After an hour of trading on Friday, the Dow Jones industrials were down 1.18%, the S&P 500 1.32% lower and the Nasdaq down 1.63%.
Blame the personal consumption expenditures (PCE) report. Prices and spending rose more than expected, raising the odds for more Federal Reserve tightening.
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After U.S. markets closed Thursday, Block reported mixed results, missing the earnings per share (EPS) estimate but beating revenue expectations. The company said it would be slowing the pace of expense growth significantly this year. Shares traded up 0.6% Friday morning.
Carvana missed consensus EPS and revenue estimates. The company had no upbeat comments on the current quarter either. Shares traded down 16.5%.
Warner Bros. Discovery also missed estimates on the top and bottom lines. The company reduced its debt by $7 billion — only $43 billion left to go. Maybe more big-budget movies based on Tolkien’s hobbits and wizards will work some magic for the company. Investors are skeptical. Shares traded up by 1.6%.
No notable reports were released before markets opened on Friday. Fisker and Li Auto are on deck to report earnings first thing Monday, then later in the day, look for results from Occidental Petroleum, Range Resources and Zoom Video.
Here is a look at three companies set to report results before Tuesday’s opening bell.
Norwegian Cruise Lines
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) has staged something of a comeback since the beginning of the year. Shares have added more than 33% in 2023, and the stock is down only 15.5% over the past 12 months. Royal Caribbean is down 13% over the past year and Carnival is down 47% in the period. The worry for the cruise ship operators is that fears of inflation will outstrip consumers wanting to get away from it all after the pandemic. Rising interest rates add more pressure on a group that can little afford it.
Of 19 analysts covering the stock, 10 have a rating of Buy or Strong Buy and seven have Hold ratings. At a recent price of around $16.00 a share, the upside potential based on a median price target of $18.50 is 15.6%. At the high target of $32.00, the implied gain is about 100%.
Fourth-quarter revenue is forecast to come in at $1.5 billion, which would be down 7.3% sequentially but up from $487.44 million in the year-ago quarter. Analysts expect the company to post a per-share loss of $0.84, worse than the prior quarter’s loss of $0.64 per share but well below the year-ago quarterly loss of $1.95. For the full year, Norwegian is expected to post a loss per share of $4.44, compared to last year’s loss of $8.07 per share. Revenue is forecast to reach $4.82 billion, up more than 600% from $647.99 million in 2021.
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Norwegian stock trades at about 15.1 times estimated 2023 earnings of $1.08 and 9.3 times estimated 2024 earnings of $1.76 per share. The stock’s 52-week trading range is $10.31 to $23.43, and the company does not pay a dividend. Total shareholder return for the past year was negative 15.77%.
Target
Target Corp. (NYSE: TGT) posted its 52-week on April 21 of last year, and shares traded Friday morning down more than 35% from that high. While revenue may have been solid in the fourth quarter, profits could fall by half. Target had mounds of inventory to clear out, and that hammered margins. Same-store sales are also expected to decline.
On Wednesday, the company said it plans to invest $100 million over the next three years to expand its same-day delivery service. When Target reported third-quarter results, it said that the company would focus more on same-day delivery using its 2,000 stores as distribution centers.
Of 35 analysts covering the company, 20 have a Buy or Strong Buy rating and 15 rate the shares a Hold. At a price of around $165.00 per share, the upside potential based on a median price target of $180.00 is about 9.1%. At the high price target of $220.00, the upside potential is 33.3%.
The consensus fourth-quarter 2023 revenue estimate is $30.69 billion, up 15.7% sequentially but down 1.0% year over year. Adjusted EPS are forecast at $1.40, down 9.0% sequentially and down 56.1% year over year. For the full year that ended in January, analysts expect Target to report EPS of $5.55, down 59.6%, on sales of $108.39 billion, up 2.3%.
Target stock trades at 29.7 times expected 2023 EPS, 17.8 times estimated 2024 earnings of $9.28 and 14.7 times estimated 2025 earnings of $11.24 per share. The stock’s 52-week range is $137.16 to $254.87. The company pays an annual dividend of $4.32 (yield of 2.61%). Total shareholder return for the past year was negative 12.1%.
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