American Airlines Shares Rise Pre-Market as Q4 Loss Narrows

American Airlines shares rose nearly 2% in pre-market trading on Thursday after the company reported a smaller loss in the fourth quarter as a result of strong travel demand.

The airline reported an adjusted net loss of $921 million, or $1.42 per share, compared to a loss of $2.2 billion, or $3.86 per share, a year ago, Reuters reported. That was better than the market expectations of $-1.72 per share. In comparison with a year ago, the company’s total operating revenue was $9.43 billion versus $4.03 billion.

American Airlines said it will continue to match its forward capacity with observed bookings trends. Based on current trends, the company expects its first-quarter capacity to be down approximately 8% to 10% compared to the first quarter of 2019. American expects its first-quarter total revenue to be down approximately 20% to 22% versus the first quarter of 2019, the press release noted.

American Airlines stock rose nearly 2% in pre-market trading on Thursday. The stock slumped nearly 4% so far this year after surging about 14% in 2021.

Analyst Comments

American Airlines reported 4Q21 adjusted loss of $921 MM, slightly above our estimate of a loss of $922 MM. American is seeing improvement in business traffic and expects international traffic to improve as omicron abates,” noted Helane Becker, equity analyst at Cowen.

“We expect these shares are likely to trade up in the morning as the company is focused on returning capacity to pre-pandemic levels and improving the balance sheet.”

American Airlines Stock Price Forecast

Eight analysts who offered stock ratings for American Airlines in the last three months forecast the average price in 12 months of $18.94 with a high forecast of $23.00 and a low forecast of $10.00.

The average price target represents a 9.42% change from the last price of $17.31. From those eight analysts, one rated “Buy”, five rated “Hold” while two rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $21 with a high of $33 under a bull scenario and $10 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the airline company’s stock.

“We rate American Airlines (AAL) Equal-weight. Following the stock’s sell-off the risk-reward looks more balanced. AAL arguably has the highest deleveraging potential of any airline by mid-decade though this could also be a show-me story in the near-term,” noted Ravi Shanker, equity analyst at Morgan Stanley.

“We expect AAL to be a strong beneficiary of the rising tide in 2022 esp. in International and corporate though its Asia exposure means that the tailwind is likely to be the last to show up (but is likely to see significant pent-up demand when it does). Mgmt. is also sounding better on near-term costs compared to some of its large peers and if it can keep 2022 CASMxF to LSD-MSD above 2019 levels, this could drive upside to numbers.”

Several other analysts have also updated their stock outlook. Evercore ISI raised the target price to $19 from $17. BofA Global Research lifted the price objective to $10 from $7. Citigroup cut the price target to $20 from $20.5. Evercore ISI upped the target price to $17 from $15.

Technical analysis also suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.

Check out FX Empire’s earnings calendar

Morgan Stanley Shares Jump Over 4% as Q4 Profit Tops Estimates

Shares of Morgan Stanley rose as much as 4.5% on Wednesday after the Midtown Manhattan, New York City-based investment bank reported better-than-expected profits in the fourth quarter, largely driven by an increase in asset management fees.

The Firm’s full-year results reflect both record net revenues of $59.8 billion up 23% year over year and net income of $15.0 billion up 37%. The Firm delivered a full-year ROTCE of 19.8%, the bank said in the press release.

The leading global financial services firm reported quarterly adjusted earnings of $2.01​​ per share, beating the Wall Street consensus estimates of $1.83 per share. The company’s revenue jumped more than 6% to $14.52 billion from a year ago. That missed the market expectations of $14.59 billion.

“The reopening of the economy from COVID-19 has recently led to strong investment banking revenue at Morgan Stanley, while persistent uncertainties over the pace of economic growth and inflation (among other factors) have kept trading revenue high,” noted Michael Wong, Sector Director at Morningstar.

Morgan Stanley also acquired discount brokerage E-Trade and asset manager Eaton Vance that boosted revenue in 2021. While Morgan Stanley will harvest synergies from recent acquisitions and is exposed to positive tailwinds, such as eventually higher interest rates, net revenue will likely reset lower over the next two years.”

Morgan Stanley stock rose over 4% on Wednesday. The stock slumped over 2% so far this year after surging more than 40% in 2021.

Morgan Stanley Stock Price Forecast

Ten analysts who offered stock ratings for Morgan Stanley in the last three months forecast the average price in 12 months of $118.50 with a high forecast of $140.00 and a low forecast of $104.00.

The average price target represents a 23.21% change from the last price of $96.18. From those ten analysts, six rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Citigroup increased the price target to $125 from $115. BofA Global Research raised the price objective to $125 from $115. Piper Sandler lifted the target price to $112 from $110. JPMorgan upped the target price to $108 from $103.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst Comments

“4Q21 adj EPS equalled $2.08 vs Cons of $1.91. Revenues of $14.5B came in modestly ahead of Cons by +$280M with modest beats in S&T and IM, while IB and WM were generally in line. The comp ratio of 37.8% was modestly better than Cons of 40.8% (ISG Comp ratio down ~950bps q/q). Morgan Stanley (MS) increased its long term ROTCE target to 20%+ (up from 17%+), which compares with 20% in 2021,” noted Daniel T. Fannon, equity analyst at Jefferies.

Check out FX Empire’s earnings calendar

Shares of Health Insurer UnitedHealth Rise After Earnings Top Estimates

The Minnesota-based health insurer UnitedHealth reported better-than-expected earnings and revenue in the fourth quarter as the COVID-19 pandemic drove Optum’s growth, and more people enrolled for its government-sponsored plans, sending its shares up over 1.3% on Wednesday.

The largest insurance company by Net Premiums said it reported quarterly adjusted earnings of $4.48​​ per share, beating the Wall Street consensus estimates of $4.31 per share. The largest health insurance company by the membership for 2021 said its revenue jumped more than 12% to $73.74 billion from a year ago. That too beat the earnings estimate of $72.75 billion.

The UnitedHealth Group’s full-year 2021 revenues grew by $30.5 billion or 11.8% to $287.6 billion, with growth across Optum and UnitedHealthcare. Earnings from operations were $24.0 billion in 2021, with Optum businesses accounting for more than half of the total. Adjusted net earnings for the full year grew 13% to $19.02 per share.

Optum’s full-year revenues increased by $19.3 billion or 14.1% year over year while operating earnings increased by $1.9 billion or 19.4% to $12.0 billion. At year-end 2021, Optum Health will serve 100 million people, up from 98 million a year ago, the company added in the press release.

In total, UnitedHealthcare served 2.2 million more people in 2021, driven by continued strong growth in Medicare Advantage and Dual Special Needs Plans and expansion in the broader Medicaid market.

Following this, UnitedHealth stock rose over 1% in pre-market trading on Wednesday after closing 1.52% lower at $461.56 a day before. The stock slumped over 8% so far this year after surging more than 40% in 2021.

Executive Comments

“Our strong 2021 performance and confident growth outlook for 2022 and beyond reflect the accelerating innovation and expanding capabilities across Optum and UnitedHealthcare,” said Andrew Witty, chief executive officer of UnitedHealth Group.

Analyst Comments

UnitedHealth’s (UNH) 4Q21 EPS upside was driven by investment income and tax rate vs our model. 2021EPS landed 12-37c above guidance. MLR was in line with consensus but DCP declined (UNH cites timing factors). COGS was above our estimate. UNH reiterated its recent guidance for2022, including its Medicare Advantage outlook, and we’ll look for more commentary on that key line of business on the call today,” noted Gary Taylor, equity analyst at Cowen.

