Reuters - Financials

What to Watch in the Week Ahead and on Monday, July 20

(The Day Ahead is an email and PDF publication that includes the day’s major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) WEEK AHEAD

With the situation in Greece now a little more stable, markets will switch focus to earnings next week, with bellwethers including IBM, Apple and Microsoft headlining a big week for results and 126 S&P 500 companies set to report. The equity market has been riding high, led by tech names, and could rise further on the back of a strong set of earnings reports from the big tech companies. The dollar should be supported by expectations for firmer rate policy, compared with the euro zone and Japan.

Apple Inc posts third-quarter results on Tuesday. The iPhone maker is expected to report revenue and profit above estimates, according to Thomson Reuters StarMine, helped by strong sales of its flagship phone. Apple sold 61.2 million iPhones in the second quarter. Investors will look for data on how the Apple Watch performed, after a report this week by research firm Slice Intelligence showed that its sales have dropped since it was launched in April.

On Tuesday, Microsoft Corp is expected to report fourth-quarter profit and revenue slightly below analyst expectations, according to StarMine. The company has been stepping up efforts to arrest falling sales in its core Windows business and shifting focus to cloud-related offerings such as its online Office 365 suite of applications. A strong dollar is also expected to weigh on its results.

Investors will focus next week on home sales data and home price index numbers. Financial data firm Markit will release its preliminary Manufacturing Purchasing Managers’ Index on Friday. New U.S. home sales data, also due Friday, is expected show a 0.1 percent fall to a seasonally adjusted annual rate of 545,000 units. Data on home resales, due on Wednesday, is likely to show a 0.9 percent increase to an annual rate of 5.40 million units, compared with the previous month’s 5-1/2-year high figure. The National Association of Realtors showed existing home sales increased 5.1 percent to an annual rate of 5.35 million units in May. Data for the home price index is due on Wednesday, along with the numbers for the index of mortgage application activity from the Mortgage Bankers Association.

American Express Co, the world’s biggest credit card issuer, posts second-quarter results on Wednesday, expected to be in-line with analysts’ estimates, according to StarMine. AmEx’s CEO indicated in March that the company might cut jobs to improve margins and achieve previously set targets, as it faces cutthroat competition from Visa and Mastercard. On Thursday, Visa Inc, the world’s largest credit and debit card company, reports third-quarter earnings, and is expected to have been helped by higher U.S. consumer spending boosted by lower gasoline prices and a strong labor market.

Verizon Communications Inc, the biggest U.S. wireless service provider, will report second-quarter earnings on Tuesday, as it gears up to launch its online video service and make a push into mobile video and targeted advertising to unlock new revenue streams. Investors will keep an eye out for its capital expenditure range amid intense competition in the wireless industry and for details on how its $ 4.4 billion purchase of AOL Inc in June will impact its bottomline. On Thursday, AT&T Inc posts second-quarter results. Investors will keep an eye out for any impact of intensified telecom industry competition on margins and the effect of the DirecTV merger on earnings.

E-commerce company Inc is expected to report second-quarter revenue marginally above estimates, according to StarMine, helped by growth in Amazon Web Services and sales in North America. The company broke out financial details of its cloud computing unit, a $ 5 billion business, for the first time last quarter. Amazon is expected to continue to report a loss, as it invests in products and services that range from Hollywood-style television productions to drone delivery and streaming video-calls.

The world’s largest beverage maker, Coca Cola Co, is likely to report second-quarter revenue above analysts average estimate on Wednesday, according to StarMine. Coke has called 2015 a transition year as it attempts to figure out how to increase soda sales.

U.S. diversified manufacturer 3M Co is expected to post second-quarter earnings of nearly $ 2 per share on $ 7.83 billion in revenue on Thursday, amid a shaky global economy that is causing concern for multinational companies. The company, whose shares have fallen some 5 percent this year, sealed its biggest-ever acquisition to boost its presence in worker protection gear last month.

