Next week, earnings season continues as investors eye key
earnings from technology behemoths Apple (NASDAQ:
) and chip maker Texas Instruments (NASDAQ:
). Texas Instruments' earnings and guidance is considered a key
indicator for the semiconductor, and the broader technology
industry by many analysts.
Key Earnings Next Week
Investors will be keen to watch Apple's earnings next week.
Apple shares have notoriously lost almost 50 percent since peaking
just above $700 per share in September. Investors await a new
product cycle and will be watching the margins going forwards, as
margin compression was one of the key drivers of the sell off.
The consensus analyst estimate for Apple's second quarter
earnings per share is at $10.13 per share, well below last year's
$12.30. Revenue is expected to have expanded to $42.7 billion in
the quarter from $39.1 billion in the same period a year ago. Apple
will report after the close on Tuesday.
Analysts as J.P. Morgan are not as bearish on the company as
many traders and analysts on the street are currently. "Our
research indicates that a new lower-priced iPhone and upgraded
iPhone 5S, along with a refreshed iPad mini with Retina Display,
could restore the "what's next?" to 2H [calendar] 2013. In our
view, the "what's next?" does not have to be a new product
"Instead, it is more a function of Apple being able to stage new
product launches of existing categories to smooth out the product
cyclicality of consumer electronics. We also think that Apple's
gross margin profile could be upward biased owing to supply chain
"With Apple, we reiterate our Overweight rating and Dec-13 price
target of $725. Apple is on the J.P. Morgan Analyst Focus List. In
our view, a compelling part of the stock's risk-reward profile is
that upside potential can return to the model. We think that timing
issues related to the supply chain and LTE network capacity
rollouts kept a lid on upside potential in recent quarters, but
these cross currents should fade moving through the rest of
The analysts at J.P. Morgan are expecting earnings per share of
$10.58 on revenue of $43.637 billion. They expect gross margins to
come in at 39.2 percent.
Analysts at Jeffries are much less bullish on the stock. The
analysts have a hold rating on the stock with a price target of
$420.00 per share.
"Cirrus Logic (
) (which we believe is the main provider of audio ICs for iPhones
and iPads) guided CQ2 revenues down 18%-27% Q/Q (St -7%). Also,
DigiTimes reports that CQ2 iPad mini shipments will drop 20%-30%
Q/Q, which reinforces our view that the new iPad mini will likely
not launch until CQ3."
An iPad 5 refresh may occur in CQ2 but volumes also look very
low. Overall our assumption of CQ2 iPad revenues +7% Q/Q (inline
with St) could be at risk even though our CQ2 rev/EPS estimates of
$35.5B/$7.22 are already well below consensus."
Texas Instruments is also expected to report earnings next week
on Monday after the close. Texas Instruments is expected to report
first quarter EPS of $0.30 vs. $0.32 a year ago on revenue of $2.85
billion, lower than the $3.12 billion reported in the same period a
Analysts at Deutsche Bank are mildly cautious ahead of the
report with a hold rating and $31 price target. "Our 1Q rev/EPS
ests stand at $2.85b (-4% q/q)/$0.31, in line with Street and
mid-pt of mid-qtr guidance for revs of $2.8-$3.91b (-3-6% q/q) and
EPS of $0.28-$0.32, net of one-time charges and benefits. By
segments, we model Analog revs to decline 1% q/q and Embedded revs
to be flat q/q, roughly in line with typical seasonality for these
"We model Other revs (including Legacy Wireless) to decline 15%
q/q with 13ppts of this drop attributed to a ~$100m q/q decline in
last-time OMAP and connectivity buys. We model GM at 46.7% (down
-1.8ppts q/q) and opex at $869m (+2% q/q). We model DIO's at 106,
flat q/q, with inventory dollars rising +3% q/q."
For 2Q13, DB rev/EPS ests are $3.06b (+7% q/q)/$0.44, compared
to the Street's $3.04b (+7% q/q)/$0.38. We model 2Q GM to expand
+2.7ppts to 49.4% on more favorable utilization/product mix and
opex at $871m (roughly flat q/q)."
"While we believe TXN will effectively manage through the
current challenging macro environment and emerge as a share gainer
in its core businesses over the long run, we maintain our Hold
rating as valuation already reflects a 1H cyclical recovery and
these long-term improvements."
Analysts at Wedbush are much more optimistic on the stock
currently, with an outperform rating and a $39 price target. "We
expect TI to print a modest beat driven by order trends continuing
to improve post Chinese New Year and, despite a choppy earnings
season, look for largely in-line Q2 revenue guide."
"TI raised and narrowed Q1 guidance to the upper half of its
prior range with GAAP EPS to a range of $0.28 to $0.32 and revenue
to a range of $2.80B to $2.91B (-6% to -2% Q/Q) at its mid- quarter
update on March 7. We expect a modest beat as checks indicate order
trends have continued to improve post the Chinese New Year holiday.
We are increasing our Q1 pro forma EPS estimate to $0.32 on revenue
of $2.87B above the Street ($0.30/$2.85B) and our prior estimates
"We continue to view TI as our best big-cap stock for investors
to play the overall recovery of the semi industry given TI's (1)
recent quarterly dividend increase to $0.28 or $1.12 annualized
implying a 3.4% dividend yield, (2) addition of $5B to current
share repurchase plan, (3) position to benefit from higher
utilization rates pushing GM higher, and (4) market share gains
driving steady Q/Q earnings and revenue growth."
) is expected to report first quarter operations after the close
Monday as well. For the first quarter, Netflix is expected to
report earnings per share of $0.18 vs. a loss of $0.08 per share a
year ago on sales of $1.02 billion vs. $869.79 million a year
Sterne Agee is cautious on the stock ahead of the earnings
release, with a hold rating but without a price target. "We expect
NFLX to handily beat consensus 1Q estimates but believe
expectations are already high and mostly reflected in the stock. We
believe the "bogey" for net domestic streaming adds in 1Q is close
to 2M subs. In addition, we believe 2Q domestic streaming guidance
will need to be healthy (above 500K net domestic streaming adds).
In the absence of either of these, we could see profit taking."
"Management had guided conservatively for 1Q and not fully
factored in the potential success of House of Cards. The series was
very successful and likely boosted subs in 1Q. We believe the
Street is expecting net domestic streaming adds to be at the upper
end of guidance of 1.4M to 2.1M net adds."
"We are looking for a net increase of 1.84M domestic streaming
subscribers and 900K international subscribers in 1Q. On other
hand, we expect a 400K decline in the number of domestic DVD
subscribers. In total, we expect the company to add 2.3M net new
subscribers during 1Q versus guidance of 1.2M to 3.1M."
"Our revenue/EPS estimate of $1B/$0.26 compares to consensus of
$1.01B/$0.17 and guidance of $1.004-$1.031B/$0.00 to $0.23,
respectively. For 2Q, management guided for 500K net domestic
streaming subscriber additions but we believe the Street expects
guidance to be stronger than that."
"We remind investors that NFLX shares have been extremely
volatile post earnings. In the past six quarters, shares have been
down double digits four times the day after earnings and up twice
Analysts at National Alliance are much more optimistic on the
stock here, with an accumulate rating and $186.64 price target on
"We estimate sales of $995m, compared to street consensus of
$1,019m. We estimated an adjusted EPS profit of $0.34, compared to
street consensus of $0.38. Domestic streaming over 6.7m subs: we
estimate $631m and $124m in sales and contribution profit,
respectively. International streaming over 6.7m subs: we estimate
$129m and ($98) million in sales and contribution loss,
respectively. Domestic DVD over 7.8m subs: we estimate $235m and
$108m in sales and contribution profit respectively."
The analysts also note that second quarter guidance could be
key. "The Company's fiscal Q2 period is seasonally weak for
subscriber trends, and could provide a subtle layer of execution
risk. We estimate sales of $1,028m, compared to street consensus of
$1,058m. We estimated an adjusted EPS profit of $0.41, compared to
street consensus of $0.49."
Key Economics Reports
Next week, the economics calendar remains rather light and
should be dwarfed by the earnings calendar, but key releases such
as the first quarter U.S. GDP report on Friday will receive extra
Next week, the economics calendar is kicked off by existing home
sales data for March from the U.S. Economists are looking for a
reading of 5.01 million sales in the month, higher than the
previous reading of 4.98 million. Monday night, the Flash China
HSBC Manufacturing PMI for April is also expected to be released;
the previous reading for the index was 51.6.
Tuesday morning will be PMI day in Europe as both the flash
manufacturing and services PMI's for the Eurozone and for France
and Germany individually are expected to be released. For the
Eurozone, the manufacturing PMI is expected to have been flat at
46.8 from the previous month while the services PMI is expected to
have increased slightly to 46.6 from 46.4.
