The three major U.S. equity indexes closed higher on Friday. The Dow Jones industrials gained 2.2%, the S&P 500 added 1.9% and the Nasdaq rose by 1.8%. All 11 S&P sectors closed higher, led by financials (3.4%) and communications services (2.6%). For the week, the Dow slipped by 0.2%, the S&P 500 retreated 0.9% and the Nasdaq lost 1.6%.
Looking ahead, two housing reports are due this week, as is the weekly report on claims for jobless benefits. In premarket action Monday morning, all three indexes were up by about 1%.
Before markets opened on Friday, Goldman Sachs beat consensus estimates on both the top and bottom lines. Beginning with the third quarter, the bank has boosted its dividend by 25% to an annual rate of $10 per share. The stock traded up by about 4% in Monday’s premarket.
Synchrony Financial also beat both top- and bottom-line estimates. Shares traded up by more than 4%.
Bank of America missed estimates on both the top and bottom lines. The stock traded down by about 0.9%.
We included IBM, which reports after markets close Monday, in our Friday preview.
Here is a look at five firms on deck to report results late Tuesday or first thing Wednesday morning.
Abbott Labs
Medical device and generic drug maker Abbott Laboratories (NYSE: ABT) has dropped about 5.7% from its stock price over the past 12 months. Since posting a 52-week high in late December, the shares have tumbled by 22%. The company reports quarterly results early Wednesday.
The company closed its Sturgis, Michigan, baby formula lab in February following reports of bacterial infections in infants who had been fed products made at the plant. Flooding forced a second closure in early June, and production is expected to restart in the next several weeks.
Among 21 analysts covering the stock, 17 have a Buy or Strong Buy rating and one more rates the stock at Hold. The median price target is $130.00, and with shares trading at around $108.90, the upside potential is 19.4%. At the high target of $150.00, the upside potential increases to 37.7%.
Second-quarter revenue is forecast to drop sequentially by about 12.7% to $10.38 billion and to increase by about 1.6% year over year. Adjusted earnings per share (EPS) are forecast at $1.14, down by about 34% sequentially and by 2.6% year over year. For the full 2022 fiscal year, analysts are looking for adjusted earnings per share (EPS) of $4.87, down about 6.6%, on revenue of $41.78 billion, down 3%.
Abbott Labs stock trades at 22.4 times expected 2022 EPS, 22.2 times estimated 2023 earnings of $4.91 and 20.1 times estimated 2024 earnings of $5.42 per share. The stock’s 52-week range is $101.24 to $142.60, and the company pays an annual dividend of $1.88 (yield of 1.73%). Total shareholder return for the past 12 months was negative 5.2%.
24/7 Wall St.ASML
Semiconductor manufacturing equipment maker ASML N.V. (NASDAQ: ASML) stock has plunged by about 33% over the past 12 months. Since posting a high in mid-November, shares have retreated by more than 45%. Recent U.S. pressure to withhold sales of the company’s state-of-the-art semiconductor wafer etching systems to China has driven the stock to a new 52-week low. The Netherlands-based company will report results before U.S. markets open on Wednesday.
Of 34 analysts following ASML stock, 25 have a Buy or Strong Buy rating and six have Hold ratings. At a recent price of around $475.60, the implied upside based on a median price target of about $728.00 is about 53%. At the high price target of $986.34, the upside potential reaches 107.4%.
Analysts expect the company to report revenue of $5.4 billion for the June quarter, up about 38% sequentially and 13.2% year over year. Adjusted EPS are forecast at $3.56, up 86.2% sequentially and by 19.1% year over year. For the full 2022 fiscal year, analysts anticipate EPS of $16.54, up about 4.6% year over year, on revenue of $22.52 billion, up 6.3%.
ASML stock trades at around 28.4 times expected 2022 EPS, 23.0 times estimated 2023 EPS of $20.41 and 20.2 times estimated 2024 earnings of $23.18 per share. The stock’s 52-week range is $558.77 to $895.93. The company pays an annual dividend of $6.28 per share (yield of 1.32%). Total shareholder return for the past 12 months was negative 31.9%.
