In Wednesday’s premarket, the Dow Jones industrials traded down 0.37%, the S&P 500 was down 0.21% and the Nasdaq traded down 0.06%. The FOMC interest rate decision due in the afternoon was keeping trading enthusiasm in check.
After U.S. markets closed Tuesday, AMD beat analysts’ consensus estimates for earnings per share (EPS) and revenue. Net income fell by 98% year over year in the fourth quarter on higher costs and PC sales. Data center (server) revenue was up 42% year over year, and PC revenue tumbled 71%. First-quarter revenue guidance was in line with expectations, but PC and gaming revenue is expected to decline and growth in the server and embedded segments is expected to continue growing. Shares traded up 3.3% Wednesday morning.
Snap beat the consensus earnings estimate but missed on revenue. First-quarter revenue is expected to be between 2% and 10% lower than in the year-ago quarter. Demand for advertising is neither better nor worse, but advertisers are cautious about making long-term commitments. The stock traded down about 15% early Wednesday.
Before markets opened on Wednesday, Altria reported mixed results, beating the EPS estimate but missing on revenue. The Marlboro maker also announced a $1 billion share buyback. Shares traded up about 0.8%.
Enterprise Products Partners reported better-than-expected EPS but missed on revenue, even though the energy infrastructure firm’s sales rose 20% year over year. Two noncash charges shaved $288 million off the company’s revenue. Shares traded down 0.2%.
Peloton also beat the consensus EPS estimate and missed on revenue. The company issued in-line guidance for the current quarter. The stock traded up 5.8%.
T-Mobile’s report was also mixed, beating the EPS estimate and falling short on revenue. The company added 314,000 new post-paid accounts to reach a record 1.4 million subscribers for the quarter. The company said it expects 5.0 million to 5.5 million postpaid additions in 2023. Shares traded down by 0.4%.
Meta Platforms is expected to report results after markets close Wednesday, and then Bristol-Myers Squibb, ConocoPhillips, Merck and Sirius XM the following morning.
Three mega-caps with market values above $1 trillion are all scheduled to report quarterly results after Thursday’s closing bell.
24/7 Wall St.Alphabet
Over the past 12 months, the parent of Google, Alphabet Inc. (NASDAQ: GOOGL), has posted a share price decline of about 27%. The stock’s 52-week high will celebrate its birthday on Thursday. After that rolls off, the stock falls pretty steadily to a 52-week low in early November.
The company has announced that 12,000 employees will be fired to cut costs. Analysts are going to want to know if those layoffs will be enough to boost earnings or if more cost-cutting is in order. Alphabet also faces headwinds in Europe, advertiser spending and a longer-term threat to its Google search engine from ChatGPT.
Analysts continue to be heavily bullish on Alphabet stock. Of 51 ratings, 47 are Buy or Strong Buy, and the other four are Hold ratings. At a recent price of around $99.00 a share, the upside potential based on a median price target of $124.00 is 25.3%. At the high price target of $160.00, the upside potential is 61.6%.
Fourth-quarter revenue is forecast at $76.49 billion, which would be up 10.7% sequentially and by 1.5% year over year. Adjusted EPS are pegged at $1.20 up 12.8% sequentially but down 21.6% year over year. For the full 2022 fiscal year, consensus estimates call for EPS of $4.74, down 15.5%, on revenue of $283.25 billion, up 9.9%.
Alphabet stock trades at about 21.0 times expected 2022 EPS, 1.8.9 times estimated 2023 earnings of $5.27 and 16.1 times estimated 2024 earnings of $6.16. The stock’s 52-week trading range is $83.34 to $151.55. The company does not pay a dividend, and the total shareholder return for the past 12 months is negative 27%.
Amazon
Since falling to a new 52-week in the first week of 2023, shares of Amazon.com Inc. (NASDAQ: AMZN) have added almost 20%. Over the past 12 months, however, shares are down about 31%.
Like Alphabet, Amazon is cutting employees (18,000 of them) as it tries to get costs under control and margins back up. One means of lowering expenses is increased shipping efficiency. Amazon also could offset some expenses with ad sales. Those have been a bright spot for the past several quarters. Perhaps the company will have something good to say about its health care initiatives, as Amazon has spent serious cash trying to gain a foothold in the sector.
Analysts continue to be strongly bullish on Amazon stock. Of 52 ratings, 48 are Buy or Strong Buy, and the other four are Hold ratings. At a price of around $103.00 a share, the upside potential based on a median price target of $134.50 is 30.6%. At the high price target of $210.00, the upside potential is nearly 104%.
Analysts are looking for fourth-quarter revenue of $145.76 billion, up 14.7% sequentially and 6.1% higher year over year. Adjusted EPS are expected to be $0.17, down 38.4% sequentially and lower than $1.39 in the year-ago quarter. For the full 2022 fiscal year, Amazon is expected to post a loss per share of $0.11, down from 2021 EPS of $3.24, on sales of $510.54 billion, up 8.7%.
Amazon stock trades at 64.5 times expected 2023 EPS of $1.60 and 336.2 times estimated 2024 earnings of $2.85 per share. The stock’s 52-week range is $81.43 to $170.83. Amazon does not pay a dividend. Total shareholder return over the past 12 months was negative 31.1%.
24/7 Wall St.Apple
Of all the tech mega-caps, Apple Inc. (NASDAQ: AAPL) is the only one to keep its share price decline under 20%. The share price improved by 11% in January, well behind Meta Platforms (up nearly 24%) and Amazon (22.8%) but close to Alphabet (12%) and well ahead of Microsoft (3.3%). Headwinds include slow demand and production issues in the company’s Chinese assembly plants. Analysts have forecast a year-over-year decline in fiscal first-quarter revenue, something that has not happened to Apple in three years.
Of 44 analysts covering Apple, 32 have a Buy or Strong Buy rating and another 10 rate the stock at Hold. At a share price of around $144.00, the upside potential based on a median price target of $172.00 is about 19.4%. At the high price target of $210.00, the upside potential is 31.4%.
Analysts expect the Dow component to report fiscal 2023 first-quarter revenue of $94.28 billion, up 7% sequentially and by 4.6% year over year. Adjusted EPS are expected to come in at $1.95, up 51.4% sequentially but down 7.1% year over year. For the 2023 fiscal year that ends in September, analysts expect the company to report EPS of $6.12, up just 0.12%, on sales of $402.55 billion, up about 2.1%.
Apple stock trades at 23.6 times expected 2023 EPS, 21.6 times estimated 2024 earnings of $6.69 and 20.3 times estimated 2025 earnings of $7.09 per share. The stock’s 52-week range is $124.17 to $179.61. Apple pays an annual dividend of $0.92 (yield of 0.64%). Total shareholder return for the past 12 months was negative 17%.
Qualcomm
Networking chip and equipment maker Qualcomm Inc. (NASDAQ: QCOM) has dropped more than 24% from its share price over the past 12 months. Since the beginning of 2023, however, shares are up about 21.2%. After Micron and Intel reported weak to terrible results last week, questions about Qualcomm are inevitable. Smartphone sales lagged in 2022, and 2023 sales are forecast to drop nearly 10%, with the largest drop coming in the December quarter. To top it off, Apple is likely to drop Qualcomm as a supplier in another couple of years.
Of 32 analysts covering Qualcomm, 24 have a Buy or Strong Buy rating and another seven rate the stock at Hold. At a share price of around $133.00, the upside potential based on a median price target of $150.00 is 12.8%. At the high target of $250.00, the upside potential is almost 88%.
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