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Here's What Analysts Are Saying About FANG Stocks Reporting Earnings This Week

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Here's What Analysts Are Saying About FANG Stocks Reporting Earnings This Week

Amazon.com, Inc. (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) are among the FANG stocks due to report earnings during this week. Both are scheduled to report after the market close Oct. 26.

Netflix, Inc. (NASDAQ: NFLX), another component of the FANG group, reported last week solid third-quarter results, with subscriber add numbers trumping expectations.

Facebook Inc (NASDAQ: FB), which completes the quartet, is scheduled to report after the market close on Nov. 1.

Reverting to the two FANGs that are in the spotlight this week, analysts are optimistic concerning the financial results of both Amazon and Google.

Amazon's New Normal: Strong Top-Line, Shrinking Margin

Deutsche Bank analysts Lloyd Walmsley and Karl Keirstead expect strong top-line growth at Amazon, especially in retail, given its aggressive investment in fulfilling centers. The company is also investing in content to improve overall value to consumers/Prime members, the analysts added.

Given the heavy investment around the globe, the analysts expect consolidated segment operating income, margin pressure in both the third and fourth quarters.

However, Deutsche Bank said, "We think the expanding TAM and Amazon's growing share within existing categories justify any short-term decline in margins."

The firm expects 40-percent revenue growth for AWS. Meanwhile, the firm said Amazon could shed additional visibility into its omnichannel strategy on the earnings call. The firm also said international expansion and AWS could also be in focus.

Cantor Fitzgerald's Kip Paulson and Martha Lepczyk expect a solid quarter from Amazon, with 27.5 percent year-over-year revenue growth, driven by a growing share of retail, robust third-party unit growth and the rapid rise of AWS.

The analysts expect Whole Foods to have contributed $1.2 billion to the top line. On margins, the analysts expect GAAP operating margin of 0.4 percent, down from 1.2 percent in the second quarter.

See also: Contrarian: Amazon Is One Of The Weakest Retailers There Is

Deutsche Bank maintains its Buy rating on the shares of Amazon and raised its price target on the shares from $1,175 to $1,192.

"We remain bullish on the name as a core long-term holding with the largest TAM of any company we cover and strong long term barriers," the firm said.

Cantor Fitzgerald maintains its Overweight rating and $1,150 price target.

Mobile To Prop Up Google's Results

Cantor Fitzgerald said, overall it expects broad-based global momentum to continue for Google, thanks to strong growth in mobile search, YouTube, programmatic and advertising revenue.

Specifically, the firm expects net revenues and EBITDA of $21.95 billion, up 20.1 percent year-over-year increase, and $11.07 billion, respectively. The firm added that its GAAP earnings per share estimate of $9.07 was above the $8.32 consensus estimate.

"Our estimates imply that Search still has a long runway and that Alphabet continues to gain share in the digital ad market," the firm said.

However, the firm is wary of the traffic acquisition cost, which slowed down in the second quarter.

Concluding the firm said the continuation of healthy double-digit growth, attractive FCF and EBITDA margins, disciplined capital allocation and compelling valuation keep it positive on the stock.

The firm maintains its Overweight rating and $1,100 price target for the shares of Google.

Related Link: Intel And AMD: Are Q3 Expectations Realistic?

Latest Ratings for AMZN

DateFirmActionFromTo
Dec 2019AssumesBuy
Nov 2019Initiates Coverage OnHold
Oct 2019MaintainsMarket Outperform

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

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

 

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