Market Overview

The Second Half Of FANG Reports This Week; Here's What To Look For

The Second Half Of FANG Reports This Week; Here's What To Look For

With the FANG rally picking up steam in 2017 following a so-so 2016, investors are likely curious to know whether fundamentals are strong enough to support the continuation of the rally.

Some hint came out of the earnings reports of Netflix, Inc.(NASDAQ: NFLX) and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL). The spotlight now shifts to Facebook Inc (NASDAQ: FB) and, Inc.(NASDAQ: AMZN), which are lined up to release their quarterly financial scorecards in the coming week.

Q4 Performances Recap: Google And Netflix

  • Google's parent Alphabet reported Thursday after the closing bell adjusted earnings of $9.36 per share, trailing the $9.64 per share Street estimate. However, revenues of $26.06 billion trumped the $25.26 billion consensus estimate. A higher tax charge, lower costs per click and a tax charge was instrumental in the company's bottom line miss. Alphabet's shares are down over 1 percent in reaction to the results.
  • Netflix reported after the close on January 18 fourth-quarter earnings of $0.15 per share on revenues of $2.48 billion. This compares to the consensus estimate, which called for earnings of $0.13 per share on revenues of $2.47 billion. Subscriber growth of 7.05 million beat the company's 5.2 million guidance. Analysts attributed the stellar results to its international expansion and focus on original content. The stock rose close to 4 percent in the session following the release of the results.

Facebook: Earnings Schedule And Estimate

Facebook is scheduled to release its fourth-quarter results after the market close Wednesday.

Analysts, on average, expect the company to report earnings of $1.31 per share, up from $0.79 per share last year. Revenues are expected to have risen 45.40 percent to $8.49 billion.

Expense Growth, Ad Load Commentary In Focus

Previewing Facebook's results, Canaccord Genuity said investors would look ahead to commentary on expense growth and ad load expansion in 2017. However, analyst Michael Graham thinks neither should come as surprises, given that company guided higher-than-expected expense growth guidance in the last two years and discussed slowing ad load expansion in the previous two quarters.

The company is bracing for another strong holiday season for ad revenues. Video and dynamic product ads drove the quarter, the firm said. This, according to the Graham, should serve to mitigate the effect of muted ad load growth in 2017 in the core News Feed experience. Additionally, the firm expects a mix shift in formats to more video that are more relevant and better quality.

Overall, Canaccord Genuity continues to like the stock going into the fourth quarter. The firm also thinks growth prospects are still solid for 2017.

Amazon: Earnings Schedule And Estimate

Amazon's fourth-quarter results are scheduled after the close Thursday. Amazon is expected to earn $1.35 per share, down from $1.86 per share last year. However, revenues are expected at $44.67 billion, up 25 percent from $35.75 billion in the year-ago period.

Strong Top-Line Growth Expected

The increasing scale and market share have made Amazon the strongest long-term growth story in Canaccord Genuity's coverage. The firm expects the growth rates to stay high for a long time to come. The analyst also believes the fourth-quarter will be another quarter of strong top-line growth, with e-commerce gross merchandise volume more than double the U.S. e-commerce sales rate.

The firm also pointed to the market leadership of AWS in the cloud space, where the company continues to roll out innovations and attract customers. Given the heightened price reduction environment in December for EC2 and S3, the firm remains cautious of the first half of 2017. The price cuts, according to the firm, could impact revenue growth and margins for about two quarters, as had happened in 2014.

Canaccord Genuity Ratings

  • Facebook: Buy, $150 price target.
  • Amazon: Buy, $875 price target.

Pre-Market Stock Performance

  • Alphabet (GOOGL shares) was down 0.83 percent at $838.
  • Netflix was down 0.53 percent at $141.70.
  • Facebook was slipping 0.41 percent at $131.64.
  • Amazon was dropping 0.44 percent at $832.06.

Latest Ratings for AMZN

Sep 2019MaintainsOverweight
Sep 2019MaintainsOutperform
Aug 2019AssumesBuy

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Price Target Previews Reiteration Analyst Ratings Best of Benzinga


Related Articles (AMZN + FB)

View Comments and Join the Discussion!

Low-Cost Retail Investors Could Be Waking Up To Trump's Protectionism

The Market In 5 Minutes: Walgreens-Rite Aid, Personal Income And Trump's Executive Order