Baker Hughes
Over the past 12 months, shares of oilfield services firm Baker Hughes Co. (NASDAQ: BKR) have added about 26.6%. Between the end of March, when the stock posted a new 52-week high, and mid-May the stock dropped 21.5%. Baker Hughes reports results before Wednesday’s opening bell.
Last week the company announced that it is closing a manufacturing plant in Broken Arrow, Oklahoma, and transferring the work to other locations. The company is also facing off with a Scottish union that has accused Baker Hughes of firing about 400 workers and then offering them their jobs back at lower pay. The company denies the union’s allegation.
Analysts remain solidly bullish on the stock, with 20 of 26 having a Buy or Strong Buy rating. Five more rate the stock at Hold. At a share price of around $26.70, the upside potential based on a median price target of $38.65 is about 44.8%. At the high price target of $47.00, the implied upside is 76%.
The consensus first-quarter revenue estimate is $5.34 billion, up 10.4% sequentially and 3.9% higher year over year. Adjusted EPS are forecast to jump sequentially by 43.3% to $0.22. That’s a year-over-year improvement of 110%. For the full 2022 fiscal year, analysts forecast EPS up 80.1% to $1.13 on sales of $22.07 billion, up 7.5%.
Baker Hughes stock trades at 23.5 times expected 2022 EPS, 15.1 times estimated 2023 earnings of $1.77 and 13.0 times estimated 2024 earnings of $2.05. The stock’s 52-week range is $19.23 to $39.78. Baker Hughes pays an annual dividend of $0.72 (yield of 2.7%). Total shareholder return for the past year was 29.2%.
Netflix
Netflix Inc. (NASDAQ: NFLX) posted its 52-week high in mid-November. Since then, the stock price has dropped by 73%. The biggest losses came after Netflix reported quarterly results in January and April. Net new subscriber numbers did not rise as expected in the last quarter of 2021 and actually declined in the first quarter of this year. Netflix estimated more (and bigger) subscriber losses in the second quarter.
How can a growth company continue to grow with those numbers? One way is by adding a new revenue stream in the form of a new, cheaper ad-supported version through a partnership with Microsoft. Expect to hear more details about that when Netflix reports results after markets close Tuesday.
Of 45 analysts covering the stock, 15 have a Buy or Strong Buy rating, while another 24 rate the shares at Hold. (Note that at the end of the first quarter, that ratings split was exactly the opposite.) At a share price of around $189.10, the upside potential based on a median price target of $245.00 is almost 30%. At the high price target of $673.00, the upside potential is about 256%.
Second-quarter revenue is forecast at $8.06 billion, up 2.1% sequentially and by 9.4% year over year. Adjusted EPS are forecast at $2.95, down 16.3% sequentially and less than 0.1% lower year over year. For the full 2022 fiscal year, analysts expect to see EPS of $10.79, down 4%, on sales of $32.25 billion, up 8.6%.
Netflix shares trade at 17.5 times expected 2022 EPS, 15.8 times estimated 2023 earnings of $12.00 and 13.3 times estimated 2024 earnings of $14.26 per share. The stock’s 52-week range is $162.71 to $700.99. Netflix does not pay a dividend. Total shareholder return for the past 12 months was negative 65.2%.
Omnicom
Omnicom Group Inc. (NYSE: OMC) is the world’s largest (by market cap) advertising, marketing and communications company, with some 5,000 clients in more than 100 countries. Ad agencies are typically unattractive when consumers are wary and advertisers rein in spending, but a recent upgrade to Omnicom stock by Wells Fargo noted that while ad spending will decline, it will not collapse.
Omnicom had negative free cash flow of $568 million in the first quarter, but over the past four quarters, free cash flow is about $1.2 billion. Strong free cash flow could boost shareholder returns by way of more share buybacks, at least.
Of 12 analysts covering the stock, five have a Buy or Strong Buy rating, while another five rate the stock at Hold. At a share price of around $65.00, the upside potential based on a median price target of $85.00 is 30.8%. At the high price target of $107.00, the upside potential is about 64.6%.
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