Big Tech Up Next for 1Q Earnings This Week

Author: Gary Ashton

Estimated read time: 3 minutes

Publication date: 27th Apr 2020 18:54 GMT+1


This week it is big tech’s turn to report 1Q financial results. Google/Alphabet (NASDAQ: GOOGL) kicks things off on Tuesday, followed by Facebook (NASDAQ: FB) and Microsoft (NASDAQ: MSFT) the next day. On Thursday, we hear from Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN). Finscreener.com has mixed earnings ratings with Google and Facebook rated a Sell, Microsoft and Amazon rated a Strong Buy, and Apple rated a Strong Sell. Analysts have revised down Apple’s earnings estimates by 26% in the last 90 days and now stand at $2.10 per share, compared to $2.46 per share for the same quarter the previous year.

So far this earning’s season, 24% of the companies in the S&P 500 have reported actual results for Q1 2020. Information technology is holding up quite well, with 81% of companies reporting coming in with earnings above 1Q estimates and 6% in line with forecasts. This week’s line up of tech names could push these already robust figures higher, especially if some of the names ranked Sell or Strong Sell report actual figures better than analysts’ estimates. Some headwinds to that theory are the fact that Wall Street analysts have revised down both earnings and revenue growth expectations for S&P 500 tech names in the last month to now stand at 0.8% and 3%, respectively, from 1.5% and 4.2% previously.

Tech names should have a decent 1Q as the impact of the global slowdown should not dominate their figures. Additionally, the global lockdown resulted in more white-collar workers working from home, and many of them have upgraded home offices with new PC and other technology equipment. Online shopping is also at unprecedented levels, which should be a direct benefit to Amazon.com Inc. The 43 Wall Street analysts offering 12-month price forecasts for Amazon have a median target of $2450 per share, with a high estimate of $2900 per share. Finscreener.com has a price target of $2402.59, indicating the stock is already at fair value. Amazon closed on Friday last week at $2410.22 per share. Amazon has performed well in 2020, up 30.43% year to date.

Big Pharma Also on Tap

Three big health care companies also report on Tuesday before the market opens next week. Analysts are keenly waiting for 1Q results from Merck & Co (NYSE: MRK), Novartis (NYSE: NVS), and Pfizer Inc. (NYSE: PFE). All three names have an Earnings Rating of Buy from Finscreener.com, and all have price targets at least 10% above current pricing (MRK +14.58%, NVS +17.16% and PFE +10.35%) even after rebounding from lows reached March 20-23 this year.


Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.com. The observations he makes are his own and are not intended as investment or trading advice.