United Technologies Corp, which has twice this year trimmed its 2015 profit forecast, reports second-quarter earnings on Tuesday. The diversified industrial conglomerate last month warned of weak order trends for its Otis elevator business, and said its UTAS aircraft components and systems unit would not hit sales growth targets in the commercial aftermarket business. Wall Street is also waiting for a decision on whether United Technologies will sell or spin off its Sikorsky helicopter unit.

Boeing Co posts second-quarter results on Wednesday. The company on Friday said it would take a $ 536 million after-tax charge related to its aerial refueling tanker for the U.S. Air Force. The commercial aircraft business will still show strong underlying growth, after delivering 381 commercial jets in the first half, more than half of its annual target of 750-755 jets. Investors will be watching for the upward creep of costs related to the 787, and for signs that Boeing will continue generating strong cash flow.

Mining and construction machinery maker Caterpillar Inc is scheduled to release second-quarter earnings on Thursday. Hurt by downturns in the previously profitable mining sector, the company has made labor cuts in both U.S. and international factories. Last quarter, CEO Doug Oberhelman said the remaining 2015 quarters’ sales and profit will be lower than the first quarter. Analysts look for mostly flat results as a potentially better construction industries outlook will likely be overshadowed by soft revenue in the company’s resources industries.

Property and casualty insurer Travelers Cos Inc’s second-quarter results are expected to be in line with analysts’ estimate, according to StarMine. Travelers missed estimates last quarter, as low interest rates and a drop in the value of its energy investments further squeezed the company’s net investment income, which has been falling for the past few years as the Federal Reserve has kept interest rates at historical lows since the financial crisis.

Comcast Corp, the largest U.S. cable TV provider, reports second-quarter earnings on Thursday, as the pay-TV market continues to grapple with stagnation. Wall Street will be keeping a close watch on Comcast’s video and broadband subscriber metrics. Investors will also look for details on whether the company’s upcoming video-streaming service “Stream”, which targets younger customers, can make up for falling pay-TV growth and hold its own in the increasingly competitive online streaming service market.

China will be a hot topic for General Motors Co executives when they report second-quarter results on Thursday. Car sales in China have slowed sharply posing a challenge to the Detroit automaker, which has counted on sustaining 9-10 percent profit margins in China to offset weak performance in other markets outside the United States. Barclays this week cut its rating on GM to “equal weight” from “overweight” and predicted GM management would have to lower its mid-term targets for China. GM also has trimmed production in Europe. So far, Chief Executive Mary Barra has shown no sign that she intends to lower her profit targets, and she has booming U.S. demand for GM’s pickup trucks and large sport utility vehicles to buoy overall results.

Yahoo Inc posts second-quarter results on Tuesday. The online search and advertising company is expected to report earnings slightly above analysts’ estimate, according to StarMine. Yahoo has been struggling to revive revenue growth with acquisitions and product revamps as its once-hot web portal and email service have lagged those of rivals such as Google and Facebook. All eyes will be on the future of its stake in Yahoo Japan and whether a possible change in U.S. tax regulations is likely to affect its planned spinoff of its stake in Alibaba Group.

On Wednesday, chipmaker Qualcomm Inc is expected to report third-quarter revenue marginally below estimates, according to StarMine, hurt by the loss of a key customer and delays in product launches by some smartphone makers that have hurt sales of its flagship Snapdragon chips. On the same day, Texas Instruments Inc is expected to report second-quarter profit above analysts’ average estimate. Texas Instruments has been winding down its unprofitable wireless business and focusing on its analog and higher-margin embedded chips business. However, the company has also been hurt by slowing demand for PCs. Investors will watch for the impact of a weak PC market on results and the company’s third-quarter forecast.

On Wednesday, data storage products maker SanDisk Corp is expected to report second-quarter revenue slightly below market expectations, according to StarMine. The company has been struggling to meet demand for its memory chips and solid-state drives. It has also been grappling with lean inventory and lower pricing, forcing it to slash revenue forecasts. Investors will look for management commentary on the outlook for the rest of 2015. Also, data storage products maker EMC Corp posts second-quarter earnings on Wednesday. The company is expected to a report quarterly profit below analysts’ estimate, according to StarMine. EMC, which slashed its full-year revenue and profit forecasts in April, is struggling with slowing sales growth in its main data storage products business. Investors will look for its third-quarter forecast.

