Earnings This Week: Apple, Alphabet, Amazon and Meta

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Josh Warner
By :  ,  Market Analyst

Earnings calendar: Jan 31-Feb 3

Earnings season gets into full swing this week, with the calendar headlined by Big Tech stocks Meta, Alphabet, Amazon and Apple. Snap and Spotify are other tech stocks to watch.

We will also see updates from oil outfit Chevron, automakers Ford and General Motors, as well as semiconductor stocks AMD and Qualcomm. It will also be a big week for the pharmaceutical and healthcare industry with results due out from Pfizer, Novartis, Sanofi, Regeneron, Roche, Eli Lilly, Bristol Myers Squibb and Gilead Sciences.

In the UK, we have results out from oil giant Shell, pharmaceutical firm GSK and telecoms firms Vodafone and BT Group.

 

Monday January 31

Thursday February 2

NXP Semiconductor Q4

Apple Q1

Ryanair Q3

Alphabet Q4

Tuesday January 31

Amazon Q4

Exxon Mobil Q4

Eli Lilly Q4

Pfizer Q4

Roche Q4

McDonalds Q4

Merck Q4

UPS Q4

Shell Q4

Amgen Q4

Bristol Myers Squibb Q4

Caterpillar Q4

Qualcomm Q1

AMD Q4

Renishaw H1

General Motors Q4

Gilead Sciences Q4

Electronic Arts Q3

Starbucks Q1

Spotify Q4

Ford Q4

Snap Q4

Ferrari Q4

Wednesday January 1

Deutsche Bank FY

Meta Q4

BT Group Q3

Novartis Q4

Cranswick Q3

T-Mobile Q4

Friday February 3

GSK Q4

Sanofi Q4

Altria Q4

Cigna Q4

Peloton Q2

Regeneron Pharmaceuticals Q4

Vodafone Q3

 

 

Snap

Snap proved to be the canary in the coal mine for the digital advertising market last earnings season after sales growth stalled to single digits for the first time since it went public, which was followed by disappointing results from larger ad rivals like Meta and Alphabet – demonstrating that no company is immune to the slowdown. Social media stocks are having a tougher time and taking the brunt of the damage as they are grappling with a myriad of sector-specific headwinds. For example, platforms are still adapting to Apple’s privacy policy update back in 2021 that hurt their ability to target adverts at users, while competition is also intensifying from the likes of TikTok and other new entrants into the digital ad space. This will result in a tepid 0.5% rise in revenue in the fourth quarter – the slowest pace on record since going public back in 2017. You can read more in our Snap Q4 Earnings Preview.

Meta

Meta is suffering from the same problems as Snap and the advertising slowdown is set to see it report its third consecutive quarter of lower sales and the fifth straight quarter of lower earnings. Plus, while Snap and other apps continue to grow their user base, analysts believe Facebook will see daily active users fall to 1.90 billion at the end of 2022 from 1.98 billion at the end of September, which will only add to its woes and fuel further speculation that some of its social media platforms have reached their peak. Lacking a revival in growth, the best thing Meta can do is demonstrate that it is getting a grip on costs and protecting profitability in these tougher times. Meta has already started to act by cutting 11,000 jobs. However, its costly metaverse ambitions will remain under the spotlight as losses are set to peak in 2023. You can read more in our Meta Q4 Earnings Preview.

Alphabet

It could be another tough quarter for Alphabet. The company has already started to see softer demand for advertising as businesses pullback on spending in the uncertain environment and that could be coupled with slower growth from its cloud computing business. This is expected to see Alphabet report its slowest revenue growth on record in the fourth quarter. Meanwhile costs are rising at a faster pace than the topline and this will lead to Alphabet’s earnings declining for a third consecutive quarter. In response to the tougher environment, Alphabet has announced plans to layoff 12,000 workers, representing over 6% of its workforce. You can read more in our Alphabet Q4 Earnings Preview.

Amazon

Amazon has already warned that revenue growth will stall to its slowest pace on record for any holiday shopping season on record as the boom in ecommerce during the pandemic continues to unwind. Meanwhile, its cloud computing arm Amazon Web Services – which provides the bulk of Amazon’s profits – is also starting to see customers tighten their belts and reduce spending due to the uncertain economic outlook that has a recession on the horizon. Its biggest rival Microsoft has warned it expects this trend to continue and for budgets to be squeezed further in 2023 suggests the landscape could become more challenging this year. We could see Amazon make faster progress in cutting costs after starting to layoff 18,000 workers this month. You can read more in Amazon Q4 Earnings Preview.

