates, leading to increasing unit growth in the second half of 2019 and into 2020.” He believes Prime 1-day has revenue potential of $1 billion to $2 billion this year.” data-reactid=”50″>Wall Street’s top analysts are also confident of Amazon’s earnings success. From Cowen, John Blackledge gives the stock a $2,500 price target and 28% upside, saying, “The company’s move to Prime 1-day delivery will drive higher conversion rates, leading to increasing unit growth in the second half of 2019 and into 2020.” He believes Prime 1-day has revenue potential of $1 billion to $2 billion this year.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Barclays analyst Ross Sandler believes Amazon will report revenue acceleration in the fiscal second quarter. He says that, “the combination of core retail picking up slightly earlier in Q2 and the extra 3%-4% to run-rate from next day shipping should take Amazon’s growth rates up from Q1.” Accordingly, he keeps his buy rating on the stock, although his price target is a more modest $2.050″ data-reactid=”51″>Barclays analyst Ross Sandler believes Amazon will report revenue acceleration in the fiscal second quarter. He says that, “the combination of core retail picking up slightly earlier in Q2 and the extra 3%-4% to run-rate from next day shipping should take Amazon’s growth rates up from Q1.” Accordingly, he keeps his buy rating on the stock, although his price target is a more modest $2.050
Amazon’s overall rating, based on an analyst consensus of 35 buys and 1 hold, is a ‘Strong Buy.’ The stock is selling for an eye-watering $1,956, so the average price target of $2,243 suggests an upside potential of 14%.
<h4 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Apple, Inc. (AAPL)” data-reactid=”61″>Apple, Inc. (AAPL)
Like it’s mega-cap peers, Apple is looking at a strong quarterly report on July 30. The expected EPS is $2.10, slightly lower than last quarter, while revenues are forecast at a healthy $53.35 billion. Now that trade tensions between the US and China have eased, and the threat of further tariffs has faded for the present, Apple’s performance in the Chinese smartphone market remains the wildcard. iPhone holds a 9% to 10% market share in China; the earnings forecast is based on the Apple maintaining that niche.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="While Apple has been publicly shifting toward a model based on increased services, the iPhone remains the company’s largest revenue generator. This is reflected in the analyst comments on the stock. Daniel Ives, quoted above regarding Microsoft, says that Wedbush’s recent market research “suggests stable Apple iPhone demand globally heading into the crucial September quarter, that he would characterize as better than feared.” Ives gives Apple at price target of $235, suggesting 17% upside.” data-reactid=”71″>While Apple has been publicly shifting toward a model based on increased services, the iPhone remains the company’s largest revenue generator. This is reflected in the analyst comments on the stock. Daniel Ives, quoted above regarding Microsoft, says that Wedbush’s recent market research “suggests stable Apple iPhone demand globally heading into the crucial September quarter, that he would characterize as better than feared.” Ives gives Apple at price target of $235, suggesting 17% upside.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Samik Chatterjee, of JPMorgan, describes is attitude toward Apple’s 2020 volume outlook for iPhone shipments as “incrementally positive.” He says, “Global supply chain and smartphone channel checks suggest that Apple is likely to pull an additional lever in the form of a refresh of the legacy iPhone SE/iPhone 8 model to address a value category.” He believes that next year’s positive volume outlook will drive upgrades to meet consensus earnings expectations and boost AAPL shares. In line with this, he sees 2020 full year earnings hitting $13 and 2021 earnings reaching $15.30.” data-reactid=”72″>Samik Chatterjee, of JPMorgan, describes is attitude toward Apple’s 2020 volume outlook for iPhone shipments as “incrementally positive.” He says, “Global supply chain and smartphone channel checks suggest that Apple is likely to pull an additional lever in the form of a refresh of the legacy iPhone SE/iPhone 8 model to address a value category.” He believes that next year’s positive volume outlook will drive upgrades to meet consensus earnings expectations and boost AAPL shares. In line with this, he sees 2020 full year earnings hitting $13 and 2021 earnings reaching $15.30.
Company guidance in the coming quarterly report will show if Chatterjee’s estimates are in line. His price target, $239, indicates confidence in a 19% upside to the stock.
AAPL’s ‘Moderate Buy’ consensus rating is based on 19 buys, 14 holds, and 3 sells. Shares are priced at $200 with an average target of $216, an 8% upside for the stock.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Visit TipRanks’ Stock Screener to find out more about the vital stats of these three stocks, and more.” data-reactid=”86″>Visit TipRanks’ Stock Screener to find out more about the vital stats of these three stocks, and more.
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