Harriet Lefton

About the Author Harriet Lefton

Harriet originates from the UK where she worked as a journalist specializing in the metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer.

Looking Ahead of Wall Street: Alphabet Inc (GOOGL), Facebook Inc (FB) and Amazon.com, Inc. (AMZN)

Alphabet Inc (NASDAQ:GOOGL) is due to releases its results today after the close. The stock has a consensus EPS forecast of $8.17 up from the EPS of $7 this time last year. Alphabet is expected to report Q2 sales of $25.7 billion, up 19% from the previous year.

The overall outlook for the stock is bullish. The stock has seen strong Google search growth as well as robust YouTube user activity trends. In fact, Alphabet has many tailwinds including a solid balance sheet, a cheap trading multiple in comparison to peers and advertising growth of around 20%.

However, investors should note that Alphabet’s profit will suffer from the $2.74 billion fine from EU regulators for Google’s bias towards its own online shopping service over rivals. Indeed, top Needham analyst Kerry Rice believes the fine will reduce Alphabet’s EPS by about $3.90- but that nonetheless results will be in-line with Street predictions.

According to the 26 analysts polled by TipRanks in the last 3 months, 22 are bullish on Alphabet while four are more cautious with a hold rating on the stock. The average 12-month price target for the company is $1080.68, marking an 9% upside from current levels.

Facebook Inc (NASDAQ:FB) will report its Q2 results on July 26. Wall Street is estimates an EPS for the quarter of $1.13 on revenue of $9.2 billion, up from EPS of $0.97 during the same period last year.

The social media giant has been performing very strongly in the last six months, with shares are up almost 30%. Indeed, even though Facebook has told investors to expect a slowdown in growth due to ad saturation, this has yet to happen as Facebook has instead been able to spread advertising across its other platforms like Instagram and Messenger. Facebook videos have also been very successful- and provide FB with another dynamic ad medium going forward.

Ahead of the results release, FB has received a flurry of buy ratings from analysts. For example, top Cantor Fitzgerald analyst Kip Paulson says that he is confident about the earnings release and calls the stock a “top pick” with predicted mobile ad revenue up 53% year-on-year to $8,026 million. Paulson points out that FB has maintained “solid user growth/ engagement” with CEO Mark Zuckerberg announcing 2 billion monthly active users (MAU) at the end of June.

According to TipRanks, 31 of the 34 analysts who have rated Facebook in the last 3 months are bullish on the company while 2 are staying on the sidelines and 1 is bearish. The average 12-month price target for the company is $172.53, marking a 4.9% potential upside from current levels.

Amazon.com, Inc. (NASDAQ:AMZN) is reporting its results the day after Facebook on July 27 when the market closes. The forecast is for revenue of $37.21 billion with EPS of $1.38. This suggest year-over-year revenue growth of over 20% but an EPS decline from the $1.78 EPS in the same period last year.

Investors are keenly waiting for the earnings results and accompanying conference call for further insights into Amazon’s mammoth $13.7 billion acquisition of Whole Foods Market. The deal was announced back in June and is currently being examined by US anti-trust enforcers. A key question is how Amazon will utilize WFM’s physical store location.

This quarter Amazon also held its Prime Day in July- a 30-hour shopping bonanza which sees thousands of goods discounted. The sales event was Amazon’s “biggest day ever”, with sales up 60% since last year and beating both Amazon’s Black Friday and Cyber Monday figures. The event was a success for Amazon not just in terms of sales- especially given that July is seasonally a very quiet period- but also in terms of brand visibility and site traffic.

Going forward, Maxim analyst Tom Forte says the stock has multiple positive elements to boost growth: “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.”

According to the 27 analysts polled by TipRanks in the last 3 months, 25 are bullish on Amazon while two are staying on the sidelines. The average 12-month price target for the e-commerce company is $1135.18, marking a 10.68% potential upside over current levels.