With the US earnings season well underway and most market participants looking to identify how specific companies have performed in their latest quarterly reports, investors and traders alike reposition themselves in the hope of a fruitful 2023 financial year.
A jam-packed earnings calendar has captivated the attention of most market participants. With that in mind, we look to Microsoft (NASDAQ: MSFT), Johnson & Johnson (NYSE: JNJ), and Tesla (NASDAQ: TSLA) to gauge how their results compare against expectations.
Microsoft Corporation (NASDAQ: MSFT)
Despite “better than feared” quarterly fiscal results, American software and technology giant, Microsoft Corp. (NASDAQ: MSFT), saw its share price plunge by approximately 3% in pre-market trading on Wednesday morning, 25th of January, due to an expected slowdown in the growth of its Azure cloud computing service suggesting a possible “weak few quarters ahead”. MSFT closed at $242.04 on Tuesday and opened at $234.48 on Wednesday morning, recovering to $240.61 by market close.
In their latest quarterly earnings results, the technology giant reported a 6% yearly decline in adjusted earnings per share (EPS) and a marginal 2% yearly rise in revenue.
Technicals:
The price action for MSFT has rebounded somewhat from the $219.34 support level (red line) and appears to be heading towards the resistance level of around $246.00 (lower dotted black line). For the bulls, a breakthrough of $246.00 could see the price rise to the next significant resistance at $264.00 (higher dotted black line). The $264.00 level will be watched closely as this could be the next support level for the price to increase to the $295.00 level (green line) or see a significant drop in value to the lower support levels.
Johnson & Johnson (NYSE: JNJ)
American multinational company and pharmaceuticals giant Johnson & Johnson (NYSE: JNJ) surpassed earnings expectations reporting quarterly earnings of $2.35 per share against expectations of $2.23 per share, but fell short on revenue estimates, reporting quarterly revenue of $23.71 billion against estimates of $23.86 billion.
The pharmaceuticals giant saw its fourth quarter adjusted EPS come in at $2.35, representing a 10.3% year-on-year increase. JNJ’s pharmaceutical sales accounted for roughly 56% of total revenue. Still, with revenue from its Covid vaccines plummeting by nearly 60% to $689 million, market participants will be looking to see how the company improves revenue growth despite slowing demand for the Covid vaccine.
Technicals:
The price action has fallen significantly from the $181.00 resistance level (higher dotted black line) last seen in early January 2023. It has broken through the support level at $168.50 (lower dotted black line). For the bear case, if the downward trajectory persists, we could see the price move significantly lower, possibly towards the $159.11 support level (red line), last seen in October of 2022. For the bull case, should market sentiment be positive on surpassed earnings expectations, we could see prices rise towards the $186.87 resistance barrier, last tested in April of 2022.
Tesla (NASDAQ: TSLA)
Tesla Inc. (NASDAQ: TSLA), an American multinational automotive and clean energy company, has seen its stock price deteriorate over the last few months, partially due to market participants reacting negatively to Elon Musk’s venture into the social media space via his Twitter takeover. With a 52-week high of $384.29, TSLA closed at $144.43 at market close on Wednesday, 25th of January, closer to its 52-week low of $101.81. Fourth quarter earnings results delivered a promising reported earnings per share (EPS) figure of $1.19, exceeding expectations of $1.11. Despite EPS expectations being beaten by approximately 7.28%, revenue expectations were met at $24.32 billion. With Tesla recently entering into a $5 billion unsecured revolving credit facility with Citibank on the 20th of January, market participants will be looking to see how the automotive giant utilises the credit agreement.
Technicals:
The price has fallen substantially from the $315.00 level (green line) last seen in September 2022. A positive surprise on EPS expectations saw TSLA rise to $152.35 post-market trading, up from $144.43 at the market close. If the rally persists, we could see TSLA test the resistance level at the $200.00 mark (lower black dotted line), last seen in December of 2022. The bears could see the price fall to the $100.80 support level (red line) should negative market sentiment continue to pave the way for Tesla’s stock price.
Sources: Microsoft Corporation, Johnson & Johnson January 24, 2023, Tesla, Streetinsider January 25, 2023 , SeekingAlpha January 24, 2023, Investors.com, Koyfin, TradingView.
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