4 Leading E-Commerce Innovators to Add to Your Portfolio In 2022

The spread of Covid-19 fueled the growth of the industry as people around the world had to rely on online platforms to order essential items in the face of mobility restrictions and social distancing measures introduced to curb the spread of the virus.

Many recent studies show that online shopping slowed in 2021 after an unprecedented increase during the lockdown phase in 2020, and e-commerce spending is predicted to stabilize in 2022. This does not, however, imply that the industry will grow at unappealing rates in the years ahead.

In 2020, a record number of customers tried online shopping for the first time, and they are anticipated to continue to be in the e-commerce ecosystem in the future due to the ease and convenience of online shopping. Many companies are capitalizing on this trend by embracing digital platforms to boost their sales.

E-commerce capabilities enable direct interaction with end-users providing real-time customer insights that allow brands to make strategic decisions more accurately and faster. A large number of data such as website traffic or trending product searches can assist a company in responding directly to a customer’s demands, thereby increasing customer retention and brand value.

According to eMarketer, global retail e-commerce sales reached $4.9 trillion in 2021, and online retail sales will hit $5.5 trillion this year, accounting for more than a fifth of total retail sales.

Exhibit 1: Worldwide Retail E-commerce Sales

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The increased usage of smartphones, laptops, and tablets to access e-commerce portals around the world is propelling the sector forward. Retailers and customers are increasingly using mobile shopping apps, which is a trend to reckon with. According to Statista, in 2022, smartphone retail e-commerce sales will pass $432 billion, and the growing influencer community on popular social media platforms will further fuel the adoption of e-commerce.

Given this promising outlook for the industry, it would be reasonable to expect e-commerce category leaders to deliver handsome investment returns in the future. Below are 4 companies that are on the right track to enjoying long-lasting competitive advantages that could help them earn economic profits in the future.

Cars.com Inc (NYSE: CARS)

Cars.com is a leading automotive classified website in the United States, offering a comprehensive range of digital solutions that connect automobile buyers and sellers. The company provides services to both buyers and dealers. Its data-driven insight and digital tools help buyers in making informed decisions and dealers gain market share.

In addition to Cars.com, the company’s brands include Dealer Inspire, FUEL, DealerRater, automotive fintech platform CreditIQ, and Accu-Trade, a vehicle valuation and appraisal technology. The company’s main source of revenue is its used and new vehicle marketplace.

In 2021, the company reported revenue of $623.7 million, a 13% increase year-over-year, driven by continued industry adoption of the company’s digital solutions. On a year-over-year basis, average monthly unique visitors increased 5% to 25.1 million. The company has continued to generate significant free cash flow, which it intends to use to acquire technology, generate additional revenue streams, and expand the total addressable market.

The favorable outlook for the used car market this year suggests Cars.com is well-positioned to grow this year, and in the long run, the company is likely to emerge as a big winner in the ongoing digital transformation of the vehicle resale market.

Zillow Group, Inc. (NASDAQ: ZG)

Zillow Group, Inc. is an online real estate marketplace based in the United States. The Internet, media, and technology (IMT) division of Zillow generated $483 million in sales in Q4 2021, up 14% from the previous quarter, and $137 million in profitability before taxes.

Zillow has also introduced new services, including mortgages and title insurance, to provide a one-stop-shopping experience for homebuyers. The company recently exited its struggling iBuying business and the company’s balance sheet appears to be on a stronger footing after making these changes to its business portfolio.

With over 198 million monthly unique users, Zillow is the most popular online real estate database in the United States. The company has reported positive revenue growth in each of the last 10 years, and a continuation of this trend can be expected as the company focuses more on improving its brand value and services offered.

PlantX Life Inc. (OTCQB: PLTXF / CSE: VEGA.CN)

PlantX is a Canadian e-commerce platform known for being the digital face of all things plant-based. The company, which has over 5,000 vegan products, meal delivery services, and indoor plant delivery services, is quickly becoming a go-to plant-based e-commerce brand. PlantX reported a strong third-quarter 2022 performance, with revenue exceeding C$2.7 million, representing a 201% increase year-over-year.

Acquisitions and partnerships are two of PlantX’s key growth strategies. The company recently announced a partnership with BESTIES Vegan Paradise (“BESTIES”) to redesign and rebrand XMarket brick-and-mortar stores in Venice and Hillcrest, California, and BESTIES is also a pioneer in the plant-based industry, having won the “Best Grocery Store” award in the VegNews Veggie Awards for the past two years. PlantX is focused on onboarding innovative plant-based product manufacturers onto its online platform, and the BESTIES partnership is one such measure that could unlock growth opportunities for the company.

PlantX are becoming a leading player in the growing plant-based industry and as such is likely to benefit from large growth in their consumer base. Analysts are suggesting PlantX may be experiencing a major recovery and as such, now may be the perfect time to get in.

Walgreens Boots Alliance, Inc. (NASDAQ: WBA)

Walgreens is an American pharmacy-led health and beauty retailer that enjoys the highest share of the e-pharmacy market in the United States, and the company generated revenue of $33.76 billion generated in the second quarter of fiscal 2022.

Although investors were concerned about slowing vaccine rates and increased investments in healthcare initiatives, the company benefited from customers stocking up on other health and wellness items, as well as sales of over-the-counter medications. With the healthcare industry laser-focused on digitalization, Walgreens seems to be well-positioned to grow by capitalizing on its online presence.

Conclusion

The e-commerce industry was once thought to be limited only to tech companies, but today, every major business industry from education to food products and healthcare is embracing this booming sector.

With many companies wanting to sell their products and services online, the enthusiasm surrounding the e-commerce sector is likely to remain strong for many years to come. The companies introduced in this analysis seem to be making steady progress toward making a name for themselves as category leaders.

When Will S&P500 Find Direction?

I’ve heard a lot of technical talk that the S&P 500 could slosh around in this 4,200 to 4,600 range until it finds new direction.

Ukraine is still in the focus

The focus lately has been the war in Ukraine and the Federal Reserve, both of which continue to exacerbate investor uncertainty. While Russia shows no signs of backing off in Ukraine, there hasn’t been too much change on the ground as Putin’s assault seems to have stalled on several fronts.

In fact, some reports indicate Russia has actually lost a bit of ground in some areas. A few military and political experts say they see hopeful signs in a prisoner exchange that Ukraine and Russia conducted this week, though others remain skeptical that Putin is no where ready to strike a peace deal.

Many experts in the space say the biggest worry is with Putin’s army failing to meet his objectives, he could turn to other even more deadly tactics. The U.S. and EU have been more vocal with their warnings to Russia this week that the use of chemical or biological weapons will bring a strong response from the West. No details have been provided on what that might be and officials behind the scenes have said they are being “deliberately ambiguous” in order to keep Putin off-guard.

Can Fed control the inflation?

As for the Fed, fears are again rising that the central bank will not be able to cool inflation without damaging the economy, particularly with the additional challenges the war has created.

Fed watchers will get a slew of new data to chew on next week, including the PCE Pries Index next Thursday, which is one of the Fed’s favorite inflation gauges. The year-over-year rate in January rose to +5.2% from a previous +4.9% and most expect it will rise again in the February read.

With the Russia-Ukraine conflict compounding the raw materials crunch and Covid lockdowns in China showing signs of jamming up supply chains again, whatever the gauge shows next Thursday, it will likely climb higher in the months ahead. Investors get a look at the U.S. labor market next Friday with the March Employment Report. Consensus is calling for a gain of around +500,000 jobs after a gain of over +675,000 in February.

Investors will be focused more on the wage component which came in flat in January. That helped bring the year-over-year rate down a bit but wages were still up more than +5% vs. February 2021.

Wage inflation is very “sticky” so the higher labor costs climb, the more it limits how much price gains can ultimately moderate.

