Review
FAANGM lagged the S&P 500 in January, falling 7.7% vs the S&P’s decline of 5.9%. AMZN and NFLX were the laggards, slumping 12.2% and 28.3% respectively.
Meta Platforms Inc (FB US, BUY, TP US$312)
Comments: 4Q21 and FY21 results were in line with expectations. However, guidance was for weaker revenue growth and elevated expenses. FB is hurt by increasing disruptions to its business model from Apple’s iOS 14 privacy changes and increased competition.
Apple Inc (AAPL US, BUY, TP US$214)
Comments: 1Q22 results beat expectations and AAPL’s share price spiked after the release in early February. iPhone beat on volume and ASP, so did gross margins for both product and services despite high inflationary pressures. Guidance for 2Q22 was good despite tough comparisons of 54% revenue growth and headwinds from FX and supply constraints. Supply constraints are easing, which bodes well for AAPL’s anticipated widest array of launches in 2022.
Amazon Inc (AMZN US, BUY, TP US$4,079)
Comments: 4Q21 results were a positive surprise. Excluding one-offs from Rivian and Prime fee hikes, AWS shone with accelerating growth vs expectations of deceleration, and operating margins beat on lower-than-expected labour costs. Growth will normalise after a pandemic-induced surge, but FY22 will benefit from easier comparisons and easing labour and fulfilment costs.
Netflix Inc (NFLX US, BUY, TP US$673)
Comments: 4Q21 and FY21 results were in line with expectations. However, guidance was weak for user growth in 1Q22 while a strong USD poses headwinds. We remain positive as NFLX continues to demonstrate strong pricing power for its services.
Alphabet Inc (GOOGL US, BUY, TP US$3,493)
Comments: 4Q21 and FY21 results were in line with expectations. We are bullish on the company’s ability to grow revenue YoY given its wide range of products and global user base. Strong demand for cloud services is expected to continue given its large order backlog.
Microsoft Corp (MSFT US, BUY, TP US$410)
Comments: MSFT showed its still in growth stages after the strong 2Q22 results. On top of margin expansions across the board, Azure growth exceeded expectations with customer long-term spending commitments up 37% YoY vs consensus estimates of 11%. This momentum was guided to continue.