The three major U.S. equity indexes closed lower Thursday. The Dow Jones industrials ended the day down 0.02%, the S&P 500 closed 0.31% lower and the Nasdaq retreated 0.35%. Eight of 11 sectors closed lower, with utilities (−1.79%) and consumer cyclicals (−1.27%) leading the slide. Technology (0.21%) and energy (0.12%) posted the largest gains.
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The only notable data point due out Friday is the National Association of Realtors report on existing home sales for October. Economists expect the number to decline from 4.71 million in September to 4.38 million. Thursday’s reports on housing starts and new building permits were slightly higher than expectations, and the report on new claims for jobless benefits slipped slightly week over week. Combined with comments from Federal Reserve officials that continued tightening was required in order to avoid a recession, markets opened lower and were unable to climb out of that early hole.

The three major indexes traded higher in Friday’s premarket session.

After U.S. markets closed Thursday, Applied Materials beat analysts’ estimates for earnings per share (EPS) and revenue. The semiconductor equipment maker also issued in-line guidance for the first quarter of fiscal 2023. Shares traded up more than 4% in Friday’s premarket.

Gap posted EPS of $0.71, compared to a consensus break-even estimate, and also surpassed revenue expectations. Earnings included a tax benefit of $0.33 per share and excluded a $53 million impairment charge related to the company’s Yeezy partnership. The stock traded up about 9% Friday morning.

Palo Alto Networks also beat estimates on the top and bottom lines. The cybersecurity specialist raised fiscal 2023 guidance. It expects fiscal year billings of $9.95 to $9.1 billion and adjusted free cash flow of 34.5% to 35.5%. Shares traded up more than 9% early Friday.

Ross Stores posted better-than-expected revenue and EPS and also issued upside guidance for fiscal 2023. The company noted, however, that it expects a “very promotional holiday selling season and ongoing inflationary headwinds.” Shares jumped about 16%.

Before markets opened on Friday, Foot Locker beat estimates on the top and bottom lines and raised guidance for a smaller loss than previously expected and better-than-expected EPS. Shares traded up about 14%.

JD.com reported better-than-expected EPS but missed the revenue estimate. The stock traded up by about 2.6%.

No notable earnings reports are due out after markets close Friday or before they open on Monday. Next week, U.S. markets are closed Thursday for the Thanksgiving holiday.
Here is a look at three companies on deck to report results before Monday’s opening bell.

Dell Technologies

Over the past 12 months, shares of Dell Technologies Inc. (NYSE: DELL) have shed more than 25% of their price. The stock hit a new 52-week low in mid-October, and shares have bounced by about 23% since then.
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Global personal computer sales fell by 15% year over year in the third quarter. Dell’s sales fell by 20%. Analysts are expecting sharp dips in earnings and revenue. Earlier this week, Dell agreed to a $1 billion settlement related to claims by shareholders that the company’s $67 billion purchase of EMC shortchanged them by billions. The settlement still needs to be approved by the court.

Sentiment among analysts remains tilted toward bullish, with 12 of 19 brokerages having a Buy or Strong Buy rating and the rest rating the stock at Hold. At a recent share price of around $42.00, the upside potential based on a median price target of $51.00 is 21.4%. At the high price target of $72.00, the upside potential is about 71.4%.

The consensus revenue estimate for Dell’s third quarter of fiscal 2023 is $24.62 billion, which would be down 6.8% sequentially and 13.3% lower year over year. Adjusted EPS are forecast at $1.61, down 4.1% sequentially and by 32.0% year over year. For the full fiscal year ending in January, analysts currently expect EPS of $6.75, up 8.4%, on sales of $102.17 billion, up 0.9%.

Dell stock trades at 6.2 times expected 2023 EPS, 6.0 times estimated 2024 earnings of $6.90 and 5.6 times estimated 2025 earnings of $7.46 per share. The stock’s 52-week trading range is $32.90 to $61.54. Dell pays an annual dividend of $1.32 (yield of 3.21%), and the total shareholder return for the past year was negative 23.5%.

Urban Outfitters

Specialty retailer Urban Outfitters Inc. (NASDAQ: URBN) has seen its share price tumble by about 32% over the past 12 months. Since reaching a peak almost exactly one year ago, the stock has fallen by more than 33%. Inventory issues that have plagued most retailers for the past year were also an issue for Urban Outfitters, and clearing that inventory at reduced prices has weighed on gross margins. Investors will want to hear that the situation is improving, not getting worse.

Analysts are cautious on the stock, with eight of 13 having a Hold rating and the other five rating the shares at Buy or Strong Buy. At a price of around $25.40 a share, the stock has outrun its median price target of $24.00. At the high target of $35.50, the implied gain is nearly 40%.
Third-quarter fiscal 2023 revenue is forecast to come in at $1.16 billion, down 2.2% sequentially but up 2.7% year over year. Analysts are forecasting EPS of $0.42, down 34.6% sequentially and by 52.8% year over year. For the full fiscal year ending in January, analysts expect EPS of $1.76, down 43.7%, on sales of $4.75 billion, up 4.5%.
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Urban Outfitters stock trades at 14.4 times expected 2023 EPS, 11.5 times estimated 2024 earnings of $2.21 and 9.7 times estimated 2025 earnings of $2.61 per share. The stock’s 52-week range is $17.81 to $38.17. The company does not pay a dividend, and the total shareholder return for the past year was negative 32.1%.

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Zoom Video

Over the past 12 months, shares of Zoom Video Communications Inc. (NASDAQ: ZM) have dropped by about 67.7%. The stock reached its 52-week high almost exactly one year ago and its 52-week low last month. The company is seeking new venues for its video conferencing program and recently partnered with AMC to launch simultaneous meetings in several Zoom Rooms at selected AMC theaters and with Tesla to deliver in-car video conferencing. While these developments are interesting, neither seems like a game changer for the company.

Analysts remain unconvinced, too. Of 32 brokerages covering the stock, 21 have a Hold rating and 10 have Buy or Strong Buy ratings. At a share price of around $82.60, the upside potential based on a median price target of $95.00 is 15%. At the high price target of $130.00, the upside potential is 57.4%.

Fiscal third-quarter revenue is forecast at $1.1 billion, up 0.3% sequentially and 4.8% higher year over year. Adjusted EPS are pegged at $0.84, down 19.9% sequentially and 24.3% lower year over year. For the full 2023 fiscal year ending in January, current estimates call for EPS of $3.73, down 26.5%, on sales of $4.4 billion, up 7.3%.

The stock trades at 22.2 times expected 2023 EPS, 22.5 times estimated 2024 earnings of $3.67 and 21.6 times estimated 2025 earnings of $3.83 per share. The stock’s 52-week range is $70.44 to $265.23. Zoom does not pay a dividend, and total shareholder return for the past year is negative 67.7%.

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