Wall Street Week Ahead Earnings: Alphabet, PayPal, Exxon Mobil, Meta, Qualcomm and Amazon in Focus

Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion will hit the stock market hard next week, making the big tech earnings that much more critical. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.

Earnings Calendar For The Week Of January 31

Monday (January 31)

TICKER COMPANY EPS FORECAST
CBT Cabot $1.06
CRUS Cirrus Logic $1.91
FN Fabrinet $1.28
HLIT Harmonic $0.09
NXPI NXP Semiconductors $2.67
PCH PotlatchDeltic $0.48
RYAAY Ryanair Holdings $-0.15
SANM Sanmina $0.91
TT Trane Technologies $1.31
WWD Woodward $0.83

 

Tuesday (February 1)

IN THE SPOTLIGHT: ALPHABET (GOOGLE), PAYPAL, EXXON MOBIL

ALPHABET: The parent of Google and the world’s largest search engine that dominates internet search activity globally is expected to report its fourth-quarter earnings of $26.71 per share, which represents year-over-year growth of about 20% from $22.3 per share seen in the same period a year ago.

The Mountain View, California-based internet giant would post revenue growth of nearly 27% to $72.133 billion from $56.9 billion a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

“Key Alphabet (GOOG) ’22 Ad Buyer Survey conclusions: i) Google Search remains highest ROI platform; ii) YouTube expected to gain ad share ’21-’23; & iii) GOOG Search & YouTube are the top platforms for ad buyers reallocating budget due to iOS changes. We est. GOOG’s share of WW Digital adv. (x-China) goes from 41% to 37% ’22-’27. We extended model to ’27, PT to$3,500 vs. prior $3,360, reiterate Outperform,” noted John Blackledge, equity analyst at Cowen.

PAYPAL: The digital payments company is expected to report its fourth-quarter earnings of $0.86 per share, which represents year-over-year growth of about 15% from $0.75 per share seen in the same period a year ago. The San Jose, California-based company would post revenue growth of over 12% to around $6.9 billion.

EXXON MOBIL: The oil company will see its earnings rise multi-fold in the fourth quarter thanks to higher energy prices and a waning pandemic that helped it bounce back after a tough period in 2020.

The Irving Texas-based company is expected to report its fourth-quarter earnings of $1.73 per share, which represents year-over-year growth of over 5,666%, up from $0.03 per share seen in the same period a year ago.

The U.S. largest publicly traded oil company is expected to report a 97.3% increase in revenue to $91.845 billion from $46.54 billion a year ago. On Dec 30, the Irving Texas-based company in its regulatory filing said that higher oil and gas prices would enable it to achieve annual profitability starting in 2021 with an operating profit increase of up to $1.9 billion.

The U.S. largest publicly traded oil company hinted that oil and gas earnings could decrease by up to $1.2 billion as a result of one-time charges for asset impairments and contractual costs. Exxon announced late last year announced that a sharply higher operating profit in oil and gas, prompting Credit Suisse, Scotiabank, and JPMorgan to raise their fourth-quarter earnings estimates.

“Improving FCF outlook and dividend sustainability. With a more constructive commodity price outlook, lower capital spending, and additional cash operating cost savings, the dividend is covered in 2021 and averages >100% over the next 5-years on our estimates. Improving dividend sustainability supports yield compression for Exxon Mobil (XOM) relative to CVX,” noted Devin McDermott, Equity Analyst and Commodities Strategist at Morgan Stanley.

“Cost cuts defend the dividend. In 2020, Exxon Mobil (XOM) reduced 2022-25 spending plans to $20-25B from $30-35B (recently extended to 2027), improving dividend sustainability while limiting further pull on the balance sheet. Additionally, Exxon Mobil (XOM) is targeting $6B in structural operating cost reductions by 2023 which should put upward pressure on consensus FCF estimates.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 1

TICKER COMPANY EPS FORECAST
AMD Advanced Micro Devices $0.69
AMCR Amcor $0.18
ASH Ashland Global Holdings $0.93
CTLT Catalent $0.79
CB Chubb $3.34
EA Electronic Arts $2.81
XOM Exxon Mobil $1.73
GM General Motors $0.84
NMR Nomura Holdings $0.2
SBUX Starbucks $0.8
UBS UBS Group $0.24
UPS United Parcel Service $3.05

 

Wednesday (February 2)

IN THE SPOTLIGHT: META PLATFORMS (FACEBOOK), QUALCOMM

META PLATFORMS (FACEBOOK): The world’s largest online social network is expected to report its fourth-quarter earnings of $3.78 per share, which represents a year-over-year decline of over 2% from $3.88 per share seen in the same period a year ago.

