Stocks To Watch: Starbucks, AMD And DraftKings Lead Earnings Parade

Apr. 30, 2022 9:55 AM ETAirbnb, Inc. (ABNB), AMD, BIRD, BKNG, BYD, DASH, DKNG, DOW, LCID, PFE, DELL, QSR, RGF, RIDE, RIVN, SAVE, SBUX, SEV, SQ, WYNN8 Comments15 Likes
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Investors turn the calendar to May with the stock market coming off its worst month in more than two years. Following earnings shockers from Netflix (NFLX) and Amazon (AMZN), the week ahead features more tech heavyweights stepping into the earnings confessional and a good dose of reporters from the energy sector. On the macroeconomic front, the two-day meeting of the policy-making committee of the Federal Reserve will be in the spotlight. The economic calendar also includes updates on construction spending, durable goods orders, trade balance, and the highly-anticipated U.S. jobs report. Analysts forecast a payrolls gain of 390K for April and an unchanged unemployment rate of 3.60%. A slight downtick in hourly earnings growth to 5.4% is anticipated as well.


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 Armour (UAA), Enbridge (ENB), Cigna (CI) and DraftKings (NASDAQ:DKNG).

IPO watch: The IPO market comes back to life with Bausch + Lomb (BLCO) expected to start trading on May 6. Bausch + Lomb has applied to list on both the New York Stock Exchange and the Toronto Stock Exchange. The New York listing for 35M shares has been priced at between $21 and $24 per share. Also next week in IPO world, the lockup period expires on Allbirds (NASDAQ:BIRD), Blue Star Foods (BSFC), Arhaus (ARHS), NerdWallet (NRDS), Cadre Holdings (CDRE, Cian (CIAN), IO Biotech (IOBT) and Real Good Food Company (NASDAQ:RGF) to free up insiders to sell shares. Of the group, Cadre Holdings is the only stock with a large gain since going public.

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

Corporate events: Li Auto (LI), Nio (NIO), and XPeng (XPEV) could be big movers after the Chinese automakers report early on May 2 on deliveries for April amid the COVID and supply chain disruption. Dell Technologies (NYSE:DELL) will be on watch with the tech company holding its flagship Dell Technologies World event during the week. CEO Michael Dell and other top execs will make appearance, as well as outside speakers from General Motors, CVS Health and Epic Games. The company will also hold a financial analyst meeting 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 an opportunity to hear the Tim Hortons Canada leadership team discuss the brand's business strategy and growth plans in detail. Spin Master Corp. (OTCPK:SNMSF) will host a virtual Investor Event with presentations from top management on May 5. Oshkosh Corporation (OSK) holds its Investor Day event at 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. Read more about the events next week that could impact shares prices in Seeking Alpha's Catalyst Watch.

Conference schedule: The conference schedule is headlined by the Wells Fargo 2022 Industrials Conference. Some of the more notable presenters that could attract investor 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 Oppenheimer 17th Annual Industrial Growth Conference and Bloom Burton & Co. Healthcare Investor Conference.

FOMC preview: The two-day Federal Reserve meeting will conclude with a rate announcement on May 4. The market has fully priced in a 50 basis points hike for May and at least another five to six 25-point hikes are expected before the end of year. Chairman Jerome Powell is likely to keep a cautiously hawkish posture during the press conference without any solid macro reason for a policy change. BTIG notes that the actual policy moves at the meeting will not be a big surprise with them being telegraphed in advance. The biggest drama seen is how Powell might respond to questions on a 75-point hike in a rip-the-Bandaid-off move down the road.

U.S auto sales preview: There could be some more ripples in the U.S. auto sector next week is the selling pressure continues for electric vehicle names like Tesla (TSLA), Rivian Automotive (NASDAQ:RIVN), Lucid Group (LCID), Fisker (FSR), Lordstown Motors (NASDAQ:RIDE) and Nikola (NKLA) without any solid catalysts seen to spark a new rally. Earnings reports from within the sector are anticipated to show production run rate below initial targets due to the ongoing supply chain issues. In addition, overall April U.S. light vehicle sales are forecast to decline ~24% year-over-year on a selling day adjusted basis, which translates to a seasonally adjusted annualized rate of a disappointing level of around 13.9M units. Bank of America is not optimistic of a quick turnaround in the sector, pointing to the supply chain disruptions from global semiconductor shortage, the Russia-Ukraine conflict, and COVID-induced shutdowns in China. The firm warns dealer lots could be short vehicles through 2022 and likely well into 2023. "As production remains under pressure and inventory remains constrained, we anticipate OEMs will continue to push price and mix as a means to bolster margins," updates BofA.

Earnings previews: Starbucks (SBUX) heads into earnings day with its brand strong and the global economic reopening working in its favor, but concerns over costs, China, and unionization have contributed to a downward move in share price. Investors will be looking to get a clearer idea from CEO Howard Schultz on the plan to pull back on share buybacks to invest in stores and employees. In the tech sector, AMD (AMD) is expected to post revenue of $5.58B and EPS of $0.92 as it looks for its eight straight earnings beat. Analysts are generally favorable on AMD despite some PC softness, with stronger laptop pricing (enterprise mix-shift), game console channel rebuild, server strength, and Xilinx upside seen driving upside. At the end of the week, DraftKings (DKNG) steps into the earnings batter's box. While DraftKings is seen churning up $413M in revenue for the quarter and a loss of $1.03 per share, the commentary on the launch date for Ontario and closing of the Golden Nugget deal could drive the company's guidance for the back half of the year.

M&A watch: Execs with Mercury Systems (MRCY) will be on a conference call on May 5 to mark their first appearance since activist Elliott Investment Management was reported to have built a stake in the defense and electronics maker. ManTech International Corporation (MANT) will hold its earnings call on May 4 with M&A intrigue swirling after reports indicated that potential bidders include KBR Inc. (KBR), Carlyle Group (CG) and Veritas Capital's Peraton. Spirit Airlines (NYSE:SAVE) will conduct its Q1 earnings call on May 5. Investors will be looking for an update on the sales process 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 (NYSE:BYD) and Wynn Resorts (NASDAQ:WYNN) on May 5, as well as Marriott International (MAR) on May 6.

Barron's mentions: The cover story delves into how Elon Musk could make Twitter (TWTR) a financial success. The bullish scenario for Twitter is said to be that it has huge potential that could be unlocked after years of mismanagement. Musk's strategy is expected to involve a harder shift to subscription revenue over advertising revenue, which accounted for nearly 90% of Twitter’s revenue last year. One of the obstacles that Twitter will face is annual interest costs could total $600 million or more after Twitter raises financing in the high-yield bond market. The cruise line sector gets a favorable write-up this week on the simple thesis the demand is booming. Onboard cruise spending in 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

This article was written by

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