Weekly Preview: Earnings to Watch This Week (AMD, BABA, BYND, LYFT)

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“Less bad is good enough.” This has been the theme of the second-quarter earnings season up to now, notably throughout the week that simply concluded, the place tech giants equivalent to Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Google father or mother Alphabet (GOOG , GOOGL) and Microsoft (MSFT), amongst others, reported their outcomes. Their numbers, as a collective, instructed that financial situations usually are not as unhealthy as feared.

That mentioned, for every report that was surprisingly constructive, there have been people who had been powerful to abdomen, such because the outcomes launched from Roku (ROKU) and Intel (INTC). The former misplaced as a lot as 25% of its worth following the outcomes, whereas Intel reached a brand new 52-week low, falling greater than 8% following its double miss and weak steerage. Conversely, there’s Microsoft, Alphabet and Amazon which galvanized the market with better-than anticipated numbers, whereas Apple capped it off with a dominant quarter of its personal.

Meta Platforms, which was believed to be struggling as outcomes from TikTok weighed on sentiment, demonstrated it may nonetheless develop its customers amongst its household of apps, despite the fact that its numbers weren’t breathtaking. Overall, it has been a combined bag up to now. For some buyers, this state of affairs between good and unhealthy has created some shopping for alternatives. For others, the outlook stays too muddied to purchase any dip throughout this selloff. For those that are considering Intel for instance, it might be some time earlier than the stock rebounds.

Baird analyst Tristan Gerra, who downgraded Intel, believes the corporate’s struggles are due to a “Shift in shopper patterns away from COVID-times at house leisure gadgets, mixed with weak first-half seasonality, suggests no PC restoration near-term, with ensuing under-utilization charges difficult gross margin restoration. While it’s nonetheless early, and there are nonetheless greater than half of the earnings season nonetheless stay, the outlook firms have offered up to now suggests rising inflation and rising rates of interest is manageable.

Friday’s stock market efficiency would appear to replicate that optimism. The Dow Jones Industrial Average continued its rally Friday, rising 315.50 factors, or 0.97%, to finish the session at 32,845.13. The S&P 500 rose 57.86 factors, or 1.42%, ending at 4,130.29, whereas the tech-heavy Nasdaq Composite add 228.09 factors, or 1.88%, to shut at 12,390.69. The Nasdaq was powered by the good points in Amazon, Apple and Tesla which led all the FAANGs increased. Investors at the moment are extra assured in regards to the path of the economic system and the affect of financial coverage choices may have. Will the rally proceed?

For earnings, listed here are the shares I’ll be watching this week.

Advanced Micro Devices (AMD) – Reports after the shut, Tuesday, Aug. 1

Wall Street expects AMD to earn $1.03 per share on income of $6.53 billion. This compares to the year-ago quarter when incomes had been 63 cents per share on $3.85 billion in income.

What to watch: Despite constant headwinds with chip provide chain challenges, AMD continues to ship robust working outcomes, suggesting that points associated to rivals equivalent to Intel (INTC) are their very own to take care of. Nevertheless, Intel’s disappointing Q2 results final week dragged down the complete sector, taking AMD with it. A weak forecast in the PC market by Intel is believed to be the strain level for chip shares. AMD has felt the strain over the previous a number of months because the stock has fallen 36% yr to date, trailing the 14% decline within the S&P 500 index. However, the decline within the stock throughout that span doesn’t replicate the robust execution throughout the firm. AMD posted 71% income development in Q1, which beat estimates by $330 million, whereas EPS surged greater than 50%. Unlike its chief rival, AMD continues to reveal robust working leverage provided that it’s in a position to develop income at a quicker fee than its income. As such, having surpassed each income and revenue estimates in twelve straight quarters, AMD stock deserves extra respect than it’s at present getting. Assuming the corporate’s development metrics stays intact in Q2 this could current an amazing shopping for alternative for AMD stock.

