Despite a disappointing start to 2016, earnings season is in full swing as analysts and investors await reports from these four stock giants: Apple, Inc. (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB), McDonald’s Corporation (NYSE:MCD), and Celgene Corporation (NASDAQ:CELG). Here’s what to watch for this week:
Apple is set to release its Q1:16 earnings on Tuesday, January 26 after market close. Analysts expect the tech giant to post revenues of $76.67 billion and earnings of $3.23 per share, compared to revenues of $74.60 billion and earnings of $2.60 per share from the same quarter of last year.
For this quarter, analysts and investors alike are watching for iPhone sales figures, as major Apple suppliers such as Qorvo recently reported a decline in iPhone component orders, indicating weak demand for the product. Similarly, it has been reported that many Apple stores have an inventory glut of the iPhone 6S and iPhone 6S Plus. Consequently, many have lowered their iPhone sales expectations.
Despite iPhone concerns, Apple CEO Tim Cook re-assured skeptics last quarter that the iPhone is just fine, pointing to a higher than ever switch rate from Android to iPhone, while also highlighting a major opportunity from emerging markets such as China and India. Related, there are rumors that Apple will produce the iPhone 6c, a smaller and less expensive version of the iPhone 6, to appeal to these markets.
Ahead of earnings, analyst Gene Munster of Piper Jaffray reiterated a Buy rating on the company with a $179 price target on January 22, 2016, stating, “We believe shares of AAPL could achieve upside of over 50% from current levels by the iPhone 7 launch in September.” He continued that despite “concerns around supply reductions followed by the macro market decline… the company specific setup for shares of AAPL remains favorable.”
According to TipRanks’ statistics, out of the 36 analysts who have rated Apple in the last 3 months, 30 gave a Buy rating, 1 gave a Sell rating, and 5 remain on the sidelines. The average 12-month price target for the stock is $137.34, marking a 35% upside from where shares last closed.
Facebook will report its Q4:15 earnings on Wednesday, January 27 after market close. For this quarter, analysts expect revenues of $5.68 billion and earnings of $0.68 per share, compared to revenues of $3.85 billion and earnings of $0.54 for the same quarter of last year.
For Q4, analysts expect revenue growth, specifically from mobile ad sales and Instragram. Ahead of earnings, analyst Mark Mahaney of RBC Capital reiterated a Buy rating on the company with a $130 price target on January 22, 2016, predicting growth in users and advertising revenue. He states, “Facebook has continued to grow users at a reasonably robust pace off a very large base.” He continued, “Facebook continues to generate very high and very profitable growth, an extremely rare combination, and we see in Facebook plenty of strong, secular platform growth ahead.”
Similarly, on December 22, 2015, analyst William Bird of FBR & Co. listed Facebook as his top tech stocks for 2016 and also commented on expected growth. He stated, “We view FB as a play on mobile advertising, pricing, and additional platform commercialization opportunities. FB is uniquely positioned to grow its share of the high-growth mobile ad market, a function of its product format, consumer stickiness, unique data asset (i.e., definitive IDs and cross-device login), and a strong track record of innovation.”
According to TipRanks, 35 analysts have rated the company in the past 3 months. 33 gave a Buy rating, 1 gave a Sell rating, and 1 remains on the sidelines. The average 12-month price target for the stock is $123.52, marking a 26% upside from where shares last closed.
McDonald’s is expected to post its Q4 earnings on Monday, January 25 before market open. Analysts are expecting revenues of $6.22 billion and earnings of $1.23 per share, compared to revenues of $6.572 billion and earnings of $1.13 per share for the same quarter of last year. For this quarter, analysts will focus on how the company’s turnaround strategy, announced in May, is playing out in respect to earnings. These initiatives include reorganization of its stores based on growth opportunities instead of geographical segments. The company also introduced new menu items, unveiled all-day breakfast, introduced an enhanced customer experience, and optimized international stores by offering trendy ingredients and non-traditional food.
As a result of its turnaround strategy, the company posted an increase in same-store sales for the first time in 8 quarters in its Q3:15 report. Analysts expect this increase to continue in its Q4 report, pointing to a recent NPD report regarding all day breakfast data after the initiative started in October. The report indicated a rise in new customers as well as an increase in the average amount spent per visit due to customers adding newly available breakfast menu items to lunch tickets. In the past few weeks, the company’s stock surged to its 52-week high of about $120.
Analyst Mark Kalinowski of Nomura Holdings is bullish on MCD pre-earnings, expecting 3.5% growth in same-store sales for the upcoming report. He states, “Our channel checks suggest that in the short term, McDonald’s has regained at least some of its mojo — and impressively, it has done so at a time in which most major segments of the domestic restaurant industry are enduring sequential deceleration in same-store sales trends.”
According to TipRanks, 15 analysts have rated the company in the past 3 months. 12 gave a Buy rating while 3 remain on the sidelines. The average 12-month price target for the stock is $125.77, marking a 6% upside from where shares last closed.
Celgene will release Q4 earnings on Thursday, January 28 before market open. Analysts estimate the company will post quarterly revenue of $2.5 billion, marking a 22% year-over-year increase. Earlier in the month, Celgene announced preliminary results for full-year 2015, expecting net product sales to fall between $10.5 billion and $11 billion, marking an approximate 17% year-over-year increase.
Revlimid, Celgene’s largest revenue driver, is approved in the U.S. to treat specific forms of cancer. In Q3, Revlimid sales came in at $1.45 billion. In this quarter, analysts expect Revlimid sales to increase to $1.6 billion. Analysts will also be looking at Pomalyst and Abraxane sales, two other cancer treatments, as these are the second and third largest revenue drivers for the company. Furthermore, analysts will be listening for an update on Celgene’s recent partnerships with AstraZeneca and Juno, as well as its acquisition of Receptos.
According to TipRanks, all 13 analysts polled in the last 3 months are bullish on the stock with an average 12-month price target of $153.73, marking a 41% potential upside from where shares last closed.