The three major U.S. equity indexes closed lower again Thursday. The Dow Jones industrials ended the day down 0.46%, the S&P 500 closed 1.06% lower and the Nasdaq fell 1.73%. Six of 11 sectors closed lower, with technology (−3.00%) and communications services (−2.83%) posting the biggest losses. Energy (2.04%) was the leading gainer.

Friday morning’s report on nonfarm payrolls for October showed that 261,000 new jobs were added last month, well above the consensus estimate of 220,000 and well below the revised September total of 315,000. The headline unemployment rate rose from 3.5% to 3.7%.

The three major indexes traded mixed in Friday’s premarket session. The Dow was higher while the S&P 500 and Nasdaq both were slightly lower.

After U.S. markets closed Thursday, Block reported better-than-expected earnings per share (EPS) and revenue results. Shares gapped up in Friday’s premarket.

Carvana missed on both the top and bottom lines. The company did not issue guidance but did say that economic headwinds are likely to continue and that Carvana will have to “rapidly decrease expenses.” Shares traded down about 15% early Friday.

Coinbase also missed EPS and revenue estimates, but the company’s outlook for the coming fiscal year included a comment about managing expenses. Shares gapped up Friday morning.

PayPal beat estimates on both the top and bottom lines but issued revenue guidance below estimates. Shares gapped down in Friday’s premarket.

Starbucks beat estimates on both the top and bottom lines and reaffirmed full-year guidance. Shares traded up more than 5.5% early Friday.

Before markets opened Friday morning, Cardinal Health reported solid beats on both the top and bottom lines. The outlook for fiscal 2023 (ending in September) was in line with expectations. Shares traded up 1.7% early Friday.

DraftKings reported a smaller loss for the quarter than the loss in the prior year quarter, but improved guidance was not good enough. Shares traded down about 17.5% in Friday’s premarket.

We already have previewed Ballard Power, NiSource and Palantir Technologies, all scheduled to report quarterly results first thing Monday morning.

Here is a preview of two companies set to report quarterly results later on Monday.

Activision Blizzard

Since Microsoft made an all-cash offer of $95 per share (about $70 billion) for interactive game maker Activision Blizzard Inc. (NASDAQ: ATVI), the company’s stock has risen by about 5.4% and trades about $13 per share below Microsoft’s offering price. The stock jumped to its 52-week high the day the offer was made, before sinking to a recent low in mid-October.
The European Union is reportedly on the verge of launching an investigation into the acquisition. Microsoft apparently has not deigned to offer any concessions to EU regulators during a preliminary review of the deal that is set to close next Tuesday.

Of 23 brokerages covering the stock, 11 have Buy or Strong Buy ratings. The other 14 have Hold ratings. At a recent share price of around $72.00, the upside potential based on Microsoft’s offer of $95 is 31.9%.

Analysts have forecast third-quarter revenue of $1.71 billion, which would be up 4.4% sequentially but 9.0% lower year over year. Adjusted EPS are forecast at $0.50, up 5.6% sequentially and down 44.0% year over year. For the full 2022 fiscal year, consensus estimates call for EPS of $2.78, down 25.4%, on sales of $7.99 billion, down 4.4%.

Activision stock trades at 25.9 times expected 2022 EPS, 19.1 times estimated 2023 earnings of $3.77 and 17.8 times estimated 2024 earnings of $4.03. The stock’s 52-week trading range is $56.40 to $86.90, and the company pays an annual dividend of $0.47 (yield of 0.65%). Total shareholder return for the past year was 6%.

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Lyft

Ride-hailing operator Lyft Inc. (NASDAQ: LYFT) got a lift of more than 10% after rival Uber issued strong guidance for the current quarter earlier this week. The gain was pared to around 3.5% by the end of the day, however. On Thursday, the company announced that it would fire about 13% of its total workforce of around 5,000 employees, citing an increased risk of recession and rising insurance costs. Shares have fallen by nearly 9.5% in the past three days.

The 43 analysts covering the stock come down on Lyft’s side, with 24 having a Buy or Strong Buy rating and another 18 rating the shares at Hold. At a share price of around $13.70, the upside potential based on a median price target of $25.00 is 82.5%. At the high target of $65.00, the upside potential is nearly 375%.

Third-quarter revenue is forecast at $1.06 billion, up 7.2% sequentially and by 22.6% year over year. The company is expected to report EPS of $0.08, down nearly 41% sequentially and up three cents year over year. For the full 2022 fiscal year, analysts anticipate EPS of $0.41, solidly better than last year’s loss per share of $0.25, on sales of $4.08 billion, up 27.3%.

Lyft stock trades at 33.2 times expected 2022 EPS, 13.2 times estimated 2023 EPS of $1.03 and 8.4 times estimated 2024 earnings of $1.63 per share. The stock’s 52-week range is $10.82 to $57.68. Lyft does not pay a dividend. Total shareholder return for the past 12 months was negative 72.1%.

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