UnitedHealth Stock Price Forecast

Sixteen analysts who offered stock ratings for UnitedHealth in the last three months forecast the average price in 12 months of $518.13 with a high forecast of $575.00 and a low forecast of $440.00.

The average price target represents a 12.40% change from the last price of $460.99. From those 16 analysts, 13 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $570 with a high of $850 under a bull scenario and $300 under the worst-case scenario. The investment bank gave an “Overweight” rating on the health care company’s stock.

UnitedHealth Group is the number one Medicare Advantage player with ~28% market share, the number two Medicare PDP player with ~20% market share, and the number two commercial player with ~15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

Several other analysts have also updated their stock outlook. Oppenheimer raised the target price to $550 from $475. Bernstein lifted the target price to $564 from $508. Truist Securities upped the target price to $575 from $520.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Check out FX Empire’s earnings calendar

Procter & Gamble Stock Rise on Earnings Beat, Outlook Revised

Procter & Gamble stock rose over 1% in pre-market trading on Wednesday after the world’s largest maker of consumer-packaged goods reported better-than-expected earnings in the fiscal second quarter and lifted its annual sales outlook.

The Cincinnati, Ohio-based consumer goods corporation said its revenue jumped over 6.0% to $20.95 billion from a year ago. That was also above the market expectations of $20.34 billion. The Gillette razor maker reported quarterly adjusted earnings of $1.66​​ per share for the quarter ended in December, beating the Wall Street consensus estimates of $1.65 per share.

The company, which is also known for laundry detergent and toothpaste, raised its outlook for fiscal 2022 all-in sales growth from a range of two to four percent to a range of three to four percent compared to the prior fiscal year. Additionally, the company raised its guidance for organic sales growth from two to four percent to four to five percent.

According to company guidance, GAAP diluted net earnings per share for fiscal 2022 will grow six to nine percent compared to fiscal 2021 GAAP EPS of $5.50. The Company expects core earnings per share to grow three to six percent for fiscal 2022 versus fiscal 2021 Core EPS of $5.66.

Following this, Procter & Gamble stock rose over 1% in pre-market trading to $158.99 on Wednesday after closing 1.93% lower at $156.73 a day before. The stock slumped over 4% so far this year after surging more than 17% in 2021.

Analyst Comments

“Net, we expect a solid 3% Q2 topline beat (6% org sales was well above the 3.7% consensus and also the higher ~5% street expectation), but modest 1.1% profit miss vs consensus (EPS was a penny ahead on below the profit line items), and reiterated FY EPS guidance, to have only a muted stock reaction, as we believe the market generally expected topline upside and GM downside,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“Ultimately, similar to last quarter, we see Procter & Gamble’s (PG) results as likely to be better than household products peers in a very challenging cost environment, with PG increasing its full-year cost/FX guidance headwind by ~400 bps to EPS, but maintaining FY EPS guidance with a 150 bp raise in organic sales guidance.”

Procter & Gamble Stock Price Forecast

Nine analysts who offered stock ratings for Procter & Gamble in the last three months forecast the average price in 12 months of $166.89 with a high forecast of $185.00 and a low forecast of $146.00.

The average price target represents a 6.48% change from the last price of $156.73. From those nine analysts, six rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $161 with a high of $187 under a bull scenario and $107 under the worst-case scenario. The investment bank gave an “Overweight” rating on the consumer goods corporation’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $165 from $164. Evercore ISI lifted the target price to $175 from $163. Jefferies upped the target price to $185 from $163.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Check out FX Empire’s earnings calendar

UnitedHealth to Post Higher 4Q Earnings and Revenue; Target Price $575 in Best Case

The Minnesota-based health insurer UnitedHealth is expected to report its fourth-quarter earnings of $4.31 per share, which represents year-over-year growth of over 70% from $2.52 per share seen in the same period a year ago.

The largest insurance company by Net Premiums would post revenue growth of over 11% to $72.748 billion from $65.47 billion a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years.

The company projects adjusted earnings between $18.65 and $18.90 per share for 2021, up from the previous estimate of $18.30 to $18.80, according to ZACKS Research.

UnitedHealth stock closed 0.27% higher at $468.69 on Friday. The stock slumped nearly 7% so far this year after surging more than 43% in 2021.

Analyst Comments

UnitedHealth (UNH) slightly increased 2021 adjusted EPS guidance from $18.30-18.80 to $18.65-18.90 (consensus $18.75), leaving their estimated $1.80 COVID yty EPS headwind unchanged. The implied stub 4Q21 EPS guidance of $4.11-4.36 just bounds consensus $4.34. Expect some elective volumes to flow into the 4th qtr like they saw in September, but this is incorporated in guidance,” noted Gary Taylor, equity analyst at Cowen.

“2022 guidance largely assumes that commercial utilization is fully recovered, government utilization keeps recovering and the cost of any new COVID waves would be offset by increased deferred care and/or antiviral therapeutics. Expects double-digit growth in the VBC business for many years to come. The long-term growth target for UNH is +13-16% per year with 3-5% coming from inorganic acquisitions & share repurchases. 2022 implied growth of +12-15% in 2022 is slightly below LT EPS guidance but still reflects some conservatism for COVID and continued investments in longer-term growth opportunities in VBC, capitation and care delivery. OptumInsight 2022 OI margin is expected to grow to 28.3% at the midpoint from 2021 margin of 27.7%. An overall investment strategy is to find a market need, start small and ultimately grow and scale.”

UnitedHealth Stock Price Forecast

Sixteen analysts who offered stock ratings for UnitedHealth in the last three months forecast the average price in 12 months of $518.13 with a high forecast of $575.00 and a low forecast of $440.00.

The average price target represents a 10.55% change from the last price of $468.69. From those 16 analysts, 13 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $570 with a high of $850 under a bull scenario and $300 under the worst-case scenario. The investment bank gave an “Overweight” rating on the health care company’s stock.

UnitedHealth Group is the number one Medicare Advantage player with ~28% market share, the number two Medicare PDP player with ~20% market share, and the number two commercial player with ~15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in a breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

Several other analysts have also updated their stock outlook. Bernstein raised the target price to $564 from $508. Truist Securities lifted the target price to $575 from $520. Credit Suisse upped the target price to $564 from $495.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Check out FX Empire’s earnings calendar

State Street on Track to Beat Earnings Estimates Again; Target Price $132 in Best Case

The Boston-based financial services and bank holding company State Street is expected to report its fourth-quarter earnings of $1.93 per share, which represents a year-on-year growth of just over 14% from $1.69 per share seen in the same period a year ago.

The second oldest bank in the United States would post revenue growth of over 3% to $3.007 billion from $2.92 billion a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years.

According to ZACKS Research, in the fourth quarter, net interest income is expected to range from $475 million to $490 million. As a result of a small rebound in short end-market rates and some movement at the longer end of the curve, this represents a notable improvement over earlier guidance of $460-470 million. Management expects earnings per share to grow between 10-15% and ROE to reach 12-15% in the medium term. Total payout ratios are expected to exceed 80%.

State Street stock closed 0.319% higher at $103.77 on Friday. The stock rose nearly 12% so far this year after surging more than 27% in 2021.

Analyst Comments

“Overweight on valuation, as we think State Street (STT) should trade at 12x 2023 PE or 1.6x PB given our expectation for a 14% ROE in 2023. The current valuation of 1.2x PB implies a 12% cost of equity on a relatively low-risk stock, too high in our opinion. We think STT should trade with an 8% cost of equity, more similar to BK and NTRS,” noted Betsy Graseck, equity analyst at Morgan Stanley.

