3 FAANG Stocks Swinging After Earnings

Stifel issued a rare GOOGL downgrade after Alphabet earnings

Karee Venema
Feb 2, 2018 at 10:06 AM
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The tech sector is in focus today, after industry heavyweights Alphabet Inc (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL) reported earnings last night. Here's a quick earnings roundup for GOOGL, AMZN, and AAPL, and how the FAANG stocks are reacting.

Susquehanna Targets 25% Upside for GOOGL Stock

Alphabet reported lower-than-expected fourth-quarter profit of $9.70 per share, though the company's $32.32 billion in revenue exceeded Wall Street's forecast -- driven by strong growth in Google's ads business. Plus, ad clicks were higher than expected, and the amount advertisers pay per click fell less than analysts had estimated.

Analysts were quick to chime in on GOOGL stock after the results. While Stifel downgraded the shares to "hold" from "buy" -- citing consumer product search competition from Amazon -- the bulk of the brokerage notes were positive. Susquehanna was most optimistic, boosting its price target to $1,475 from $1,250, a nearly 25% premium to last night's close.

Against this backdrop, GOOGL shares have dropped 5.4% out of the gate to trade at $1,117.39 -- on track to snap their four-week win streak. Heading into today's trading, Alphabet stock was up more than 12% year-to-date, and hit a record high on Jan. 29. Not surprisingly, most analysts are upbeat, with more than four-fifths of those covering the shares maintaining a "buy" or better rating, and not a single "sell" to be found.

Amazon Earnings Show Record-Breaking Quarterly Profit

Amazon reported a fourth-quarter profit of $1.9 billion -- a new record -- or $3.75 per share, thanks to tax reform, the company's purchase of Whole Foods, growth in its Amazon Web Services cloud division, and a strong holiday sales season. AMZN said revenue arrived at $1.9 billion in the three-month period, with both bottom- and top-line results coming in above expectations. Amazon also offered upbeat current-quarter revenue guidance.

AMZN stock received an onslaught of price-target hikes in the wake of the company's earnings report. The highest one came from Monness Crespi Hardt, which raised its Amazon target price by $500 to $2,000 -- representing expected upside of 44% to Thursday's close.

In reaction, AMZN shares have jumped 4.6% to trade at $1,456.16 -- earlier touching a record high of $1,498, a triumphant end to a week that saw the company announce a high-profile healthcare initiative and add to a 25.5% year-to-date lead.

Apple Stock Tests Familiar Support After Earnings

Apple reported fiscal first-quarter earnings of $3.89 per share on $88.3 billion in revenue -- above analysts' estimates. However, the tech giant said quarterly iPhone unit sales fell short, and that it expects current-quarter revenue to arrive between $60 billion and $62 billion and gross margins to be between 38% and 38.5%, both below Wall Street's expectations.

Analyst reaction has been mixed following Apple's earnings report. While Citigroup added the stock to its U.S. focus list, KeyBanc downgraded AAPL to "sector weight" from "overweight," calling the company's iPhone sell-through and gross margin outlook disappointing.

AAPL stock is down 2.6% in early trading at $163.37 -- on track for a second straight weekly loss. What's more, the shares are at risk of breaching support at their 120-day trendline, a familiar layer of support that recently cushioned the equity's pullback from its Jan. 18 record high of $180.10.


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