Investing

Earnings Previews: Barrick Gold, Palantir, Tyson Foods, Viatris

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The three major U.S. equity indexes closed higher Wednesday. The Dow Jones industrials added 1.29%, the S&P 500 increased by 1.56%, and the Nasdaq jumped by 2.59%. All 11 sectors ended the day higher, led by tech (2.7%), consumer cyclicals (2.4%) and communications services (2.4%).

Before markets opened Thursday morning, the U.S. Department of Labor released its weekly report on new and continuing claims for unemployment benefits. Economists were expecting new claims to rise from 256,000 last week to 260,000. Friday’s report on nonfarm payrolls will have more influence on investors. New jobs are forecast to rise by 250,000, well below June’s increase of 372,000. All three indexes traded higher in Thursday’s premarket session.

After markets closed on Wednesday, electric vehicle maker Lucid missed consensus estimates on both the top and bottom lines. The worse news was that the company lowered its production outlook for the year by 50% to a new range of 6,000 to 7,000 vehicles. Shares traded down 12.6% Thursday.

APA reported better-than-expected earnings per share (EPS) and revenue. The company expects to generate $3 billion in free cash flow this year and further expects to return $1.8 billion to shareholders through dividends and buybacks. The stock traded down about 1.5%.

Energy Transfer also beat top-line and bottom-line estimates. Shares traded up about 2.4%.

Before markets opened on Thursday, Alibaba reported better-than-expected EPS and revenue. Shares traded up by more than 7%.

ConocoPhillips beat consensus estimates on both the top and bottom lines and announced a $5 billion increase to $15 billion for its 2020 capital return to investors. Shares traded up about 2.4%.

Paramount Global also beat top-line and bottom-line estimates, but a 6% drop in ad revenue put investors in a bad mood. Shares traded down more than 4%.

After markets close Thursday afternoon, AES, AMC, Block, Virgin Galactic and Warner Bros. Discovery will be reporting quarterly results. Friday morning, before U.S. markets open, Canopy Growth, DraftKings, and Western Digital will report.


Here are previews of four earnings reports due out first thing Monday morning.

Barrick Gold

Over the past 12 months, the price of gold has dipped by about 1.3%. Barrick Gold Corp. (NYSE: GOLD) has seen its share price plunge by 30% over the same period. Since June 10, Barrick stock has dropped by nearly 28%. Lower gold prices played a role, of course, but the bigger problem for Barrick was a July announcement that its costs were going to be 3% to 5% higher in the second quarter than previously forecast.
Analysts remain bullish on Barrick stock, with 19 of 24 brokerages having a Buy or Strong Buy rating while the rest have Hold ratings. At a recent price of around $15.20 per share, the upside potential based on a median price target of $27.00 is about 77.6%. At the high price target of $29.00, the upside potential is nearly 91%.

Second-quarter revenue is forecast at $2.85 billion, which would be flat sequentially and down about 1.4% year over year. Adjusted EPS are forecast at $0.22, down 14.4% sequentially and down 24.1% year over year. For the full 2022 fiscal year, estimates call for EPS of $1.01, down 12.7%, on sales of $11.89 billion, down 0.8%.

Barrick stock trades at 15.0 times expected 2022 earnings, 14.1 times estimated 2023 earnings of $1.08 and 14.1 times estimated 2024 earnings of $1.08 per share. The stock’s 52-week range is $14.80 to $26.07. Barrick pays an annual dividend of $0.40 (yield of 2.54%). Total shareholder return for the past year was negative 27.4%.

Palantir

Over the past 12 months, shares of Palantir Technologies Inc. (NYSE: PLTR) have declined by almost 50%. Since posting a 52-week high in mid-September, shares have declined by about 61%. The tech sector is down about 4.3% over the past 12 months, and the software industry is lower by about 7.1%. Between early May and late July, Palantir stock traded below its September 2020 IPO price of $10 a share. Palantir simply has not walked the talk, and what growth it has been able to show has in some part come from companies it has invested in.

