|Wall Street Breakfast: The Week Ahead|
Jun. 26, 2022 7:06 AM ET
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Economic reports in the week ahead
A rough second quarter in the market will come to an end next week, but not before big earnings reports from Nike (NYSE: NKE) and Micron (NASDAQ: MU) land on the laps of investors. The economic calendar includes updates on durable goods orders on June 27, home prices on June 28, GDP on June 29, PMI on June 30, and construction spending on July 1. Near the end of the week, oil traders will be watching the OPEC+ meeting to see if the plan is to proceed with the targeted August oil production increase against a backdrop of high prices and limited spare capacity for some members. Also watch for news out of Hewlett Packard Enterprise Company (NYSE: HPE) with the company holding its three-day edge-to-cloud HPE Discover conference. A big stock split at Shopify ( SHOP) and the mad rush at Tesla ( TSLA) to generate late-quarter deliveries will also capture attention. Those events all fall in front of a three-day holiday and with firms like JPMorgan noting that portfolio managers will be rebalancing ahead of Q3 and potentially buying more stocks in order to keep their asset mix at the expected levels.
Earnings spotlight: Monday, June 27 - Nike ( NKE), Jefferies ( JEF), and Trip.com ( TCOM).
Earnings spotlight: Tuesday, June 28 - Progress Software ( PRGS) and Aerovironment ( AVAV).
Earnings spotlight: Wednesday, June 29 - Paychex ( PAYX), General Mills ( GIS), Bed, Bath & Beyond ( BBBY), and McCormick ( MKC).
Earnings spotlight: Thursday, June 30 - Constellation Brands ( STZ), Walgreens Boots Alliance ( WBA), and Micron ( MU).
IPO watch: Onfolio (NASDAQ: ONFO) is expected to start trading in the U.S. on July 29. In Asia, Chinese podcasting startup Ximalaya is considering launching its planned Hong Kong IPO as soon as next week. Also keep an eye on Zhong Yang Financial Group ( TOP), with the first analyst ratings expected to follow the expiration of the analyst quiet period.
Nike earnings preview: Nike ( NKE) will provide its earnings report after the close on June 27. In its last quarterly update, NKE gave Wall Street a pleasant surprise, overcoming supply chain issues and inflationary pressures to beat expectations and expand margins. However, since that release, shares of the shoemaker have dropped more than 20%, amid general market fears of a recession. Meanwhile, analysts have recently focused on NKE's performance in China, with both Barclays and Morgan Stanley publishing notes recently forecasting softer-than-expected revenue in the region. BTIG is also cautious on Nike into the report. The firm said that in addition to the seemingly well-known China demand issues which could increase the probability of excess inventories building in the region, there are some emerging signs pointing to a sharp slowdown in online spending by consumers in North America. Recession talk, high gas prices, and post-stimulus consumer fatigue are also seen weighing on consumers. On the other side of the argument, Baird analyst Jonathan Komp expects China sales to come in above the consensus and lead to a top-line beat. Bank of America is also a bit more positive, with an expectation that Nike will speak constructively on the reopening in China and outlook for a rebound in its growth trajectory. However, BofA reminded that currency swings are working against Nike in 2022 and could impact guidance.
Micron earnings preview: Micron Technology ( MU) will report its fiscal third quarter results on June 30. The semiconductor company, which specializes in DRAM and NAND memory storage, has seen shares fall sharply since the start of June, hurt by a cautious outlook by industry heavyweight Intel ( INTC). Last quarter, MU topped expectations with its financial figures and offered an upbeat forecast. Ahead of the report, Wells Fargo noted that Micron issued a positive update at their recent Investor Day, but the firm also warned that data points have continued to turn more negative and near-term guidance could disappoint. The firm is still positive on the risk-reward profile for long-term investors, with management noted to be disciplined and memory expected to continue to play an increasingly important role in core-to-edge compute. Micron's strong balance sheet and buyback firepower of $5.3B were also highlighted.