Cost cuts and new treatments for cancer and diabetes are expected to help Eli Lilly and Co report second-quarter earnings growth on Thursday, despite the stronger dollar and generic competition for its Cymbalta depression drug. On the same day, Bristol-Myers Squibb Co is expected to report lower second-quarter earnings and sales, hurt by the end of a longstanding agreement allowing it to sell blockbuster schizophrenia drug Abilify in partnership with Japanese drugmaker Otsuka Holdings Co. Canada’s Valeant Pharmaceuticals International Inc reports second-quarter results. The company is reportedly interested in buying Zoetis Inc and CEO Mike Pearson’s comments about its M&A plans are usually the headline from Valeant conference calls. Biogen Inc will likely report better-than-expected second-quarter profit on Friday, as sales of its key multiple sclerosis drug, Tecfidera, are expected to perk up after disappointing Wall Street last quarter. On the same day, AbbVie Inc, which agreed in March to pay $ 21 billion for smaller U.S. drugmaker Pharmacyclics, is expected to report strong profit and sales growth in the second quarter, largely due to continuing strong sales growth of its Humira treatment for rheumatoid arthritis.

Oilfield services provider Baker Hughes Inc, which is in the process of being acquired by Halliburton Co, is expected to report a loss in the second quarter as E&P companies scale back capital spending due to depressed oil prices. The company warned in April that it expects rig count to drop 30 percent on a sequential basis. However, the focus this time will be on the pending deal with Halliburton.

On Thursday, Boston Scientific Corp is expected to report a fall in second-quarter profit, according to StarMine, as the company continues to face litigation charges. The company is in court over claims that its transvaginal mesh device has injured patients. Separately, Intuitive Surgical Inc is expected to report lower-than-expected second-quarter profit and revenue on Tuesday, according to StarMine, as the company experiences weakness in its Instrument & Accessory business unit.

Abbott Laboratories Inc is expected to report stronger second-quarter profit on Wednesday, as sales at the company’s three biggest business units – nutritional products, diagnostic products and pharmaceutical products – rose. Analysts will look at whether the company, which gets nearly 70 percent of its revenue from outside United States, is able to maintain the 30-percent-plus growth rate it has seen in branded generic sales.

Burrito chain Chipotle Mexican Grill Inc is expected to report second-quarter sales slightly above the average estimate on Tuesday, according to StarMine. The company expects lower sales this year after it fired a pork supplier for not giving its pigs outdoor access. Chipotle has started importing pork from United Kingdom-based Karro Food to supply most of its Florida restaurants. The restaurant chain, which had temporarily stopped serving its popular carnitas, is bringing the popular pork dish back to some select stores across the United states. Analysts believe that the return of carnitas will drive traffic in the coming quarters. On Thursday, Dunkin Brands Group Inc, the owner of the Dunkin Donuts and Baskin-Robbins chains, is likely to report second-quarter sales slightly above analysts’ estimate, according to StarMine. The company raised its full-year revenue and adjusted profit forecasts in April after a strong first quarter and its deal to sell Dunkin K-cups at groceries and other retail outlets and online through J M Smucker and Keurig Green Mountain. Investors will look for updates on sales of its K-cups through Keurig and Smucker, progress on Dunkin’s loyalty program and its plan to launch online ordering next year.

Printer maker Lexmark International Inc reports second-quarter results on Tuesday. The company is expected to report a profit slightly below estimates, according to StarMine. Analysts expect cost reductions to offset the effect of currency pressure on operating profit. For 2015, analysts also expect revenue from the company’s hardware and supplies unit to drag.

On Wednesday, Newmont Mining Corp, the world’s second-biggest gold producer, is expected to report higher second-quarter earnings on the back of lower costs, helped by weaker oil prices and local currencies, and despite weaker gold prices in the quarter.