Data to watch

Other data next week includes advance reads on International Trade, Retail Inventories, and Wholesale Inventories on Monday; the S&P Case-Shiller Home Price Index and Consumer Confidence on Tuesday; the ADP Employment Change and final estimate of Q4 GDP on Wednesday; Personal Income and Outlays and Chicago PMI on Thursday; and ISM Manufacturing and Construction Spending on Friday.

On the earnings front, highlights next week include Chewy, Concentrix, Lululemon, and Micron Technology on Tuesday; BioNTech and Paychex on Wednesday; and Walgreens on Thursday. Russia’s war in Ukraine and the Fed’s war against inflation should remain in the spotlight…

The Big Food Worry… There’s no question food-importing nations are going to feel some major pain. In the USA prices at the grocery store more than likely continue even higher. The world is screaming for more acres and more production but supply chain dislocations along with Russia’s war in Ukraine has fertilizer and input prices sky-high and in some nations in extremely short supply.

Walgreens Shares Rise on Q1 Earnings Beat, Outlook Revised

Walgreens shares jump nearly 3% in pre-market trading on Thursday after the global leader in retail and wholesale pharmacy reported better-than-expected earnings in the fiscal first quarter and lifted its full-year 2021 guidance.

The Deerfield, Illinois-based retail pharmacy provider said it earned $1.68 per share in the quarter ended Nov. 30, beating the market expectations of $1.22. The company’s revenue surged nearly 8% to $33.9 billion, that too above the analysts’ estimate of $32.74 billion.

The largest U.S. drugstore chain raised fiscal 2021 outlook to low-single-digit growth from flat previously.

Following this, Walgreens Boots Alliance shares rose nearly 3% to $55.41 in pre-market trading on Thursday. The stock surged over 30% in 2021.

Analyst Comments

Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy in Europe. The new Health Segment, guided to contribute as much as 60% to LT EPS growth in FY25 and beyond, carries significant investment requirements and integration risk. Management’s inexperience in healthcare could cause growing pains,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

“Risk of core operations slipping as focus increasingly shifts to healthcare.”

Walgreens Stock Price Forecast

Seven analysts who offered stock ratings for Walgreens in the last three months forecast the average price in 12 months of $54.86 with a high forecast of $70.00 and a low forecast of $49.00.

The average price target represents a 1.59% change from the last price of $54.00. Of those seven analysts, one rated “Buy”, five rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $49 with a high of $69 under a bull scenario and $33 under the worst-case scenario. The firm gave an “Underweight” rating on the retail pharmacy provider’s stock.

Several other analysts have also updated their stock outlook. Baird raised the target price to $70 from $68. Cowen and company lifted the price objective to $55 from $53. Credit Suisse upped the target price to $52 from $48.

Technical analysis also suggests it is good to buy as 100-Day Moving Average and 20-200-day MACD Oscillator signals a buying opportunity.

Check out FX Empire’s earnings calendar

What do FOMC ‘minutes’ Mean for the Stock Market?

When the Fed might begin unloading its bond holdings has fast become a red hot topic. The “minutes” released yesterday from the central bank’s December meeting indicate nearly all members favor starting the balance sheet reduction as soon as this year.

Monetary policy tightening

Investors largely view this sort of action as a form of monetary policy tightening designed to slow the economy and most believed it was still at least a year or even two away.

The Fed is currently on track to stop adding to its nearly $8.2 trillion worth of Treasuries and mortgage-backed securities by mid-March.

For what it’s worth, this is only the second time in its history that the Fed has embarked on an asset purchase “taper” program. After completing the previous (and first) “taper” in 2014, the Fed essentially maintained its balance sheet until 2018, when it began allowing some bonds to roll off. That was ended in 2019 however, when demand for bank reserves outstripped the Fed’s supply, causing volatility in short-term money markets and forcing the Fed to again add to its balance sheet.

Not surprisingly, investors are worried about the Fed once again making a misstep, especially considering that its balance sheet is twice the size it was in 2018.

It’s also worth noting that the Fed hasn’t lifted its benchmark interest rate since 2018.

Interest rates hike

Wall Street currently anticipates anywhere from two to four rate hikes this year, so this is another area where investors worry the central bank could get it wrong. The possibility that they simultaneously attempt to both raise rates and reduce asset holdings means double the chances of missing the mark.

As there is no Fed policy meeting in February, many Wall Street insiders fear that officials could move too aggressively at the upcoming January 25-26 meeting as they face increasing pressures to beat back inflation.

Nothing in recent data provides a reason the Fed might suddenly strike a more dovish tone, either. That includes the job market, which has struggled to return to pre-pandemic levels and which many bulls have hoped might sway the Fed to maintain supports for longer. However, even with nearly 4 million fewer jobs than what the U.S. had in January 2020, the Fed considers the labor market to be mostly healed.

Yesterday, ADP‘s private payroll report showed that employers added almost +900,000 workers in December, which is more than double the +400,000 gain expected from the Labor Department’s official report due on Friday. While the two data sets have diverged greatly in recent months, Friday’s report is still largely expected to exceed expectations.

Today, investors will be digesting the ISM Services Index. Most attention will be focused on the “prices paid” component, which fell slightly in November but was still the third-highest reading ever recorded. Other economic data today include International Trade and Factory Orders. Finally, earnings worth noting include Bed Bath & Beyond, Bridgestone, Conagra, Sanderson Farms, and Walgreens.

Best Stocks, Crypto, and ETFs to Watch – JETS, Disney, Block, and Bitcoin in Focus

U.S. Global Jets ETF (JETS) turned sharply lower in the mid-20s in November, more than two weeks before Omicron hit the newswires. The fund posted a 13-month low at 19.52 on Dec. 20th and bounced into Christmas, reversing at 50-day moving average resistance last week. A third trip into this critical level appears likely, raising odds for a breakdown that stretches into July 2020 support between 15 and 16. That could mark a low-risk buying opportunity, with the fast-moving infection generating massive herd immunity.

The January Effect will be in full swing this week, potentially lifting a basket of 2021’s biggest losers, especially at the beginning of this annual phenomenon. Dow component Walt Disney Company (DIS) looks like a great play in this regard, dropping to the bottom of the Dow performance list with a 15% annual loss. If you’re looking for even more risk, take a shot at fallen angel Block Inc. (SQ), formerly known as Square, which has punished shareholders with a 26% annual loss and swift decline to a 14-month low.

Walgreens Boots Alliance (WBA) kicks off January earnings in Thursday’s pre-market, reporting Q1 2022 results. The pharmacy chain is expected to report a profit of $1.32 per-share on a $32.7 billion in revenue. The stock ended 2021 on a high note, attracting strong foot traffic as a provider of COVID-19 vaccines and boosters. However, Morgan Stanley downgraded WBA just two weeks ago, projecting zero earnings-per-share (EPS) growth through 2023.

Bitcoin cycles are slowly turning in favor of buyers, raising odds for an oversold bounce that could generate intermediate profits. The crypto king has been holding support at 46,000 for five weeks, right at the .786 Fibonacci retracement of the June into November uptick. Two bounces have faded above 51,000, carving a rectangular pattern that could yield a breakout and short squeeze toward 58,000. However, aggressive profit-taking is advised because longer-term sell cycles remain in place, threatening another leg down after sellers get flushed out of the system.

Banking stocks have performed admirably in 2021 and should gain additional ground in 2022. The best play in this group is north of the border in Canada, where The Bank of Nova Scotia (BNS) has posted a 33% annual return.  Better yet, the $62.5 billion financial institution just completed a 7-year cup and handle breakout above resistance in the upper 60s, forecasting a long-term price target above 100.  And that’s not all because the stock also pays an outstanding 4.38% dividend yield.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Earnings Week Ahead: Walgreens Boots Alliance, Constellation Brands and Acuity Brands in Focus

With the stock market ending 2021 on a strong footing, investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus to see how it affects the U.S. economy and earnings in 2022. The following is a list of earnings slated for release January 3-7, along with a few previews. Although next week’s earnings are unlikely to have much of an effect on major market movements, it is sufficient to gauge investors’ sentiment.