STT is one of the most rate-sensitive names in our coverage. That’s particularly true on the short end, as a 50bp increase in front end rates increases EPS by 9%. STT is laser-focused on driving efficiencies and delivering operating leverage, even in an inflationary environment.”

State Street Stock Price Forecast

Thirteen analysts who offered stock ratings for State Street in the last three months forecast the average price in 12 months of $115.92 with a high forecast of $132.00 and a low forecast of $99.00.

The average price target represents an 11.71% change from the last price of $103.77. From those 13 analysts, nine rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $700 with a high of $900 under a bull scenario and $440 under the worst-case scenario. The firm gave an “Overweight” rating on the company’s stock.

Several other analysts have also updated their stock outlook. Deutsche Bank lowered the target price to $132 from $133. UBS raised the target price to $119 from $116. Citigroup lifted the price target to $120 from $115. JPMorgan upped the target price to $110 from $107.50.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Check out FX Empire’s earnings calendar

Wall Street Week Ahead Earnings: Goldman Sachs, Procter & Gamble, United Airlines, and Netflix in focus

The following is a list of earnings slated for release January 17-21, along with a few previews. A number of big companies will report earnings in the week ahead, including Goldman Sachs and Bank of America, Procter & Gamble, Netflix, and a number of transportation companies. Investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus variant to see how it affects earnings in 2022.

Earnings Calendar For The Week Of January 17

Monday (January 17)

No major earnings are scheduled for release. The stock market in the U.S. will be closed in observance of Martin Luther King, Jr. Day.

Tuesday (January 18)

IN THE SPOTLIGHT: GOLDMAN SACHS

The New York-based leading global investment bank Goldman Sachs is expected to report its fourth-quarter earnings of $11.89 per share, which represents a year-over-year decline of about 2% from $12.08 per share seen in the same period a year ago.

The world’s leading investment manager would see a decline in revenue of nearly 1% to $11.65 billion from a year ago. It is worth noting that in the last two years, Goldman Sachs has surpassed market consensus expectations for profit and revenue most of the time.

“We expect Goldman Sachs to report mixed results, with revenues outperforming the consensus estimates and earnings missing the expected figure. The investment bank reported better than expected results in the last quarter, with the top-line increasing 26% y-o-y. This was driven by significant growth in the investment banking business, followed by higher global markets and consumer & wealth management revenues,” noted analysts at TREFIS.

“While investment banking grew on the back of growth in mergers &acquisitions (M&A) and equity underwriting deal volumes, global markets benefited from higher equity trading revenues. Similarly, the consumer & wealth management segment gained from an increase in outstanding loan balances. That said, the top-line was partially offset by negative growth in the asset management division, primarily due to lower equity investment revenues. We expect the same trend to continue in the fourth quarter. We estimate Goldman Sachs’ valuation to be around $447 per share which is 14% above the current market price.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 18

TICKER COMPANY EPS FORECAST
BAC Bank of America $0.78
SCHW Charles Schwab $0.83
CNXC Concentrix $2.54
HWC Hancock Whitney $1.33
IBKR Interactive Brokers $0.74
JBHT J.B. Hunt Transport Services $2.0
MBWM Mercantile Bank $0.85
ONB Old National Bancorp $0.38
PNFP Pinnacle Financial Partners $1.56
PNC PNC Financial Services $3.62
PRGS Progress Software $0.62
SBNY Signature Bank $3.92
TFC Truist Financial $1.27
UCBI United Community Banks $0.63

 

Wednesday (January 19)

IN THE SPOTLIGHT: PROCTER & GAMBLE, UNITED AIRLINES

PROCTER & GAMBLE: The world’s largest maker of consumer-packaged goods, is expected to report its fiscal second-quarter earnings of $1.66 per share, which represents year-on-year growth of just over 1% from $1.64 per share seen in the same period a year ago.

The Cincinnati, Ohio-based consumer goods corporation would post revenue growth of over 3% to $20.4 billion from a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

“We believe strategy changes can sustain Procter & Gamble (PG) LT topline growth in the 4% range. In the US, a strong breadth of performance and share gains give us confidence that market share momentum is sustainable and supports LT topline growth above HPC peers. While near-term pressures from commodity/freight inflation will impact margins, we believe PG has stronger pricing power than peers, particularly with share gains,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

PG trades at ~22.5x CY22e EPS, an HSD% discount to HPC peers CLX, CL and CHD, and looks compelling given our call for higher LT PG growth.”

UNITED AIRLINES: The major U.S. airline company is expected to report a loss for the eight-consecutive time of $-2.12 in the holiday quarter as the aviation service provider continues to be negatively impacted by the ongoing COVID-19 pandemic and travel restrictions.

However, that would represent a year-over-year improvement of about 70% from -$7.0 per share seen in the same period a year ago. The Chicago, Illinois-based airlines would post revenue growth of over 130% to $7.94 billion.

“Despite some headwinds around staffing issues, we expect United Airlines (UAL) to guide to a continued sequential improvement with capacity guided to be down in the 17-18% range in Q1, which incorporates domestic capacity down in the 1% range, while international capacity remains down 27%,” noted Sheila Kahyaoglu, equity analyst at Jefferies.

“Remaining in a Net Loss Position into Q1. We expect a continued sequential decline in CASM-ex to 11.63¢, which reflect a 9% increase vs. 2019 levels, which compares to the 13% increase we expect in Q4. Nonetheless, UAL will remain in a net loss position in Q1, before turning positive in Q2.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 19

TICKER COMPANY EPS FORECAST
AA Alcoa $2.5
ASML ASML Holding $4.3
CFG Citizens Financial Group $1.16
CMA Comerica $1.6
DFS Discover Financial Services $3.48
FAST Fastenal $0.36
FUL H.B. Fuller $1.06
KMI Kinder Morgan $0.27
MS Morgan Stanley $1.83
PACW PacWest Bancorp $1.06
PG Procter & Gamble $1.66
STT State Street $1.93
USB U.S. Bancorp $1.13
UAL United Airlines $-2.12
WTFC Wintrust Financial $1.56

 

Thursday (January 20)

IN THE SPOTLIGHT: NETFLIX

The California-based global internet entertainment service company NetFlix is expected to report its fourth-quarter earnings of $0.82 per share, which represents a year-over-year decline of over 30% from $1.19 per share seen in the same period a year ago.

However, the streaming video pioneer would post revenue growth of over 16% to $7.71 billion. It is worth noting that the company has beaten earnings per share (EPS) estimates just thrice in the last two years.

“We believe share performance is highly dependent on increasing global membership scale. Proven success in the US and initial international markets provides a roadmap to success in emerging markets, and scale should allow Netflix (NFLX) to leverage content investments and drive margins,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“Higher global broadband penetration should increase the Netflix (NFLX) addressable market, driving member growth and providing further opportunity given NFLX’s global presence. Longer-term, we see the ability to drive ARPU growth, particularly given increased original programming traction.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 20

TICKER COMPANY EPS FORECAST
AAL American Airlines $-1.72
CSX CSX $0.42
FITB Fifth Third $0.91
ISRG Intuitive Surgical $1.01
KEY KeyCorp $0.56
MTB M&T Bank $3.24
NTRS Northern Trust $1.82
OZK Bank OZK $0.98
PPBI Pacific Premier Bancorp $0.85
PPG PPG Industries $1.2
RF Regions Financial $0.49
SASR Sandy Spring Bancorp $1.1
SIVB SVB Financial $6.29
TRV Travelers $3.77
UNP Union Pacific $2.66
WBS Webster Financial $1.11

 

Friday (January 21)

TICKER COMPANY EPS FORECAST
ALLY Ally Financial $2.0
FHB First Hawaiian $0.47
HBAN Huntington Bancshares $0.37
INFO IHS Markit $0.71
SLB Schlumberger $0.39

 

Preview: What to Expect From NetFlix’s Earnings Next Week

The California-based global internet entertainment service company NetFlix is expected to report its fourth-quarter earnings of $0.82 per share, which represents a year-over-year decline of over 30% from $1.19 per share seen in the same period a year ago.

