Investing

Earnings Previews: Airbnb, AMD, Devon Energy, Energy Transfer

The three major U.S. equity indexes closed solidly higher on Friday. The Dow Jones industrials ended the day up 2.59%, the S&P 500 closed 2.46% higher and the Nasdaq jumped by 2.87%. Ten of 11 sectors closed higher, led by tech (4.52%) and communication services (2.98%). Consumer cyclicals (−0.3%) posted the only loss.

This week’s economic highlight is the Federal Open Market Committee (FOMC) meeting, which begins Tuesday and concludes with a press announcement on Wednesday. The FOMC is expected to tack on another 0.75% interest rate hike, raising the federal funds rate from a range of 3.00% to 3.25% to a new range of 3.75% to 4.00%. On Friday, the monthly report on nonfarm payrolls is expected to show a gain of 220,000 jobs, down from the September total of 263,000 new jobs. The headline unemployment rate is forecast to tick higher, from 3.5% to 3.6%.

All three major indexes traded lower in Monday’s premarket session.

Before markets opened Monday morning, coal miner Alliance Resources missed the consensus revenue estimate and the consensus GAAP earnings per share (EPS) estimate. The stock traded down about 2.2% in the premarket.

ON Semiconductor beat consensus estimates on both the top and bottom lines and issued inline guidance for the fourth quarter. Shares traded down 1.85%.

After U.S. markets close Monday or before they open Tuesday, NXP Semiconductors, Sofi Technologies and Uber are on deck to report quarterly earnings. First thing on Tuesday, BP, Enterprise Products, Marathon Petroleum and Newmont are on deck to report quarterly results.

Here is a preview of four companies due to report quarterly results after Tuesday’s closing bell.

Airbnb

Over the past 12 months, shares of vacation rental provider Airbnb Inc. (NASDAQ: ABNB) have declined by 32.9%. Since posting a 52-week high in mid-November, the shares are down about 42%.

There is anecdotal information that demand for vacation rentals has fallen off in the past few months. However, that is a problem that bedevils property owners more than it does Airbnb, which is currently sitting on a cash pile of nearly $10 billion. Cash flow from operations totaled almost $2.8 billion for the 12 months through the second quarter, and free cash flow for the period totaled nearly the same amount. Free cash flow per share for the 12 months is $4.34.

Of 41 brokerages covering the stock, 23 have a Hold rating while 16 have either a Buy or Strong Buy rating. At a recent price of around $115.20 a share, the upside potential based on a median price target of $140.00 is 21.5%. At the high price target of $201.90, the upside potential is 75.3%.

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