Earnings Calendar For The Week Of January 3

Monday (January 3)

No major earnings are scheduled for release.

Tuesday (January 4)

TICKER COMPANY EPS FORECAST
SGH Smart Global Holdings $1.74

 

Wednesday (January 5)

TICKER COMPANY EPS FORECAST
RPM RPM International $0.86
SMPL Simply Good Foods $0.35
UNF UniFirst $2.15

 

Thursday (January 6)

IN THE SPOTLIGHT: WALGREENS BOOTS ALLIANCE, CONSTELLATION BRANDS

WALGREENS BOOTS ALLIANCE: The blue-chip pharmaceutical name is expected to report its fiscal first-quarter earnings of $1.22 per share, which is unchanged from the same period a year ago. The Deerfield, Illinois-based retail pharmacy provider’s revenue is predicted to slump more than 9% to around $32.9 billion.

The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years. According to ZACKS Research, for the full-year earnings to be $4.91 per share and revenue of $131.5 billion.

Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy in Europe. The new Health Segment, guided to contribute as much as 60% to LT EPS growth in FY25 and beyond, carries significant investment requirements and integration risk. Management’s inexperience in healthcare could cause growing pains,” noted Ricky Goldwasser, Equity Analyst at Morgan Stanley.

“Risk of core operations slipping as focus increasingly shifts to healthcare.”

CONSTELLATION BRANDS: Beer and wine seller is expected to report its fiscal third-quarter earnings of $2.82 per share, which represents year-over-year growth of nearly 9% from $3.09 per share seen in the same quarter a year ago.

The New York-based Fortune 500 international beverage alcohol company revenue is predicted to slump more than 6% to around $2.28 billion. The company has been able to beat earnings per share (EPS) estimates twice in the last four quarters and revenue in all four.

According to ZACKS Research, for the full-year earnings to be $10.01 per share and revenue $8.64 billion.

“While Constellation Brands historically made its bones as a winery and distillery, we now view the firm as one of the most stellar brewers across our global coverage. After parlaying AB InBev’s antitrust quandary (as it sought to acquire Mexican brewer Grupo Modelo) into exclusive U.S. ownership rights to brands like Corona and Modelo, we see the firm’s overall Mexican beer portfolio as auspiciously situated at the confluence of unwavering secular and demographic trends. With an enviable growth profile and best of breed margins, we have confidence that the beer business can thrive even amid an evolving industry landscape,” noted Jaime M. Katz, Senior Equity Analyst at Morningstar.

“The firm’s outlook is not completely rosy, particularly with its wine and spirits business in flux. It has divested lower-quality brands as it places more intentionality behind its “high growth, high margin “long-term strategy, but the remaining brands (such as Meiomi, Kim Crawford, Svedka vodka, and High West craft whiskey) will still face rife competition. Constellation’s foray into explosive-growth categories like hard seltzer are also demanding nontrivial investment, given the competitive intensity and brand equity already built up by the incumbents. Nevertheless, we believe the experience of the management team will allow the firm to navigate these risks.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 6

TICKER COMPANY EPS FORECAST
BBBY Bed Bath & Beyond $0.03
CAG ConAgra Brands $0.67
FC Franklin Covey $0.05
HELE Helen of Troy $2.87
KRUS Kura Sushi USA $-0.16
PSMT PriceSmart $0.95
SCHN Schnitzer Steel Industries $1.63
WDFC WD-40 $1.25

 

Friday (January 7)

IN THE SPOTLIGHT: ACUITY BRANDS

The lighting and building management firm is expected to report its fiscal first-quarter earnings of $2.2 per share, which represents year-over-year growth of over 17%, up from $1.87 per share seen in the same period a year ago.

The Atlanta, Georgia-based company would post year-over-year revenue growth of more than 11% to around $ 880.24 million. The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years.

“We remain constructive on Acuity’s product breadth, top-notch agent channel, and leadership in control integration. This positioning should allow the company to outperform the market, even when macro challenges present themselves. The company boasts a 40%+ gross margin and has a strong cash flow generation profile,” said Jeffrey Osborne, equity analyst at Cowen in Oct 6 research note.

“As macro conditions improve we expect more large-scale higher-margin projects will begin to move off the sidelines. This should help to further support the company’s margin profile longer term. We believe that Acuity is differentiated relative to its peers and has an early lead in the intelligent building market thanks to its Distech and Atrius products. Longer-term, we see an opportunity in the UVC germicidal market and believe the company is well-positioned given its many partnerships in the space.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 7

TICKER COMPANY EPS FORECAST
AYI Acuity Brands $2.2

 

What to Expect in the Markets in 2022

In 2021 the S&P 500 has returned more than 15% for the third straight year, investors have to wonder whether there will be any more upside in the stock market over the coming year. The S&P 500 have risen about 27% last year, and the index’s P/E ratio is above its long-term average, which raises concerns about overbought conditions. A forward price-to-earnings ratio of 21.3 significantly exceeds the long-term average of 15 for the S&P 500.

In addition, earnings are expected to slow down this year after a strong 2021. In light of the newly hawkish U.S. Federal Reserve and the ever-evolving virus, analysts and investors are having a difficult time gauging the future direction of the stock market.

With the high inflation rate, investors are facing more uncertainty as they attempt to justify record stock prices, and the fast-spreading new Omicron variant is putting an end to the optimistic hopes that the global economy would improve by 2022.

“We expect solid economic and earnings growth in 2022 to help U.S. stocks deliver additional gains (this) year. If we are approaching—or are already in—the middle of an economic cycle with at least a few more years left (our view), then we believe the chances of another good year for stocks in 2022 are quite high. We believe the S&P 500 could be fairly valued at 5,000–5,100 at the end of 2022, based on an EPS estimate of $235 for 2023 and an index P/E between 21 and 21.5,” noted Ryan Detrick, CMT, Chief Market Strategist, LPL Financial.

“Prospects for above-average economic growth and accompanying earnings gains in 2022 point to another potentially good year for stock investors. While the pandemic is not completely behind us as the COVID-19 Omicron variant spreads rapidly (though with a high proportion of mild cases), and there are several other risks to watch, particularly inflation, stocks have historically done well in mid-cycle economies. We do not expect 2022 to be an exception,” LPL Financial’s Detrick added.

Jurrien Timmer, Fidelity’s global macro director, believes that stocks are poised to deliver positive returns in 2022, but not as much as they did this year, due to a slowdown in earnings growth and a tightening of monetary policy by the U.S. Federal Reserve.

“Since the brief-but-sharp 35% decline almost 2 years ago, US stocks have risen to record highs, thanks in part to the timely and massive fiscal and monetary policy response to COVID-19 and the resulting lockdowns,” noted Jurrien Timmer, director of global macro in Fidelity’s Global Asset Allocation Division.

“Now as 2022 begins, I expect the markets to mean-revert back to trend-like growth, and for the Fed to take the first steps on the road back to a neutral monetary policy,” he added.

As stock market trends continue to change rapidly in the pandemic world, it is becoming increasingly difficult to predict future stock performance, especially with analysts and investors dealing with hawkish central banks, on the one hand, and the risk of a further economic shutdown on the other.

According to a stockmarket.com report, three FAANG stocks will be closely watched this year. In the context of the broader stock market’s recovery, tech stocks are once again in focus. Among the most successful stocks in the sector, the FAANG stocks shine brightest as S&P 500 companies with a tech component make up a large portion of the index. In case you’re not familiar, this group of stocks includes Meta Platforms (formerly known as Facebook), Amazon, Apple, Netflix, and Google’s parent company Alphabet will be in focus in 2022.