However, the streaming video pioneer would post revenue growth of over 16% to $7.71 billion. It is worth noting that the company has beaten earnings per share (EPS) estimates just thrice in the last two years.

According to ZACKS Research, Netflix expects earnings per share of 80 cents in the fourth quarter of 2021. Zacks Consensus Estimate is pegged at $1.07 per share, higher than the company’s projection but down 10.08% from the quarterly figure reported a year ago.

In the fourth quarter of 2021, Netflix expects to have 222.06 million paid subscribers globally, an increase of 9% from the previous quarter. Revenue is expected to reach $7.71 billion, representing a 16.1% increase over last year. Based on Zacks Consensus Estimates, revenues are expected to be $7.70 billion, lower than the company’s expectations.

Netflix stock slumped nearly 3% to $65.86 on Friday. The stock rose over 12% so far this year after falling more than 2% in 2021.

Analyst Comments

“We believe share performance is highly dependent on increasing global membership scale. Proven success in the US and initial international markets provides a roadmap to success in emerging markets, and scale should allow Netflix (NFLX) to leverage content investments and drive margins,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“Higher global broadband penetration should increase the Netflix (NFLX) addressable market, driving member growth and providing further opportunity given NFLX’s global presence. Longer-term, we see the ability to drive ARPU growth, particularly given increased original programming traction.”

Netflix Stock Price Forecast

Thirty-one analysts who offered stock ratings for Netflix in the last three months forecast the average price in 12 months of $662.93 with a high forecast of $800.00 and a low forecast of $342.00.

The average price target represents a 28.87% change from the last price of $514.42. From those 31 analysts, 23 rated “Buy”, five rated “Hold” while three rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $700 with a high of $900 under a bull scenario and $440 under the worst-case scenario. The firm gave an “Equal-weight” rating on the internet television network’s stock.

Several other analysts have also updated their stock outlook. UBS cut the target price to $690 from $720. Moffett Nathanson lowered the target price by $5 to $460. Baird slashed the target price to $575 from $680. Stifel cut the target price to $660 from $690.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator are giving a mixed signal.

Check out FX Empire’s earnings calendar

Citigroup Shares Fall 3% as Profit Declines 26% in Q4 on Higher Expenses

Citigroup shares fell nearly 3% on Friday after the New York City-based investment bank said its profit slumped 26% in the fourth quarter, largely due to reflecting higher expenses, partially offset by higher revenues and lower cost of credit.

The investment bank reported quarterly adjusted earnings of $1.46​​ per share, beating the Wall Street consensus estimates of $1.38 per share. The company said revenue rose 3.1% to $17.02 billion from a year ago. That too beat the market expectations of $16.75 billion.

Net income of $3.2 billion decreased 26% from the prior-year period, reflecting higher expenses, partially offset by higher revenues and lower cost of credit.

Following this, Citigroup stock slumped nearly 3% to $65.86 on Friday. The stock rose over 12% so far this year after falling more than 2% in 2021.

Moreover, JPMorgan shares also slumped over 4% in pre-market trading on Friday after the leading global financial services firm said a slowdown in its trading arm caused its profits to decline by 14% in the fourth quarter.

For the full year 2021, Citigroup reported a net income of $22.0 billion on revenues of $71.9 billion, compared to net income of $11.0 billion on revenues of $75.5 billion for the full year 2020.

Analyst Comments

“While the stock is cheap at 0.6x NTM BVPS, and new CEO is taking strong, proactive strategic action to boost returns closer to peers, we believe these actions will take time to play out,” noted Betsy Graseck, equity analyst at Morgan Stanley.

Citi is exiting 13 consumer businesses in Asia and EMEA, and focusing on higher-growth areas of US consumer, Asia WM, International wholesale and consumer payments. These actions could drive ROE higher than the 9% we are modelling for 2023, but we expect the stock will only start to fully reflect this once revenues begin to accelerate. Citi benefits less than peers from higher rates, and we expect some of our more rate sensitive stocks will outperform as the Fed begins to raise rates next year.”

Citigroup Stock Price Forecast

Fifteen analysts who offered stock ratings for Citigroup in the last three months forecast the average price in 12 months of $78.56 with a high forecast of $120.00 and a low forecast of $64.00.

The average price target represents an 18.30% change from the last price of $66.41. From those 15 analysts, eight rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $82 with a high of $111 under a bull scenario and $53 under the worst-case scenario. The firm gave an “Equal-weight” rating on the investment bank’s stock.

Several other analysts have also updated their stock outlook. Jefferies cut the target price to $80 from $87. JPMorgan slashed the target price to $76 from $80.5. Piper Sandler lowered the target price to $88 from $94. Evercore ISI cut the target price to $64 from $74.

Technical analysis also suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.

Check out FX Empire’s earnings calendar

JPMorgan Shares Slump Over 4% as Profit Declines 14% in Q4

JPMorgan shares slumped over 4% in pre-market trading on Friday after the leading global financial services firm said a slowdown in its trading arm caused its profits to decline by 14% in the fourth quarter.

The New York City-based investment bank reported quarterly adjusted earnings of $3.33​​ per share, beating the Wall Street consensus estimates of $3.01 per share. The largest bank in the United States said its revenue jumped 0.6% to $30.35 billion from a year ago. That was also above the market expectations of $29.89 billion.

The bank with over $3.0 trillion Assets Under Management (AUM) said its net income was $10.4 billion, down 14%, driven by higher noninterest expense. Non-interest expense was $17.9 billion, up 11%, largely on higher compensation

Following this, JPMorgan stock slumped over 4% to $160.80 in pre-market trading on Friday. The stock rose over 6% so far this year after gaining nearly 25% in 2021.

Analyst Comments

JPMorgan (JPM) is trading at 12x our 2023 EPS, which includes accelerating loan growth and 5 rate hikes from here (2 in 2022 and 3 in 2023). With that backdrop, we see more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure. This drives our relative Underweight rating,” noted Betsy Graseck, equity analyst at Morgan Stanley.

JPM also has less excess capital as a % of the market cap relative to other names in the group, which drives a lower benefit from buybacks.”

JPMorgan Chase Stock Price Forecast

Fifteen analysts who offered stock ratings for JPMorgan Chase in the last three months forecast the average price in 12 months of $184.23 with a high forecast of $210.00 and a low forecast of $125.00.

The average price target represents a 9.51% change from the last price of $168.23. From those 15 analysts, 10 rated “Buy”, three rated “Hold” while two rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $184 with a high of $233 under a bull scenario and $119 under the worst-case scenario. The firm gave an “Underweight” rating on the investment bank’s stock.

Several other analysts have also updated their stock outlook. Citigroup raised the price target to $188 from $184. Jefferies cut the target price to $192 from $198. BofA Global Research lifted the price objective to $200 from $190. Piper Sandler increased the target price to $192 from $190.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator are giving mixed signals.

