Wall Street Breakfast: The Week Ahead


Economic reports in the week ahead

Investors are turning the calendar to May, with the stock market coming off its worst month in more than two years. After the Netflix (NFLX) and Amazon (AMZN) earnings shocks, the coming week will see more tech heavyweights entering the earnings confessional and a healthy dose of energy sector journalists. On the macroeconomic side, the two-day meeting of the Federal Reserve’s policy-making committee will take center stage. The economic calendar also includes updates on construction spending, durable goods orders, the trade balance and the highly anticipated US jobs report. Analysts predict a payroll gain of 390,000 for April and an unchanged unemployment rate of 3.60%. A slight decline in hourly wage growth to 5.4% is also expected.

Earnings Spotlight: Monday, May 2 – Expedia (EXPE), MGM Resorts International (MGM), Clorox (CLX) and Williams Companies (WMB).

Earnings Spotlight: Tuesday, May 3 – Pfizer (NYSE: PFE), Marathon Petroleum Corporation (MPC), Advanced Micro Devices (NASDAQ: AMD), Hilton Worldwide (HLT), Airbnb (NASDAQ: ABNB) and Starbucks (NASDAQ: SBUX).

Earnings Spotlight: Wednesday, May 4 – CVS Health (CVS), Marriott International (MAR), Moderna (MRNA), Etsy (ETSY), Fortinet (FTNT), Uber (UBER) and Booking Holdings (NASDAQ: BKNG).

Earnings Spotlight: Thursday, May 5 – ConocoPhillips (COP), Anheuser-Busch InBev (BUD), Dominion Energy (D), Lucid Group (NASDAQ: LCID), DoorDash (NYSE: DASH), Shopify (SHOP) and Block (NYSE: SQ).

Earnings Spotlight: Friday, May 6 – Under Armor (UAA), Enbridge (ENB), Cigna (CI) and DraftKings (NASDAQ: DKNG).

IPO monitoring: The IPO market is coming back to life with Bausch + Lomb (BLCO) set to begin trading on May 6. Bausch + Lomb has applied for listing on the New York Stock Exchange and the Toronto Stock Exchange. New York listing for 35 million shares has been valued between $21 and $24 per share. Also next week in the world of IPOs, the lockup period expires on Allbirds (NASDAQ:BIRD), Blue Star Foods (BSFC), Arhaus (ARS), Nerd Wallet (NRDS), Executive Holdings (CDRE, Cian (CIAN), IO Biotech (IOBT) and Real Good Food Company (NASDAQ:FGR) to allow insiders to sell shares. Of the group, Cadre Holdings is the only stock with a significant gain since its IPO.

Projected dividend increases: Companies that plan to increase their quarterly dividend payouts include Packaging Corp. of America (PKG) at $1.20 from $1.00, Diamondback Energy (FANG) at $0.70 from $0.60, Tetra Tech at $0.23 from $0.20, Devon at 1.15 from $1.00, Chesapeake Utilities (CHK) at $0.55 from $0.48, and Baxter at $0.32 from $0.28.

Corporate events: Li Auto (LI), Nio (NIO) and XPeng (XPEV) could be big movers after Chinese automakers announced early May 2 deliveries for April amid COVID and supply chain disruptions. Dell Technologies (NYSE:DELL) will be on call with the tech company hosting its flagship Dell Technologies World event during the week. CEO Michael Dell and other senior executives will appear, along with outside speakers from General Motors, CVS Health and Epic Games. The company will also hold a meeting of financial analysts that could lead to ratings revisions on Dell. Restaurant Brands International (NYSE: QSR) will host a Tim Hortons Canada Investor Day event on May 3. The event will give investors the opportunity to hear Tim Hortons Canada’s management team discuss in detail the brand’s business strategy and growth plans. Spin Master Corp. (OTCPK:SNMSF) will host a virtual investor event with presentations from senior management on May 5. Oshkosh Corporation (OSK) is hosting its Investor Day event on the New York Stock Exchange on May 6. The company is likely to highlight its new partnership with Robotic Research to accelerate its innovation and autonomy offerings. Learn more about next week’s events that could impact stock prices in Seeking Alpha’s Catalyst Watch.

Conference schedule: The conference program is headlined by the Wells Fargo 2022 Industrials Conference. Some of the more notable presenters that may catch investors’ attention include Allegion (ALLE), Astra Space (ASTR), Autoliv (ALV), Blade Air Mobility (BLDE), Dow Inc. (NYSE:DOW), General Electric ( GE), JELD-WEN Holding (JELD), Ranpack Holdings (PACK), Rocket Lab USA (RKLB) and BorgWarner (BWA). Other conferences scheduled for the week include the 17th Annual Oppenheimer Industrial Growth Conference and the Bloom Burton & Co. Healthcare Investor Conference.

