24/7 Wall St. often looks at the key earnings reports scheduled for the week ahead. We have the bulk of the S&P 500 earnings behind us and we are now starting to move to the off-calendar quarterly reports. This coming week we are focused on six key companies that are set to report earnings as the key to their sectors. This list may not seem like the most important companies to the broad market, but these will shape the outlook for other companies reporting in the week.
The top earnings we are looking at are as follows: Dendreon Corporation (NASDAQ: DNDN); Electronic Arts Inc. (NASDAQ: EA); Rackspace Hosting Inc. (NYSE: RAX); The Walt Disney Co. (NYSE: DIS); Cisco Systems, Inc. (NASDAQ: CSCO); Macy’s Inc. (NYSE: M); Priceline.com Incorporated (NASDAQ: PCLN); and Nuance Communications Inc. (NASDAQ: NUAN).
We have taken estimates and price targets from Thomson Reuters consensus estimates and have added in color on each.
The shape of the biotech sector is likely to hinge based on the earnings of Dendreon Corporation (NASDAQ: DNDN). VIVUS Inc. (NASDAQ: VVUS) also reports on Monday but Dendreon has many things that biotech investors want: a product on the market, a controversial story, a stock way off its post-approval highs, a history of soft sales with the promise of better times ahead, and a rather large short interest. This is a sales story rather than an earnings story: Thomson Reuters expects sales of $81.2 million for the last quarter, $90.1 million for the quarter ahead (the quarter we are in now, and $378.3 million in 2012. These sales are all from Provenge for late-stage prostate cancer. This is the one that will set the tone for biotech during the week and this stock is back down closer to $11 after having popped to $15 from $8 earlier this year.
Electronic Arts Inc. (NASDAQ: EA) is no longer the leading game company for investors, but it is one of the largest game makers in the world. Its earnings are also ahead of the larger video game giant Activision Blizzard Inc. (NASDAQ: ATVI) which reports later in the week. This is also considered one of the throw-away quarters of the video game sector. Thomson Reuters expects E.A. to report $0.17 EPS on $959.56 million in sales, with next quarter expected to be -$0.32 EPS on $580.9 million in sales. This will mark the year-end report and the growth in the year ahead is expected to go to $1.13 EPS from $0.84 EPS expected and sales are expected to grow to $4.5 billion from $4.17 billion expected.
Rackspace Hosting Inc. (NYSE: RAX) may not seem like the most important company but it is a high-flyer in the hot space of ‘the cloud.’ With shares around $58.00 it is only about $2.50 under an all-time high and it trades at a whopping 70-times the expected 2012 earnings estimate. A meet and guide in-line is not going to be enough here and we think that Rackspace could be the lynchpin that swings the entire cloud space higher or lower in the week. Thomson Reuters has estimates of $0.18 EPS and $300.5 million, with next quarter estimate of $0.19 EPS and $319.67 million.
The Walt Disney Co. (NYSE: DIS) reports earnings on Tuesday after the close of trading and this is one of two DJIA components reporting in the week. The stock is up about 40% from the lows of late-2011 and is up about 15% year to date. Shares are close to $43 and the Thomson Reuters estimates are $0.55 EPS and $9.56 billion in revenue. Disney may influence other media companies and it reports a day before the troubled News Corp. (NASDAQ: NWSA) reports its earnings.
Cisco Systems, Inc. (NASDAQ: CSCO) reports on Wednesday after the close of trading and this is going to shape the pace for technology the rest of the week. The DJIA component now trades closer to $19.00 against a 52-week range of $13.30 to $21.30 and Thomson Reuters has a target price of just over $22.50 on the stock. Thomson Reuters has estimates of $0.47 EPS and $11.58 billion in sales. For the current quarter we are in, estimates are 0.49 EPS and $11.99 billion in sales. Cisco barely trades at only just above 10-times expected earnings for its current year. The much smaller Juniper Networks, Inc. (NYSE: JNPR) popped big with its earnings report but shares immediately sold off and are now lower than before it reported earnings. The European rival of Alcatel-Lucent, S.A. (NYSE: ALU) was also a disaster and its shares are now flirting with a 52-week low again.
Macy’s Inc. (NYSE: M) is also up to report earnings on Wednesday. Its earnings report is a day ahead of the more upscale Nordstrom Inc. (NYSE: JWN), but it is Macy;s which may shape the retail reception. Estimates are $0.39 EPS and $6.13 billion in sales. With shares around $41 this is only about 2% or so under its multi-year high. Macy;s trades at roughly 12-times the expected earnings for a year ahead but the guidance of course depends upon the most important fourth quarter that is still months and months away. Analysts have a consensus target of about $44.25 on Macy’s.
Priceline.com Incorporated (NASDAQ: PCLN) may not be a market moving stock on the surface, but this is one of the high-priced high-flyers that is up huge with shares close to $735.00. The online travel bidding site has a range of $411.26 to $774.96 over the last 52-weeks. It also now sports a market cap of over $36 billion and trades at about 23.4-times expected 2012 earnings. Thomson Reuters expects earnings of $3.94 EPS and $1.04 billion in sales. Estimates for the quarter ahead are $7.37 EPS and $1.39 billion in sales. If one company can forecast the demand of travel ahead it is this one and we expect clean insight into lodging and flying trends for summer to be evident here.
Nuance Communications Inc. (NASDAQ: NUAN) is going to be highly important when it reports earnings on Friday. The reason is that it is the voice service technology that supports Siri for the Apple Inc. (NASDAQ: AAPL) iPhone. That means that investors may treat Nuance as the ultimate bogey again for the rest of the big Apple suppliers. It also comes after Apple shares have taken it on the chin and after its own shares have fallen too. With shares around $23.50, the 52-week range is $15.56 to $31.15 and the consensus price target is now just over $30 per share. Estimates are $0.39 EPS and $410.12 million and estimates for the next quarter are $0.41 EPS and $428.6 million.
JON C. OGG