Blue-chip Walgreens Boots’ Q1 Earnings to Show Flat Growth

Blue-chip pharmaceutical name Walgreens Boots Alliance is expected to report its fiscal first-quarter earnings of $1.22 per share, which is unchanged from the same period a year ago.

The Deerfield, Illinois-based retail pharmacy provider’s revenue is predicted to slump more than 9% to around $32.9 billion. The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years. According to ZACKS Research, for the full-year earnings to be $4.91 per share and revenue of $131.5 billion.

“Reasons To Buy: Various strategic partnerships entered into by Walgreens Boots is expected to benefit the company more over the long run. The company’s progress in cost-cutting initiatives further boost our confidence in the stock,” noted analysts at ZACKS Research.

“Reasons To Sell: Persistent reimbursement pressure and competitive market offer tough challenges for Walgreens Boots. Also, the fluctuating weak U.S. macroeconomic environment still prevailing might hamper the company’s margin.”

Walgreens Boots Alliance stock closed 0.50% higher at $50.73 on Monday. It soared over 27% so far this year.

Analyst Comments

Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy in Europe. The new Health Segment, guided to contribute as much as 60% to LT EPS growth in FY25 and beyond, carries significant investment requirements and integration risk. Management’s inexperience in healthcare could cause growing pains,” noted Ricky Goldwasser, Equity Analyst at Morgan Stanley.

“Risk of core operations slipping as focus increasingly shifts to healthcare.”

Walgreens Boots Alliance Stock Price Forecast

Seven analysts who offered stock ratings for Walgreens Boots Alliance in the last three months forecast the average price in 12 months of $54.86 with a high forecast of $70.00 and a low forecast of $49.00.

The average price target represents an 8.14% change from the last price of $50.73. Of those seven analysts, one rated “Buy”, five rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $49 with a high of $69 under a bull scenario and $33 under the worst-case scenario. The firm gave an “Underweight” rating on the retail pharmacy provider’s stock.

Several other analysts have also updated their stock outlook. Baird raised the target price to $70 from $68. Cowen and company lifted the price objective to $55 from $53. Jefferies cut the price target to $49 from $53. Credit Suisse upped the target price to $52 from $48.

Technical analysis also suggests it is good to hold for now as a 100-200-day MACD Oscillator signals a mild selling opportunity.

Check out FX Empire’s earnings calendar

Wall St Ends Up Sharply as Earnings, Economic Data Lift Optimism

The technology sector gave the S&P 500 its biggest boost, with shares of Microsoft Corp and Apple Inc rising.

Shares of Citigroup, Bank of America Corp and Morgan Stanley rose after they topped quarterly earnings estimates. The rebounding economy allowed them to release more cash they had set aside for pandemic losses, while sizzling deals, equity financing and trading added to profits. The S&P bank index jumped.

UnitedHealth Group Inc also climbed after the health insurer reported results and raised its full-year adjusted profit forecast on strength from its Optum unit that manages drug benefits.

Adding to optimism, data showed the number of Americans filing new claims for unemployment benefits last week fell close to a 19-month low, and a separate report showed producer prices eased in September.

“Some of the things that worried the market in September, and even last week, as far as the inflation aspect and higher interest rates and the Delta variant, maybe have lessened,” said Alan Lancz, president, Alan B. Lancz & Associates Inc., an investment advisory firm, based in Toledo, Ohio.

“Not that it’s all over, but on a temporary scale at least, you can make a case for it trending in the right direction.”

According to preliminary data, the S&P 500 gained 74.35 points, or 1.70%, to end at 4,438.15 points, while the Nasdaq Composite gained 248.97 points, or 1.71%, to 14,824.90. The Dow Jones Industrial Average rose 532.21 points, or 1.55%, to 34,910.02.

Gains were broad-based, with all S&P 500 sectors higher.

Shares of Moderna Inc were sharply higher after a panel of expert advisers to the U.S. Food and Drug Administration voted to recommend booster shots of its COVID-19 vaccine for Americans aged 65 and older and those at high risk of severe illness.

Also in earnings, Walgreens Boots Alliance Inc jumped after the drugstore chain reported fourth-quarter revenue and adjusted profit above estimates and forecast growth of 11% to 13% in the long term.

U.S. companies are expected to report strong quarterly profit growth for the third quarter, but investors have been keen to hear what they say about rising costs, labor shortages and supply problems.

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

(Additional reporting by Devik Jain in Bengaluru and Federica Urso in Gdansk; Editing by Arun Koyyur and David Gregorio)

Marketmind: No Escaping the Inflation Beast

A look at the day ahead from Dhara Ranasinghe.

Data on Thursday showed China’s factory gate prices grew at their fastest pace on record in September, a day after figures showed another solid increase in U.S. consumer prices.

The take away from markets is that transitory or not, central banks are likely to respond to higher inflation sooner rather than later.

And with minutes from last month’s Federal Reserve meeting showing policymakers’ growing concern about inflation, investors have again brought forward rate-hike expectations.

Fed Funds futures have pulled forward expectations for the first hike from late in 2022 to almost fully price a 25 basis point hike by September.

In addition, money market pricing suggests the Bank of England could move before year-end, the cautious European Central Bank could tighten next year and the overtly dovish Reserve Bank of Australia could raise rates by end-2023 — a trajectory that doesn’t gel with the central bank’s guidance.

Singapore’s central bank on Thursday unexpectedly tightened monetary policy, citing forecasts for higher inflation.

Markets, having priced in higher inflation and a tighter monetary policy outlook, appear to be in a calmer mood in early Europe. Asian shares rallied overnight, European and U.S. stock futures are higher too. U.S. Treasury yields, while a touch higher, are holding below recent multi-month highs.

Still, China property shares fell as investors fretted about a debt crisis in the sector.

The Turkish lira, at record lows versus the dollar, is also in the spotlight after Turkey’s President Tayyip Erdogan dismissed three central bank officials.

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

– BOJ policymaker rules out stimulus withdrawal even after economy recovers

– Taiwan’s TSMC posts 13.8% rise in Q3 profit on global chip demand surge

– Japan dissolves parliament, setting stage for general election

– Data: Spain harmonized inflation rate(Sept), Canada manufacturing sales (Aug)

– United States: Initial Jobless Claims (Oct), Jobless Claims 4-week Average, PPI (Sept), NY Fed Treasury Purchases 22.5 to 30 years, 4-week and 8-week T-Bill Auction

– Central Banks: Fed’s Bowman, Bostic, Barkin, Bullard, Daly and Harker, ECB’s Elderson, and BoE’s Tenreyro and Mann speak

– Earnings: UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp, Walgreens Boots Alliance, Fast Retailing, Domino’s Pizza.

(Reporting by Dhara Ranasinghe; Editing by Rachel Armstrong)

 

Biden Enlists Disney, Microsoft CEOs In Push For Vaccine Mandates

Participants in the meeting included the chief executives of Walt Disney Co, Microsoft Corp and Walgreens Boots Alliance Inc .

Biden last week announced vaccine mandates for nearly all federal employees, federal contractors, and larger companies as the number of U.S. infections continued to rise, hospital beds in some parts of the country filled up and mask requirements returned. After months of trying to persuade Americans to get free vaccinations, the White House is pushing state and local governments, companies and schools to adopt mandates requiring them instead.

Biden said at the beginning of the meeting that it would take some time to get the new requirements in place.

“It’s about beating this virus and saving lives,” he said.

Some Republican-led states and a sizable minority of Americans have defied vaccine recommendations from health officials, citing economic or freedom-of-choice arguments. With just 63% of the population having received at least one dose, the U.S. vaccination rate now lags  developed economies.

Opinion polls have shown a majority of Americans support some form of vaccine mandate.

Biden told reporters on Tuesday that he had seen “positive support for mandates, by and large,” although he conceded that there would always be a small percentage of people who would refuse to get inoculated.

