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U.S. equity strategists, namely Morgan Stanley strategists, did warn that the next leg lower in stocks could be facilitated by negative estimates revisions.
Today, several analysts lowered their estimates on major tech names to account for ongoing macro headwinds. For instance, Baird analysts cut 2023 estimates and price targets on internet stocks, including Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), and Meta Platforms (NASDAQ:META).
“We are lowering our 2023 estimates for a range of Internet bellwethers, reflecting slower recoveries in e-commerce and online advertising post-pandemic, as well as expectations for a mild to moderate recession and softening labor market. While a more severe recession scenario would necessitate further cuts, we remain, for now, below consensus on ABNB, AMZN, BABA, EBAY, GOOGL, META, PINS, PYPL, and SHOP,” they wrote in a client note.
New price targets for AMZN, GOOGL, and META are $120, $115, and $145 per share, respectively. The analysts remain bullish on these mega-cap names over the medium term as they expect “positive secular growth trends to resume.”
Similarly, Needham & Company analysts lowered estimates for Amazon.
“It is our view that AMZN’s economic model has problems created by itself. That is, we hold our FY22 rev estimate constant at approximately $510B, and yet costs will represent nearly $500B in FY22, so that Operating Income for 1mm employees for an entire year of work will be about $11B (2% op margin) in FY22,” they wrote.
The analysts also revised Apple’s (NASDAQ:AAPL) estimates lower to now project just 2% revenue growth for 2023.
“We lower our estimates for 1Q23 and FY23, owing to weak macro global consumer demand trends, supply-chain shortages, and growing geopolitical pressures between the US and China which lead to weak iPhone demand in China (about 20% of AAPL’s revs historically) during FY23,” the analysts wrote in a separate note.