Check out FX Empire’s earnings calendar

Planet Fitness Price Target Raised to $106 at Morgan Stanley

Morgan Stanley raised their base stock price forecast on Planet Fitness to $106 and said a key driver for the stock, the beat in 4Q reinforces our view that 2022 will see continued acceleration potentially back to 200+ new units.

Planet Fitness, which releases its next earnings on February 17, will show its strengths. The Hampton, New Hampshire-based operator and franchiser of fitness centres is expected to report its fourth-quarter earnings of $0.24 per share, which represents year-on-year growth of over 40% from $.17 per share seen in the same period a year ago. The company would post revenue growth of over 30% to around $174 million.

Last year, Planet Fitness shares surged nearly 17%. On Thursday, the stock closed 3.24% lower at $89.62.

“Member gains, ’21 development ahead of guidance reinforce key elements of our OW thesis and set up a favourable ’22. A large franchisee acquisition increases operating leverage for the recovery and should be EPS accretive; business mix shifts but franchising will remain the main growth driver,” noted Brian Harbour, equity analyst at Morgan Stanley.

Morgan Stanley gave the stock price forecast of $140 under the bull scenario and $72 under the worst-case scenario. Other equity analysts also updated their stock price outlook. Stifel raised the target price to $105 from $100. Cowen and company lifted the target price to $110 from $100. D.A. Davidson upped the target price to $110 from $105.

Twelve analysts who offered stock ratings for Planet Fitness in the last three months forecast the average price in 12 months of $102.08 with a high forecast of $115.00 and a low forecast of $85.00.

The average price target represents a 13.90% change from the last price of $89.62. Of those 12 analysts, nine rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

“As the largest fitness club chain by system sales in the US, Planet Fitness (PLNT) fortified its competitive position in recent years, and came through Covid with no closures, while +20% of industry capacity closed. Marketing, tech, development scale are increasingly important,” Morgan Stanley’s Harbour added.

“Strong history of SSS growth driven by pricing, Black Card mix, marketing and density to drive traffic; Covid recovery likely extends into ’22 in our view, while unit growth should pick back up to +200/yr range by ’23 driven by a strong franchised model and strong unit economics. Value players less threatened by at-home fitness. Underperformance vs key benchmarks and discount to pre-Covid highs present a more compelling entry point.”

Technical analysis suggests it is a good time to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.

Check out FX Empire’s earnings calendar

Procter & Gamble on Track to Beat Earnings Estimates Again

Procter & Gamble, the world’s largest maker of consumer-packaged goods, is expected to report its fiscal second-quarter earnings of $1.66 per share, which represents year-on-year growth of just over 1% from $1.64 per share seen in the same period a year ago.

The Cincinnati, Ohio-based consumer goods corporation would post revenue growth of over 3% to $20.4 billion from a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

The company forecasts both all-in and organic sales growth are expected to be 2 to 4%. For fiscal 2022, currency movements are expected to have no effect on sales growth. On a reported basis, EPS is expected to increase 6-9%, whereas the company reported $5.50 in fiscal 2021. EPS for fiscal 2022 is expected to increase 3-6% from $5.66 earned in fiscal 2021, according to ZACKS Research.

Procter & Gamble stock was trading 0.42% lower at $158.35 on Thursday. The stock fell over 3% so far this year after gaining more than 17% in 2021.

Analyst Comments

“We believe strategy changes can sustain Procter & Gamble (PG) LT topline growth in the 4% range. In the US, a strong breadth of performance and share gains give us confidence that market share momentum is sustainable and supports LT topline growth above HPC peers. While near-term pressures from commodity/freight inflation will impact margins, we believe PG has stronger pricing power than peers, particularly with share gains,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

PG trades at ~22.5x CY22e EPS, an HSD% discount to HPC peers CLX, CL and CHD, and looks compelling given our call for higher LT PG growth,”

Procter & Gamble Stock Price Forecast

Seven analysts who offered stock ratings for Procter & Gamble in the last three months forecast the average price in 12 months of $163.43 with a high forecast of $185.00 and a low forecast of $146.00.

The average price target represents a 3.27% change from the last price of $158.25. From those seven analysts, four rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $161 with a high of $187 under a bull scenario and $107 under the worst-case scenario. The firm gave an “Overweight” rating on the consumer goods corporation’ stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $165 from $164. Evercore ISI lifted the target price to $175 from $163. Jefferies upped the target price to $185 from $163.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Check out FX Empire’s earnings calendar

Delta Air Lines Shares Jump on Earnings Beat, But Flags Omicron Risk

Delta Air Lines shares jumped as much as 4.7% on Thursday after the airline company reported better-than-expected earnings and revenue in the fourth quarter but anticipates making a profit this year as travel demand increases.

The Airline company, which provides scheduled air transportation for passengers and cargo throughout the United States and across the world, reported quarterly adjusted earnings of $0.22 ​​ per share in the holiday quarter, beating the Wall Street consensus estimates of $0.14 per share.

The company said its revenue jumped more than 135% to $9.47 billion from a year ago. That too was above the market expectations of $9.21 billion.

In the first quarter of 2022, the Atlanta-based airline expects revenue to reach 72% to 76% of what it was in 2019. It expects pre-pandemic capacity to be restored to 83% to 85% during this quarter. According to the forecast, the company’s capital expenditures in the quarter will increase by about 69% from the December quarter, according to a Reuters report.

The increasing number of cases of the new Omicron Coronavirus is one of the biggest risks facing the airline industry. After COVID-19 brought the industry to its knees in 2020, American airlines have come a long way. However, the pandemic still lurks in the background.

In a short-staffed industry, a highly contagious virus variant has caused havoc with a new wave of sickness caused by the Omicron Coronavirus. In addition to a spike in daily sick calls, winter storms have also led to massive flight cancellations.

Delta Air Lines shares jumped as much as 4.7% to $42.52 on Thursday. The stock gained over 7% so far this year after falling nearly 3% in 2021.

Executive Comments

“The recent rise in COVID cases associated with the omicron variant is expected to impact the pace of demand recovery early in the quarter, with recovery momentum resuming from President’s Day weekend forward. Factoring this in to our outlook, we expect total March quarter revenue to recover to 72 to 76% of 2019 levels, compared to 74% in the December quarter,” said Glen Hauenstein, Delta’s president.

Analyst Comments

Delta reported 4Q21 revenue of $9.47 billion, above the $9.2 billion consensus but below our estimate of $9.6 billion. Adjusted pretax income of $170 MM was also lower than our $202 MM estimate and below investor day guidance. Delta was on track for a better quarter, but flight cancellations hurt results at the end of the month,” noted Helane Becker, equity analyst at Cowen.

“We believe March will “make” the current quarter as January is likely to be a difficult month given the continued impact of winter weather and the omicron variant. Delta noted they are starting to see fewer sick calls this week among its personnel, so perhaps we are past the peak of employee illnesses. Revenue in the March quarter is forecast to be 72% to 76% of 2019 levels, which is about in line with the 74% recovery in the December quarter. Management is forecasting capacity will be 83% – 85% of 2019 levels; fuel price / gallon of $2.35 to $2.50 and CASM, ex up~15% compared to March 2019. Adjusted net debt is forecast to be ~$22 billion.”

Delta Air Lines Stock Price Forecast

Fifteen analysts who offered stock ratings for Delta Air Lines in the last three months forecast the average price in 12 months of $53.07 with a high forecast of $67.00 and a low forecast of $42.00.