The White House hopes Wednesday’s meeting will serve “as a rallying cry for more businesses across the country to step up and institute similar measures,” an official said, speaking on condition of anonymity.

The meeting involves business leaders and chief executives who have instituted vaccine requirements or are working to implement the new rules, the person said.

The policies announced last week require nearly all federal workers and federal contractors to get COVID-19 vaccinations and push large employers to have workers inoculated or tested weekly. The new measures would apply to businesses with more than 100 employees, about two-thirds of all U.S. workers.

Also among those meeting with Biden were the CEOs of the Kaiser Permanente healthcare system, the Children’s Hospital of Philadelphia and Molly Moon’s Homemade Ice Cream.

Josh Bolten, president of the Business Roundtable representing employers of 20 million workers, also attended. The Business Roundtable has welcomed Biden’s announcement on mandates. Bolten was a chief of staff to Republican former President George W. Bush.

The fast-spreading Delta variant of the coronavirus has sparked a new wave of sickness and death, posing increased risk not just to the country but to a president who as a candidate promised to get control of the pandemic.

Some small employers have voiced frustration with the mandate. Large employers like U.S. automakers General Motors Co and Ford Motor Co and rare-earths producer MP Materials Corp said they are encouraging employees to get the vaccine, but they were quiet about Biden’s executive order.

Raytheon Technologies Corp, a weapons maker and aerospace company that does extensive business with the U.S. government, said on Wednesday that it expects Biden’s vaccine mandate will strengthen their business outlook heading into the fourth quarter.

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

(Reporting by Trevor Hunnicutt, Doina Chiacu and Jeff Mason; Editing by Nick Zieminski and Jonathan Oatis)

Today’s Market Wrap Up and a Glimpse Into Friday

Stocks rallied yet again, sending the S&P 500 to its sixth consecutive all-time high. Investors celebrated jobless claims showing that the economy is back on track. Weekly jobless claims came in at their lowest level since the pandemic reared its head.

The Nasdaq also finished higher while the Dow Jones Industrial Average added more than 100 points amid a strengthening economy and a second-quarter earnings parade that is just getting underway.

Energy stocks were a bright spot in the session after WTI crude oil surpassed USD 75 per barrel. Dow member Chevron benefited from the bullish sentiment and tacked on about 1.5%

New in the Hood

The market was abuzz about Robinhood’s IPO filing. The commission-free trading app has been generating revenue hand-over-fist as the retail-investor-fueled meme stock craze has taken shape. Now Robinhood seeks to capitalize on that demand and list on the Nasdaq under a sign-of-the-times trading symbol, HOOD. To demonstrate how popular the app has become, Robinhood generated USD 522 million in Q1 2021 revenue vs. USD 127.6 million in the corresponding year-ago period.

Stocks to Watch

Nike gained 2% on the day after touching on a new all-time high. The sports apparel company turned in impressive sales results and investors expect the momentum to continue.

Walgreens did not receive the same reception on Wall Street even though it also produced a solid quarter. The stock was down 7% in the session despite having lifted its outlook for the year. Investors are still ahead as the stock is up more than 20% year-to-date.

Meme stock AMC Entertainment shed 4% in the session. The stock’s market cap is currently just over USD 27 billion but the company has billions of dollars of debt on its balance sheet. Investors might be starting to think twice about the sustainability of the valuation.

Look Ahead

Investors should keep an eye on Virgin Galactic on Friday.  Billionaire Richard Branson will reportedly head into space on July 11, nine days before rival Jeff Bezos’ space flight. The stock is up more than 4% in extended-hours trading.

On Friday, the much-anticipated Employment Report for June will be released at 8:30 a.m. ET. Wells Fargo predicts that hiring accelerated in June vs. May and that the economy added 750K non-farm payrolls.

Walgreens Boots Alliance Tops Earnings and Revenue Estimates, Lifts 2021 Guidance

Walgreens Boots Alliance, a global leader in retail and wholesale pharmacy, reported better-than-expected earnings in the fiscal third quarter and lifted its full-year 2021 guidance.

The Deerfield, Illinois-based retail pharmacy provider said adjusted earnings came in at $1.51 per share, beating analysts’ estimates of $1.17 per share. The company’s revenue rose over 12% to $34.03 billion, higher than Wall Street’s consensus expectations of $33.76 billion.

The largest U.S. drugstore chain raised fiscal 2021 guidance from mid-to-high single-digit growth to around 10% growth in constant currency-adjusted EPS from continuing operations. The revised guidance reflects strong results in the third quarter and greater clarity on the impact of COVID-19 vaccinations.

Despite that Walgreens Boots Alliance shares slumped about 9% to $48.03 on Thursday. The stock surged more than 20% so far this year.

Walgreens Boots Alliance Stock Price Forecast

Nine analysts who offered stock ratings for Walgreens Boots Alliance in the last three months forecast the average price in 12 months of $58.67 with a high forecast of $72.00 and a low forecast of $50.00.

The average price target represents 19.52% from the last price of $49.09. Of those nine analysts, one rated “Buy”, eight rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $60 with a high of $75 under a bull scenario and $36 under the worst-case scenario. The firm gave an “Equal-weight” rating on the retail pharmacy provider’s stock.

Several other analysts have also updated their stock outlook. Jefferies lowered the target price to $59 from $62. Mizuho raised the target price to $55 from $47. Guggenheim lifted the price target to $62 from $58. Citigroup increased the price target to $60 from $50.

Analyst Comments

Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy and Alliance drug distribution in Europe. With COVID-19 disruption likely to weigh on results for the first part of FY21, at the least, along with ongoing structural reimbursement pressure, EBIT and EPS growth will likely be constrained for the foreseeable future,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

Walgreens has the balance sheet to deploy capital into M&A, as well as the strategic optionality to potentially reposition its portfolio of assets in a changing healthcare marketplace. Unveiling a new strategy under a new CEO that provides a roadmap to future growth is a potential catalyst for shares.”

Check out FX Empire’s earnings calendar

Today’s Market Wrap Up and a Glimpse Into Thursday

Another day, another new all-time high for the S&P 500. The broader market index just set its fifth-straight record after finishing the day fractionally higher to just under 4,300. The Nasdaq failed to keep up and ended the day slightly lower, while the Dow Jones Industrial Average tacked on 210 points, with Boeing, Goldman Sachs and Walmart leading the gains.

Now that the month of June is in the rear-view mirror, it’s clear investors have managed to push stocks to impressive gains despite signs of inflation and lofty valuations. The S&P 500 and Dow are up roughly 14% and close to 13%, respectively, year-to-date.

The economy is humming along, with consumers exhibiting signs of resilience. For the back half of the year, however, investors will be weighing whether the economy can stand on its own two feet without the help of a dovish Fed. This will begin with Friday’s all-important employment report.

Stocks on the Move

When you hear that an electric vehicle stock is rallying, you would not be alone to guess Tesla. Today, however, that title went to NIO, a Shanghai-based EV maker. The stock gained nearly 6% on the day amid optimistic investors ahead of the company’s Q2 results coupled with China’s recovering economy. Wall Street analysts are also reportedly turning more bullish on the stock.

Sticking with the auto stock theme, shares of Ford fell 1% today. The company revealed it would suspend operations at some of its North American facilities due to a shortage of chips. The shutdown will cost the automaker upwards of USD 2 billion and slash its production significantly in the interim.

China’s ride-share company Didi made its debut on the U.S. stock market today. The ADR shares came out of the gate strong, rallying by a double-digit percentage, but the enthusiasm didn’t last. Didi finished the day with a gain of 1%.

Look Ahead

The ISM Manufacturing index for June comes out after surpassing estimates and climbing to 61.2 in May. Wells Fargo predicts the reading will stay “elevated” for June amid a strong orders pipeline.

