The earnings season is gradually gathering momentum and analysts are eager to weigh in on tech giant Apple Inc. (NASDAQ:AAPL), global commerce leader eBay Inc (NASDAQ:EBAY), and fast-food firm Chipotle Mexican Grill, Inc. (NYSE:CMG), as the companies are scheduled to release their earnings reports tomorrow after closing bell. Let’s take a closer look.
The time is drawing nearer for one of the most anticipated corporate earnings reports of the season. Apple will release its fiscal 2016 second quarter results tomorrow, and Drexel Hamilton analyst Brian White is modeling a YoY decline in sales, profits and iPhone units given that Apple is nearing the end of the iPhone 6-Series cycle and facing difficult iPhone comparisons.
White noted, “For 2Q:FY16, we are modeling sales of $52.34 billion (Street is at $51.97 billion) and EPS of $1.99 (Street is at $2.00). Our sales estimate represents a 31% QoQ decline (the weakest March quarter that we have on record that goes back 18 years) and much weaker than the five-year average QoQ decline of 17% over past March quarters. Recall, Apple’s 2Q:FY16 outlook calls for sales of $50-53 billion and implies EPS of approximately $1.94 at the mid-point of this revenue outlook.”
The analyst continued, “Looking into 3Q:FY16, we are modeling sales of $44.55 billion (Street is at $47.32 billion) and EPS of $1.60 (Street is at $1.76). We expect Apple to provide a cautious 3Q:FY16 outlook given the company is nearing the end of iPhone 6-Series cycle and the macro environment remains uncertain.”
White reiterated a Buy rating on Apple shares with a price target of $200, which implies an upside of 90% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian White has a yearly average return of 8.3% and a 54% success rate. White has an 20.6% average return when recommending AAPL, and is ranked #155 out of 3907 analysts.
With eBay preparing to release first-quarter earnings tomorrow evening, Youssef Squali, a media analyst at Cantor Fitzgerald, weighed in today with his expectations. Squali rates the stock a Hold, with a price target of $24, which represents a slight downside potential from current levels.
Squali noted, “We expect 1Q:16 results to come in line with muted Street expectations, given the declining auction business, reduced search traffic as the company transitions to structured data, and FX headwinds, all of which look likely to weigh down Marketplaces’ growth. Our checks indicate that business trends remained soft in 1Q, with low-single-digit growth in SSS and a decline in visitation. We remain on the sidelines into earnings.”
According to TipRanks.com, Youssef Squali is a top analyst with a yearly average return of 15% and a 64% success rate. Squali has a 17% average return when recommending EBAY, and is ranked #14 out of 3907 analysts.
Out of the 30 analysts polled by TipRanks, 10 are bullish on eBay stock, 18 remain sidelined, and only 2 are bearish. With a return potential of 14.5%, the stock’s consensus target price stands at $27.85.
Chipotle Mexican Grill, Inc.
Wells Fargo analyst Jeff Farmer joins the earnings party, reiterating an Outperform rating on shares of Chipotle with a valuation range of $580.00 to $600.00, ahead of tomorrow’s earnings, which are likely to be in line with mid-March guidance of a $1.00 loss.
Farmer wrote, “We’ve modeled a 29% SSS decline and $1.03 EPS loss, with both estimates in line with Street. We remain constructive on CMG based on case studies which indicate that: (1) share price recoveries closely track the recapture of lost samestore-sales (SSS), and (2) the majority of restaurant concepts that have experienced a food safety issue see the return of sustained SSS growth within 12- 15 months of the incident. We’re lowering our 2016E EPS to $6.47 from $7.54 to reflect our expectation for elevated redemption rates on the company’s promotional offerings; and lowering 2017E EPS to $13.45 from $14.03 to more closely align labor, occupancy, and D&A costs with expected SSS recovery pace.”
According to TipRanks.com, analyst Jeff Farmer has a yearly average return of 16% and a 77% success rate. Farmer has a 1.0% average return when recommending CMG, and is ranked #396 out of 3907 analysts.
As of this writing, out of the 25 analysts polled by TipRanks, 10 rate Chipotle stock a Buy, 9 rate the stock a Hold and 6 recommend a Sell. With a return potential of 7%, the stock’s consensus target price stands at $473.42