The three major U.S. equity indexes closed higher on Tuesday, courtesy of a weaker dollar and an expected rise in U.S. crude inventories that sent oil prices lower early in the day. Add in overall bearishness from fund managers, and discounted equities looked like a good deal. The Dow Jones industrials closed up 2.4%, the S&P 500 rose 2.8%, and the Nasdaq jumped by 3.1%. All 11 S&P sectors closed lower. Industrials and communications services (up 3.6%) led, while utilities lagged (up 0.6%).
The monthly report on existing home sales from the National Association of Realtors is due early Wednesday, and the U.S. oil inventory report will be released later in the morning. In premarket trading Wednesday, all three indexes were slightly lower.
After markets closed Tuesday, Netflix beat analysts’ consensus profit estimate but missed the revenue projection. The big news was that the company lost less than half the 2 million subscribers it expected to lose in the quarter. The stock traded up by more than 6% in Wednesday’s premarket.
Omnicom reported better-than-expected earnings and revenue. Shares of the communications company traded up by about 7% in Wednesday’s premarket.
Before markets opened on Wednesday, semiconductor equipment maker ASML reported better than expected earnings per share (EPS) and revenue. Downside guidance for the third quarter and full-year revenue have sent shares lower by about 1.5% in premarket trading.
Abbott Labs beat earnings and revenue estimates and raised full-year EPS guidance. The stock traded down more than 2.5% in Wednesday’s premarket, likely due to continuing concern over infant formula sales.
Baker Hughes missed estimates on both the top and bottom lines. Shares were down more than 5% in premarket trading.
Here are our previews of five companies set to report quarterly results after markets close on Wednesday: Kinder Morgan, Las Vegas Sands, Steel Dynamics, Tesla and United Airlines. First thing Thursday morning, American Airlines, AT&T, D.R. Horton, Freeport-McMoRan and Philip Morris will share quarterly results.
Here is a look at four firms on deck to report results after markets close on Thursday or before they open on Friday.
American Express
American Express Co. (NYSE: AXP) has posted a 12-month share-price decrease of about 12%, all of it coming in the past five weeks. From the stock’s peak in mid-February, shares have dropped by nearly 28%. The Dow component reports results before Friday’s opening bell.
The company has just relaunched its Blue Cash rewards card, to go along with earlier changes to its reward programs for other versions of its cards. But until the airlines can untangle themselves and get more travelers in the air, Amex is forced to tinker around the edges to keep customers using the card and investors buying the stock.
Analysts like, but do not love, the stock. Of 25 brokerages covering the firm, 12 have a Hold rating and another 12 have a Buy or Strong Buy rating. At a recent share price of around $147.80, the implied gain based on a median price target of $168.00 is about 13.7%. At the high price target of $210.00, the upside potential rises to 42%.
Second-quarter revenue is forecast to rise sequentially by about 6.9% to $12.54 billion. That is a jump of about 22.4% year over year. Adjusted EPS are pegged at $2.41, down 11.7% sequentially and by 13.9% year over year. For the full 2022 fiscal year, analysts are looking for EPS of $9.77, down 2.5%, on revenue of $50.61 billion, up 19.4%.
The stock trades at 15.1 times expected 2022 EPS, 13.2 times estimated 2023 earnings of $11.20 and 12.3 times estimated 2024 earnings of $12.05 per share. The stock’s 52-week range is $134.12 to $199.55, and American Express pays an annual dividend of $2.08 (yield of 1.46%). Total shareholder return for the past 12 months was negative 8.2%.
Snap
On Monday, Snap Inc. (NYSE: SNAP) introduced a web version of its mobile app that will be available only to users of its (paid) Snapchat+ subscribers. Snap launched the paid app ($3.99 a month) in late June in an effort to offset lower advertising revenue. The company had to try something because its stock has dropped by 76% over the past 12 months and by 83% since its 52-week high in late September. The company reports quarterly results after U.S. markets close on Thursday.