On the earnings front, retailer Walgreens and spice maker McCormick are on deck. McCormick has benefited from rising demand as consumers spent more time cooking during the shift to staying at home during the health crisis.

Walgreens Could Offer Profitable Short Sales

Walgreens Boots Alliance Inc. (WBA) forced market speculators to take notice in the second half of 2019, rallying on reports the $45-billion drug chain was holding preliminary talks with private equity firms to ‘go private’. Unfortunately, the worst long-term performer in the Dow Jones Industrial Average couldn’t finalize a deal and turned sharply lower, ending 2020 with a negative 38% return. However, things are looking better so far in 2021, with the stock up near 30%.

Losing Market Share to Amazon

The pharmacy chain reports fiscal Q3 2021 results next week, with Wall Street analysts looking for a profit of $1.18 per-share on $33.8 billion in revenue. If met, earnings-per-share (EPS) will mark a 42% profit increase compared to the same quarter last year, which included the pandemic lockdown. The stock topped out a week after raising fiscal 2021 guidance in March and has drifted lower during the second quarter.

Amazon.com Inc. (AMZN) has hurt pharmacy chain income in recent years, with formerly loyal customers loading up on all sorts of front-of-store items online. Unfortunately, the e-commerce juggernaut is now getting into the pharmacy business, with a new division that makes “at-home delivery pharmacy easier and more convenient for customers.” Recent reports also indicate the company is looking at opening brick-and-mortar pharmacies in direct physical competition.

Wall Street and Technical Outlook

Wall Street consensus is locked in glacial ice at a ‘Hold’ rating, based upon 1 ‘Buy’, 1 ‘Overweight’, 17 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $37 to a Street-high $72 while the stock is set to open Tuesday’s session about $5 below the median $56 target. Gravity could easily take control in this configuration, especially if Walgreens fails to meet or exceed Q3 expectations.

The stock topped out in 2015 and entered a persistent decline that’s carved an endless series of lower highs and lower lows. The current advance stalled at 50-month moving average resistance at the start of the second quarter while price is now sandwiched between that level and support at the 200-month moving average. A breakdown through that trading floor will set off a major sell signal that could generate profitable short sales, given the stock’s southern trajectory in recent years.

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

Disclosure: the author held Amazon in a family account at the time of publication.

Walgreens Tops Earnings Estimates, Misses on Revenue; Target Price $64 in Best Case

Walgreens Boots Alliance, a global leader in retail and wholesale pharmacy, reported better-than-expected earnings in the fiscal second quarter and said it raised full-year 2021 outlook to mid-to-high single-digit growth in constant currency adjusted EPS, sending its shares up about 4% on Wednesday.

The Deerfield, Illinois-based retail pharmacy provider said adjusted earnings came in at $1.40 per share, beating analysts’ estimates of $1.12 per share. Although the company’s revenue rose 4.8% to $32.8 billion, it missed Wall Street’s consensus expectations of $33.8 billion.

The largest U.S. drugstore chain forecasts rests on administering 26-34 million doses in 2021 and includes benefits from the new vaccination rates, Reuters reported.

“We’re more constructive, given strong F2Q21 results, despite worse than expected COVID-19 impact, raised FY21 guide and a more favorable overall strategic outlook. More specifically, we like the acceleration in digitization, investment in automation, strong growth in online sales and new CEO’s previous success in digital transformation,” said Charles Rhyee, equity analyst at Cowen and Company.

Walgreens Boots Alliance shares, which slumped more than 32% in 2020, surged about 38% so far this year.

Walgreens Boots Alliance Stock Price Forecast

Thirteen analysts who offered stock ratings for Walgreens Boots Alliance in the last three months forecast the average price in 12 months of $50.09 with a high forecast of $64.00 and a low forecast of $40.00.

The average price target represents a -8.76% decrease from the last price of $54.90. Of those 13 analysts, two rated “Buy”, ten rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $52 with a high of $62 under a bull scenario and $35 under the worst-case scenario. The firm gave an “Equal-weight” rating on the retail pharmacy provider’s stock.

Several other analysts have also updated their stock outlook. Truist Securities raised the target price to $58 from $50. RBC lifted the stock price forecast to $52 from $44. Credit Suisse upped the target price to $50 from $46. CFRA increased the target price to $55.

Analyst Comments

“Roz Brewer’s debut cc provided early insights on the path forward, & guidance leaves room for near-term upside from broader adoption of higher COVID-19 reimbursement,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy and Alliance drug distribution in Europe. With COVID disruption likely to weigh on results for the first part of FY21, at the least, along with ongoing structural reimbursement pressure, EBIT and EPS growth will likely be constrained for the foreseeable future. Walgreens has the balance sheet to deploy capital into M&A, as well as the strategic optionality to potentially reposition its portfolio of assets in a changing healthcare marketplace. Unveiling a new strategy under a new CEO that provides a roadmap to future growth is a potential catalyst for shares.”

Check out FX Empire’s earnings calendar

The Three Pillars for Stocks

We’re officially almost through with the first quarter of 2021. While a broad correction did not happen by now, as I thought, the Nasdaq dipped into correction territory twice.

There might also be as much uncertainty for tech stocks today as there was at March’s start.

However, let’s look at the big picture almost a week after we hit the 1-year anniversary of the market’s bottom. Three pillars remain in motion as a strong backdrop for stocks:

  1. Vaccines
  2. Dovish monetary policy full of stimulus
  3. Financial aid

While the major indices are still positive for 2021, every month this year has been marked by hot starts, marred by mid-month uncertainty and downturns. We’re dealing with rising bond yields, inflation scares, volatile Reddit trades, and an improving yet slowing labor market recovery.

Plus, although earnings came in strong this past quarter, stock valuations are still at an overly inflated point not seen in years. In fact, Ray Dalio , founder of the world’s largest hedge fund, Bridgewater Associates, says there’s a bubble that’s ‘halfway’ to the magnitude of 1929 or 2000.

We could see some more volatility on tap this week as the market continues to figure itself out.

  1. Suez Canal- There’s been a gigantic tanker blocking arguably one of the most crucial waterways for global trade for the last 6 days. There are indications that the tanker may be on the way to being freed. But the sooner this happens, the better. The Suez Cana controls about 10% of global trade, so you can only imagine the hundreds of billions of dollars bleeding per day the more this drags on.
  2. Economic Data- Consumer Confidence, the March job’s report, the unemployment rate, and the PMI Manufacturing index will be released this week.
  3. Earnings- Chewy (CHWY) will report Tuesday (Mar. 30) after market close, and Walgreens Boots Alliance (WBA), Dave & Busters (PLAY), Micron (MU) will all report after market close Wednesday (Mar. 31).

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

Over a year after we bottomed, there is optimism but signs of concern.

The market has to figure itself out. More volatility is likely, and we could experience more muted gains than what we’ve known over the last year. Inflation and interest-rate worries should be the primary tailwind. However, a decline above ~20%, leading to a bear market, appears unlikely to happen any time soon.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

Russell 2000 – Time to Pounce?

Figure 1- iShares Russell 2000 ETF (IWM)

I kicked myself for not calling BUY on the Russell after seeing a minor downturn during the second half of February. I wasn’t going to make that mistake again.

After the iShares Russell 2000 ETF (IWM) went on its latest rally to start March, I checked out the chart. I noticed that almost every time it touched or minorly declined below its 50-day moving average, it reversed.

Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.

Fast forward to Tuesday (Mar. 23). The Russell 2000 saw its worst day since February 25, dropped below its 50-day, and I switched the call to a BUY.

Now, as we start the final week in March, we may be looking at the 6th reversal after dipping below its 50-day. The IWM has been up about 4.25% since March 24.

Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.

Based on the RSI and where we are in relation to the 50-day moving average, I still feel that this is a BUY.

For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Earnings to Watch in Holiday-Shortened Week: Lululemon, Walgreens Boots and CarMax in Focus

Earnings Calendar For The Week Of March 29

Monday (March 29)

No major earnings scheduled for release.