Corporate events: Shareholders with Agrico Acquisition Corp. (NASDAQ: RICO) meet to vote on June 27 on the SPAC deal to combine with vertical farming company Kalera. Beginning on June 28, Hewlett Packard Enterprise Company ( HPE) will hold its three-day edge-to-cloud HPE Discover conference. Watch for the keynote address from CEO Antonoio Neri to include some details on the company's strategy. Avalara ( AVLR) will host a Virtual Analyst Day event on June 28. In the crypto world, the distribution date of Cryptyde to shareholders of Vinco Ventures (NASDAQ: BBIG). On June 28, BBIG holders will receive one share of Cryptyde ( TYDE) common stock for every ten shares of Vinco common stock held. Cryptyde is a crypto upstart focused on leveraging blockchain technologies to disrupt consumer facing industries. Performance Food Group Company (NYSE: PFGC) will host an investor day event on June 29 that will be of interest to the broad food supplier sector. Read more about the events next week that could impact shares prices in Seeking Alpha's Catalyst Watch.
Data reads: Watch for updates on monthly deliveries from Chinese automaker Li Auto ( LI), Nio ( NIO), and XPeng ( XPEV). Tesla ( TSLA) could also post its quarterly deliveries report. In the casino sector, the Macau gross gaming revenue report for June is also due out with a disappointing tally expected to be released for the local properties for Las Vegas Sands ( LVS), Wynn Resorts ( WYNN), and MGM Resorts ( MGM).
Conference schedule: The European Blockchain Convention 2022 bills itself as the most influential blockchain & crypto event in Europe. Speakers will include reps from Meta ( META), Coinbase Global ( COIN), Google ( GOOG), and American Express ( AXP). There is also some buzz around the Wells Fargo 4th Annual Bricks to Clicks Digital Conference, with Chewy ( CHWY), NuSkin ( NUS), the RealReal ( REAL), ThredUp ( TDUP), and ( BOXD) on the list of participants. Other conferences of note include the H.C. Wainwright 1st Annual Mental Health Conference, the Cantor Fitzgerald Technology ESG Conference, the Wells Fargo’s 2022 Virtual Bricks to Clicks Digital Conference, Morgan Stanley's Putting the Tech in Biotech Conference and the Stifel Virtual Cell Therapy Conference.
Stock split The Shopify ( SHOP) 10-for-1 stock split will become effective at the end of the trading day.
Box office preview: The U.S. box office is forecast to see four films grab a lion of the market share. Holdovers Top Gun: Maverick and Jurassic Park will be challenged by Warner Bros.' ( WBD) Elvis and Universal's ( CMCSA) The Black Phone. Those four films are all given a decent chance of topping $50M for the weekend, while Lightyear is also expected to top $25M to give AMC Entertainment ( AMC), Marcus Corporation ( MCS), and Cinemark ( CNK) momentum into the big 4th of July holiday weekend.
Barron's mentions: Carvana's (NYSE: CVNA) tower of problems is highlighted in the cover story. The auto retailer is in the spotlight, with some customers complaining about the registration and titling process. In Carvana's home state, the Arizona Department of Transportation is noted to have received more than 80 complaints about the company over a four-year period. The breakdown on Starbucks (NASDAQ: SBUX) in the issue was more positive, with the China business expected to finally turn around. Valuation makes sense to some analysts, with SBUX trading at just over 22X 12-month forward earnings vs. the five-year average of 27.3X. Of note, closing that gap to 25X 2024 earnings would put the stock at $98, up about 30% from the current level. Finally, the question of which are the cheapest stocks for investors to consider is tackled. Home builders and steelmakers dominate the list of value plays, led by D.R Horton ( DHI), Lennar ( LEN), Toll Brothers ( TOL), Cleveland-Cliffs ( CLF), Nucor ( NUE), Stelco Holdings ( OTCPK:STZHF), Steel Dynamics (NASDAQ: STLD) and U.S. Steel (NYSE: X).
Sources: EDGAR, Bloomberg, CNBC, Reuters, The Hollywood Reporter