Stock Market News – Facebook and Microsoft eyed as earnings season continues
January 31, 2018 3:26 pm
Technology heavyweights Facebook and Microsoft will be releasing financial results for the quarter ending December 2017 after Wednesday’s US market close, with the former also releasing full-year results. The consensus recommendation for both Facebook and Microsoft is a “buy”, with the average consensus recommendation for their peer groups – Online Services and Software respectively – also being a “buy”.
Facebook’s quarterly EPS are expected to stand at $1.95, with analysts’ average EPS estimate being revised upwards from $1.94 over the last four weeks. If earnings come in as projected, this would reflect an improvement by around 38.5% relative to Q4 2016 when the social-networking giant earned $1.41 per share. The most bearish analyst submitting their projections to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S) forecasts EPS to stand at $1.72 and the most bullish anticipates them at $2.10. The firm managed to exceed Wall Street earnings estimates in three of the four quarters that preceded, while falling shy of expectations once.
An earnings beat is anticipated to spur buying interest for Facebook’s stock, with the area around last week’s all-time high of $190.66 potentially acting as a barrier to bullish movement. An upside break could shift the focus to the $200 handle, a level that might hold psychological significance. On the downside and in case of disappointing earnings that would result in selling pressure, the range around the current level of the 50-day moving average at $180.93 could provide support; the area around this level was congested in recent months.
Regarding the California-based company’s outlook, it’s been quite some time that it has been receiving criticism on the topic of what type of content its algorithms prioritize on users’ news feed – this being linked to the “fake news” story. The social media firm pledged to make considerable investments in security to the extent “it will impact [its] profitability”. Investors would be assessing and positioning themselves accordingly depending on by how much security spending could act to the detriment of the company’s bottom line moving forward.
In Microsoft’s case, quarterly EPS are forecast to come in at $0.86, with the average EPS estimate remaining unchanged over the last four weeks. Should earnings meet expectations, they would reflect an increase of around 4% relative to the respective quarter from last year when the company earned $0.83 per share. Analysts’ EPS projections range at the moment from $0.83 to $0.97. Microsoft surpassed analysts’ EPS forecasts over the past four quarters, with another beat extending this positive streak.
Stronger-than-anticipated bottom line results are likely to be met with price advancing. In this case, the area around Monday’s record-high for the stock of $95.45 would be eyed as potential resistance, with $100 being the focus next. An earnings miss on the other hand, could see the stock finding support around $90.00, a level that may be of psychological importance.
The chances of price action for both Facebook and Microsoft storming past levels that could offer support/resistance are positively related to the deviation between actual and expected results; the greater the discrepancy, the higher the odds.
In terms of Microsoft’s outlook, the company has entered a period of “restructuring” under the guidance of CEO Satya Nadella, revamping operations and expanding in “hot” areas such as the cloud and blockchain technologies. It would be interesting to see how these moves play out.
Any developments on the regulatory front, as well as how Facebook and Microsoft respond to the new tax environment in the US will also be closely watched by investors as the year progresses.
Facebook is an S&P 500 and Nasdaq 100 component stock, with Microsoft being a Dow constituent as well apart from comprising the two aforementioned indices. Year-to-date (before Wednesday’s US market open), the Dow, S&P and Nasdaq 100 have risen by 5.5%, 5.6% and 8.35% respectively. Facebook and Microsoft’s respective performance stands at 6.0% and 8.4%.
Tech giants Alibaba, Amazon, Apple and Google parent Alphabet will be among companies releasing quarterly earnings reports on Thursday; Alibaba before the US market open and all remaining ones after Wall Street’s closing bell.
Technology heavyweights Facebook and Microsoft will be releasing financial results for the quarter ending December 2017 after Wednesday’s US market close, with the former also releasing full-year results. The consensus recommendation for both Facebook and Microsoft is a “buy”, with the average consensus recommendation for their peer groups – Online Services and Software respectively – also being a “buy”.
Facebook’s quarterly EPS are expected to stand at $1.95, with analysts’ average EPS estimate being revised upwards from $1.94 over the last four weeks. If earnings come in as projected, this would reflect an improvement by around 38.5% relative to Q4 2016 when the social-networking giant earned $1.41 per share. The most bearish analyst submitting their projections to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S) forecasts EPS to stand at $1.72 and the most bullish anticipates them at $2.10. The firm managed to exceed Wall Street earnings estimates in three of the four quarters that preceded, while falling shy of expectations once.
An earnings beat is anticipated to spur buying interest for Facebook’s stock, with the area around last week’s all-time high of $190.66 potentially acting as a barrier to bullish movement. An upside break could shift the focus to the $200 handle, a level that might hold psychological significance. On the downside and in case of disappointing earnings that would result in selling pressure, the range around the current level of the 50-day moving average at $180.93 could provide support; the area around this level was congested in recent months.
Regarding the California-based company’s outlook, it’s been quite some time that it has been receiving criticism on the topic of what type of content its algorithms prioritize on users’ news feed – this being linked to the “fake news” story. The social media firm pledged to make considerable investments in security to the extent “it will impact [its] profitability”. Investors would be assessing and positioning themselves accordingly depending on by how much security spending could act to the detriment of the company’s bottom line moving forward.
In Microsoft’s case, quarterly EPS are forecast to come in at $0.86, with the average EPS estimate remaining unchanged over the last four weeks. Should earnings meet expectations, they would reflect an increase of around 4% relative to the respective quarter from last year when the company earned $0.83 per share. Analysts’ EPS projections range at the moment from $0.83 to $0.97. Microsoft surpassed analysts’ EPS forecasts over the past four quarters, with another beat extending this positive streak.
Stronger-than-anticipated bottom line results are likely to be met with price advancing. In this case, the area around Monday’s record-high for the stock of $95.45 would be eyed as potential resistance, with $100 being the focus next. An earnings miss on the other hand, could see the stock finding support around $90.00, a level that may be of psychological importance.
The chances of price action for both Facebook and Microsoft storming past levels that could offer support/resistance are positively related to the deviation between actual and expected results; the greater the discrepancy, the higher the odds.
In terms of Microsoft’s outlook, the company has entered a period of “restructuring” under the guidance of CEO Satya Nadella, revamping operations and expanding in “hot” areas such as the cloud and blockchain technologies. It would be interesting to see how these moves play out.
Any developments on the regulatory front, as well as how Facebook and Microsoft respond to the new tax environment in the US will also be closely watched by investors as the year progresses.
Facebook is an S&P 500 and Nasdaq 100 component stock, with Microsoft being a Dow constituent as well apart from comprising the two aforementioned indices. Year-to-date (before Wednesday’s US market open), the Dow, S&P and Nasdaq 100 have risen by 5.5%, 5.6% and 8.35% respectively. Facebook and Microsoft’s respective performance stands at 6.0% and 8.4%.
Tech giants Alibaba, Amazon, Apple and Google parent Alphabet will be among companies releasing quarterly earnings reports on Thursday; Alibaba before the US market open and all remaining ones after Wall Street’s closing bell.
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