Tuesday (March 30)

IN THE SPOTLIGHT: LULULEMON ATHLETICA

The Vancouver-based healthy lifestyle-inspired athletic apparel company Lululemon Athletica is expected to report its fourth-quarter earnings of $2.48 per share, which represents year-over-year growth of about 9% from $2.28 per share seen in the same quarter a year ago.  In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 12%.

Lululemon would post year-over-year revenue growth of about 19% year-on-year to around $1.7 billion.

“We see upside to both Street 4Qe EPS & mgmt. guidance, as revenue, GM, & SG&A assumptions appear conservative. The recent pullback may make for an attractive entry point, though we acknowledge valuation remains full at 46x ’21e P/E. Stay Equal-weight for now, & trim price target to $386 on rising rates/WACC,” said Kimberly C Greenberger, equity analyst at Morgan Stanley.

“Expanded eComm capabilities, improved supply chain, better inventory management, and product initiatives led to enviable ’18-’19 performance and a robust return to pre-COVID-19 levels in 3Q20, making +mid-high-teens comps seem normal. Still, the current valuation appears extreme, so we stay EW. Compelling LT and post-COVID-19 growth opportunity driven by three factors: international expansion (maybe less evident in ‘20e given COVID-19 outbreak), digital growth, and product innovation. LULU dominates the NA athletic yoga apparel category due to its unique brand positioning and fashionable products, and its athleisure focus is further advantaged in a COVID-19 affected world.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 30

Ticker Company EPS Forecast
BNTX BioNTech SE -$0.17
MKC McCormick $0.58
ASO Avesoro Resources $0.62
LULU Lululemon Athletica $2.48
IGMS IGM Biosciences -$0.74
PVH PVH -$0.37
BACHY Bank China ADR $0.46
CEA China Eastern Airlines -$0.49
GGB Gerdau $0.17
CUK Carnival -$1.54
CCL Carnival -$1.54
CCL Carnival -£1.12

 

Wednesday (March 31)

IN THE SPOTLIGHT: WALGREENS BOOTS ALLIANCE

Deerfield, Illinois-based retail pharmacy provider is expected to report its fiscal second-quarter earnings of $1.13 per share, which represents a year-over-year decline of over 25% from $1.52 per share seen in the same quarter a year ago.

The largest U.S. drugstore chain’s revenue would decline over 5% year-over-year to around $33.8 billion.

Walgreens Boots continues to maintain its estimates of low single-digit growth in adjusted earnings per share at CER in fiscal 2021. The Zacks Consensus Estimate for the same is currently pegged at $4.79. Although the company anticipates higher adverse impacts of the pandemic-led disruptions (including a weaker cough, cold, and flu season) during the second quarter of fiscal 2021, the adjusted earnings per share during the first half of fiscal 2021 is likely to be in line with the company’s earlier expectations,” noted analysts at ZACKS Research.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 31

Ticker Company EPS Forecast
WBA Walgreens Boots Alliance $1.13
AYI Acuity Brands $1.70
UNF UniFirst $1.68
MU Micron Technology $0.93
VRNT Verint Systems $0.81
CIG Companhia Energetica Minas Gerais $0.03
ZNH China Southern Airlines -$1.41

 

Thursday (April 1)

IN THE SPOTLIGHT: CARMAX

The used-car retailer’s fourth-quarter earnings is pegged at $1.27 cents on revenues of $5.15 billion, according to ZACKS Research.

“Store-expansion initiatives and high-quality product offerings are likely to boost CarMax’s prospects. The company’s omnichannel offerings to improve customer shopping experience is likely to bolster revenues. Increasing sales of used vehicles remain a bright spot for the firm. Solid performance from the wholesale segment also acts a booster,” noted analysts at ZACKS Research.

“Further, temporary cost-cut initiatives undertaken by the firm may offer respite. However, the auto parts retailer is likely to bear the brunt of rising selling, general & administrative (SG&A) expenses as the company resumes new store expansion. Also, the second wave of coronavirus could impact the company’s sales and profits. High debt levels also play a spoilsport. As such, the stock warrants a cautious stance.”

Friday (April 2)

No major earnings scheduled for release. The stock market is closed on April 2 for Good Friday.

Drugstore Chain Walgreens Shares Soar Over 8% After Q1 Earnings Top Estimates

The largest U.S. drugstore chain Walgreens Boots Alliance reported better-than-expected earnings in the fiscal first quarter and remained broadly consistent in its full-year forecast for earnings growth, sending its shares up over 8% on Thursday.

Walgreens Boots Alliance said its sales increased 5.7% to $36.3 billion in fiscal first quarter ended November 2020, up 5.2% on a constant currency basis. Loss per share was $0.36, compared to EPS of $0.95 in the year-ago quarter, including a $1.73 per share charge from the company’s equity earnings in AmerisourceBergen.

Adjusted EPS decreased by 11.2% to $1.22, down 11.6% on a constant currency basis, reflecting an estimated adverse COVID-19 impact of $0.26 to $0.30 per share. But it beat analysts’ expectations of $1.03 per share.

“Walgreens Boots Alliance (WBA) reported adj. EPS of $1.22, vs. consensus of $1.03. We look for details around the better than expected results in Retail Pharmacy USA and Retail Pharmacy Int’l. FY21guidance was maintained but now skewed positively. Mgmt now expects to see a greater impact from COVID-19 in F2Q, and we look for an update to mgmt’s COVID-19 recovery assumptions,” said Charles Rhyee, equity analyst at Cowen and company.

Drugstore chain maintained its fiscal year 2021 guidance, but with the profile skewed positively. The company continues to forecast expects adj. EPS of low single-digit growth, roughly in-line with consensus of $4.81, which implies growth of +1.5% y/y.

Walgreens forecasts to see a higher adverse impact from COVID-19 in the fiscal second quarter but continues to expect F1H21 adj. EPS to decline 17%-23%, broadly consistent with prior expectations. On a full-year basis, the impact of COVID-19 vaccines is likely offset by COVID-19 related lockdowns and increased growth investments.

Walgreens Boots Alliance shares soared over 8% to $46.48 on Thursday. However, the stock fell over 30% in 2020.

Walgreens Boots Alliance Stock Price Forecast

Seven analysts who offered stock ratings for Tiffany & Co in the last three months forecast the average price in 12 months at $41.20 with a high forecast of $44.00 and a low forecast of $40.00. The average price target represents a -10.47% decrease from the last price of $46.02. All those seven equity analysts, none rated “Buy, six rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $40 with a high of $46 under a bull scenario and $27 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the pharmacy provider’s stock.

Several other analysts have also recently commented on the stock. Truist Securities raised the price target to $44 from $40. Citigroup upped their price objective to $45 from $40. Cowen and company lowered the stock price forecast to $41 from $46. Deutsche Bank raised the price target to $41 from $40. UBS lowered the target price to $41 from $42.

Analyst Comments

“Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy and Alliance drug distribution in Europe. With COVID-19 disruption likely to weigh on results for the first part of FY21, at the least, along with ongoing structural reimbursement pressure, EBIT and EPS growth will likely be constrained for the foreseeable future, said Ricky Goldwasser, equity analyst at Morgan Stanley.

“Walgreens has the balance sheet to deploy capital into M&A, as well as the strategic optionality to potentially reposition its portfolio of assets in a changing healthcare marketplace. Unveiling a new strategy under a new CEO that provides a roadmap to future growth is a potential catalyst for shares.”

Check out FX Empire’s earnings calendar

Walgreens Perfect Play for the January Effect

Dow component Walgreens Boot Alliance Inc. (WBA) reports Q1 2021 earnings in Thursday’s pre-market session, with Wall Street analysts expecting a profit of $1.04 per-share on $35.01 billion in revenue. If met, earnings-per-share (EPS) will mark a 24% profit decline compared to the same quarter in 2019. The stock ticked higher after beating Q4 top and bottom line estimates in October and has added a few more points into January 2021.