 

Apple

Apple proved to be more resilient than its Big Tech peers in the last quarter, but the situation has become more challenging for the iPhone maker since then as it tries to navigate supply chain problems and softening demand. Wall Street forecasts revenue will fall 1.5% from last year to $122.06 billion in the first quarter of the financial year. That would be the first fall at the topline in over three years, driven by the drop in iPhone and Mac sales as supply chain challenges and softer demand for devices bites. That would also mean Apple won’t be reporting sales growth over the so-called Golden Quarter for the first time since at least the start of the millennium. The debate now is how many of these sales will be pushed into 2023 and how many will be lost entirely. Apple has trimmed its outlook by 3 million handsets in response to softer demand and supply chain constraints in China, but some analysts believe the impact could be greater. However, some research suggests Apple had a stronger quarter in China than anticipated. EPS is expected to fall 6.9% to $1.95 as a result. Apple wielded its healthy cash balance last year and accelerated share buybacks to help support the bottom-line, a tactic it could continue to deploy should it want to capitalise on the drop in its share price and bolster EPS. Watch out for a more detailed preview early next week.

 

AMD

Initial results from the chipmaking industry have been uninspiring so far, with Intel’s gloomy outlook rocking the boat. Wall Street forecasts AMD’s revenue will rise 14% from last year to $5.5 billion and adjusted EPS is expected to fall for a second consecutive quarter, this time by 28%, to $0.67. Strength from data centres will counter lower sales from its other divisions, including gaming. However, there are concerns that data centre demand will also soften in 2023 as other companies note a pullback in spending from December. Earnings are under pressure thanks to surging costs. On a brighter note, we could see free cashflow surpass $1 billion for the first time in years this quarter. The first half of 2023 will remain challenging for semiconductor stocks, but markets are still optimistic of a recovery in the second.

 

Pfizer

All eyes remain on Covid-19 at Pfizer. Wall Street forecasts Pfizer will report a 1.7% rise in revenue in the fourth quarter to $24.2 billion. This will be largely driven by its Covid-19 treatment Paxlovid, which will counter lower demand for its vaccine. The outlook for 2023 will be key as markets continue to weigh up how demand for both drugs will hold-up in 2023 as the world continues to move on from the pandemic. Sales of both Paxlovid and its vaccine are forecast to more than halve in 2023 compared to 2022, which will significantly contribute toward a steep drop in revenue and earnings.  Adjusted EPS is expected to fall 2.8% in the fourth quarter from last year to $1.05, marking the first drop in profits in years as it comes up against particularly tough comparatives from the year before. Pfizer has said it is aiming to deliver $6.40 to $6.50 adjusted EPS over the full year.

 

Exxon Mobil

Oil stocks are celebrating a stellar year in 2022, when profits hit record highs and propelled share prices to new levels not seen before. Elevated commodity prices allowed them to generate huge amounts of cash, which has been generously returned to shareholders through dividends and buybacks. Exxon Mobil is expected to generate more than enough cash to cover these returns in the fourth quarter, even if earnings slide from the peak we saw in the third quarter thanks to a slight easing in oil and gas prices. That leaves scope for buybacks to be accelerated, with rival Chevron having more then trebled the size of its own programme just this week. Wall Street forecasts revenue will be up 13.6% from last year in the fourth quarter at $96.5 billion and that adjusted EPS will jump 60% to $3.28. Oil stocks are expected to see earnings fall in 2023 from the record levels in 2022, but they should remain elevated compared to historic levels and remain in favour among those seeking dividends and buybacks.

 

Shell

Meanwhile, UK-listed outfit Shell is also set to round-off a record-breaking year this week. Analysts forecast Shell will report a 20% year-on-year rise in sales to $102.0 billion and adjusted earnings are expected to surge 41% to $9.0 billion. Free cashflow is also expected to exceed $9.0 billion – more than enough to cover the anticipated $5.5 billion of dividends and buybacks. With this in mind, the company launched a $4 billion buyback last year but this could be expanded, with a larger hike to the dividend less likely.

 

GSK

GSK’s sales are forecast to fall 26% from last year to £7.05 billion and adjusted EPS is expected to fall 30% to £0.23. Shingles vaccine Shingrix will remain the bright spot with sales forecast to rise 24%, accompanied by growth in demand for other products including its asthma treatments and HIV treatment. However, this will not be enough to counter the collapse in sales of its Covid-19 treatment. Investors are trying to look past Covid-19 and markets believe sales can grow by a low-to-mid single digit range in 2023 if the treatment is stripped out. It has a treatment for anemia and its RSV vaccine in the pipeline and they could get approval this year. However, the Zantac litigation continues to hang over the stock.

 

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