FOMC Snapshot: The Federal Reserve’s two-day meeting will end with a rate announcement on May 4. The market has fully priced in a 50 basis point hike for May and at least five to six more 25 basis point hikes are expected before the end of the year. Chairman Jerome Powell is likely to maintain a cautiously hawkish posture at the press conference without any solid macroeconomic reason for a change in policy. BTIG notes that the actual political changes at the meeting will not come as a big surprise, as they will be telegraphed in advance. The biggest drama seen is how Powell could answer questions on a 75-point hike in a scam move on the road.

Overview of US auto sales: There could be further ripples in the US auto sector next week if selling pressure continues for EV names like Tesla (TSLA), Rivian Automotive (NASDAQ:RIVN), Lucid Group (LCID), Fisker (FSR), Lordstown Motors (NASDAQ:RIDE) and Nikola (NKLA) with no strong catalysts seen to spark a new rally. Earnings reports for the sector are expected to show a production rate below initial targets due to ongoing supply chain issues. Additionally, overall U.S. light vehicle sales in April are expected to decline approximately 24% year-over-year on a day-of-sale-adjusted basis, translating to a variance-adjusted annualized rate. sales at a disappointing level of around 13.9 million units. Bank of America is not optimistic about a quick recovery in the sector, pointing to supply chain disruptions from the global shortage of semiconductors, the Russian-Ukrainian conflict and COVID-induced shutdowns in China. The company warns that dealer lots could be short vehicles through 2022 and likely into 2023. “While production remains under pressure and inventory remains limited, we expect OEMs to continue to push prices and the combination as a way to bolster margins,” BofA updates.

Earnings overviews: Starbucks (SBUX) enters the earnings day with its strong brand and the global economic reopening working in its favor, but concerns over costs, China and unionization contributed to a decline in the share price. Investors will be looking to get a clearer picture from CEO Howard Schultz on the plan to pull back share buybacks to invest in stores and employees. In the technology sector, AMD (AMD) is expected to post revenue of $5.58 billion and EPS of $0.92 as it seeks its eight straight gains. Analysts are generally supportive of AMD despite some weakness in PCs, with higher prices for laptops (changing business mix), rebuilding the gaming console channel, server strength and rising Xilinx upward view. At the end of the week, DraftKings (DKNG) enters the winning batting box. While DraftKings is expected to generate $413 million in revenue for the quarter and a loss of $1.03 per share, commentary on Ontario launch date and Golden Nugget deal closing could guide guidance of the company for the second half of the year.

M&A monitoring: Mercury Systems (MRCY) executives will take part in a May 5 conference call to mark their first appearance since activist Elliott Investment Management reportedly took a stake in the defense and electronics maker. ManTech International Corporation (MANT) will hold its earnings call on May 4 with a swirling M&A intrigue after reports indicated that potential bidders include KBR Inc. (KBR), Carlyle Group (CG) and Veritas Capital’s Peraton . Spirit Airlines (NYSE:SAVE) will make its first quarter earnings call on May 5. Investors will be looking for an update on the process of selling to a bidder such as JetBlue Airways (JBLU) or Frontier Group (ULCC).

Annual meetings: Notable annual meetings during the week include Kraft Heinz (KHC), Boyd Gaming Inc (NYSE:BYD) and Wynn Resorts Inc (NASDAQ:WYNN) on May 5, as well as Marriott International (MAR) on May 6.

Mentions of Barron: The cover story explains how Elon Musk could make Twitter (TWTR) a financial success. The bullish scenario for Twitter would be that it has huge potential that could be unlocked after years of mismanagement. Musk’s strategy is expected to involve a harder shift from subscription revenue to advertising revenue, which accounted for nearly 90% of Twitter’s revenue last year. One of the hurdles Twitter will face is that annual interest charges could total $600 million or more after Twitter raises money in the high-yield bond market. The cruise industry is getting a favorable review this week on the simple thesis that demand is booming. Onboard cruise spending at restaurants, spas and other venues this winter and spring has been strong, while bookings for 2022 and beyond are accelerating in a positive development for Royal Caribbean (RCL), Carnival (CCL) and Norwegian Cruise Line (NCLH).

Sources: EDGAR, Bloomberg, CNBC, Reuters, Renaissance Capital


Comments are closed.