As earnings season is about to hit us with its full force, investors need to be prepared.Ugg ugly As part of my earnings coverage each quarter, I always do a pre-earnings season article about stocks to be careful with going into earnings. Originally, the segment was focused on stocks to not be long through earnings. The segment has evolved, adding stocks to not be short through earnings, along with possible trades for these names when they report. I also will include stocks to just plain avoid at certain times. But there is one important point, or disclaimer, I must make. Just because I say be careful with a stock going into earnings, doesn’t necessarily mean that longs (and shorts potentially as well) should exit their positions before earnings. It simply means that there are certain items you need to think about before deciding on what position to hold (or not) going into the report, or even leading up to it. This quarter, I will discuss ten names, covering the first half of those names today. You can see the second half here.
While the point of this series originally was to focus solely around the day before, of, and after earnings,Ugg ugly Apple has changed the thought process. When I say „be careful into earnings,“ I mean it with Apple. Apple closed at $527 on January 4th, and I subsequently wrote an article called „An Apple Repeat of Last Quarter?“ The point of this article was to caution investors that if we saw Apple analysts take down their estimates and issue negative reports on Apple before earnings,Ugg ugly the stock would drop. I stated that if we saw a repeat of last quarter, Apple’s stock would probably drop below $500, and potentially down to $475. Well, we’ve broken $500 already, and Tuesday’s low was under $484 before Wednesday’s rebound.
On Tuesday, the note was from Nomura, which slashed its price target on Apple from $660 to $530, citing iPhone and gross margin worries. Current Q1 estimates call for $54.70 billion in revenues and $13.41 in earnings per share. Analysts have raised their Q1 forecasts over the past two weeks by $0.16 billion and $0.08, respectively. However, they have cut the Q2 averages by $0.83 billion and $0.30, respectively. Analysts have also taken down later quarters,Ugg ugly so the full fiscal year (ending September 2013) estimates continue to be cut, since there are more analysts that provide full-year estimates than quarterly ones. The table below shows how full-year estimates have come down since Apple’s last report in October. Just notice how much the estimates have been cut since December 31st.