Bloomberg: Even with lower third-quarter earnings estimates, the proportion of S&P 500 companies beating expectations two weeks into reporting season has been in line with the level at this point last quarter, but trending lower than the previous year. Of the 18% of companies that have reported, 58% posted positive surprises in both revenue and EPS, according to data compiled by Bloomberg.
Goldman Sachs, Bank of America and Netflix all delivered more upbeat reports this week, easing concerns for now about consumer health even as executives remain cautious about the economic outlook. Tesla, on the other hand, reported lackluster results and said it will miss overall annual growth targets due to concerns about demand for electric vehicles in China and Europe. Snap’s announcement of its slowest quarterly sales growth triggered a sell-off across its social media peers as evidence the sector continues to be hit by shrinking digital ad budgets, setting the stage for next week when big tech companies capitalization are ready to report.
MondayCadence Design (CDNS US), a maker of semiconductor design software, is expected to post modest sequential revenue growth in the third quarter when it reports the secondary market, thanks to secular trends favoring more design software. chips and their increased complexity. Analysts at Bloomberg Intelligence and KeyBanc Capital Markets are bullish on the company’s long-term drivers, potential new customer flows and business prospects, with BI comparing “Cadence to selling the paint and brushes in a semiconductor renaissance” . The company is expected to comment on the impact of recently announced US chip export rules against China, though BI said it could be minimal as Synopsys said it did not expect a material impact on earnings.
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Tuesday: Microsoft (MSFT US) is projected to post its slowest year-over-year revenue growth since late 2017 when it delivers fiscal first-quarter results after market close. Guggenheim analysts question the company’s ability to maintain full-year guidance, saying its double-digit revenue growth target is at risk if the dollar continues to strengthen and macroeconomic conditions weaken further. Still, a pickup in cloud spending could help it beat expectations in 2024, according to Bloomberg Intelligence.
Biogen (BIIB US) reports before the opening bell. The drugmaker’s next steps for lecanemab, a co-developed Alzheimer’s treatment, may garner attention from the results, Bloomberg Intelligence wrote, given positive findings from the phase 3 trial last month. Baird analysts said the company could face questions about its regulatory and pre-launch effort with Eisai for the treatment, also noting investor interest in pricing plans. They expect third-quarter results to largely meet the Street consensus, which points to a low-double-digit contraction in both the top and bottom quarter results.
Wednesday: Boeing (BA US) will report before the bell. Analysts project a return to positive free cash flow and sequential growth in generated operating cash for the fiscal third quarter, reinforcing comments made last month by CFO Brian West. On the earnings call, analysts at Cowen expect the planemaker to address labor and supply chain concerns.
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Seagate (STX US) expires before market open. Having cut its revenue forecast in August due to worsening economies and supply chain entanglements, the computer hard drive maker should post a top line for the fiscal first quarter that meets its updated guidance, it wrote. Bloomberg Intelligence. The sharp drop in sales (consensus implies a 32% decline compared to a year ago) may trigger cost-cutting measures as a margin remedy, they added.
Thursday: Apple (AAPL US), which publishes its fourth quarter results after the bell, could be more affected than expected by the effects of the strengthening of the dollar and the weakness in China. “Unfavorable exchange rate movement may have fueled high single-digit growth in services for both the fourth quarter, with similar earnings potential in the first quarter of 2023, compared to an average of 19.7% in the last four quarters,” Bloomberg said. Intelligence said. iPhone sales could match or beat the consensus of about 9.8% year-over-year growth, thanks to an additional week of new iPhone sales, but total iPhone revenue in 2023 is forecast to rise by only about 2. 7%. Apple withdrew plans to ramp up production of the iPhone 14 late last month as the anticipated surge in demand failed to materialize.
Caterpillar (CAT US) will inform prior to marketing. The heavy machinery maker is set to post accelerating revenue growth, fueled by factors identified by BI as its strong order book, strong underlying demand and easing supply constraints. Most of its North American dealers expect more price increases in 2023 as demand is outstripping supply, according to Citigroup analysts. Management’s view on China’s inflationary, supply chain and demand pressures will be closely watched after its chief executive said in August that there had been no overall improvement on these macro challenges.
Friday: Exxon (XOM US) and Chevron (CVX US) are due before the opening bell. The two oil giants are projected by consensus to continue the streak of earnings expansion they have seen over the past year, thanks to oil prices that remained elevated for most of the third quarter. Producers’ fourth-quarter outlook will be key as Bloomberg Intelligence raised the possibility of weaker cash flow for Exxon due to falling oil and gas prices, as well as potentially slower earnings growth for Exxon. Chevron.