The three major U.S. equity indexes closed higher Thursday. The Dow Jones industrials added 0.98%, the S&P 500 rose by 1.41% and the Nasdaq jumped 1.67. All 11 sectors ended the day with gains, led by materials (2.3%) and communications services (2.0%). All three major indexes traded slightly lower in Friday’s premarket session.
Before U.S. markets opened on Friday, the monthly report on personal consumption and expenditures (PCE) showed that core PCE inflation (the Federal Reserve’s favored inflation measure) rose by 0.1% month over month in July, less than the expected 0.3% increase and way below June’s increase of 0.6%. The year-over-year increase dipped from 4.8% in June to 4.6%. Fed Chair Jerome Powell is due to speak at the bank’s Jackson Hole symposium later in the morning, and his words will be carefully parsed for hints about the size of further interest rate hikes.
After markets closed Thursday, Workday reported better-than-expected earnings per share (EPS) and revenue. The company also reiterated prior guidance. Shares traded up more than 10% Friday morning.
Dell beat the consensus EPS estimate but missed on revenue as demand for personal computers slipped. The stock traded down about 4.3% Friday.
Affirm beat estimates on both the top and bottom lines but issued downside guidance for the current quarter and for the 2023 fiscal year. The stock plunged more than 13% Friday morning.
Farfetch beat top-line and bottom-line estimates and, coupled with the company’s purchase earlier this week of a minority stake in rival online luxury goods seller Yoox, shares gained more than 12% in Friday’s premarket session.
Here is a preview of three companies set to report results on Monday or Tuesday morning.
Baidu
Beijing-based Baidu Inc. (NASDAQ: BIDU) is China’s premier search engine, and like its U.S. counterpart, it has been developing a quantum computer. On Thursday, the company announced that it has completed work on a 10-qubit processor and that its first quantum computer will be available to paying customers. The shares have bounced back from a trough in mid-May to trade down just 2.6% for the past year. The company reports quarterly results before markets open on Tuesday.
Of 35 brokerages covering the stock, 29 have a Buy or Strong Buy rating on the shares and the other six rate the stock at Hold. At a recent price of around $151.00 a share, the stock’s upside potential based on a median price target of $195.10 is about 29.2%. At a high price target of $271.14, the upside potential is nearly 80%.
24/7 Wall St.Analysts expect Baidu to post second-quarter 2022 revenue of $4.23 billion, which would be a sequential decline of 2.6% and a 13.0% drop year over year. Adjusted EPS are forecast at $1.58, down 10.7% sequentially and by 38.9% year over year. For the full 2022 fiscal year, the consensus estimate calls for EPS of $7.32, up nearly 600% year over year, and revenue of $18.59 billion, down 5.1%.
The company’s stock trades at 20.6 times expected 2022 EPS, 13.8 times estimated 2023 earnings of $8.98 and 14.0 times estimated 2024 earnings of $10.75 per share. The stock’s 52-week range is $101.62 to $182.60. Baidu does not pay a dividend, and total shareholder return for the past year was negative 2.7%.
Best Buy
Over the past 12 months, shares of technology retailer Best Buy Co. Inc. (NYSE: BBY) have plunged 33.4%. Since late November when shares traded at a 52-week high, the stock has fallen by nearly 42%. The company reports results first thing Tuesday morning.
Late in July, the company cut its forecast for the second quarter, blaming high inflation and sinking customer demand compared to the year-ago quarter, when federal stimulus checks ginned up strong demand for electronics. Best Buy announced two weeks later that it would cut jobs but did not specify how many people would be fired.
Analysts have mixed sentiments on the stock. Of 27 brokerages covering the company, 16 rate the shares at Hold and nine have a Buy or Strong Buy rating. At a share price of around $78.20, the upside potential based on a median price target of $82.00 is about 4.6%. Based on a high price target of $114.00, the upside potential is 45.8%.
For the company’s fiscal 2023 second-quarter revenue, analysts are forecasting $10.24 billion, down 3.8% sequentially and 13.6% lower year over year. Adjusted EPS are forecast at $1.29, down 17.7% sequentially and by 56.7% year over year. For the full fiscal year ending in January, current estimates call for EPS of $6.08, down 39.3%, on sales of $45.85 billion, down 11.4%.
The stock trades at 12.9 times expected 2023 EPS, 10.8 times estimated 2024 earnings of $7.22 and 9.4 times estimated 2025 earnings of $8.28 per share. The stock’s 52-week range is $61.29 to $141.97. Best Buy pays an annual dividend of $3.52 (yield of 4.46%). Total shareholder return for the past year is negative 33.6%.
Pinduoduo
Pinduoduo Inc. (NASDAQ: PDD) focuses on an e-commerce marketplace that matches China’s farmers and agricultural product wholesalers directly with the country’s consumers. Like other tech companies, Pinduoduo has taken a beating over the past year, dropping nearly 40% of its share price value as a result of tighter government regulation and a threatened U.S. delisting. Since bottoming in mid-March, the stock price has more than doubled. Recent solid reports from Alibaba and JD.com have also boosted the share price. Pinduoduo is on deck to report Monday morning.
Of the 39 analysts covering the stock, 29 have a Buy or Strong Buy rating. The other 10 rate the shares at Hold. At a price of around $59.80 per share, the upside potential based on a median price target of $65.11 is about 8.9%. At the high price target of $128.29, the upside potential is about 165%.
Analysts expect fiscal 2022 second-quarter revenue to be $3.44 billion, down 8.4% sequentially and 3.6% lower year over year. Adjusted EPS are forecast at $0.41, down 11% sequentially and by 6.8% year over year. For the full fiscal year, Pinduoduo is forecast to post EPS of $1.98, up 31.6%, on sales of $16.02 billion, up 11.4%.
Pinduoduo shares trade at 30.2 times expected 2022 EPS, 22.6 times estimated 2023 earnings of $2.65 and 17.2 times estimated 2024 earnings of $3.48 per share. The stock’s 52-week range is $23.21 to $109.79. The company does not pay a dividend, and the total shareholder return for the past year was a negative 38.9%.
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