There are a total of 41 brokerages covering Snap stock. Analysts are solidly bullish, with 31 having a Buy or Strong Buy rating and nine rating the shares at Hold. At a share price of around $14.20, the upside potential based on a median price target of $23.00 is 62%. At the high price target of $65.00, the upside potential is 357.7%.
Second-quarter revenue is forecast at $1.14 billion, up 6.8% sequentially and 16.1% higher year over year. Analysts are looking for an adjusted loss per share of $0.03, a penny lower sequentially and down from EPS of $0.10 in the year-ago quarter. For the full 2022 fiscal year, consensus estimates call for EPS of $0.20, down 59.5%, on sales of $4.99 billion, up 21.3%.
Snap stock trades at 69.8 times expected 2022 EPS, 25.4 times estimated 2023 earnings of $0.56 and 15.7 times estimated 2024 earnings of $0.90 per share. The stock’s 52-week range is $11.88 to $83.34. Snap does not pay a dividend, and total shareholder return for the past year was negative 76.3%.
In early April, Tesla CEO Elon Musk announced a $44 billion offer to take Twitter Inc. (NYSE: TWTR) private. Since the company’s board accepted the offer ($54.20 per share) on April 25, Twitter’s share price has fallen by nearly 24%. Musk has withdrawn his offer, Twitter has filed a lawsuit and a Delaware judge set aside five days in October to hear the case. The outcome of the dispute may have a bigger impact on Twitter’s share price than anything else the company does to boost its fortunes in the battle against TikTok. Twitter reports quarterly results early Friday.
Of 36 brokerages covering the stock, there are 30 Hold ratings and four Buy or Strong Buy ratings. At a share price of around $39.50, the upside potential based on a median price target of $49.00 is 24%. At the high price target of $55.00, the upside potential is 39.2%.
For the second quarter, revenue is forecast at $1.34 billion, up 11.5% sequentially and by 12.6% year over year. Adjusted EPS are forecast at $0.14, down 84.4% sequentially and 30.0% lower year over year. For full fiscal 2022, consensus estimates call for EPS of $1.65, up 726.8%, on revenue of $5.85 billion, up 15.3%.
Twitter stock trades at 23.9 times expected 2022 EPS, 33.4 times estimated 2023 earnings of $1.18 and 25.3 times estimated 2024 earnings of $1.56 per share. The 52-week trading range is $31.30 to $73.34. The company does not pay a dividend. Total shareholder return for the past year is negative 40.2%.
Verizon
Telecom giant and Dow component Verizon Communications Inc. (NYSE: VZ) has seen its share price fall by about 6.2% over the past 12 months. The company lowered fiscal year EPS guidance when it reported quarterly results in April, and the share price plunged 11% over the course of the next week. While the company and analysts expect revenue to rise, earnings could fall because rising costs may outrun increased revenues. Verizon reports quarterly results Friday morning.
Analysts remain cool on Verizon’s outlook. Of 29 analysts, only eight have Buy or Strong Buy ratings and 20 have a Hold rating. At a share price of around $50.50, the implied gain based on a median price target of $56.50 is 11.9%. At the high price target of $71.00, the potential upside is 41.2%.
Second-quarter revenue is forecast to come in at $33.8 billion, up 0.7% sequentially and essentially flat year over year. Adjusted EPS are forecast at $1.33, down 1.6% sequentially and by 2.9% year over year. For the full 2022 fiscal year, analysts expect Verizon to post EPS of $5.35, down 0.7%, on sales of $137.02 billion, about up to 2.6%.
Verizon stock trades at 9.4 times expected 2022 EPS, 9.1 times estimated 2023 earnings of $5.54 and 8.9 times estimated 2024 earnings of $5.66 per share. The stock’s 52-week range is $45.55 to $56.85. Verizon pays an annual dividend of $2.56 (yield of 5.07%). Total shareholder return over the past 12 months was negative 5.2%.
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