Stocks staged a strong rebound on Friday as dip-buyers swooped in at the last hour of trading to acquire some cheap shares. Could this be a sign of things to come in the weeks ahead? The major averages closed out the week booking gains, which helped to reverse massive declines to start the week.
Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks.
Increasing Treasury yields and risk aversion will hit the stock market hard next week, making the big tech earnings that much more critical. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.
Earnings Calendar
Monday, 31 January
Harmonic
Harmonic Inc. HLIT is scheduled to report fourth-quarter 2021 results on Jan 31, after the closing bell. In the last reported quarter, the company’s earnings per share beat the Zacks Consensus Estimate by 5 cents, delivering a surprise of 125%.
The San Jose, CA-based company is expected to have recorded year-over-year higher revenues on the back of strong market momentum along with the execution of growth initiatives.
During the quarter, Harmonic integrated Google Cloud Marketplace in its CableOS cloud-native core platform. The integration provides operators using the CableOS Platform access to Google Cloud Marketplace applications, allowing them to deploy new revenue-generating services.
Harmonic partnered with Rogers Communications, a leading technology and media company in Canada. It is to power the latter’s multi-gigabit broadband services using Harmonic’s CableOS cloud-native converged core platform. These developments are likely to have positively impacted Harmonic’s performance in the fourth quarter.
Tuesday, 1 February
Alphabet
The parent of Google and the world’s largest search engine that dominates internet search activity globally is expected to report its fourth-quarter earnings of $26.71 per share, which represents year-over-year growth of about 20% from $22.3 per share seen in the same period a year ago.
The Mountain View, California-based internet giant would post revenue growth of nearly 27% to $72.133 billion from $56.9 billion a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.
Can Google’s cloud business finally make a big dent in quarterly revenues? Amid the recent tech decline, which has punished GOOG stock 10% year to date, the company’s cloud arm could be a strong catalyst for a rebound.
If Google can show continued acceleration in that segment, the market will begin to take it more seriously. Estimates call for Google Cloud to deliver Q4 segment revenues of $5.5 billion, implying year-over-year growth of almost 45%. Will that be enough? In the meantime, the company will continue to rely on its search dominance, where it has 90% market share, and digital advertising, which has seen some cyclicality of late.
Advanced Micro Devices (AMD)
Wall Street expects AMD to earn 76 cents per share on revenue of $4.52 billion. This compares to the year-ago quarter when earnings were 52 cents per share on $3.24 billion in revenue.
Having surpassed both revenue and profit estimates in ten straight quarters, it appears AMD is finally getting the respect it deserves. But not everyone believes AMD’s success can last. AMD stock was under pressure last week, falling some 7% amid the selloff in tech. And analysts at Piper Sandler fanned more bear flames by downgrading the stock and slashing the price target.
Citing several areas of concern, including a decline in the PC market, analyst Harsh Kumar rated AMD down from Overweight to Neutral. Kumar also reduced his 12-month price target to $130. The analysts also expect a potential headwind with earnings and revenue growth from AMD’s recent deal for Xilinx (XLNX). In the meantime, investors are wondering if the decline is the beginning of a trend or a buying opportunity. Assuming the company’s growth metrics have not drastically decelerated, it would be a mistake to part with AMD stock.
Paypal
Paypal (NASDAQ: PYPL) is expected to report strong fourth-quarter 2021 earnings results after the market closes on February 1, based on monthly users statistics.
For digital payments firms like PayPal, total website visits are a strong indicator of user involvement on PayPal’s platform. The more people visit PayPal’s website, the more money the corporation may generate through transaction fees, interchange fees, cash interest, and other sources.
In addition, the tool shows that PayPal’s other subsidiaries, such as Honey, Venmo, Xoom, and Braintree, have also seen an increase in user visits on a sequential basis in Q4. More precisely, total projected visits to joinhoney.com, venmo.com, xoom.com, and braintreepayments.com increased by 24.5%, 2.7%, 3.4%, and 26.2%, respectively, on a sequential basis.
This total quarterly rise suggests robust transactional activity on Paypal’s platform. Also, PayPal’s key metrics, such as total payment volume (TPV), active customer accounts, and a total number of payment transactions, may have improved in the fourth quarter, favorably boosting the company’s revenue in the fourth quarter.
Wednesday, 2 February
Meta (Facebook)
The world’s largest online social network is expected to report its fourth-quarter earnings of $3.78 per share, which represents a year-over-year decline of over 2% from $3.88 per share seen in the same period a year ago.
