Investing

Earnings Previews: AbbVie, Humana, Marathon Petroleum, Novartis

Marathon Petroleum

Oil refiner and marketer Marathon Petroleum Corp. (NYSE: MPC) posted an all-time high share price on January 18, which has since dropped about 5%. That is still remarkable for a refining company that typically finds itself struggling when crude oil prices rise. In the current case, both strong demand and somewhat constrained production of oil are keeping prices high. How long the situation can or will endure is anybody’s guess.

Of 18 brokerages covering Marathon, 15 rate the shares a Buy or Strong Buy and the rest rate the stock at Hold. At a share price of around $71.20, the stock’s upside potential based on a median price target of $81 is about 13.8%. At the high target of $88, upside potential is 23.6%.

Fourth-quarter revenue is forecast at $31.48 billion, down 3.5% sequentially but up by about 73% year over year. In the same quarter last year, Marathon posted an adjusted loss per share of $0.94. For the final quarter of 2021, analysts are looking for EPS of $0.56. For full fiscal 2021, the consensus estimates call for EPS of $1.75, compared to a 2020 loss per share of $3.44. Revenue is forecast to rise by 61.2% to $111.25 billion.

Marathon Petroleum’s stock trades at about 40.7 times expected 2021 EPS, 15.9 times estimated 2022 earnings of $4.48 and 15.3 times estimated 2023 earnings of $4.67 per share. The stock’s 52-week range is $42.32 to $75.88. Marathon pays an annual dividend of $2.32 (yield of 3.23%). Total shareholder return for the past 12 months was 71.8%.

Novartis

Switzerland-based Novartis AG (NYSE: NVS) is another pharmaceuticals giant and another drugmaker that pays a generous dividend. The company has a broad portfolio of cancer medicines, while its best-seller is immunosuppressor Cosentyx. The better news for investors is that Cosentyx, which generated about $3.5 billion in sales for the first nine months of 2021, is protected by patent exclusivity until 2026. Novartis’s product pipeline is well-stocked, including two new cancer treatments.

Of 26 brokerages covering the company, 11 have put Buy or Strong Buy ratings on the stock and another 12 have given the shares a Hold rating. At a share price of around $86.50, the implied gain based on a median price target of $100 is 15.6%. At the high price target of $105, the implied gain is 21.4%.

Estimates for the fourth quarter of fiscal 2021 call for revenue of $13.28 billion, up 1.9% sequentially and down 4% year over year. Adjusted EPS are pegged at $1.44, down 15.8% sequentially and up by about 7.5% year over year. For the full year, analysts are looking for EPS of $6.27, a gain of 8.4% year over year, and sales of $51.98 billion, up 6.8%.

Novartis stock trades at about 13.7 times expected 2021 EPS, 13.3 times estimated 2022 earnings of $6.45 and 12.1 times estimated 2023 earnings of $7.08 per share. The stock’s 52-week range is $79.34 to $95.17, and the company pays an annual dividend of $3.20 (yield of 3.72%). Total shareholder return over the past year was negative 1.8%.

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