The average price target represents a 26.09% change from the last price of $42.09. From those 15 analysts, 12 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $60 with a high of $96 under a bull scenario and $33 under the worst-case scenario. The firm gave an “Overweight” rating on the airlines’ stock.

“Why Overweight? Delta Air Lines (DAL) has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. While DAL cannot escape Legacy overhangs (delayed International/corporate recovery, strained balance sheet), it should rise with the industry tide. The risk-reward looks attractive,” noted Ravi Shanker, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $48 from $46. Bernstein lifted the target price to $67 from $61. Jefferies upped the target price to $50 from $45. Citigroup cut the price target to $56 from $58.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator giving mixed signals.

Check out FX Empire’s earnings calendar

United Airlines Q4 Earnings to Improve; Omicron Spike A Risk For Aviation

The major U.S. airline company United Airlines is expected to report a loss for the eight-consecutive time of $-2.12 in the holiday quarter as the aviation service provider continues to be negatively impacted by the ongoing COVID-19 pandemic and travel restrictions.

However, that would represent a year-over-year improvement of about 70% from -$7.0 per share seen in the same period a year ago. The Chicago, Illinois-based airlines would post revenue growth of over 130% to $7.94 billion.

One of the biggest risks facing the airline industry is the rising number of cases of the new Omicron coronavirus. Since COVID-19 knocked the industry to its knees in 2020, American airlines have come a long way. But the pandemic still looms large.

A new wave of sickness caused by a highly contagious virus variant, the Omicron Coronavirus, has caused chaos for a short-staffed industry. In addition to an increase in daily sick calls, winter storms have led to mass flight cancellations, according to a Reuters report.

“Despite some headwinds around staffing issues, we expect United Airlines (UAL) to guide to a continued sequential improvement with capacity guided to be down in the 17-18% range in Q1, which incorporates domestic capacity down in the 1% range, while international capacity remains down 27%,” noted Sheila Kahyaoglu, equity analyst at Jefferies.

“Remaining in a Net Loss Position into Q1. We expect a continued sequential decline in CASM-ex to 11.63¢, which reflect a 9% increase vs. 2019 levels, which compares to the 13% increase we expect in Q4. Nonetheless, UAL will remain in a net loss position in Q1, before turning positive in Q2.”

United Airlines shares traded 0.34% higher in pre-market trading on Wednesday. The stock gained over 7% so far this year after rising just over 2% in 2021.

Analyst Comments

United Airlines (UAL) is our 2022 Best Idea. They should benefit from increased international leisure demand and continued strength in domestic leisure travel. Any business travel recovery would be a boon. We expect UAL to focus on paying down debt and improving its balance sheet while maintaining strong liquid it,” noted Helane Becker, equity analyst at Cowen.

“We are maintaining our Outperform rating on the common shares of United Airlines. We believe these shares can sell at 7x our preliminary 2023 EPS estimate of $11.18 or $78 /share. Our estimate is 47% greater than the $7.59 consensus. We attribute our optimism relative to the peer group to our view that international leisure destinations will outperform domestic beginning in summer 2022 and continue into 2023 and beyond.”

United Airlines Stock Price Forecast

Nine analysts who offered stock ratings for United Airlines in the last three months forecast the average price in 12 months of $60.00 with a high forecast of $78.00 and a low forecast of $42.00.

The average price target represents a 27.93% change from the last price of $46.90. From those nine analysts, five rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $60 with a high of $95 under a bull scenario and $27 under the worst-case scenario. The firm gave an “Equal-weight” rating on the Airlines’s stock.

“Why Equal-weight? We like United Airlines’ (UAL) confidence in providing a 2023 cost guide which includes a goal to permanently reduce $2 bn of cost and at least match 2019 margins. The market is also very keen to see UAL’s go-to-market strategy on the revenue side as travelers return,” noted Ravi Shanker, equity analyst at Morgan Stanley.

“However, the legacy network footprint is a slightly bigger overhang than its network peers and the cap structure will likely take years to normalize, which could remain overhangs on the stock.”

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $42 from $40. Bernstein cut the target price to $73 from $78. Raymond James lowered the target price to $75 from $78. Citigroup cut the price target to $64 from $67.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator gives mixed signals.

Check out FX Empire’s earnings calendar

Preview: What to Expect From Goldman Sachs’ Earnings Next Week

The New York-based leading global investment bank Goldman Sachs is expected to report its fourth-quarter earnings of $11.89 per share, which represents a year-over-year decline of about 2% from $12.08 per share seen in the same period a year ago.

The world’s leading investment manager would see a decline in revenue of nearly 1% to $11.65 billion from a year ago. It is worth noting that in the last two years, Goldman Sachs has surpassed market consensus expectations for profit and revenue most of the time.

The bank will announce its earnings results before the market opens on Tuesday, January 18th. Goldman Sachs shares closed nearly 1% higher at $403.05 on Tuesday. The stock jumped over 45% in 2021.

Analyst Comments

“CEO Solomon is laser-focused on delivering on the ROE/ROTCE targets of 13%+ / 14%+ by 2023, as evidenced by the reduction in comp ratio. Goldman Sachs (GS) should be able to keep their total expense ratio under 60% even as revenues decline,” noted Betsy Graseck, equity analyst at Morgan Stanley.

GS has led peers in market share gains. We expect they can hold this share as they use their excess capital to lean into client flows, risk, middle-market banking and M&A capabilities. GS is also leaning into tech, which could drive market share gains higher. Examples span across the platform from trading to corporate treasury to consumer finance. These 3 trends give us more conviction that GS will be able to achieve its 13%+ / 14%+ ROE / ROTCE targets by 2023.”

Goldman Sachs Stock Price Forecast

Fourteen analysts who offered stock ratings for Goldman Sachs in the last three months forecast the average price in 12 months of $477.23 with a high forecast of $576.00 and a low forecast of $416.00.

The average price target represents an 18.40% change from the last price of $403.05. From those 14 analysts, nine rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $479 with a high of $594 under a bull scenario and $252 under the worst-case scenario. The firm gave an “Equal-weight” rating on the financial services company’s stock.

Several other analysts have also updated their stock outlook. BofA Global Research cut the price objective to $475 from $490. JPMorgan raised the target price to $465 from $460. UBS lifted the target price to $416 from $415. Evercore ISI upped the target price to $445 from $442.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.

Check out FX Empire’s earnings calendar

Wells Fargo Shares Rise Ahead of Q4 Earnings; Target Price $81 in Best Case

Wells Fargo shares gained nearly 15% so far this year ahead of its fourth-quarter earnings, which is expected to enjoy better loan activity and a higher net interest income than that seen in early last year due to favourable industry trends.

The fourth-largest U.S. lender is expected to report its fourth-quarter earnings of $1.11 per share, which represents a year-on-year growth of over 70% from $0.64 per share seen in the same period a year ago.

The San Francisco, California-based multinational financial services company would post revenue growth of more than 4% to $18.8 billion.

Wells Fargo shares rose over 1% to $55.35 on Monday. The stock jumped nearly 15% so far this year after surging nearly 60% in 2021.

Analyst Comments

Wells Fargo (WFC) benefit to EPS from rising rates is the highest in the group, with each 50bps increase in FF driving 15% increase in EPS; 50bps in long-end rates drives 7% to EPS. WFC is in a strong position to monetize higher rates, as cash stands at 15% of earning assets, 7% points above pre-pandemic levels,” noted Betsy Graseck, equity analyst at Morgan Stanley.