Of 14 analysts covering the stock, just four have a Buy rating and seven have a Hold rating. At a share price of around $11.20, the upside potential based on a median price target of $12.00 is 7.1%. At the high price target of $20.00, the potential upside is almost 79%.

The consensus second-quarter revenue estimate is $471.72 million, up 5.7% sequentially and by 25.6% year over year. Adjusted EPS are forecast at $0.03, up 57.1% sequentially but 25% lower year over year. For full fiscal 2022, estimates call for EPS of $0.16, up nearly 25%, on sales of $1.98 billion, up 28.3%.

The stock trades at 69.1 times expected 2022 EPS, 47.2 times estimated 2023 earnings of $0.24 and 33.8 times estimated 2024 earnings of $0.33 per share. Palantir stock’s 52-week range is $6.44 to $29.29, and the company does not pay a dividend. The total shareholder return for the past year is negative 49.6%.

Tyson Foods

A global supplier of beef, chicken, pork and prepared foods, Tyson Foods Inc. (NYSE: TSN) stock has added more than 22% to its value over the past 12 months. For 2022 to date, the shares are up less than 1%, representing a dip of about 11% from the high posted in early February.
Tyson, which supplies about 20% of U.S. chicken, has been struggling to keep up with competitors Pilgrim’s Pride and Sanderson Farms. Labor and feed costs are rising, and higher chicken prices (which have tripled in 18 months) have not offset those higher costs. Beef profits are also in danger, as the supply of cattle is expected to decline, and supermarket prices for beef are expected to rise sharply.

Of 15 analysts covering the stock, five have ratings of Buy or Strong Buy and nine rate the shares at Hold. At a share price of around $87.60, the implied gain based on a median price target of $99.00 is 13%. At the high price target of $113.00, the implied gain is 29%.

For Tyson’s third quarter of fiscal 2022, analysts are expecting revenue of $13.25 billion, up 1% sequentially and 6.2% higher year over year. Adjusted EPS re forecast at $1.97, down 14% sequentially and by 27% year over year. For full fiscal 2022, Tyson is expected to report EPS of $9.04, up 9.2%, on sales of $52.74 billion, up 12.1%.

Tyson stock trades at 9.7 times expected 2022 EPS, 11.0 times estimated 2023 earnings of $7.93 and 10.7 times estimated 2024 earnings of $8.22 per share. The stock’s 52-week range is $70.03 to $100.72. The company pays an annual dividend of $1.84 (yield of 2.1%). The total shareholder return over the past year was 24.7%.

Viatris

Pharmaceuticals maker Viatris Inc. (NASDAQ: VTRS) has seen its share price decline by more than 31% over the past 12 months. Since the company came public in November 2020, the stock is down about 35%. Viatris was formed in a merger of Mylan and Pfizer’s Upjohn division, and it manufactures brand-name drugs like Lipitor, Creon and Viagra. The company’s free cash flow in the first quarter was $1.07 billion, and its free cash flow yield is 25%, the highest in its peer group. The company also pays a generous dividend.

Of 13 analysts covering the stock, four have ratings of Buy or Strong Buy and seven have Hold ratings. At a share price of around $9.75, the implied gain based on a median price target of $13.00 is 33.3%. At the high price target of $21.00, the implied gain is 115%.


For the second quarter, analysts are expecting revenue of $4.18 billion, down less than 1% sequentially and by 8.7% year over year. Adjusted EPS are forecast at $0.83, down 10.6% sequentially and 15.3% lower year over year. For the full 2022 fiscal year, Viatris is expected to report EPS of $3.46, down 6.5%, on sales of $17.02 billion, down 4.8%.

The stock trades at 2.8 times expected 2022 EPS, 2.9 times estimated 2023 earnings of $3.38 and 2.9 times estimated 2024 earnings of $3.33 per share. The stock’s 52-week range is $9.45 to $15.60. The company pays an annual dividend of $0.48 (yield of 4.97%). The total shareholder return over the past year was negative 28.88%.

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