Waking Up from the Dead

The drug chain is one of the Dow Industrial’s worst long-term performers, losing nearly 40% since it was added to the Average in June 2018. It posted a stomach-churning negative 32% return in 2020 but that’s now good news because the stock has become an attractive January Effect buying candidate. It’s also starting to wake up from the dead, just announcing a key divestiture and partnership intended to shore up a troubled balance sheet.

AmerisourceBergen (ABC) will acquire the majority of Walgreens’ Healthcare businesses for $6.275 billion and two million ABC shares. In addition to the acquisition, the companies will strengthen their “strategic partnership by extending and expanding their commercial agreements”. The current distribution agreement will be extended to 2029 while the partnership includes a “commitment to pursue additional opportunities in sourcing and distribution”.

Wall Street and Technical Outlook

Wall Street consensus is as bad as it gets for a Dow component, with a ‘Hold’ rating based upon 6 ‘Hold’ and 1 ‘Sell’ recommendation. Not one analyst is recommending that investors buy Walgreens at this time. Price targets currently range from a low of $40 to a Street-high $44 while the stock has opened Wednesday’s U.S. session less than $1 above the median $41 target. These targets and ratings are likely to change after tomorrow’s quarterly confessional.

The stock topped out in the 90s in 2015 and lost two-thirds of its value into October’s 8-year 2020 low at 33.36. Accumulation fell to a two-year low at the end of December, highlighting persistent investor mistrust. However, price is acting well at 200-day moving average resistance, trading above that barrier four times since Nov. 10. This persistence is paying off, establishing the first monthly Stochastic buying signal since Sept. 2019.

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

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Earnings to Watch Next Week: Carnival, RPM, Constellation Brands and Walgreens Boots Alliance in Focus

Earnings Calendar For The Week Of January 4

Monday (January 4)

IN THE SPOTLIGHT: CARNIVAL

Carnival, the world’s largest cruise ship operator, is expected to report a loss for the third consecutive time in the fourth quarter. The Miami, Florida-based company’s revenue will plunge ​nearly 100% to $142.09 million from $4.78 billion posted in the same period a year ago. Carnival is expected to report a loss of $1.84 per share, worse compared to a profit of 62 cents per share registered in the same quarter last year.

“We think the cruise industry will be one of the slowest sub-sectors to recover from the COVID-19. Cruising needs just not international travel to return, but ports to reopen, authorities to permit cruising, and the return of customer confidence,” said Jamie Rollo, equity analyst at Morgan Stanley.

“We expect cruising to resume in January 2021, and only expect FY19 EBITDA to return in FY24 given historically CCL has lacked pricing power, and EPS to take even longer given dilution of share issues and higher interest expense. We see debt doubling in FY21 vs FY19 due to operating losses and high capex commitments, and leverage looks high at 4-5x even in FY23-24e, so we see risk more equity might need to be raised,” Rollo added.

According to the mean Refinitiv estimate from eleven analysts, Carnival Corp is expected to show a decrease in its fourth-quarter earnings to -186 cents per share. Wall Street expects results to range from a loss of $-2.10 to ​a loss of $-1.64 per share, Reuters reported.

Tuesday (January 5)

No major earnings scheduled for release.

Wednesday (January 6)

IN THE SPOTLIGHT: RPM INTERNATIONAL

RPM International, manufacturer of specialty chemical product lines, including high-quality specialty paints, protective coatings, roofing systems, sealants, and adhesives, is expected to report a profit of $1.0 in the fiscal second quarter of 2021, up from $0.76 reported in the same quarter last year.

The specialty chemicals company’s revenue could grow more than 4% year-on-year to $1.46 billion.

“Nearly 1/3 of sales are related to U.S. housing and home improvement (the second highest in the industry behind Sherwin-Williams). This continues to be our preferred coatings end market as it benefits from COVID-19 driven home improvement demand, which we think is sustainable. Importantly, RPM has no meaningful auto, aerospace exposure, but does have US infrastructure/construction exposure which could benefit from stimulus policy,” noted Vincent Andrews, equity analyst at Morgan Stanley.

“RPM’s MAP self-help program offers an offset to COVID-19 challenges. Meaningful opportunity remains for improvement in margins, free cash flow conversion, and return of capital to shareholders. Management highlighted upside to MAP targets on the recent conference call,” Andrews added.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 6

Ticker Company EPS Forecast
RPM RPM International $1.00
MSM MSC Industrial Direct $1.08
UNF UniFirst $1.68
AUOTY AU Optronics $0.09

Thursday (January 7)

IN THE SPOTLIGHT: CONSTELLATION BRANDS, WALGREENS BOOTS ALLIANCE

CONSTELLATION BRANDS: New York-based Fortune 500 international beverage alcohol company is expected to report a profit of $2.40 in fiscal third quarter, up from $2.14 per share seen in the same quarter a year ago, which would indicate a positive year-over-year growth rate of more than 12%.

The leading beverage alcohol company’s revenue could grow more than 12% year-on-year to $2.26 billion.

“We believe the focus of Constellation Brands’ FQ3 EPS will be on accelerating and above consensus beer depletions to +8.3% y-o-y in FQ3 (vs. 5% in F1H21) with improving beer out-of-stocks, as well as a beer shipment recovery after the under-shipment in F1H21. We also expect an update on beer depletion trends in December, with solid U.S. scanner data trends but likely weakening on-premise trends with more on-premise restrictions, particularly in California (about a quarter of Constellation Brands’ volumes),” said Dara Mohsenian, equity analyst at Morgan Stanley.

“Additionally, we believe investors will focus on beer margins, which we believe could surprise to the upside in FQ3 (we are 20 bps above consensus on beer margins and 2.3% above consensus on beer profit) and in F2H21, with Constellation Brands full year FY21 guidance of flat beer margins implying -160 bps of y-o-y margin declines in H2, with our estimates above guidance at -20 bps y-o-y,” Mohsenian added.

WALGREENS BOOTS ALLIANCE: The largest U.S. drugstore chain is expected to report a profit of $1.03 in fiscal first quarter ended November 2020, representing a year-over-year plunge of -25.6%. The retail pharmacy provider’s revenue could grow about 2% year-on-year to $34.93 billion.

“When Walgreens provided 2021 guidance back on October 15th, management didn’t include any negative impact from additional lockdown measures in Europe or changes to utilization patterns in the US including higher demand for flu vaccines in 1Q but softer demand for cough, cold, and flu products. To reflect how the environment has changed, we have updated our estimates. For 1Q, we now model EPS of $0.98 from $1.14 prior and versus consensus’ $1.03 (range $0.97 – $1.08). Our changes are primarily driven by our estimate of international retail segment sales down -20% y/y and -4.5% sequentially,” said Ricky Goldwasser, equity analyst at Morgan Stanley.

“While we are lowering our 2021 estimate to $4.55 from $4.70, our numbers include only the additional hiring of pharmacy technicians throughout the year but not the benefit associated with administrating the vaccines to the general populations. We think the benefit could be as high as a $1.00 – $1.40 split between 2HF21 and 1HF22. In comparison, the consensus is $4.82 and guidance of low single-digit y/y growth implies a $4.78 to $4.87 range.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 7

Ticker Company EPS Forecast
STZ Constellation Brands $2.40
WBA Walgreens Boots Alliance $1.03
CAG Conagra Foods $0.73
HELE Helen Of Troy $3.01
AYI Acuity Brands $1.83
BBBY Bed Bath & Beyond Inc. $0.17
MU Micron Technology $0.69
DCT DCT Industrial Trust -$0.01
WDFC Wd 40 $0.87
PSMT PriceSmart $0.67

Friday (January 8)

No major earnings scheduled for release.