AutoNation Inc, the largest U.S. auto dealer group, is also expected to report a second-quarter profit above analysts’ estimate, according to StarMine. Investors will be interested to see if the company’s soon-to-be launched online service ‘AutoNation Express’ has the potential to boost vehicle sales.

Advertising agency Interpublic Group of Cos Inc is expected to report a second-quarter profit above the average estimate, according to StarMine. The company has been improving its operating margins, helped by improvements in creative agencies. Investors will look for improved margins and the impact of account reviews on its results.

F5 Networks Inc will report third-quarter results after market on Wednesday. Last quarter, the company warned of a continued foreign currency impact. F5, whose customers range from Facebook Inc to the U.S. government, has also been expanding its suite of security products to better protect applications and networks against malware, phishing and cyber threats.

Teck Resources Ltd’s second-quarter results on Thursday are expected to continue to be weighed down by weaker metallurgical coal prices, outweighing small improvements in copper and zinc prices. The market will be looking for signs of a further dividend cut after Teck slashed its dividend by 67 percent in April. There will likely be questions on whether Teck has bid for Barrick Gold’s Zaldivar copper asset, which is on the market. On the same day, Canada’s largest oil and gas rig contractor Precision Drilling Corp is expected to report a bigger second-quarter loss as customers cut back spending amid a steep drop in crude prices. Investors will want to know more about the company’s spending plans and demand for its rigs. Also, land rig provider Patterson-UTI Energy Inc is expected to swing to a second-quarter loss as oil and gas producers cut back on drilling. Patterson-UTI had an average of 122 rigs active in the second quarter, down from 201 rigs a year earlier. Still, the company has fared better than its rivals, helped by demand for new, faster rigs that help oil drillers cut costs and operate more efficiently. Investors will want to know if demand for these high-spec rigs is going to stay robust.

While U.S. airlines are expected to post far larger profits in the second-quarter than they did a year earlier, market sentiment remains low for the industry. Second-quarter unit revenue is expected to fall for American Airlines Group Inc, United Continental Holdings Inc and Southwest Airlines Co as they grow capacity, with their Dallas and Chicago hubs verging on price wars, and as the two legacy carriers face weak demand abroad from the strong U.S. dollar. Investors will listen for guidance on whether the airlines will lower their capacity growth plans in line with demand. U.S. regulators will be listening for the guidance too, as the Justice Department is investigating whether the carriers, along with Delta, have worked together illegally to keep fares high by signaling supply cuts.

On Thursday, footwear company Under Armour Inc is expected to report second-quarter sales above analysts’ estimates, according to Thomson Reuters StarMine data, helped by higher demand for Speed Form and Curry One shoes. Under Armour, which typically beats expectations, had a rough first quarter, hurt by high expenses following a couple of acquisitions.

Rogers Communications posts second-quarter results on Thursday. Canada’s largest wireless operator and a major cable and media company is under pressure to show operational progress amid a major strategic overhaul. Investors are expecting a slip in profit from a year ago on higher revenue, and will be closely watching subscriber numbers for any signs that losses are slowing or even reversing.

Dow Chemical Co, which has been benefiting from low raw material costs for making plastics, is estimated to report a rise in second-quarter profit on Thursday. The company has been ramping up its plastics operations, while shedding low-margin businesses to increase its focus on performance plastics, electronics and agricultural science products. The company, which is growing investments mainly in the U.S. Gulf Coast and the Middle East, cut 3 percent of its global workforce in May as part of a broader plan to reduce costs by $ 1 billion over three years. Investors will look for details on additional cost-cutting measures.

Xerox Corp, which has been shifting its focus to IT services from making printers and copiers, is expected to report second-quarter results on Friday that are slightly below Street expectations, according to analysts. Xerox, which gets about a third of its revenue from outside the United States, is also expected to be hurt by a strong dollar. The 110-year-old company has been moving toward services in recent years to make up for the falling sales of its copiers and printers as companies cut down on printing and personal computing moves to tablets and smartphones.

