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CSX, Intuitive Surgical to Release Earnings Reports Thursday Afternoon

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Tech sector earnings season gets started after U.S. markets close on Wednesday, when Netflix and Tesla will release earnings reports. Many more will hit the tape next week.

Tuesday Afternoon’s Reports

After markets closed on Tuesday, J.B. Hunt missed consensus estimates for both earnings per share (EPS) and revenue. Revenue dipped 17.6% year over year, and EPS were down almost 30%. The stock traded down 5.3% shortly after Wednesday’s opening bell.

Omnicom surpassed estimates on both the top and bottom lines. The advertising giant reiterated a 4% organic growth target for the full fiscal year. Shares traded down 1.7%.

United Airlines also beat top-line and bottom-line estimates. Revenue was up 12.6% year over year and EPS was up nearly 30%. Rising labor and fuel costs, however, remain a worry. The stock traded down 6.6% early Wednesday.

Wednesday Morning’s Reports

Before U.S. markets opened on Wednesday, ASML posted better-than-expected EPS but missed on revenue. Fourth-quarter revenue guidance was in line with expectations, but gross margins were guided slightly below the third quarter’s 51.9% total. Shares traded down 3.8% early Wednesday.

Elevance Health beat the consensus EPS estimate but missed the revenue forecast, even though sales were 7.2% higher than last year. The health insurer guided full-year EPS to $33.00, above the consensus estimate of $32.93. The stock traded up 2.5%.

Morgan Stanley exceeded estimates on the top and bottom lines but commented that net interest income for the current quarter will continue to slide. Revenue was up 2.2% year over year. The stock traded down 6.4%.

Procter & Gamble also beat profit and sales estimates. Revenue was up 6.1% year over year, and EPS were up 16.6%. The consumer products behemoth guided full-year EPS at up 6% to 9% and revenue up 2% to 4%. Both were in line with analysts’ consensus estimates. Shares traded up 2.9%.

Coming Up

After markets close on Wednesday, Kinder Morgan, Netflix and Tesla are set to report quarterly results. First thing Thursday morning, American Airlines, AT&T and Freeport-McMoRan will release their earnings reports.

Here is a look at two earnings reports on the calendar for late Thursday.

CSX

Shares of railroad operator CSX Corp. (NYSE: CSX) have risen by more than 11% over the past 12 months. In the past three months, however, the stock has dropped about 5.6%.

Imported goods were down by about $115 billion (4.3%) in the first eight months of the year. CSX’s revenue fell by 3% year over year, largely due to a decline in its intermodal (container) business. The company’s operating ratio (expenses divided by revenue) rose by 4.5 percentage points in the previous quarter. There is little reason to believe the situation has improved much. Add to this some serious disputes over federal and state regulation, and you get some idea of the issues facing the country’s railroads.

Analysts remain mostly bullish on the stock, with 19 of 28 having a Buy or Strong Buy rating. The others rate it at Hold. At a trading price of around $31.50 a share, the upside potential to a median price target of $37.00 is about 17.5%. At a high price target of $43.00, the upside potential rises to 36.5%.

For the third quarter, analysts forecast revenue at $3.56 billion, which would be down 3.7% sequentially and by 8.7% year over year. Adjusted EPS are forecast at $0.43, down 12.5% sequentially and 17.3% lower year over year. For the full fiscal year, analysts are looking for EPS of $1.84, down 2.8%, on revenue of $14.6 billion, down 1.7%.

CSX stock trades at 17.0 times expected 2023 EPS, 15.7 times estimated 2024 EPS of $2.00 and 14.2 times estimated 2025 earnings of $2.20 per share. Its 52-week trading range is $26.79 to $34.38. The company pays an annual dividend of $0.44 (yield of 1.4%). Total shareholder return over the past year was 13.00%.

Intuitive Surgical

Shares of Intuitive Surgical Inc. (NASDAQ: ISRG) have risen by nearly 45% over the past 12 months. But shares of the robotics firm have dropped by about 22% in the past three months, following its second-quarter earnings report. The headline numbers were good but, perhaps, not good enough.

Investors expected more because other medical stocks were predicting an uptick in surgeries that had been postponed during the pandemic. Intuitive also has a significant bariatric surgery business that was threatened by the surge in weight-loss drugs. The company is going to have to post a good-sized beat to wipe away investors’ concerns.

Analysts remain moderately bullish, with 18 of 30 brokerages having a Buy or Strong Buy rating and another 11 rating the shares at Hold. At a price of around $275.00 a share, the upside potential based on a median price target of $352.50 is 28.2%. At the high price target of $400.00, the upside potential is 45.5%.

Analysts expect the company to report 2023 third-quarter revenue of $1.77 billion, up 0.9% sequentially and by 13.5% year over year. Adjusted EPS are forecast at $1.42, flat sequentially and up 19.3% year over year. Current estimates for the 2023 fiscal year call for EPS of $5.57, up 19.1%, on sales of $7.13 billion, 14.6%.

The stock trades at 49.4 times expected 2023 EPS, 42.4 times estimated 2024 earnings of $6.50 and 36.4 times estimated 2025 earnings of $7.56 per share. The 52-week trading range is $192.40 to $358.07. Intuitive Surgical does not pay a dividend, but total shareholder return for the past year was 44.84%.

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