After Google Price Spike, Pre-Earnings Release Outlooks Revised

by: Peter F. Way, CFA

My most recent article was a direct response to a commenter's suggestion that it might be interesting to see how the market-makers saw Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT) before their 3Q earnings announcements.

Given the market's price reaction to GOOG's news, there should be some interest in the sympathetic reactions of the other three. You can compare this plot of day-later price-range forecasts by market-makers (MMs) to the October 16 map of upside vs. downside prospects shown in the article.

(used with permission)

The MMs kept MSFT's prospects right where they were on the previous day, cut GOOG's upside prospects by a couple of percent because of its big price jump, and put its drawdown exposure 2-3% higher for the same reason. AMZN gained a percent on the upside, but got dealt some 2% more downside risk in the process. AAPL came out the winner in the expectations race, with a bit higher upside prospect and no added penalty on the downside.

Here are the revised price range forecasts for the four, along with the implications from each one's prior experiences at the new Range Index levels.

GOOG's jump in expectations is visually exciting:

We will be following each of the others to see how the market takes their news, and what is then being expected next.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.