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Earnings Previews: Lam Research, Kinder Morgan, Chipotle, Alaska Airlines, American Airlines

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A slew of earnings reports was released Tuesday morning and most of the reporting companies managed to post better earnings than analysts were looking for. Two exceptions were Xerox and Dow 30 component Travelers.

After markets close Tuesday, we’ll hear from, among others, Netflix, Tenet Healthcare, and Intuitive Surgical. Before markets open Wednesday, Verizon, NextEra Energy, and ASML are all on tap to report results.

Here’s a look ahead at companies reporting after markets close Wednesday and before they reopen Thursday morning. Also check out our look at AT&T, Freeport-McMoRan, Clevland-Cliffs, and Valero, all of which report results Thursday morning.

Lam Research

Semiconductor equipment maker Lam Research Corp. (NASDAQ: LRCX) saw its shares gain 125% over the past 12 months. Last year was a banner year for equipment manufacturers and there’s plenty of reason to believe investors will see more of the same this year. Chip shortages for everything from smartphones to automobiles indicate expansion is a top priority for chipmakers like Intel and Taiwan Semiconductor. The company reports results after markets close Wednesday.

Of 19 brokerages covering Lam Research, the stock is rated as a Buy or Strong Buy by 16 and a Hold by the others. The consensus price target on the stock is $646.29 and at a recent price of $620.00, upside potential is 4.2%. At the high target of $800, the upside potential is about 29%.

Earnings per share (EPS) for the quarter is forecast at $6.60, up by about 65% year over year, and revenue is forecast to jump by 47.4% to $3.69 billion. The outlook for the fiscal year calls for EPS of $25.13, up nearly 584% year over with revenue up 40% to $14.06 billion.

Shares trade at around 25.1x expected 2021 EPS, 23.49x estimated 2022 earnings, and 20.1x estimated 2023 earnings. The stock’s 52-week range is $229.69 to $669.00 and Lam Research pays a dividend of $5.20 (yield of 0.84%).

Kinder Morgan

Energy infrastructure giant Kinder Morgan Inc. (NYSE: KMI) also reports after markets close Wednesday. The company said last month that it will create an Energy Transition Ventures division to figure out ways that the company can fund growth projects in the clean energy sector. Over the past 12 months, Kinder Morgan stock has gained 19%.

Ratings on the stock are mixed, with 11 of 19 rating the shares a Buy or Strong Buy with eight rating the stock a Hold. The consensus price target is $17.11, implying a potential upside of 3.7% at a recent price of around $16.50. At the high target of $22, upside potential is 33%.

Analysts expect the company to post EPS of $0.24, flat with the same quarter last year, on revenue of $3.03 billion, a dip of 2.5%. Estimates for the full year currently call for EPS of $0.92, up about 5% year over year, and revenue of $12.12 billion, up 3.6%.

The shares trade at 19.7x expected 2021 EPS, 19.6x estimated 2022 earnings, and 20.4x estimated 2023 earnings. The stock’s 52-week range is $11.45 to $17.97 and Kinder Morgan pays a dividend of $1.05 (yield of 6.32%).

Chipotle

Fast-casual restaurant chain Chipotle Mexican Grill Inc. (NYSE: CMG) is the third firm on our list that is scheduled to report quarterly results late Wednesday. For all the turmoil in the restaurant industry due to the COVID-19 pandemic, Chipotle stock has gained nearly 88% in the past 12 months, overcoming a dip of more than 40% in late March of 2020. The company threw resources at its digital ordering business and added drive-thru windows last year to help it overcome the effects of the pandemic.

Analysts have mostly adopted a wait-and-see attitude to the stock with 23 of 35 firms putting a Hold rating on the shares and just 7 rating the stock a Buy or Strong Buy. The consensus share price is $1,676.57, implying a potential upside of 9% to a recent price of $1,536.70. At the high target of $2,000, the upside potential rises to just over 30%.

The consensus EPS forecast is $4.89 on sales of $1.74 billion, up 59% and 23.4%, respectively. For the full year, EPS is forecast at $23.62, more than double the 2020 total, on sales of $7.28 billion, up nearly 22%.

Chipotle’s stock trades at 64.5x expected 2021 EPS, 48.8x estimated 2022 EPS, and 38x estimated 2023 earnings. The stock’s 52-week range is $772.01 to $1,579.52. Chipotle does not pay a dividend.

Alaska Airlines

Alaska Air Group Inc. (NYSE: ALK) is scheduled to report results before markets open Thursday morning. After United Airlines reported a worse-than-expected loss on Monday evening and a miss on revenue, Alaska stock is trading down nearly 4%, nearly as much as United itself. Since January of 2020, the airline’s shares have gained just 1.5%, but shares traded up about 120% over the past 12 months, thanks in part to federal help and, now, rising passenger counts and expectations for more.

Most analysts–11 of 14–rate the stock a Buy or Strong Buy while the other three think it best to Hold. The 12-month price target on the stock is $82, implying potential upside of about 23.5% to a recent price of $66.33. At the high target of $90, the potential upside is around 36%.

Alaska is expected to post a loss per share of $3.63 on revenue of $785.58 million for the first quarter. For the year, analysts are forecasting a loss per share of $3.25 on revenue of $5.69 billion. Current expectations call for Alaska to post a profit in the second half of this year.

Shares trade at around 11.2x estimated 2022 earnings and 7.6x estimated 2023 earnings. The stock’s 52-week range is $23.39 to $74.25. Alaska suspended its dividend last year.

American Airlines

The impact of United Airlines’ report has hit American Airlines Group Inc. (NASDAQ: AAL) even harder than it hit United. The stock traded down more than 6% Tuesday morning ahead of American’s Thursday morning earnings report. The airline has already tipped a decline of 62% in first-quarter revenue and a net loss of $2.7 billion. Since January of last year, the stock is down more than 25% and that includes a 12-month gain of some 74%.

Half of the 18 analysts who cover the stock rate it a Buy or Strong Buy and seven rate the shares a Hold. The 12-month price target is $17.75 and shares were trading at around $20.25 early Tuesday, outpacing analysts’ expectations. At a high target of $28, the stock’s upside potential is around 28%.

Analysts are forecasting a net loss per share of $4.24 on revenue of $4.04 billion. Unlike Alaska, losses are expected to continue throughout the year, leading to a full-year per-share loss of $8.29 on revenue of $26.29 billion.

American’s stock trades at 34x estimated 2022 EPS and 13x estimated 2023 earnings. The stock’s 52-week range is $8.25 to $26.09. American has suspended its dividend.

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