No. 1 U.S. railroad Union Pacific Corp reports second-quarter results on Thursday. After a disastrous quarter for coal freight volumes in particular across the sector, analysts will be watching how the Omaha, Nebraska-based railroad has managed costs and pricing in a weak freight environment.

PulteGroup Inc, the third-largest U.S. homebuilder, is expected to report higher revenue and profit for the second quarter on Thursday, as it sold more homes at higher prices. Investors will be looking out for an update on its full-year financial forecast.

Pet products maker Blue Buffalo Pet Products Inc is expected to start trading on the Nasdaq on Wednesday. The company’s products include the Blue Basics brand for pets with food sensitivities, and the Wilderness brand that includes more meat and the grain-free Freedom brand.

Canada’s retail sales are likely to recover from its unexpected drop of 0.1 percent in April. Market operators forecast a 0.5 percent gain in retail sales for the month of May.

Brazil’s government statistics agency IBGE issues its IPCA-15 consumer price index for the month to mid-July on Wednesday. It is expected to increase 0.50 percent, down from 0.99 percent in the month to mid-June. Also, the consumer confidence data for July is due to be released on Friday, together with the unemployment rate data on Thursday, which is expected to have increased 6.80 percent in June, compared to May’s increases of 6.7 percent. On Wednesday, data will see how Mexico’s consumer spending has fared in May, after a monthly decline of 0.3 percent in the previous month. The next day, consumer price data from the first half of July will show whether a lasting weakness in the peso has helped lift inflation from above record lows as the central bank has been hinting it could. Friday will show whether the economy has built on stronger growth posted in April when the May reading of monthly economic activity is published. The same day will also reveal whether unemployment resumed a downward trend in June.


Technology services company International Business Machines Corp is expected to report second-quarter results slightly below analysts’ average estimate, according to Thomson Reuters StarMine. The company’s revenue has been shrinking as it sheds low-profit businesses such as cash registers, low-end servers and semiconductors and focuses on emerging areas such as security software and cloud services. The new businesses have so far failed to make up for revenue lost to divestitures. IBM, which gets more than half its revenue from overseas, said in April that it expected a 7 percent impact from currency headwinds in the full year.

Morgan Stanley will report results for the second quarter. Although executives across Wall Street said mid-way through the quarter that trading activity was muted, market volatility toward the end of June and a number of big mergers may have helped Morgan Stanley’s institutional business, while analysts expect the wealth management business to keep churning out steady profit margins of 20 percent or more.

Greece is due to make its 3.5 billion euro plus interest payment to the European Central Bank. German lawmakers voted in favor of Berlin starting negotiations on a third bailout program for Greece, but a sizeable minority opposed the talks, in a setback for Chancellor Angela Merkel. Also, Greek banks are expected to re-open after they get permission from the central bank and the government. Banks have been closed since June 29 after Athens imposed capital controls.

Halliburton Co, which is buying smaller oilfield services provider Baker Hughes Inc, is expected to report a lower second-quarter profit due to a sharp decline in North American drilling activity. The focus this quarter will be on the assets that Halliburton will have to divest to win regulatory approval for its Baker Hughes deal.

Toymaker Hasbro Inc is expected to slightly miss analysts’ estimates for profit and sales in its second quarter, according to Thomson Reuters StarMine. Hasbro has been closing the gap with larger rival Mattel over the past few quarters, and is expected to reap the benefits from toy deals with the Marvel and Jurassic Park franchises after the success of the new Avengers and Jurassic World movies. However, the company’s sales are expected to be hurt from weak performing brands like Furby and Playskool as well as a shift in demand among kids from traditional toys towards electronic devices. Investors will be also looking out for any comments leading up to this year’s holiday season.

Statistics Canada releases wholesales trade data for the month of May. The wholesale trade jumped by 1.9 percent in April from March. (0830/1230) (Compiled by Nivedita Balu; Edited by Simon Jennings and Maju Samuel)

Reuters: Financials

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