In Focus:
It's a big week for the earnings calendar, with about 20% of S&P 500 companies set to report. Among them is electric vehicle maker Tesla (TSLA), which will report its fourth-quarter earnings after the Jan. 26 close.
Jefferies analyst Philippe Houchois (Buy) calls Tesla's fourth-quarter results “critical.” Why? They will be used to “validate (or not) the Q3 profit dynamics that could see Tesla 1) carve out meaningful share from legacy [original engine manufacturers] busy protecting their own share by ramping up [battery electric vehicles] and 2) claim a disproportionate share of the industry profit pool,” he writes in a note.
Analysts are expecting solid results for Tesla's fourth quarter. Consensus estimates are for earnings of $2.26 per share, +182.5% year-over-year (YoY), and revenues of $16.4 billion – a 52.2% increase over the year prior.
Analyst Says Buy Any Post-Earnings Weakness in Apple Stock
All eyes will be on Apple (AAPL) when the iPhone maker unveils its fiscal first-quarter earnings report after Thursday's close. The Wall Street pros, on average, are calling for earnings per share (EPS) of $1.88 (+11.9% YoY) and revenues of $118.4 billion, which would mark a 6.3% improvement over its year-ago results.
AAPL stock has struggled alongside the broader market in 2022, down 7.1% for the year-to-date. But Morgan Stanley analysts Katy Huberty (Overweight, equivalent of Buy) says she sees any additional post-earnings weakness as a buying opportunity.
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Apple will likely “post upside to Street forecasts for the December quarter and guide to a relatively in-line March quarter on the back of improving iPhone production into year end and modest services outperformance,” she writes in a note. She also expects management to address the status of the supply chain in the earnings call, which “will be important in helping investors understand at what point hardware supply and demand will become more balanced.”
Microsoft Earnings Due on Heels of Activision Acquisition
It's been an exciting year already for Microsoft (MSFT). On Jan. 18, the tech titan said it was buying gaming giant Activistion Blizzard (ATVI) for $68.7 billion – MSFT's largest-ever acquisition – as it looks to gain exposure to the quickly expanding metaverse.
The tech giant's fiscal second-quarter earnings report, due out after Tuesday's close, will likely garner plenty of headlines, as well. Analysts, on average, are looking for a 13.8% pop in earnings to $2.31 per share and an 18% jump in revenues to $43.1 billion.
Wedbush analyst Dan Ives (Outperform) is targeting even higher earnings of $2.29 per share. Ives also believes Microsoft will show strong cloud figures, with the company “poised to beat Azure whisper growth numbers of ~43% this quarter.” And despite potential valuation and interest rate-related headwinds, the analyst sees MSFT's share price heading higher over the next six to nine months, “as the Street is still underestimating the underlying growth story in Redmond in our opinion.”
Conservative Guidance Could Lead to Intel Earnings Beat
Intel (INTC) is slated to unveil its fourth-quarter earnings report after the Jan. 26 close. Wedbush analyst Matt Bryson sees the possibility for a Q4 beat. This is due to management setting a “modest bar with conservative Q4 guidance, with Street consensus and our numbers mirroring this outlook,” as well as positive PC trends late in the quarter.
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Over the long term, though, Bryson anticipates further struggles for the chipmaker. “While Intel is doing the right thing in lifting investment to try and restore manufacturing and product supremacy, the required increase in spending over the next few years will necessarily weigh heavily on company results,” he writes in a note. The analyst has an Underperform rating on the Dow Jones stock, which is the equivalent of a Sell.
Overall, consensus estimates for Intel's fourth quarter are for earnings to arrive at 90 cents per share (-40.8% YoY) and revenue to land at $18.3 billion (-8.3% YoY).
Chevron Set for Skyrocketing Earnings, Revenue Growth
Chevron (CVX) has benefited from surging energy prices – a message that's been made abundantly clear in the oil major's surging share price. CVX stock is up almost 34% in the last 12 months to trade at levels not seen since early 2018.
Raymond James analyst Justin Jenkins (Outperform) thinks Chevron's fourth-quarter earnings report – due out ahead of Friday's open – will further underscore the momentum in the integrated oil name. “Efficiency drivers are set to improve profitability into 2022, while a ‘block and tackle' capital program over the next few years should further improve competitiveness, even without more help from the macro environment,” he writes in a note.
Chevron has “the strongest financial base of the majors, coupled with an attractive relative asset portfolio,” he adds. As such, CVX “offers the most straightforwardly positive risk/reward, in our view.”
As for Chevron's upcoming report: The pros, on average, expect EPS of $3.13 per share, compared to a per-share loss of 1 cent in the year-ago period, and revenues of $45.6 billion (+80.7% YoY).