Investing

Earnings Previews: Abbott Labs, AT&T, Boeing, Freeport-McMoRan

We have well and truly arrived at the December-quarter earnings reporting season. Hundreds of results are due out this week, including those from the two largest U.S. tech firms.

Netflix, which fell by 22% on Friday, was down another 3.1% in early trading Monday morning, and Halliburton, which beat on both the top and bottom lines and raised its dividend from 4.5 cents to 12 cents per share, traded lower by about 2.2%. It was a mean old world again.

We already have previewed four companies that will report earnings before markets open Tuesday (American Express, General Electric, Johnson & Johnson and 3M) and four more also scheduled to report results before Tuesday’s opening bell (Lockheed Martin, NextEra Energy, Raytheon and Verizon). And Monday morning, we posted previews of four firms reporting results after markets close on Tuesday (Capital One, Microsoft, Navient and Texas Instruments).

Here is a look at four companies scheduled to report results first thing Wednesday morning.

Abbott Labs

Medical device and generic drug maker Abbott Laboratories (NYSE: ABT) added about 9.5% to its share price over the past 12 months, including a dive of around 14 percentage points since late December. The company has beaten sales estimates in three of the past four quarters and EPS estimates in all four. Shares are trading at about the same level as they were late last July. The company’s Binax COVID-19 tests lead in market share, but investors appear to be waiting to see what the coronavirus will do next.

Among 22 analysts covering the stock, 17 have given the stock a Buy or Strong Buy rating, and three more rate the stock at Hold. The consensus price target is $144.50, and with shares trading at around $121.70, the upside potential is 18.7%. At the high target of $1578, the upside potential increases to 29%.

Fourth-quarter revenue is forecast to slide by about 2% sequentially to $10.71 billion, which would be roughly flat year over year. Adjusted earnings per share (EPS) are forecast at $1.21, down about 13.8% sequentially and 16.6% lower year over year. For the full 2021 fiscal year, analysts are looking for EPS of $5.06, up about 38.5%, on revenue of $42.21 billion, up 22%.

Abbott stock trades at about 24.0 times expected 2021 EPS, 25.5 times estimated 2022 earnings of $4.75 and 23.5 times estimated 2023 earnings of $5.17 per share. The stock’s 52-week range is $105.36 to $142.6, and the company pays an annual dividend of $1.88 (yield of 1.49%). Total shareholder return for the past 12 months was 9.2%.

AT&T

Following a spike in early May, shares of AT&T Inc. (NYSE: T) tumbled by 30% through mid-December. Since the beginning of the year, the stock is up more than 8%, even after dropping more than four points in the past four trading sessions. Even worse for shareholders is the company’s plan to cut its rich dividend.

Sentiment on the stock is decidedly cool. Of 28 brokerages covering the stock, 15 have a Hold rating on the stock while two more rate the shares at Sell. The rest have Buy or Strong Buy ratings. At a share price of around $26.00, the implied upside based on a median price target of $30 is 13.3%. At the high price target of $42, the upside potential is about 57.7%.

Fourth-quarter revenue is forecast at $40.45 billion, up 1.3% sequentially but down 11.5% year over year. Adjusted EPS are forecast at $0.76, down 13% sequentially and up a penny year over year. For full fiscal 2021, EPS is expected to come in at $3.34, up 5.1%, on sales of $168.42 billion, down about 2%.

AT&T stock trades at about 7.8 times expected 2021 EPS, 8.1 times estimated 2022 earnings of $3.20 and 7.8 times estimated 2023 earnings of $3.33. The stock’s 52-week range is $22.02 to $33.88. AT&T’s current annual dividend is $2.08 (yield of 7.28%). Total shareholder return for the past 12 months was negative 3.2%.

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