Stocks to watch: Apple, Microsoft, Boeing and Amazon lead the profit barrage
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Earnings reports will be pouring in at lightning speed next week, with every sector sending heavy hitters to knock the numbers down. Apple’s hit reports (NASDAQ: AAPL), Amazon and Microsoft (MSFT) have the best chance of giving investors a positive break from the relentless cycle of inflation and interest rate news. Meanwhile, Intel’s (INTC) spinoff of Mobileye Global (MBLY) through an IPO is also expected to generate a lot of buzz and Elon Musk’s (TWTR) acquisition of Twitter closes at its October 28 deadline with plenty of drama still in the mix.
Earnings Spotlight: Monday, October 24 – Packaging Corporation of America.
Earnings Spotlight: Tuesday, October 25 – Valero Energy (VLO), General Motors (GM), UPS (UPS), Coca-Cola (KO), Alphabet (GOOG), Mattel (NASDAQ: MAT), Microsoft (MSFT), Visa (V), F5 (FFIV), Alphabet (GOOG) and Chipotle (CMG).
Earnings Spotlight: Wednesday, October 26 – Boeing (BA), General Dynamics (GD), Kraft Heinz (KHC), Ford Motor (F), Meta Platforms (META), Canadian Pacific (NYSE: CP) and Hilton Worldwide.
Earnings Spotlight: Thursday, October 27 – Comcast (CMCSA), Anheuser-Busch InBev (BUD), Caterpillar (NYSE: CAT), Merck (MRK), McDonald’s (MCD), Southwest Airlines (LUV), Altria (MO), Amazon (NASDAQ: AMZN), Apple (AAPL) and Intel (INTC)
Earnings Spotlight: Friday, October 28 – Exxon Mobil (XOM), Chevron (NYSE: CLC), and AbbVie (ABBV)
Overview of the IPO: The IPO market heats up next week with Intel (INTC) putting standalone subsidiary Mobileye (MBY) in a bid for free. Intel (INTC) expects the offer will be priced between $18 and $20 per share, which would value the Israel-based company at nearly $16 billion. After the IPO, Intel will still retain control of Mobileye by owning 750 million Class B shares, which is 10 times the voting power of Class A shares. Mobileyé (MBLY) has partnerships with notable automakers such as Audi, BMW, and Volkswagen. In addition to the Mobileye IPO, watch Medical (NASDAQ:TNON), Ostin Technology Group (sound), Hille Vax (HLVX), Organic Belite (NASDAQ: BLTE), and Marpai (NASDAQ: MRAI) next week with the expiration of IPO lock-up periods for certain blocks of shares.
Apple revenue overview: There is a feeling that a beating in Apple (AAPL) earnings and strong guidance could calm not just the tech sector, but the broader market as well. UBS is constructive on Apple based on recent trends, including stable iPhone, iPad and Mac production despite signs of deteriorating consumer hardware spending intentions. Other crucial factors pointed out by the company are that a record shift in the iPhone mix is likely to have more than offset FX headwinds and the longer 14-week quarter does not appear to be factored into some consensus estimates. Morgan Stanley said its latest audits indicated iPad and Mac should grow above normal seasonality in the quarter as Apple catches up to past component shortages that have limited iPad and Mac sales. . Services growth trajectory for the fourth quarter and gross margin forecast are considered important by the company in determining which direction stocks are heading after the report.
Amazon Revenue Snapshot: E-commerce powerhouse Amazon (AMZN) will release its results on October 27. Ahead of the report, analysts expressed some concern that Amazon will revise holiday sales expectations, especially with the second Prime Day shopping event in October pushing some sales forward. However, Amazon is also being tipped by Bank of America to impress on the third quarter margin line. The company pointed to positive factors such as higher fees on Prime, fuel surcharges and holiday shipping surcharges. Lower energy costs and lower freight costs could also contribute to a slightly better margin reading. Reducing the excess supply of employees and greater discipline around growth investments could also improve Amazon’s results. The conclusion is that a slight shortfall and a drop in share price could provide investors with an attractive entry point with shares already trading at just 13X on EV/EBITDA and total enterprise value. Amazon at 12.7X the revenue of AWS.
Technical overview: A major topic in the coming week will be the ramifications of semiconductor export restrictions to China. Expect to hear more analysts dive into the short-term and long-term implications for individual companies if the issue hasn’t been resolved. For its part, S&P Global Ratings said the impact of the semiconductor rules will depend on how strictly they are enforced. The rating agency warned that the effects could also be felt outside the semiconductor/tech world in sectors such as automotive, aerospace and defense, and energy. S&P has a stable short-term rating outlook for US semiconductor companies. Of course, the timing of the export controls issue coincides with general investor concern over a potential recession, high inflation and continuing supply chain constraints. Watch for more drama for semiconductor giants like Nvidia (NVDA), ADM (ADM), and Intel (INTC) as the issue unfolds.
Corporate events: Caterpillar (CAT) will display four prototype electric machines at a trade show in Munich, Germany on October 24. Some analysts see the event as a potential catalyst for the stock price ahead of CAT earnings. Atai Life Sciences (ATAI) will host an R&D Day event on October 25 with KOL presentations and discussions. Charles Schwab Corporation (SCHW) will host a fall update for institutional investors on October 27. The event is designed to update the investment community on recent developments and management’s strategic direction. Read Seeking Alpha’s Catalyst Watch for a detailed list of next week’s events.
Box office overview: The US box office will make its first blockbuster debut in weeks with DC Films’ (NASDAQ: WBD) Black Adam debuts in over 3,000 theaters. The film’s opening weekend forecast has been cut to $60 million after a 50% Rotten Tomatoes score raised some concerns. Watch the actions of AMC Entertainment movie theaters (New York Stock Exchange: AMC) Cineworld (OTCPK:CNNWQ), Cinemark (CNK), IMAX (IMAX) Marcus (MCS), Reading International (RDI), Cineplex (CGXGF) and National CineMedia (NCMI) for potential stock price shakes.
Mentions of Barron: Big Oil’s big bet on renewable energy is making headlines this week. Instead of being destroyed by the energy transition, the big oil companies are now considered to be in a very good position to generate profits from their investments in clean energy. Renewables could rise to account for 60% of electricity generation in Western Europe and 35% in the United States by 2030, according to S&P Global Commodity Insights. Oil majors BP (BP), Shell (SHEL), Exxon Mobil (XOM), Total Energies (NYSE: TTE) and Chevron (CVX) have responded to the expected change by investing in low-carbon activities, building wind farms, producing fuel from plants and waste, and developing strategies for carbon capture , bioenergy, convenience, electric vehicle charging, renewable energy and hydrogen. A key point for investors is that Big Oil is increasingly convinced that it can go greener without sacrificing profits. Helped by rising crude oil prices, companies will have enough cash to fund drilling, pay down debt, pay dividends and continue to make their aggressive investments in low-carbon companies. Underpinning clean energy strategies, new government subsidies for carbon-reducing technologies are expected to give a boost to these clean energy investments.
Sources: EDGAR, Bloomberg, CNBC, Reuters