WFC is taking action to restructure its business mix as it works to exit the Fed consent order/asset cap and reduce its expense base. Excess capital at Wells stands at 10% of market cap vs. 5% for median Large Cap Bank, enabling a net buyback yield of 10% in 2022 and a total cash return of 12%. Risks around the timing of asset cap removal and further regulatory action remain.”

Wells Fargo Stock Price Forecast

Fifteen analysts who offered stock ratings for Wells Fargo in the last three months forecast the average price in 12 months of $56.62 with a high forecast of $65.00 and a low forecast of $45.00.

The average price target represents a 2.29% change from the last price of $55.35. From those 15 analysts, 11 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $61 with a high of $81 under a bull scenario and $27 under the worst-case scenario. The firm gave an “Overweight” rating on the multinational financial services company’s stock.

Several other analysts have also updated their stock outlook. Jefferies raised the target price to $64 from $59. BofA Global Research lifted the price objective to $70 from $60. JPMorgan upped the target price to $57 from $53.5. Evercore ISI raised the target price to $60 from $54.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.

Check out FX Empire’s earnings calendar

Shares of Cannabis Producer Tilray Soar on Q2 Earnings Beat

Tilray shares jumped as much as 22% on Monday after the pharmaceutical and cannabis company surprised investors with a profit in the fiscal second quarter as a result of higher revenues and more cost-cutting.

The company, which provides pharmaceutical-grade cannabis products to patients, researchers, pharmacies, and governments said its net income increased to $6 million from a net loss of $89 million a year ago.

Tilray said its net revenue increased 20% to $155 million during the second quarter from $129 million a year ago. That also beat the ZACKS consensus estimate of $173 million.

The increase was driven by a 7% growth in cannabis revenue to $58.8 million, net beverage alcohol revenue of $13.7 million from SweetWater, and wellness segment revenue of $13.8 million from Manitoba Harvest.

According to ZACKS Research, Tilray also beat on earnings. The company reported break-even earnings while the Zacks Consensus Estimate was a loss of 9 cents.

The leading global cannabis-lifestyle and consumer packaged goods company said its adjusted EBITDA came in at $13.8 million in the second quarter 2022, up 8% compared to the preceding prior quarter, and the eleventh consecutive quarter of positive Adjusted EBITDA.

Following this, Tilray shares surged as much as 22% to CAD 9.92 on Monday.

Analyst Comments

“Based on Hifyre data, Tilray (TLRY) accounted for approximately 13% of all sales in the November-ended fiscal 2Q22 period, which marks a sequential decrease of 290 bps QoQ and an acceleration from the 130 bp QoQ share loss seen in fiscal 1Q. Having previously lowered our top-line estimates to reflect lower adult-use sales, we now lower our FY22 and FY23 adjusted EBITDA margin estimates for the company, driven by higher operating leverage, to 7.5% and 9.8%, respectively,” noted Vivien Azer, equity analyst at Cowen.

Tilray Stock Price Forecast

Seven analysts who offered stock ratings for Tilray in the last three months forecast the average price in 12 months of C$13.30 with a high forecast of C$27.82 and a low forecast of C$8.00.

The average price target represents a 40.63% change from the last price of C$9.46. From those seven analysts, one rated “Buy”, five rated “Hold” while one rated “Sell”, according to Tipranks.

CIBC cut the target price to $8 from $12. Alliance Global Partners lowered the target price to $7 from $12. Haywood Securities slashed the target price to $8 from $12.5. Piper Sandler cut the target price to $8 from $13.

Tilray has struggled to maintain its market share in the Canadian adult-use market and has been trending away from its target of 30%+ as of recent. The Company will likely turn to price competition or look to use the strength of its balance sheet for M&A to increase Canadian market share. Tilray does have a diversified revenue mix that will present an opportunity for growth as the Company continues to work towards optimizing its Canadian cannabis segment,” noted analysts at Haywood Securities.

“Additionally, Tilray’s position in the German medical market will become of increasing interest as the country has begun taking the steps towards adult-use legalization. We are lowering our target price to $8.00 (previously $12.50) based on lower estimates and a multiple of 5.5x F2023 revenue (previously 8x).”

Check out FX Empire’s earnings calendar

Shares of Yoga Wear Maker Lululemon Tumble After It Warns of Omicron’s Impact on Q4 Results

Lululemon’s shares plunged nearly 7% in pre-market trading on Monday after the Vancouver-based healthy lifestyle-inspired athletic retailer warned its fourth-quarter earnings and revenue will be hit by the Omicron variant of the coronavirus.

The apparel retailer expects the company’s net revenue to be toward the low end of its range of $2.125 billion to $2.165 billion, and diluted earnings per share and adjusted diluted earnings per share to be toward the low end of its ranges of $3.24 to $3.31 and $3.25 to $3.32, respectively.

Not only Lululemon, everyone has been affected by the Omicron virus, and this is hurting the retail sector at large, which is already dealing with a strained supply chain.

Following this, Lululemon shares plunged nearly 7% to $332 in pre-market trading on Monday. The stock rose over 12% in 2021.

Executive Comments

“We are closing out a strong 2021 in the coming weeks, and we’re pleased with how lululemon has delivered over the course of the year. We started the holiday season in a strong position but have since experienced several consequences of the Omicron variant, including increased capacity constraints, more limited staff availability, and reduced operating hours in certain locations. I am proud of how our teams continue to deliver for our guests, and we are excited about what the future holds for lululemon,” noted Calvin McDonald, Chief Executive Officer.

Analyst Comments

Lululemon (LULU) is a LT topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”

Lululemon Stock Price Forecast

Sixteen analysts who offered stock ratings for Lululemon in the last three months forecast the average price in 12 months of $467.44 with a high forecast of $530.00 and a low forecast of $344.00.

The average price target represents a 31.60% change from the last price of $355.21. From those 16 analysts, 11 rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $283 with a high of $524 under a bull scenario and $244 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.

Several other analysts have also updated their stock outlook. Truist Securities initiated coverage with a hold rating and set the target price at $435. MKM Partners raised the target price to $485 from $468. Deutsche Bank cut the target price to $484 from $486. JPMorgan lowered the target price to $518 from $570.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator is giving a mixed signal.

Check out FX Empire’s earnings calendar

Earnings Week Ahead: Q4 Season Kicks Off With Delta Air Lines and Big Banks Like BlackRock, Citigroup, Wells Fargo and JPMorgan

This week will also bring us an inflation report, US-Russia talks, and a lot of Fed talks. The following is a list of earnings slated for release January 10-14, along with a few previews. Investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus variant to see how it affects earnings in 2022.

Earnings Calendar For The Week Of January 10

Monday (January 10)

TICKER COMPANY EPS FORECAST
AZZ AZZ $0.82
CMC Commercial Metals $1.29
TLRY Tilray $-0.09

 

Tuesday (January 11)

TICKER COMPANY EPS FORECAST
SNX TD Synnex Corp $2.6
ACI Albertsons $0.55

 

Wednesday (January 12)

TICKER COMPANY EPS FORECAST
INFY Infosys $0.17
JEF Jefferies Financial Group $1.4
KBH KB Home $1.77
SJR Shaw Communications $0.3
VOLT Volt Information Sciences $0.07

 

Thursday (January 13)

IN THE SPOTLIGHT: DELTA AIR LINES

Delta Air Lines, one of the major players in the United States aviation industry, is expected to report earnings per share (EPS) of $0.11 in the fourth quarter, more than doubling compared to a huge loss of $-2.53 per share seen in the same period a year ago.

The Airline company, which provides scheduled air transportation for passengers and cargo throughout the United States and across the world, is forecast to report revenue growth of over 130% to around $9.2 billion. It is worth noting that in the last two years, the airline has beaten consensus earnings estimates just four times.

