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Earnings Previews: Carnival, Micron, Nike

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The three major U.S. equity indexes closed mixed on Tuesday. The Dow Jones industrials ended Tuesday down 0.43%, while the S&P 500 closed lower by 0.21% and the Nasdaq saw a gain of 0.25%. Seven of 11 sectors closed lower, with consumer staples (1.76%) and utilities (1.70%) leading the decliners. Energy posted the day’s largest gain (1.16%). Futures traded lower again Wednesday morning, and all three major indexes were down.

The weekly report on U.S. crude oil inventories is due Wednesday morning. Tuesday’s report from the American Petroleum Institute showed a build of 4.15 million barrels last week, far above the 330,000 consensus estimate. The huge difference is down to a 4.6 million barrel release from the U.S. Strategic Petroleum Reserve. So far this year, the SPR has sold 166 million barrels of crude.

After U.S. markets closed on Tuesday, BlackBerry reported quarterly results that beat consensus estimates on both the top and bottom lines. Shares traded down about 2.6% in Wednesday’s premarket due to a dip in the company’s cybersecurity business that could not be offset by a gain of 28% in the firm’s automotive segment.

Before markets opened on Wednesday, Paychex beat consensus estimates on both the top and bottom lines. The company also issued upside guidance for fiscal year earnings per share (EPS). Shares traded up about 2.9% early Wednesday.

After markets close Wednesday and first thing Thursday morning, Bed Bath & Beyond, CarMax and Rite Aid will report quarterly results.

Here is a look at three companies reporting quarterly results on Thursday and Friday.

Carnival

Cruise ship operator Carnival Corp. & PLC (NYSE: CCL) will report quarterly results at 10:00 a.m. ET Friday. Over the past 12 months, Carnival stock has dropped about 64%. Shares reached a 52-week high one year ago and have been balling ever since. The company has posted 10 consecutive quarterly losses, beginning in the March quarter of 2020. Only once was the loss smaller than the consensus estimate. Analysts are expecting the losses to continue but to narrow.

Analysts remain cautious on the stock, with eight of 23 analysts having a Buy or Strong Buy rating and another 10 assigning a Hold rating. At a recent share price of around $9.20, the upside potential based on a median price target of $12 is 30.4%. At the high target of $36, the upside potential is 291.3%.

For the company’s third quarter of fiscal 2022, analysts have forecast revenue of $4.91 billion, which would be up nearly 105% sequentially and by about nine times year over year. The company reported revenue of $546 million in the same period a year ago. The adjusted loss per share is forecast at $0.15, much smaller than the prior quarter’s loss of $1.64 and also much better than last year’s quarterly loss of $1.75 per share.

For the full 2022 fiscal year ending in November, Carnival is expected to post a per-share loss of $3.78, compared with last year’s loss of $7.06 per share. Revenue is forecast to reach $13.48 billion, up more than 600% year over year. Carnival posted revenue of $1.91 billion in fiscal 2021.

Carnival is expected to post EPS of $0.96 in its 2023 fiscal year and $1.52 in fiscal 2024. The stock’s 52-week trading range is $8.10 to $26.99. The company does not pay a dividend. Total shareholder return for the past year is a negative 65%.

Micron

Shares of semiconductor maker Micron Technology Inc. (NASDAQ: MU) have lost more than 32% over the past 12 months. Since reaching a 52-week high in early January, the stock has dropped by more than 45%.

Earlier this month, analysts at BNP Paribas gave the stock an Outperform rating and a $75 price target, noting the company’s DRAM and flash memory process expertise. On Tuesday, J.P. Morgan reiterated an Outperform rating while lowering its $80 price target to $65. Weaker demand for the company’s products due to higher interest rates and recession fears weigh on Micron, as they do on most tech hardware stocks.

Of 36 analysts covering the stock, 28 have a Buy or Strong Buy rating and another six rate the shares at Hold. At a share price of around $50.60, the upside potential based on a median price target of $70 is about 38.3%. At the high target of $110, upside potential is 117.4%.

Fiscal fourth-quarter revenue is forecast at $6.78 billion, down 21.6% sequentially and by 18.0% year over year. Adjusted EPS are forecast at $1.39, down 46.5% sequentially and 74.1% lower year over year. For the full 2022 fiscal year ended in August, revenue is currently forecast at $30.88 billion, up 11.5%, and EPS is forecast at $8.29, up 36.8%.

Micron stock trades at 6.1 times expected 2022 EPS, 12.2 times estimated 2023 earnings of $4.16 and 8.2 times estimated 2024 earnings of $6.16 per share. The stock’s 52-week range is $48.45 to $98.45, and Micron pays an annual dividend of $0.46 (yield of 0.93%). Total return over the past 12 months was negative 32.3%.

Nike

Over the past 12 months, shares of athletic gear maker Nike Inc. (NYSE: NKE) have declined by about 35%. For the year to date, the Dow component is the second-worst performer, down more than 42%, and down 44% since its 52-week high posted lasted November. The company boosted its direct-to-consumer business sharply during the worst of the pandemic, but growth there has stalled, and sales from physical stores are not so hot for any retailer right now. The prognosis is not encouraging either. Nike has had a tough year, and hopes for the next one are just that — hope.

Analyst sentiment on the stock has declined over the past couple of quarters. Of 33 brokerages covering the Dow stock, 22 (down from 28 of 34 two quarters ago) rate the shares a Buy or Strong Buy. The rest have Hold ratings. At a share price of around $96.30, the upside potential based on a median price target of $125 is about 29.8%. At the high price target of $185, the implied upside is 92.1%.


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