Investing

Earnings Previews for AbbVie, Chevron, Exxon Mobil; All Reporting Friday Morning

Paul Ausick

Published: October 25, 2023 11:42 am

Last Updated: October 25, 2023 11:44 am

Before U.S. markets open on Thursday, the U.S. Bureau of Economic Analysis will release its first estimate of third-quarter gross domestic product (GDP). Economists have forecast quarterly growth of 4.0% to 4.5%, around double second-quarter growth. Deflation is forecast at 2.7%, indicating that prices also dropped sharply in the quarter.

Nearly 90% of the 16 S&P 500 companies reporting results so far have beaten earnings estimates. Three-quarters have also beaten revenue estimates. The big question now is how the Federal Reserve’s Federal Open Market Committee will react at next week’s meeting. The economy continues to run hot, and that could lead to an unexpected increase in the federal funds rate.

Tuesday Afternoon Earnings Reports

After U.S. markets closed Tuesday, Alphabet beat consensus estimates for earnings per share (EPS) and revenue. At $76.9 billion, revenue was up 11% year over year in the quarter. The search giant’s weakness came in cloud computing growth, and investors are punishing the stock. Shares were down 8.4% in mid-morning trading Wednesday.

Microsoft also beat consensus estimates on the top and bottom lines. Revenue was up 12.8% year over year on strong results from the company’s cloud business. Shares traded up about 3.5%.

Snap posted EPS of $0.02, crushing the consensus estimate for a loss of $0.02. Revenue was up 5.3% year over year. The stock jumped more than 10% in after-hours trading but pulled back early Wednesday. Shares added about 2% in morning trading.

Texas Instruments missed consensus estimates on both EPS and revenue. Year over year, revenue was down 13.5% and EPS tumbled by 26.5%. Shares traded down 4.3%.

Visa beat consensus estimates on both the top and bottom lines. Revenue rose by nearly 11% year over year. Shares traded up 1.2%.

Wednesday Morning Earnings Reports

Before markets opened, Boeing reported revenue slightly above the consensus estimate while posting a larger-than-expected loss per share. The company lowered guidance on 737 deliveries to around 400 and affirmed delivery guidance of 70 to 80 787s. Boeing expects 737 production of 38 planes per month by the end of this year. Shares traded down 2.4%

General Dynamics beat consensus estimates on both the top and bottom lines. Revenue rose 6% year over year, and the company said that demand remains strong and backlog is growing. The stock traded up 4.3%.

T-Mobile reported EPS above the consensus estimate, but missed on revenue. Sales fell 1.2% year over year. The mobile service provider raised fourth-quarter estimates slightly for both net post-paid subscribers and core adjusted EBITDA. The stock traded up less than 1%.

On Deck

After markets close on Wednesday, Baker Hughes, IBM and Meta Platforms are among the companies reporting results. Comcast, Merck, UPS and Valero Energy will post quarterly results first thing Thursday morning. Then later that day, look for earnings reports from  Amazon, Ford, Intel and U.S. Steel.

Here is a look at what to expect from three earnings reports on the calendar for Friday morning.

AbbVie

Pharmaceuticals giant AbbVie Inc. (NYSE: ABBV) has had a tough year. It lost patent protection on its best-selling Humira drug, sending shares down 12% in the first quarter. The stock mounted a comeback in the second quarter but is still on track to end the fiscal year down by almost 8% compared to 2022. If management has found a way to plug this hole, look for the stock to move higher. If no such message is forthcoming, the stock may do well just to hold its current level.

Brokerage firms remain moderately upbeat, with 15 of 29 putting Buy or Strong Buy ratings on the stock and another 13 having Hold ratings. At a share price of around $146.00, the implied upside based on a median price target of $167.00 is 14.4%. At the high price target of $205.00, the implied gain is 40.4%.

Estimates for the third quarter call for revenue of $13.71 billion, which would be down 1.1% sequentially and by 7.4% year over year. Meanwhile, adjusted EPS is pegged at $2.87, down 1.4% sequentially and 21.6% lower year over year. For the 2023 fiscal year, analysts are looking for EPS of $11.05, a drop of 19.7% year over year, and sales of $53.58 billion, down 7.7%.

AbbVie stock trades at 13.2 times expected 2023 EPS, 13.2 times estimated 2024 earnings of $11.07 and 12.1 times estimated 2025 earnings of $12.06 per share. The 52-week trading range is $130.96 to $168.11, and AbbVie pays an annual dividend of $5.92 (yield of 4.05%). Total shareholder return over the past year was 0.76%.

Chevron

On Monday, Chevron Corp. (NYSE: CVX) announced that it would acquire oil and gas rival Hess for $53 billion in an all-stock transaction. The deal gives Chevron a 33% stake in an offshore field near Guyana that is controlled by Exxon Mobil and matches Exxon’s previously announced buyout of Pioneer Natural Resources for around $60 billion.

Lost in the furor is Chevron’s performance for the third quarter. Revenue and EPS are forecast to come in much lower year over year while still producing solid returns for investors. Share price movement will still be tied more closely to the Hess deal than to actual performance. Shares have dropped 9.9% over the past 12 months.

Analysts’ sentiment remains mostly bullish on the stock. Of the 26 brokerages covering it, 16 have a Buy or Strong Buy rating and the rest have Hold ratings. At a share price of around $156.00, the upside potential based on a median price target of $184.00 is 17.9%. At the high price target of $215.00, the upside potential is 37.8%.

Third-quarter revenue is forecast at $52.96 billion, up 8.3% sequentially and 20.5% lower year over year. Analysts have forecast adjusted EPS at $3.71, up 20.6% sequentially and down 33.3% year over year. For the 2023 fiscal year, analysts expect Chevron to post EPS of $14.03, down 25.5%, on revenue of $205.19 billion, down 16.7%.

Chevron stock trades at 11.1 times expected 2023 EPS, 10.6 times estimated 2024 earnings of $14.69, and 10.5 times estimated 2025 earnings of $14.92 per share. The 52-week trading range is $149.74 to $189.68. Chevron pays an annual dividend of $6.04 (yield of 3.86%). Total shareholder return for the past 12 months was negative 6.58%.

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Exxon Mobil

Shares of Exxon Mobil Corp. (NYSE: XOM) have added slightly more than 2% over the past 12 months, including a decline of 7.9% for the past six months. Virtually all the loss has come since Exxon announced its $60 billion acquisition of Pioneer Natural Resources earlier this month. Exxon’s business, like Chevron’s, is still cruising on high crude oil prices and continued demand. What investors do not like is issuing more stock to pay for acquisitions rather than raising buybacks and dividends.

Of 27 analysts covering the stock, 14 rate it at Hold, three have a Strong Buy rating, and 10 rate it at Buy. At a share price of around $109.00, the upside potential based on a median price target of $125.00 is 14.7%. At the high target of $150.00, the upside potential is 37.6%.

Third-quarter revenue is forecast at $92.57 billion, up 11.6% sequentially but down 17.4% year over year. Adjusted EPS are pegged at $2.36, up 21.7% sequentially and 35.3% lower year over year. For the 2023 fiscal year, estimates call for EPS of $9.41, down 33%, on sales of $355.86 billion, down 14%.

Exxon shares trade at 11.5 times expected 2023 EPS, 11.6 times estimated 2024 earnings of $9.36 and 11.6 times estimated 2025 earnings of $9.38 per share. The 52-week trading range is $98.02 to $120.70. Exxon pays an annual dividend of $3.64 (yield of 3.36%). Total shareholder return for the past 12 months was 5.10%.