The Menlo Park, California-based social media conglomerate would post revenue growth of over 30% to around $33.04 billion. The social media giant has consistently beaten consensus earnings estimates in most of the quarters in the last two years, at least.

QUALCOMM: The world’s biggest mobile phone chipmaker is expected to report its fiscal first-quarter earnings of $2.77 per share, which represents a year-over-year decline of over 40% from $1.97 per share seen in the same period a year ago.

The chip manufacturer would post revenue growth of nearly 27% to $10.45 billion. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

Qualcomm forecasts GAAP revenue in the first quarter of fiscal 2022 to be between $10 billion and $10.8 billion. On a non-GAAP basis, earnings will likely range from $2.90 to $3.10 per share, while GAAP earnings will likely range from $2.53 to $2.73 per share, according to ZACKS Research.

“After underperforming the SOXX for most of 2021 until a sharp rally late in the year, we see a strong setup for a now Apple-overhang-free Qualcomm in 2022 as investors begin to appreciate the diverse revenue drivers beyond Wireless. Expect solid print and guide, with focus on execution and growth in the connected intelligent edge and update our estimates accordingly,” noted Matthew Ramsay, equity analyst at Cowen.

“We reiterate our price target of $210 based on 17.5x our F2023 EPS estimate of $12.0 and our Outperform rating.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 2

TICKER COMPANY EPS FORECAST
EAT Brinker International $0.5
CHRW C.H. Robinson Worldwide $1.85
CPRI Capri Holdings $1.67
CTSH Cognizant Technology Solutions $1.03
RACE Ferrari $1.08
FB Meta Platforms $3.78
MET MetLife $1.63
TMUS T-Mobile $0.2

 

Thursday (February 3)

IN THE SPOTLIGHT: AMAZON

The e-commerce leader for physical and digital merchandise, Amazon, is expected to report its fourth-quarter earnings of $3.9 per share, which represents a year-over-year decline of over 70% from $14.09 per share seen in the same period a year ago.

However, the Seattle, Washington-based multinational technology giant would post revenue growth of about 10% to around $138 billion. The company has beaten earnings per share (EPS) estimates most of the time in the two years.

“We are reiterating our BUY rating and our price target to $3,900. Our price target is based on our updated discounted cash flow model, including our long-term adj. EBITDA margin forecast of 22.0% versus 13.7% in 2020,” noted Tom Forte, MD, Senior Research Analyst at D.A. DAVIDSON.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 3

TICKER COMPANY EPS FORECAST
ABB ABB $0.38
ALL Allstate $2.72
COP ConocoPhillips $2.23
LLY Eli Lilly $2.37
HON Honeywell International $2.09
PRU Prudential Financial $2.44
SU Suncor Energy $0.95
SYNA Synaptics $2.63

 

Friday (February 4)

TICKER COMPANY EPS FORECAST
APD Air Products & Chemicals $2.51
AON Aon $3.33
BMY Bristol Myers Squibb $1.85
CBOE Cboe Global Markets $1.41
ETN Eaton $1.73

 

Marketmind: Aussie Cbank Caves in, Who’s Next?

A look at the day ahead from Sujata Rao.

The RBA sets the stage for the U.S. Fed, BoE and the Norges Bank later this week, with markets already pricing multiple rate hikes in the coming year given rising inflation.

But…stock markets don’t seem unduly perturbed. MSCI’s global index is back to record highs hit nearly two months ago and Wall Street is scaling new record peaks.

Leaving aside Monday’s 8.5% jump in Tesla, so-called value stocks outperformed, indicating possibly that recent “curve flattening” momentum on bond markets is abating. Indeed, the spread between two-and 10-year U.S. yields is 10 basis points wider than last Thursday.

Several analysts, including those at JPMorgan, see recent bond and money market moves as technically driven and expect normalcy to return. They advise buying more cyclical stocks to position for higher longer-dated yields. Watch this space.

Meanwhile, inflation is marching higher almost everywhere; South Korean price growth accelerated to a decade peak, staying above-target for the seventh straight month. High prices slowed U.S. manufacturing in October, the closely watched ISM survey showed on Monday. It also hinted at some moderation in demand.

What’s helping stocks stay aloft is of course the earnings season. CEOs may be bemoaning cost pressures, yet there’s no sign of margins being hit. U.S. Q3 earnings are expected to have climbed 39%, Refinitiv IBES says, versus the original Q3 prediction for 29% growth.

