Apple Spins Balanced Risk/Reward Ahead of the Print
Mizuho analyst Abhey Lamba may be anticipating Apple Inc. (NASDAQ:AAPL) will meet consensus expectations, but he believes the tech giant played it safe with its guidance, making in-line results a less tremendous feat come August 1st.
As such, even predicting prospective downside to the fourth quarter guide, the analyst reiterates a Neutral rating on shares of AAPL with a $150 price target, which aligns with current levels. (To watch Lamba’s track record, click here.)
For the third fiscal quarter, the analyst projects total revenues between $44.5 and $45.0 billion, within the company guided range of $43.5 to $45.5 billion and mirroring consensus of $45 billion. Additionally, the analyst believes gross margins may circle the top-end of guidance of 37.5% to 38.5%, which matches consensus expectations, and calls for EPS between $1.55 to $1.58, compared to consensus of $1.57.
For the fourth fiscal quarter, the analyst believes the company guide will either align or fall just under consensus, with Lamba forecasting total revenue outlook of $48.5 to $50.5 billion, which would signify a 4% to 8% year-over-year rise, compared to consensus of $50 billion.
Forecasted implied iPhone shipments at most will see a 2% year-over-year rise to a range between 44.5 million and 46.5 million units, more or less the equivalent of consensus at 46.5 million. “We think this suggests EPS in-line to slightly below current consensus as well. That said, we believe investors could look past the softer guide in anticipation of the upcoming product cycle,” adds the analyst.
Ultimately, Lamba is neither running for the hills nor throwing a bullish parade ahead of the print, concluding, “We expect results to print largely in-line with consensus based on our view of a potentially conservative guide. iPhone shipment expectations of 41mm units seem reasonable, while we expect in-line ASPs as well. Supply chain checks by our Japan team suggest that production of the high-end OLED SKU is being pushed out, though, demand likely remains strong. For F4Q, we expect the outlook to be in-line to slightly below estimates. In all, we remain on the sidelines given our view that the large upcoming cycle is already baked into the stock.”
TipRanks analytics showcase AAPL as a Strong Buy. Out of 31 analysts polled by TipRanks in the last 3 months, 24 are bullish on Apple stock while 7 remain sidelined. With a return potential of 9%, the stock’s consensus target price stands at $164.00.
Amazon’s Competition Will Not Undermine Its Zipping Profitability
What should investors expect from Amazon.com, Inc. (NASDAQ:AMZN) next Thursday, when the online auction and e-commerce leader hands over its second-quarter financial results? According to Maxim analyst Tom Forte, especially in a quarter that included a record-achieving Prime Day, shareholders should get ready to celebrate healthy sales-meets-general-profitability.
Therefore, in a bullish quarterly preview, the analyst reiterates a Buy rating on AMZN with a price target of $1,300, which represents a 26% increase from where the shares last closed. (To watch Forte’s track record, click here.)
A great deal of buzz is circulating Amazon’s upcoming Whole Foods deal, and Forte finds great intrigue here, noting, “We will be listening for additional details on its pending acquisition of Whole Foods […] and plans for utilizing its physical footprint.”
The one real risk facing the company points to a market rife with rivalry, with the analyst explaining, “We are monitoring the increasing potential for lumpiness in the sales growth rates for Amazon Web Services (AWS), due to increased competition from Google and Microsoft and, to that end, will be listening for details on the call regarding the current competitive landscape.”
Not to worry though, says Forte, who believes with advertising sales-minded strategy and prioritization, Amazon these endeavors “[…] could provide a short-term boost to revenues and margins as [the company] expands the effort.” Meanwhile, Amazon experienced “biggest sales day in its history” thanks to Prime Day 2017, with Forte cheering, “In particular, we were impressed by its Alexa-related hardware sales, up 7x from last year, which should provide multiple future benefits for Amazon.”
Sizing up the guide, the analyst surmises that Amazon is in good shape in diversifying its investment expenses, underscoring, “We anticipate 3Q17 guidance to reflect a continuation of significant investment spending across multiple initiatives, including Alexa, AWS, category expansion (including apparel), content, international expansion (India), and physical stores.”
TipRanks analytics exhibit AMZN as a Strong Buy. Based on 28 analysts polled by TipRanks in the last 3 months, 26 rate a Buy on Amazon stock while 2 maintain a Hold. The 12-month average price target stands at $1,130.39, marking a nearly 10% upside from where the stock is currently trading.
Facebook Innovation to Light 2Q Fire
In an encouraging preview setting confident expectations ahead of quarterly earnings, the analyst reiterates a Buy rating on shares of FB with a $180 price target, which represents a just under 10% increase from where the stock is currently trading. (To watch Bellini’s track record, click here.)
For the second quarter, the analyst projects Facebook total revenue to reach a 43% year-over-year rise to $9.209 billion and GAAP to hit $1.16, compared to FactSet consensus expectations looking for $9.186 billion in total revenue and $1.12 in GAAP EPS.
“Our checks in 2Q were universally positive, pointing to FB accelerating its pace of innovation on both the consumer product and the ad tech stack,” commends the analyst, who likewise points out, “Advertisers continue to achieve high returns, though pricing has increased to mitigate some of the improvement in return on ad spend, according to our checks. As such, we expect another solid print and see upside risk to our revenue forecast.” In other words, all is well for bullish investors in the internet-verse.
Bellini contends that with the titan’s “new monetization levers,” from bolstered video content taking new precedence to a flood of advertisement opportunities for Messenger, Facebook investors need not be concerned of management prefaces warning of relaxed revenue growth daring to hit by the close of the year. Not fazed by “ad load saturation” detracting from core Facebook, Bellini stresses, “Since those comments began, the company has pushed for more video content from publishers on the site (adding inventory for pre-roll and mid-roll video ads) and has recently opened up Messenger to advertisers more broadly. We expect these initiatives to help drive higher CPMs on Facebook and Instagram, and higher available ad inventory overall, increasing our confidence in sustained revenue growth.”
TipRanks analytics demonstrate FB as a Strong Buy. Based on 32 analysts polled by TipRanks in the last 3 months, 30 are bullish on Facebook stock while 2 remain sidelined. With a return potential of 5%, the stock’s consensus target price stands at $172.90.