Earnings Scorecard & Analyst Reports for Apple, Amazon & Others

Tuesday, April 14, 2020

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time scorecard for the Q1 earnings season, which got underway today, and new research reports on 16 major stocks, including Apple (AAPL), Amazon (AMZN) and AstraZeneca (AZN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Q1 Earnings Scorecard

JPMorgan (JPM) and Wells Fargo (WFC) kicked off the Q1 earnings season for the big banks, with market participants getting spooked by management's comments about credit quality and increasing defaults as households and businesses deal with the ongoing economic downturn. 

On the earnings front, JPMorgan's Q1 earnings were -68.8% below the year-earlier level on -3% lower revenues,with the banking leader booking a large reserve in anticipation of coming defaults. The market is justifiably concerned that if the best run and best positioned banking institution is in this state, then the picture is a lot more dire for many of the less capable operators that will be reporting in the next few days. 

Looking at 2020 Q1 as a whole, total S&P 500 earnings are now expected to be down -11.8% on +1.2% higher revenues, with the Finance sector now expected to suffer an -18.1% earnings decline

Estimates have been steadily coming down for 2020 Q2 and for the full year 2020. The index's June quarter bottom up earnnings are now expected to be down -19.7%, which is down from +3% in early February. For full-year 2020, S&P 500 earnings are now expected to be down -10.5%, which is down from +7.9% at the start of January. 

Apple’s shares have outperformed the S&P 500 over the past six months (+20.9% vs. -8%), with the Zacks analyst crediting steady momentum in the Services segment for this outperformance. This momentum is showing up in strong App Store sales and the robust adoption of Apple Music and Apple Pay.

The company recently launched new iPad and MacBook. Solid adoption of Apple Watch and AirPod are expected to drive its top line. However, it doesn’t expect to achieve its second-quarter revenue guidance due to supply chain disruption amid the coronavirus outbreak, which is expected to hurt iPhone sales.

This, in turn, will likely dent investor confidence in the near term. Moreover, the company’s intensifying legal woes due to antitrust investigations and App Store-related lawsuits raise a concern.

(You can read the full research report on Apple here >>>)

Shares of Amazon have gained +22.3% over the past year against the S&P 500’s fall of -5.4%, with the company emerging as a key provider of essential services in an otherwise tough backdrop in the retail space. 

Solid adoption of Prime driven by customer benefits, strengthening grocery services and expanding content portfolio is a tailwind. Further, expanding distribution strength and workforce which are helping in addressing the overflowing online orders during the coronavirus pandemic are major positives. Additionally, strengthening AWS services and its growing adoption rate are aiding Amazon’s dominance in the cloud space.

Furthermore, improving Alexa skills and features are other positives. However, rising transportation cost related to its free one-day shipping service is an overhang. Further, delivery delays due to coronavirus led rising orders are concerns. Also, intensifying cloud competition poses risk.

(You can read the full research report on Amazon here >>>)

AstraZeneca’s shares have lost -5.3% over the past three months against the Zacks Large Cap Pharmaceuticals industry’s fall of -9.3%. The Zacks analyst believes that AstraZeneca’s core products like Nexium, Crestor and Seroquel are facing generic competition, which is hurting sales.

Its diabetes franchise also faces stiff competition while pricing pressure is hurting sales in the respiratory unit. Also, the coronavirus outbreak may hurt its profits in 2020. Nonetheless, AstraZeneca’s newer drugs, mainly cancer medicines, Lynparza, Tagrisso and Imfinzi, should keep driving revenues in 2020. Its pipeline is strong with abundance of pipeline catalysts lined up for 2020.

Several launches are underway across each of the therapeutic areas, Oncology, CV metabolism and Respiratory. The company has a mixed record of earnings surprises in the recent quarters. Estimates have declined slightly ahead of Q1 earnings release.

(You can read the full research report on AstraZeneca here >>>)

Other noteworthy reports we are featuring today include Tesla (TSLA), Petrobras (PBR) and Barrick Gold (GOLD).

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Sheraz Mian

Director of Research

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Apple (AAPL) Banks on Services to Counter Coronavirus Chaos

Coronavirus Led Surge in Online Orders Aids Amazon (AMZN)

AstraZeneca (AZN) Rides on Solid Pipeline, Drug Launches

Featured Reports

Gigafactory 3 Progress to Aid Tesla (TSLA) Amid High Capex

While the ramp up of production at Shanghai Gigafactory is a positive for Tesla, the Zacks analyst is worried about high capex and R&D costs, which may dent profits.

Pre-Salt Reserves Boosts Petrobras (PBR), Debt Pile Hurts

Petrobras' stakes in Brazil's attractive pre-salt oil reservoirs should boost its earnings outlook. However, the Zacks analyst is concerned over the company's huge debt load of $78.9 billion.

Debt Reductions, Randgold Acquisition Aid Barrick (GOLD)

While Barrick faces challenges from higher production costs, it should gain from its actions to cut debt and synergies of the Randgold buyout, per the Zacks analyst.

Occupier Outsourcing, Acquisitions to Drive CBRE Group (CBRE)

Per the Zacks Analyst, CBRE Group will gain from strategic acquisitions and a brisk occupier outsourcing business.

Bio-Rad's (BIO) Blood Typing Prospect Strong amid Margin Woes

Per the Zacks analyst, Bio-Rad holds bright long-term prospects in blood typing market on growing demand for its Life Sciences and Clinical Diagnostics offerings. Escalating expenses pose challenge.

Solid Digital Content Portfolio Benefits Discovery (DISCA)

Per the Zacks Analyst, Discovering is benefiting from an expanding digital content portfolio, addition of UKTV Lifestyle business and the launch of Food Network Kitchen.

KB Home's (KBH) Growth Initiatives Solid, Coronavirus Fears

With solid Returns-Focused Growth plan and land investment strategy, KB Home is likely to benefit in 2020 and beyond, per the Zacks analyst. However, coronavirus-induced economic uncertainty hurts.

New Upgrades

Robust Sensor and Transmitter Segments Aid DexCom(DXCM)

The Zacks analyst is bullish about DexCom gaining consistently from the Sensor and Transmitter segments. Solid prospects in glucose monitoring market is another plus.

Solid Investments, Renewable Goal Aid Hawaiian Electric (HE)

Per the Zacks analyst, solid investments in infrastructure development projects should boost Hawaiian Electric's operations. Its goal to achieve 100% renewable energy by 2045 is also impressive.

Aduro's (ADRO) Strong Collaboration Agreements Aids Growth

Per the Zacks analyst, Aduro's lucrative collaborations with large-pharma players not only justify its research platforms but also boost its finances, generating enough funds for pipeline development.

New Downgrades

Low Interest Rates Continue to Hurt UBS Group's (UBS) NII

Per the Zacks analyst, UBS Group's net interest income continue to remain under pressure due to the prevailing low rate environment in the European economy. Also, higher legal costs remain a concern.

High Costs & Lack of Diversified Loans Hurt Huntington (HBAN)

Per the Zacks analyst, steadily increasing non-interest expenses and high exposure to commercial loan portfolios continue to keep Huntington's financials under pressure.

Coronavirus-led Soft Traffic to Hit Lamb Weston's (LW) Sales

Per the Zacks analyst, coronavirus-led social distancing is likely to hurt Lamb Weston's sales as social distancing is denting restaurant traffic. Incidentally, management withdrew fiscal 2020 view.

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Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
 
Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
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