And then there’s M&A — $4.7 trillion in deals have been announced year-to-date, according to Refinitiv.

(For graphic on ISM – https://graphics.reuters.com/USA-STOCKS/jnvwewmdjvw/ISMPMI.png)

Key developments that should provide more direction to markets on Tuesday:

-StanChart Q3 profit doubles as bad loans shrink, trade finance booms

-BP to repurchase another $1.25 billion of shares by early 2022, after buying $900 million in Q3

-Shipping group Moller-Maersk said record-high freight rates boosted earnings despite lower container volumes due to port congestion

-U.S. earnings: Dupont, ThomsonReuters, Estee Lauder, Pfizer,  ConocoPhilips, Ralph Lauren, T-Mobile, Mondelez, Western union, Prudential

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sujata Rao; editing by Dhara Ranasinghe)

Stock of the Day: Prudential

Stocks are back in bullish mode, so we’re back to looking for sweet buying occasions too. I have to admit, after the recent correction, we do have a lot of handsome buying opportunities.

Today’s comes from Prudential, a Fortune 500 company in the Financial Services industry. Here, we have a buy signal and it’s very fresh as it was only triggered yesterday!

Why are we positive here? We have three main positive factors. First, is the long-term uptrend. Second, is the defense of the horizontal support on 95 USD (orange). Third, and maybe the most important, is the wedge pattern (blue) and the breakout of its upper line. In theory, that breakout ends the bearish correction and starts the new bullish wave.

As long as the price stays above the orange support, the sentiment is positive. Price breaking the 95 USD line will mean the end of a buy signal, but this scenario does not seem likely at the moment.

For a look at all of today’s economic events, check out our economic calendar.

Prudential sells $500 million stake in Jackson to Athene

Prudential, a British multinational life insurance and financial services company, reached a reinsurance deal to sell its $500 million stake in U.S. business Jackson to a leading retirement services company Athene Holding.

Following the announcement, Prudential shares rose 7.8%.

On Thursday, the UK insurer announced that Athene, the life insurer backed by private equity group Apollo, would buy 11.1% of its stake in the FTSE 100 life insurer’s Jackson arm.

Athene, which is buying $500 million in equities just ahead of an initial public offer (IPO) of Jackson, has acknowledged to reinsure Jackson’s $27.6 billion in-force fixed and fixed indexed annuity portfolio under a long-term arrangement, effective from 1 June 2020.

The company in its press release noted that Athene’s investment will take the form of a cash subscription for the issuance of new common equity in Brooke Inc, the holding company containing Prudential’s U.S. businesses.

These include Jackson National Life Insurance Company, a top-two annuity provider with best-in-class products, distribution and operations headquartered in Lansing, Michigan, and PPM America Inc, an asset manager headquartered in Chicago, Illinois.

The combined effects of the investment and reinsurance transactions are expected to increase Jackson’s risk-based capital cover ratio by approximately 80 percentage points.

 

Executives’ comments

Mike Wells, Group Chief Executive of Prudential, said in a statement, “We are delighted to be forging a new relationship with the team at Athene, given their deep expertise in the US annuity sector and long-term commitment to its development. This agreement is a key step forward in meeting our strategic objectives for Jackson.”

Michael Falcon, Chairman and Chief Executive Officer of Jackson, said in a statement, “Today’s transactions with Athene, a leading franchise in the retirement services market, further strengthen our capital position and enhance our ability to grow. We value Athene’s investment in Jackson, which is aligned to our common goal of serving the growing population of American savers transitioning into and through retirement.”

Jim Belardi, CEO of Athene, said in a statement, “We are very pleased to announce this mutually beneficial transaction in coordination with Jackson and its parent, Prudential plc. As top annuity providers focused on serving the US retirement marketplace, we are excited to bring these two leading franchises together through a large-scale reinsurance transaction that includes a new investment in Jackson by Athene.”

Analyst comment and stock outlook

In an interview with Reuters, Nicholas Hyett, equity analyst at Hargreaves Lansdown said “The deal is particularly welcome since there were concerns the current market conditions would make a disposal difficult. The inherently unpredictable nature of Jackson’s large variable annuity portfolio isn’t exactly the reliable income model investors generally expect from a life insurer.”

According to Tipranks, eight analysts forecast the average price in 12 months at $70.20 with a high of $100.00 and a low of $57.00. The average price target represents a 9.62% increase from the last price of $64.04.

Deutsche Bank cuts Prudential’s target price to 1400p from 1480p and Evercore ISI raises price target to 1550p from 1525p.