For Germany, the manufacturing PMI is expected to have been flat
at 49.0 from the previous month while the services PMI is expected
to have ticked up slightly to 51 from 50.9. Lastly, the French
manufacturing PMI is expected to have risen to 44.3 from 44 in the
previous month while the services PMI is expected to gain to 42.0
Later Tuesday, the retail sales report from Canada will be
watched, especially by currency traders, and the Flash U.S.
Manufacturing PMI will continue PMI day. Later, new home sales and
the Richmond Fed Index as well as the RBNZ rate decision are all
Wednesday, markets will focus on the German IFO Business Climate
Index, due out at 4:00 am eastern. The index is expected to have
slipped slightly in the latest reading to 106.2 from 106.7 at the
last report. Later Wednesday, the key durable goods report will be
released from the U.S.
Thursday brings more data from the EU as the Spanish
unemployment rate for March is due out and is expected to have
risen to 26.5 percent from 26.02 percent previously. Later, the
Kansas City Manufacturing Index is due out.
Friday brings the first reading of first quarter U.S. GDP. The
economy is expected to have grown 3.0 percent in the first quarter,
much better than the first quarter's 0.4 percent rate of growth.
Many analysts see downside to this number due to recent data
including employment indicators, PMI's, and inflation data.
Earnings Expected From: Ameriprise Financial(NYSE:
), Caterpillar (NYSE:
), Coventry Health Care (NYSE:
), Halliburton (NYSE:
), Gilead Sciences (NASDAQ:
), Hasbro (NASDAQ:
), MetroPCS (NASDAQ:
), Netflix (NASDAQ:
), and Texas Instruments (NASDAQ:
). Economic Releases Expected: Chicago Fed National Activity Index,
Mexican Retail Sales, and Existing Home Sales.
Earnings Expected From: AK Steel (NYSE:
), Amgen (NASDAQ:
), Apple (NASDAQ:
), AT&T (NYSE:
), Broadcom (NASDAQ:
), Coach (NYSE:
), Cree (NASDAQ:
), Delta Air Lines (NYSE:
), Forest Labs (NYSE:
), Juniper Networks (NYSE:
), Lockheed Martin (NYSE:
), Panera (NASDAQ:
), and Yum! Brands (NYSE:
). Economics Releases Expected: Eurozone, German, and French
Manufacturing and Services PMI's, Canadian Retail Sales, the
Redbook, the U.S. Manufacturing PMI, New Home Sales, Richmond Fed
Index, the RBNZ Interest Rate Decision, and South Korean GDP.
Earnings Expected From: Barrick Gold (NYSE:
), Boeing Company (NYSE:
), Cabot Oil and Gas (NYSE:
), Cliffs Natural Resources (NYSE:
), Credit Suisse (NYSE:
), Eli Lilly (NYSE:
), Evercore Partners (NYSE:
), Ford (NYSE:
), Hess (NYSE:
), Proctor and Gamble (NYSE:
), Southern Company (NYSE:
), Sprint Nextel (NASDAQ:
), and Zynga (NASDAQ:
). Economics Releases Expected: German IFO Business Climate Index,
U.S. Core Durable Goods, Crude Oil Inventories, and Gasoline
Earnings Expected From: 3M (NYSE:
), Altria (NYSE:
), Amazon (NASDAQ:
), Baidu (NASDAQ:
), Colgate-Palmolive (NYSE:
), ConocoPhillips (NYSE:
), ExxonMobil (NYSE:
), Jetblue (NASDAQ:
), Potash (NYSE:
), Starbucks (NASDAQ:
), and Yandex (NASDAQ:
). Economics Releases Expected: Spanish Unemployment Rate, Initial
Jobless Claims, Kansas City Fed Manufacturing Index, New Zealand
Trade Balance, and Japan's Manufacturing PMI.
Earnings Expected From: Chevron (NYSE:
), DTE Energy (NYSE:
), GNC Holdings (NYSE:
), Lazard (NYSE:
), Total (NYSE:
), and VF Corp. (NYSE:
). Economic Releases Expected: French Consumer Confidence, U.S.
First Quarter GDP, Mexican Trade Balance, Michigan Consumer
Confidence, and the Mexican Interest Rate Decision.
Good luck and good trading.
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