Investing

Earnings Previews: Albemarle, Applied Materials, Cisco Systems, Pioneer Natural Resources

Paul Ausick

Published: February 15, 2022 12:45 pm

More than 500 companies are scheduled to report quarterly earnings this week, with about half due on Wednesday and Thursday. A couple of major players in lithium production are on deck this week, along with a number of independent oil and gas producers.

About halfway through this earnings season, growth stocks have seen a couple of pretty consistent analyst moves. First, guidance trumps results. Specifically, lowered guidance outweighs results that beat expectations.

Second, analysts are lowering price targets on growth stocks while maintaining their ratings. Not too surprising, given the hammering that these stocks have taken so far this year.

We already have previewed earnings for four companies reporting results after markets close on Tuesday (Airbnb, Devon Energy, SolarEdge and ViacomCBS) and three others set to report before markets open on Wednesday (Barrick Gold, Kraft Heinz and Shopify).

Here is a look at four firms scheduled to report results later on Wednesday.

Albemarle

Lithium producer Albemarle Corp. (NYSE: ALB) has added more than 46% to its share price over the past 12 months. The going has been especially smooth since mid-August of last year. Since then, shares have bounced around but currently trade at a virtually identical price. Battery-grade lithium carbonate prices, however,  have traded up by nearly a third in the past month to around $52.50 per kilogram. Since late January, Albemarle’s stock price has increased by 16%. Tight supplies of battery-grade lithium could be the story for the next several months.

Analysts are bullish on Albemarle. Of 23 brokerages covering the stock, 13 have Buy or Strong Buy ratings and seven rate the stock at Hold. At a recent price of around $238.80 a share, the implied gain based on a median price target of $280 is 17.3%. Based on the high price target of $325, the upside potential is 36.1%.

Fourth-quarter revenue is forecast at $889.88 million, which would be up about 7.1% sequentially and 22.2% higher year over year. Adjusted earnings per share (EPS) are forecast at $0.98, down 6.2% sequentially and about 16.2% lower year over year. For the full 2021 fiscal year, analysts expect Albemarle to report EPS of $4.04, down 2%, on sales of $3.33 billion, up about 6.4%.

Albemarle stock trades at 59.4 times expected 2021 EPS, 39.1 times estimated 2022 earnings of $6.14 and 28.9 times estimated 2023 earnings of $11.44 per share. The stock’s 52-week range is $133.82 to $291.48. Albemarle pays an annual dividend of $1.55 (yield of 0.65%). Total shareholder return over the past year was nearly 47%.

Shares of semiconductor equipment maker Applied Materials Inc. (NASDAQ: AMAT) have added about 19% in the past 12 months. Over the past two years, shares have more than doubled, but the first several weeks of this year have seen the stock sink by around 15%. Given Tuesday morning’s announcement of Intel’s offer to acquire chipmaker Tower Semiconductor and the positive impact that deal is having on other semiconductor stocks, Applied Materials should see some sunny days ahead.

Of 32 analysts covering the stock, 21 have Buy or Strong Buy ratings on the shares, and the other 11 have a Hold rating. At a share price of around $138.20, the upside potential based on a median price target of $175 is 26.2%. At the high target of $208, the upside potential is 50.5%.

For the company’s first quarter of fiscal 2022, analysts are expecting revenue of $6.16 billion, up 0.6% sequentially and 19.4% year over year. Adjusted EPS are forecast at $1.85, down 4.4% sequentially but up 33.1% year over year. For the full fiscal year, analysts are currently forecasting EPS of $8.20, up 19.9%, on sales of $26.52 billion, up 15%.

The stock trades at 16.8 times expected 2022 EPS, 15.5 times estimated 2023 earnings of $8.92 and 15 times estimated 2024 earnings of $9.24 per share. The stock’s 52-week range is $105.50 to $167.06. Applied Materials pays an annual dividend of $0.94 (yield of 0.69%). Total shareholder return over the past year was 19.4%.

Cisco Systems

Networking giant and Dow Jones industrial average component Cisco Systems Inc. (NASDAQ: CSCO) has posted a share price gain of about 17.6% over the past 12 months including a drop of nearly 15% since late December. A reported $20 billion offer from cloud data analysis firm Splunk was rejected on Monday, and if Cisco can follow that with better-than-expected results and upside guidance, shareholders will be very pleased.

Analysts are mostly bullish on the stock, with 14 of 28 rating it a Buy or Strong Buy, and the other 14 have Hold ratings. At a share price of around $54.10, the upside potential based on a median price target of $64 is 18.3%. At the high price target of $73, the upside potential is 34.9%.
For Cisco’s second quarter of fiscal 2022, analysts are expecting revenue of $12.66 billion, a decline of 1.9% sequentially and an increase of 5.9% year over year. Adjusted EPS are forecast at $0.81, down 1.2% sequentially and up by 2.5% year over year. For the full fiscal year, analysts currently estimate EPS of $3.42, up 6.2%, on revenue of $52.74 billion, up about 5.9%.

Cisco’s stock trades at 15.8 times expected 2022 EPS, 14.7 times estimated 2023 earnings of $3.69 and 13.8 times estimated 2024 earnings of $3.91 per share. The stock’s 52-week range is $44.15 to $64.28. Cisco pays an annual dividend of $1.47 (yield of 2.74%). Total shareholder return over the past year was 17.5%.

Pioneer Natural Resources

Pioneer Natural Resources Co. (NYSE: PXD) is the country’s second-largest independent producer of oil and natural gas, with a market cap of around $53 billion. Only ConocoPhillips is larger. The company’s stock has added about 71% to its share price over the past 12 months, thanks largely to an increase in crude oil prices that began in late September. Free cash flow nearly doubled to $7.68 per share in the prior quarter and should remain strong in the company’s fourth quarter as well.

Analysts are solidly bullish on the stock, with 25 of 33 giving the shares a Buy or Strong Buy rating. The rest have Hold ratings. At a share price of around $209, the upside potential based on a median price target of $237.50 is 13.6%. At the high target of $309, the upside potential is 47.8%.

Consensus estimates call for fourth-quarter revenue of $4.79 billion, down 6.7% sequentially but 157.5% higher year over year. Adjusted EPS are forecast at $3.87, down 6.4% sequentially and up 261.6% year over year. For full fiscal 2021, Pioneer is projected to post EPS of $12.67, up 512%, on revenue of $15.37 billion, up 130%.

The stock trades at 17.1 times expected 2021 EPS, 10.0 times estimated 2022 earnings of $21.63 and 10.5 times estimated 2023 earnings of $20.64 per share. The stock’s 52-week range is $131.76 to $232.84. The company pays an annual dividend of $2.23 (yield of 1.15%). Total shareholder return for the past year was 70.4%.

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