According to ZACKS Research, based on strong passenger demand during the holidays, Delta Air Lines raised its guidance for the fourth quarter of 2021. It hopes to achieve “meaningful” profitability in 2022 despite Omicron-induced woes. In the December quarter, the airline expects to make approximately $200 million in adjusted pre-tax profit, according to an SEC filing.

Compared to the same period last year, Delta expects to recover 74% of its adjusted total revenues (excluding third-party refinery sales) in the fourth quarter. In 2022, DAL expects its capacity to reach approximately 90% of its level in 2019. In 2023 and beyond, it expects to achieve pre-pandemic levels of capacity. With adjusted revenues (ex-refinery) exceeding $50 billion in 2024, the company expects earnings per share to surpass $7, ZACKS analysts noted.

“Mgmt. laid out a plan to meet and exceed pre-pandemic financial benchmarks by 2024 by building a best-in-class premium airline. The plan is sound and targets appear conservative though the near-term trajectory remains outside of mgmt.’s control. We see line of sight to the stock doubling from here,” noted Ravi Shanker, equity analyst at Morgan Stanley.

“Why Overweight? Delta Air Lines (DAL) has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. While DAL cannot escape Legacy overhangs (delayed International/corporate recovery, strained balance sheet), it should rise with the industry tide. The risk-reward looks attractive.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 13

TICKER COMPANY EPS FORECAST
TSM Taiwan Semiconductor Manufacturing $1.14

 

Friday (January 14)

IN THE SPOTLIGHT: BLACKROCK, CITIGROUP, JPMORGAN, WELLS FARGO

BLACKROCK: The world’s largest asset manager is expected to report its fourth-quarter earnings of $10.14 per share, which represents a year-on-year decline of about 0.4% from $10.18 per share seen in the same period a year ago.

The New York-based multinational investment management corporation would post revenue growth of nearly 15% to around $5.15 billion. The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years.

“We believe BlackRock (BLK) is best positioned on the asset mgmt barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive ~11% EPS CAGR (2020-23e) via ~6% avg LT organic growth,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. Recently acquired Aperio also bolsters solutions offering and organic growth. We expect the premium to widen as BLK takes share in evolving industry and executes on improving organic revenue growth trajectory.”

CITIGROUP: The New York City-based investment bank is expected to report its fourth-quarter earnings of $1.87 per share, which represents a year-on-year decline of about 10% from $2.07 per share seen in the same period a year ago. But the U.S. third-largest banking institution would post revenue growth of nearly 4% to $17.06 billion.

“While the stock is cheap at 0.6x NTM BVPS, and new CEO is taking strong, proactive strategic action to boost returns closer to peers, we believe these actions will take time to play out,” noted Betsy Graseck, equity analyst at Morgan Stanley.

Citi is exiting 13 consumer businesses in Asia and EMEA, and focusing on higher growth areas of US consumer, Asia WM, International wholesale and consumer payments. These actions could drive ROE higher than the 9% we are modelling for 2023, but we expect the stock will only start to fully reflect this once revenues begins to accelerate. Citi benefits less than peers from higher rates, and we expect some of our more rate sensitive stocks will outperform as the Fed begins to raise rates next year.”

JPMORGAN: The leading global financial services firm with assets over $2 trillion is expected to report its fourth-quarter earnings of $2.94 per share, which represents a year-on-year decline of over 20% from $3.79 per share seen in the same period a year ago. But one of the world’s oldest, largest, and best-known financial institutions would post revenue growth of just over 2% to $29.9 billion.

WELLS FARGO: The fourth-largest U.S. lender is expected to report its fourth-quarter earnings of $1.11 per share, which represents a year-on-year growth of over 70% from $0.64 per share seen in the same period a year ago. The San Francisco, California-based multinational financial services company would post revenue growth of more than 4% to $18.8 billion.

Wells Fargo (WFC) benefit to EPS from rising rates is the highest in the group, with each ~50bps increase in FF driving ~15% increase in EPS; 50bps in long-end rates drives ~7% to EPS WFC is in a strong position to monetize higher rates, as cash stands at 15% of earning assets, 7% points above pre-pandemic levels,” noted Betsy Graseck, equity analyst at Morgan Stanley.

WFC is taking action to restructure its business mix as it works to exit the Fed consent order/asset cap and reduce its expense base. Excess capital at Wells stands at 10% of market cap vs. 5% for median Large Cap Bank, enabling a net buyback yield of 10% in 2022 and a total cash return of 12%. Risks around the timing of asset cap removal and further regulatory action remain.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 14

TICKER COMPANY EPS FORECAST
C Citigroup $1.87
JPM JPMorgan Chase $2.94
BLK BlackRock $10.15
WFC Wells Fargo $1.11

 

Conagra Brands Misses on Q2 Earnings on Higher Inflation

Chicago, Illinois-based packaged foods company Conagra Brands reported lower-than-expected earnings in the fiscal second quarter and cautioned that high raw material and shipping costs are expected to hit full-year margins.

The world’s leading food company reported quarterly adjusted earnings of $0.64 per share for the quarter ended in November, missing the Wall Street consensus estimates of $0.68 per share.

However, the company’s revenue beat analysts’ expectations, rising more than 2% to $3.06 billion from a year ago. The company posted a quarterly net income of $275.5 million.

The company lowered its outlook for annual operating margin from 16% to around 15.5%. Organic net sales are now expected to rise about 3% annually, as opposed to 1%.

At the time of writing, Conagra Brands shares traded 2.65% higher at $34.42 on Friday. The stock slumped nearly 6% in 2021.

Executive Comments

“Looking ahead, we expect to continue experiencing cost pressures above original expectations in the second half of fiscal 2022. However, we believe the sustained elevated consumer demand coupled with the mitigating actions we have successfully executed and will continue executing, put us on track to overcome these near-term challenges, improve margins in the back half of the fiscal year, and deliver on our profit plan,”  noted Sean Connolly, president and chief executive officer of Conagra Brands.

Analyst Comments

“We rate Conagra Brands (CAG) Equal-weight. Valuation of 10.5x CY23 EBITDA reflects current challenges, but we are cautious on demand risk post-COVID, as well as GM pressure given rising commodities, and limited pricing power,” noted Pamela Kaufman, equity analyst at Morgan Stanley.

“Advantaged legacy CAG topline growth outlook: Exposure to frozen, opportunity to turnaround refrigerated business, and snacking growth should sustain LSD org sales growth. PF deal increases operational complexity and reduces fundamental visibility: Greater risk of PF disappointing given higher expectations from management’s strong turnaround track record. Solid topline growth potential but limited mid-term target upside: Opportunity to close gross margin gap vs peers, but see downside risk given the inflationary environment and if synergy estimates fall short of F22 targets.”

Conagra Brands Stock Price Forecast

Five analysts who offered stock ratings for Conagra Brands in the last three months forecast the average price in 12 months of $38.20 with a high forecast of $40.00 and a low forecast of $35.00.

The average price target represents a 13.93% change from the last price of $33.53. From those five analysts, two rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $36 with a high of $45 under a bull scenario and $19 under the worst-case scenario. The firm gave an “Equal-weight” rating on the packaged foods company’s stock.

Several other analysts have also updated their stock outlook. Deutsche Bank cut the target price to $35 from $36. Jefferies lifted the price objective to $40 from $38.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 50-200-day MACD Oscillator is showing a mixed signal.

Check out FX Empire’s earnings calendar