Schaeffer's Top Stock Picks for '25

Which Stock is Primed for a Netflix-Like Post-Earnings Pop?

See the trends, stock reactions, and what’s next for investors

Managing Editor
Jan 29, 2025 at 11:40 AM
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Despite the choppy start to the year, fourth-quarter earnings season has been encouraging for investors and companies alike. A Wall Street Journal report indicates the average S&P 500 Index (SPX) stock has swung by around 5.5% after reporting results—well above the roughly 3.9% move up or down anticipated by derivatives traders. The upbeat reports are a beacon of stability amid a very anxious time for Wall Street.

Over 90% of S&P 500 companies are scheduled to report earnings after President Trump's inauguration. Of the top 10 companies in the U.S. by market cap, not a single one has stepped up to the earnings plate yet. Those two statistics, together, should be encouraging for investors. But as Fed fatigue and Trump tariffs linger as obstacles that could cloud future earnings seasons, this could be the last opportunity for investors to take advantage of certainty-laden outlooks and the outsized gains they bring.

To prep for the week(s) ahead, there are some earnings trends from the last week worth highlighting. Airliners showed that Wall Street rarely forgives guidance missteps. American Airlines (AAL) reported a top-line beat for the current quarter, but 2025 guidance was well below forecasts, prompting the stock to gap lower 8.7% on Thursday. The only of the ‘Big 3’ airliners unable to top its guidance estimates, and investors let it be known.

Earlier this week, we profiled Texas Instruments (TXN) as the first major chipmaker to step into the earnings confessional for 2025. TXN had a brutal post-earnings history and weak industrial demand were already bubbling ahead of Friday morning. Right on cue, TXN dropped 6.3%, with a softer-than-anticipated first-quarter forecast overshadowing an earnings and revenue beat. Analysts piled on with five price-target cuts, the worst coming from Morgan Stanley to $165 from $167.

Another trend forming is that bloat is out, and spinoffs can have a positive effect on companies. A nimbler GE Aerospace (GE) hit an earnings triple play, prompting no fewer than six price-target hikes, the highest coming from Deutsche Bank to $261 from $228. GE gapped up 6.6% and is now 20% higher year-to-date already. Energy spinoff GE Vernova (GEV) brushed off a fourth-quarter revenue miss and affirmed its 2025 outlook, helping GEV pop 2.7% on Jan. 22 and nab a record high. As an aside, this means bookmark Chemical giant DuPont’s (DD) massive split in the next 24 months and watch what happens.

The most important takeaway from the week’s earnings is that all it takes is one report to shift the paradigm. Look no further than Netflix’s (NFLX) “near flawless” fourth-quarter report that saw the stock gap higher by 9.7% in response. Wall Street’s reaction was rabid; the stock received at least 10 price-target hikes and three upgrades, the loftiest coming from Rosenblatt Securities to $1,495 from $680. The report was so stellar it gave a halo lift to streaming peers Roku (ROKU) and Walt Disney (DIS), the former of which landed a bull note off of Netflix’s report.

Historic performance plays a part in identifying the stocks prone to big post-earnings moves. Earlier this month, we profiled Netflix’s earnings history: the stock had finished four out of eight next-day sessions higher over the past two years. And for Wednesday’s trading, options traders were pricing in a 9.4% move for NFLX, regardless of direction, slightly more than the 8.6% average post-earnings swing over the last eight reports.

With that in mind, who are the candidates to pull a Netflix next week? Apple (AAPL), Microsoft (MSFT), Meta Platforms (MSFT), and Tesla (TSLA) make up 10 trillion market cap alone. All four step into the earnings confessional next week. The table below examines the stock’s post-earnings reactions. Note the table below the volatility and penchant for big moves from META and TSLA, though the options market is pricing in a smaller-than-usual move from both equities for next Thursday’s trading. Microsoft is looking for redemption after a 5.9% drawdown last October, though the stock has filled that gap twice since.

Big Tech Earnings COTW

Next week will also feature blue-chip, heavy-hitting reports from energy giants Exxon-Mobil (XOM) and Chevron (CVX), as well as fintech staples Visa (V) and MasterCard (MA). Those four market caps only add up to $1.8 trillion, while Meta’s market cap alone sits at $1.6 trillion. Blue chips tend to have a rather quiet history of post-earnings moves, as most non-tech Dow names do. So if you’re looking for a Netflix-type reaction that sends shockwaves through a sector, a few candidates come to mind.

Tech Earnings COTW

Intel (INTC), IBM (IBM), and ASML Holding (ASML) all roughly fit the billing of the self-imposed criteria established above. Intel and IBM are a little lighter on their feet lately thanks to spinoffs, though the former’s is probably too fresh to be impacted by this upcoming report. Intel and IBM, two former tech institutions, shared encouraging guidance for 2025 back in the fall. And last month, ASML reaffirmed its own guidance even amid the new U.S. semiconductor export curb.

Highlighting post-earnings winners is arm-chair quarterbacking at its finest. Calling those same winners pre-event is a dart throw at best. Trying to time big earnings swings with options is not for the faint of heart, especially with implied volatility (IV) often spiking premiums to pricier-than-usual levels. Caution must be exercised around every turn. However, hopefully the above tables show that a little bit of historical context goes a long way in cutting through the noise.

 
 

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