Alibaba (BABA) – Reports earlier than the open, Thursday, Aug. 4

Wall Street expects Alibaba to earn $1.52 per share on income of $30.05 billion. This compares to the year-ago quarter when earnings got here to $2.57 per share on income of $32.37 billion.

What to watch: Since its peak within the latter a part of 2020, Alibaba has misplaced roughly two-thirds of its market cap or about half a billion. The shares have plunged greater than 72% since its 2020 peak, pushed by China’s elevated regulatory scrutiny. The Chinese e-commerce large has been below strain from points associated to company governance and its political standing in China. Operating necessities imposed onto BABA by the SAMR embody providing subsidies to retailers and companions and forcing the corporate to improve its investments within the nation, whether or not within the type of direct gross sales and advertising {dollars} or “strategic initiatives” funding. The added strain has impacted Alibaba not solely by way of slowing income development, however SAMR’s anti-competition insurance policies have additionally pressured Alibaba’s revenue margins which have fallen by eleven proportion factors from 27% in 2020 to 16% on the finish of 2021. On Friday the stock continued its decline following a report that mentioned billionaire Jack Ma plans to cede management of Ant Group (Alibaba owns roughly one-third of Ant). It seems after a chronic interval of regulatory pressures, Ant could now need to distance itself from Alibaba.

Lyft (LYFT) – Reports after the shut, Thursday, Aug. 4

Wall Street expects Lyft to lose 3 cents per share on income of $987.94 million. This compares to the year-ago quarter when it reported a lack of 5 cents per share on income of $696.86 million.

What to watch: Despite the brutal selloff of the stock, Lyft’s enterprise continues to function nicely. Currently commanding 29% market share within the U.S., Lyft is the second-largest ride-sharing firm subsequent to Uber (UBER). While questions stay relating to the corporate’s worldwide growth initiatives in addition to driver incentives, there are nonetheless tons of catalysts to propel Lyft increased and maintain development over the long run. The firm has seen a robust rebound in rider demand which was mirrored within the first quarter outcomes. The firm loved not solely a sturdy 44% yr over yr development in complete revenues, but in addition a 40% yr over yr leap within the variety of energetic drivers. Notably, regardless of the rise in gasoline costs, driver earnings had been up. The firm continues to profit from the rebound in company journey. Yet, the stock is down 67% yr to date, together with a 61% decline over the previous six months, trailing the S&P 500 in each spans. With the stock at present buying and selling decrease than its IPO value, worth buyers ought to see this as a chance to add. That mentioned, for the stock to rebound from present ranges, Lyft not solely should ship a top- and bottom-line beat Thursday, it additionally wants upside steerage that lays out a path in the direction of stronger profitability.

Beyond Meat (BYND) – Reports after the shut, Thursday, Aug. 4

Wall Street expects Beyond Meat to lose $1.18 per share on income of $151.18 million. This compares to the year-ago quarter when the loss got here to 31 cents per share on income of $149.43 million.

What to watch: Beyond Meat stock has been within the meat grinder for a while. Once the darling of the stock market, the plant-based meat large has misplaced all of its sizzle. Aside from wage inflation, the corporate is coping with provide chain shortages which has impacted its as soon as torrid development tempo. It additionally seems that industrial traction is fading, which has resulted in steepening losses. As a end result, the stock has misplaced greater than 50% of its worth up to now this yr, together with a forty five% decline up to now six months. And when increasing that view my twelve months, shares have plunged some 75%, in contrast to a 7.5% decline within the S&P 500 index. In the most-recent quarter, the corporate not solely missed income estimates, nevertheless it additionally introduced a big quarterly loss. On the intense facet, the corporate posted nearly $110 million in complete income, although it was offset by downbeat gross margin. The administration has guided for continued income development. But the market desires to know when the corporate can begin rising its gross margins and obtain profitability. The valuation is extra interesting at present ranges, and assuming that the corporate doesn’t decrease its income and revenue steerage, the stock might stabilize and begin transferring increased from right here.

The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.



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