In the first half-hour of Wednesday’s regular session, the Dow Jones industrials had added 0.2%, the S&P 500 traded up 0.21% and the Nasdaq was up 0.31%. Investors are waiting on the Federal Open Market Committee minutes, set to be released Wednesday afternoon, before making a decision on where they think equities will be going in the next few months.
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Coinbase traded down about 1.5% in premarket action after it posted a bigger-than-expected per-share loss in the fourth quarter late on Tuesday. Revenue beat the consensus estimate but fell by nearly 75% year over year. The company said its plans going forward include generating positive EBITDA in “all market conditions.” Shares traded up 6.8% early Wednesday.

Palo Alto Networks beat consensus earnings per share (EPS) and revenue estimates. Guidance for the current quarter was mixed and full-year guidance was in line with expectations. Shares traded up 12.1%.

Transocean missed consensus estimates on both the top and bottom lines. Shares traded down 7.5% Wednesday morning.

Before markets opened on Wednesday, Baidu beat top-line and bottom-line estimates handily and announced a $5 billion share buyback program lasting through the end of 2025. The stock traded up 2.5%.

Stellantis overcame supply chain and logistics issues with higher prices, beating expectations on both the top and bottom lines. The company also announced a $1.6 billion share buyback program. Stellantis will also distribute $2.13 billion to employees in bonus and profit-sharing payments. Shares traded up 4.9%.

TJX Companies met the consensus EPS estimate and beat on revenue. The company also issued downside guidance for the current quarter and for its 2024 fiscal year ending in January. Shares traded down 1.6%.

After U.S. markets close on Wednesday, Coterra, eBay, Lucid and Nvidia are expected to report quarterly earnings. Alibaba, Newmont and Nikola will then take their turns in the earnings spotlight the following morning.

Here is a look at what to expect when the following three companies share their results after Thursday’s closing bell. There are no notable reports scheduled for Friday.

Over the past 12 months, Block Inc. (NYSE: SQ) has seen its share price fall by nearly 27%. Since posting a 52-week high late last March, the stock has dropped by about 51%, including a 33% bounce following a 52-week low in early November.
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Payment processing rivals PayPal and Affirm already have reported results, with only PayPal beating expectations. Block is expected to report results more like PayPal’s than Affirm’s. Also worth noting is that a handful of shareholder lawsuits related to Block’s $23 billion acquisition of Afterpay have been filed recently and more are likely to follow.

Analysts remain mostly bullish on the shares, with 32 of 45 brokerages having a Buy or Strong Buy rating. Another nine rate the stock at Hold. At a recent price of $72.00 a share, the upside potential based on a median price target of $90.00 is 25%. At the high price of $150.00, the upside potential is 108.3%.

Fourth-quarter revenue is forecast at $4.59 billion, which would be up 1.6% sequentially and by 12.5% year over year. Adjusted EPS are expected to come in at $0.30, down 29% sequentially but up 11.1% year over year. For the full 2022 fiscal year, estimates call for EPS of $1.12, down 34.5%, on sales of $17.46 billion, down 1.1%.

Block’s shares trade at about 64.2 times expected 2022 EPS, 40.7 times estimated 2023 earnings of $1.77 and 28.5 times estimated 2024 earnings of $2.52 per share. The stock’s 52-week trading range is $51.31 to $149.00. Block does not pay a dividend. The total shareholder return for the past year was negative 26.37%.

Carvana

Following a near-death experience in early December, used car retailer Carvana Co. (NYSE: CVNA) was revived in late January in what looks like nothing so much as a short squeeze. At the end of the previous quarter, Carvana stock had lost 95% of its value over the preceding 12 months. The 12-month loss three months later remains at 92%. The power of the short squeeze is limited after all. Even the fact that George Soros acquired some shares had no major impact on the share price.
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Analysts are neither excited nor demoralized by the stock price. Of 26 brokerages covering Carvana, 21 have a Hold rating and three have a Buy or Strong Buy rating. At a price of around $10.00 a share, the stock trades right at its median price target. At the high price of $22.00, the upside potential is 120%.
Carvana’s fourth-quarter revenue is forecast at $3.05 billion, down 10% sequentially and 18.7% lower year over year. The company is expected to post an adjusted loss per share of $2.37, better than the $2.67 loss per share in the prior quarter but much worse than the year-ago per-share loss of $1.02. For the full 2022 fiscal year, estimates call for an adjusted loss per share of $10.12, much worse than the year-ago loss of $1.63 per share. Full-year sales are forecast at $13.84 billion, up 8% year over year.

Carvana is not expected to post a profit in 2022, 2023 or 2024. The company’s enterprise value to sales multiple for 2022 and 2023 is 0.6, dropping to 0.5 in 2024. The stock’s 52-week trading range is $3.55 to $156.68. The company does not pay a dividend. The total shareholder return for the past year was negative 92.04%.

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Warner Bros. Discovery

Media company Warner Bros. Discovery Inc. (NASDAQ: WBD) was created following the April 2022 merger of Discovery with AT&T’s WarnerMedia. The stock posted a 52-week low in late December and has managed to rise by nearly 60% from that trough. Likely that is due to ruthless cost-cutting by CEO David Zaslav, achieved primarily through job cuts at both the studio and at Warner-owned CNN. All we can say is that the company better not miss adjusted earnings estimates.

Of 26 analysts covering the stock, there are 10 Hold ratings and 15  Buy or Strong Buy ratings. At a share price of around $15.00, the implied gain based on a median price target of $20.00 is 25%. At the high price target of $36.00, the implied gain is 140%.

Fourth-quarter revenue is forecast at $11.23 billion, which would up 14.4% sequentially. Because this is the new company’s first year, comparable data for the prior year is not available. Analysts are looking for an adjusted loss of $0.24 per share, slightly worse than the prior quarter’s loss of $0.22 per share. The estimates for the full year call for a loss per share of $1.98 on sales of $43.35 billion.

Warner Bros. Discovery stock is expected to post a net loss in 2022 and 2023. The stock trades at a multiple of 20.4 times estimated 2024 earnings of $0.50 per share. The stock’s post-merger range is $8.82 to $30.20. The company does not pay a dividend, and the total shareholder return for the past year is negative 46.8%.

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