The Menlo Park, California-based social media conglomerate would post revenue growth of over 30% to around $33.04 billion. The social media giant has consistently beaten consensus earnings estimates in most of the quarters in the last two years, at least.
Meta’s advances in virtual reality with its Oculus VR headset give it a leg up on the competition. The market will get more details about the company’s plans. In the near term, the company announced it will split out revenue and profits for two business segments.
Aside from Family of Apps, which includes Facebook, Instagram, Messenger, WhatsApp, investors will get a breakdown for Reality Labs, which included augmented reality/virtual reality hardware as well as software and content.
Spotify
Spotify Technology (NYSE: SPOT) will release its earnings data after the market closes on Wednesday, February 2nd. Analysts expect Spotify Technology to post earnings of ($0.44) per share for the quarter.
Shares of Spotify Technology stock opened at $184.04 on Wednesday. The firm has a fifty-day moving average of $231.72 and a two-hundred-day moving average of $239.25.
A hedge fund recently raised its stake in Spotify Technology stock. Morgan Stanley boosted its position in shares of Spotify Technology S.A. (NYSE: SPOT) by 3.2% in the second quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission.
The institutional investor owned 19,265,688 shares of the company’s stock after purchasing an additional 589,486 shares during the period. Spotify Technology comprises 0.7% of Morgan Stanley’s holdings, making the stock it’s 16th largest position.
Morgan Stanley owned approximately 10.75% of Spotify Technology worth $5,309,432,000 as of its most recent filing with the Securities and Exchange Commission. 56.36% of the stock is owned by institutional investors.
Qualcomm
The world’s biggest mobile phone chipmaker is expected to report its fiscal first-quarter earnings of $2.77 per share. This represents a year-over-year decline of over 40% from $1.97 per share seen in the same period a year ago.
The chip manufacturer would post revenue growth of nearly 27% to $10.45 billion. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.
Qualcomm forecasts GAAP revenue in the first quarter of fiscal 2022 to be between $10 billion and $10.8 billion. On a non-GAAP basis, earnings will likely range from $2.90 to $3.10 per share, while GAAP earnings will likely range from $2.53 to $2.73 per share, according to ZACKS Research.
“After underperforming the SOXX for most of 2021 until a sharp rally late in the year. We see a strong setup for a now Apple-overhang-free Qualcomm in 2022 as investors begin to appreciate the diverse revenue drivers beyond Wireless.
Expect solid print and guide, with focus on execution and growth in the connected intelligent edge and update our estimates accordingly,” noted Matthew Ramsay, equity analyst at Cowen.
“We reiterate our price target of $210 based on 17.5x our F2023 EPS estimate of $12.0 and our Outperform rating.”
Thursday, 3 February
Amazon
Amazon (NASDAQ: AMZN) is slated to report its fourth-quarter and full-year 2021 results after the market closes on Thursday, Feb. 3. An analyst conference call is scheduled for the same day at 5:30 p.m. ET.
The period to be reported on is the second quarter that Andy Jassy has been CEO of the e-commerce and technology giant. Investors will probably be approaching Amazon’s report with some apprehension.
Last quarter, the company missed Wall Street’s expectations for both revenue and earnings, with the bottom-line missing a sizable one. That was the second consecutive quarter that revenue fell short of the analyst consensus estimate.
Amazon will not only need to beat expectations but provide better than expected guidance when they report results this coming week. Otherwise, the declines could grow worse and even threaten pre-COVID levels. The key to growth stocks is delivering better than expected results and raising future expectations. Amazon’s inability to do that last quarter, along with falling cash flow from operations, has been why the stock has struggled so mightily.
Snap Inc.
Snap (SNAP) – Report shares slumped lower Monday after analysts at Wedbush cut their rating. The price target on the message app maker is ahead of the group’s fourth-quarter earnings report next week.
Snap will publish its fourth-quarter earnings on February 3. Analysts looking for adjusted earnings of 10 cents per share on revenues of $1.227 billion.
That would take the group’s annual revenue to around $3.88 billion. Some $50 billion shies of the 2021 tally recorded by TikTok owner ByteDance, according to Reuters.
Snap cautioned in late October that supply chain disruptions would hit advertising spending in the social media sector over the final three months of the year. Adding that new privacy changes in Apple’s operating system made it more difficult to track and target users with specific ads.
“making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.”
