The sell-off in equities continues, with the tech-heavy Nasdaq composite index witnessing a 7.6% decline, while the Dow Jones Industrial Average fell by about 5% last week.
With the FOMC (Federal Open Market Committee) meeting scheduled for January 25-26 and big tech companies reporting earnings, volatility in the market will likely remain elevated this week.
Speaking at his confirmation hearing before the U.S. Senate Committee on Banking, Housing and Urban Affairs earlier this month, Federal Reserve Chairman Jerome Powell highlighted the need to normalize monetary policy and hike interest rates.
Focus on Tesla & Big Tech Earnings
With earnings season in full swing, Tesla (NASDAQ:TSLA) and big tech giants, including Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT), will report their quarterly numbers this week.
Microsoft will report its Q2 FY22 financial results on January 25. Analysts expect it to post EPS of $2.32 on revenues of $50.78 billion. Daniel Ives of Wedbush expects Microsoft to deliver a strong performance in Q2 on the back of “Azure/Office 365.”
As for FY22, Ives expects Microsoft to benefit from price increases. He added, “the Office 365 price increase for 2022 was a smart strategic poker move that could be another $5 billion+ incremental tailwind for Redmond in 2022, giving more confidence that numbers could continue to move higher.”
Ives recommends a Buy on Microsoft stock ahead of the earnings and has a price target of $375 (26.7% upside potential).
For EV giant Tesla, which is scheduled to announce its Q4 financials after the market closes on January 26, Wall Street expects it to post earnings of $2.36 per share on revenues of $16.65 billion.
Commenting on TSLA’s upcoming earnings, Jefferies analyst Philippe Houchois stated that “Q4 results on 26 Jan are critical.”
Houchois expects Tesla to post EBIT of $3.04 billion in Q4. Further, he raised his “2021-23 EBIT and FCF” estimates, citing higher volumes. The analyst has a Buy rating on TSLA stock with a price target of $1,400 (48.3% upside potential).
For Apple’s Q1 (scheduled on January 27), analysts expect it to post earnings of $1.88 a share on revenues of 118.31 billion.
While supply-chain constraints could remain a drag on its top line, strong iPhone demand will likely boost its financials. Ives stated, “our iPhone 13 checks continue to be much stronger than expected heading into 2022.”
Ives added, “Apple sold north of 40 million iPhones during the holiday season” despite chip shortages.
Looking ahead, Ives expects higher demand and an increase in average selling prices to drive Apple’s financial performance.
Ives recommends a Buy on Apple stock and has a price target of $200 (23.2% upside potential).
Other Prominent Earnings:
Monday – International Business Machines (NYSE:IBM), Halliburton (NYSE:HAL)
Tuesday – Johnson & Johnson (NYSE:JNJ), Lockheed Martin (NYSE:LMT)
Wednesday – Abbott Labs (NYSE:ABT), AT&T (NYSE:T)
Thursday – Visa (NYSE:V), Altria Group (NYSE:MO)
Friday – Colgate-Palmolive (NYSE:CL), Caterpillar (NYSE:CAT)
For more, please refer to TipRanks’ earnings calendar.
Download the TipRanks mobile app now
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure
