In late-morning trading on Tuesday, the Dow Jones industrials were down 0.27%, the S&P 500 down 0.14% and the Nasdaq 0.17% lower.
Before markets opened on Tuesday, Bank of America reported better-than-expected earnings per share (EPS) and revenue. Net interest income rose 25% year over year, while deposits declined by just 1%. Shares traded down about 1% Tuesday.
Goldman Sachs beat analysts’ consensus EPS estimate but missed on revenue. The bank’s global banking and markets segment posted lower revenue that was only partially offset by higher revenue in the asset and wealth management and platform solutions segments. Shares traded down 1.9% Tuesday morning.
BNY Mellon beat the consensus EPS estimate by a penny and missed the revenue estimate. Shares traded basically flat.
Ericsson missed the consensus EPS estimate but did beat revenue expectations. Sales in developed markets declined but were stronger in developing economies like India. The stock traded down about 7.9%.
Johnson & Johnson beat estimates on both the top and bottom lines. The company also raised fiscal 2023 EPS and revenue guidance. Shares traded down 2.7%.
Lockheed Martin beat both top-line and bottom-line estimates and reaffirmed full-year EPS and revenue guidance. The stock traded up 2.3% Tuesday.
After U.S. markets close Tuesday, Netflix, United Airlines and Western Alliance Bancorp are on deck to post quarterly results. Look for reports from Abbott Labs, ASML, Baker Hughes and Morgan Stanley the following morning. Then later on Wednesday, IBM, Kinder Morgan, Las Vegas Sands and Tesla take their turns in the earnings spotlight.
Here are previews of three other companies set to report results late on Wednesday afternoon.
American Express
American Express Co. (NYSE: AXP) shares have decreased more than 9% in the past 12 months. After missing consensus fourth-quarter estimates in January, fiscal 2023 revenue and EPS estimates were increased modestly, likely due to higher interest rates and expectations of continued consumer spending. Spending probably has not increased as much as originally expected, but interest rate increases have only slowed, not stopped. The Federal Reserve’s FOMC meeting early in May could set the tone for Amex and other U.S. credit card issuers.
Analysts remain lukewarm on the stock. Of 27 brokerages covering the firm, 14 have a Hold rating and another 10 have a Buy or Strong Buy rating. At a recent price of around $163.70 per share, the implied gain based on a median price target of $182.50 is about 11.5%. At the high price target of $205.00, the upside potential rises to 25.2%.
First-quarter revenue is forecast to slip sequentially by about 1.1% to $14.02 billion. That would be a jump of about 19.5% year over year. Adjusted EPS are pegged at $2.67, up 29.0% sequentially but down 2.2% year over year. For the full 2023 fiscal year, analysts are looking for EPS of $11.12, up 12.9%, on revenue of $60.58 billion, up 14.6%.
The stock trades at 14.7 times expected 2023 EPS, 13.1 times estimated 2024 earnings of $12.51 and 11.3 times estimated 2025 earnings of $14.50 per share. The stock’s 52-week range is $130.65 to $192.42, and American Express pays an annual dividend of $2.40 (yield of 1.47%). Total shareholder return for the past 12 months was negative 8.38%.
AT&T
Shares of AT&T Inc. (NYSE: T) have added about 1.6% over the past 12 months. Rival Verizon is down by more than 26% over the same period, while T-Mobile is up by more than 15%. AT&T completed its divestiture of WarnerMedia just over a year ago, but the move did not begin paying off until more recently. In 2023 to date, AT&T has gained 7.2%, Verizon is down about 0.6% and T-Mobile is up 7.6%. The focus on wireless and fiber networking has turned out to be a good thing for investors who want to see the company’s generous dividend rise further.
Sentiment on the stock remains cautious. Of 27 brokerages covering it, 13 have a Buy or Strong Buy rating, while 12 have Hold ratings. At a share price of around $19.80, the implied upside based on a median price target of $22.00 is 11.1%. At the high price target of $25.00, the upside potential is about 26.3%.
First-quarter revenue is forecast at $30.22 billion, down 3.6% sequentially and 20.7% lower year over year. Adjusted EPS are forecast at $0.59, down 3.3% sequentially and by 23.4% year over year. For the full 2023 fiscal year, EPS is expected to come in at $2.45, down 4.7%, on sales of $122.58 billion, up about 1.5%.
AT&T stock trades at 8.1 times expected 2023 EPS, 7.8 times estimated 2024 earnings of $2.52 and 7.7 times estimated 2025 earnings of $2.58. The stock’s 52-week range is $14.46 to $22.84. AT&T’s current annual dividend is $1.11 (yield of 5.61%). Total shareholder return for the past 12 months was 7.67%.
Taiwan Semiconductor
When Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) released March sales data a week ago, it reported a year-over-year increase of 3.6%. But compared to February, sales were down 10.9%, and compared to March 2022, sales had tumbled 15.4%. The share price has dropped by more than 10% over the past 12 months, despite an increase of 18.1% so far in 2023.
Nikkei Asia reported last week that 19 Taiwanese tech manufacturing firms posted a combined sales trap of 18.5% in March, the largest drop in 10 years. Those 19 companies include Apple’s main assembler, Foxconn, and TSMC. Weak demand from PC makers reportedly has cut TSMC’s production line operations by half.
Of 30 analysts covering the firm, 29 have a Buy or Strong Buy rating. At a share price of around $87.80 per American depositary receipt (ADR), the upside potential based on a median price target of $105.50 is 20.2%. At the high price target of $139.25, the upside potential is about 58.6%. Each ADR is equal to five ordinary shares traded in Taiwan.
For TSMC’s first quarter, analysts are looking for revenue of $13.96 billion, down 16.7% sequentially and 1.1% lower year over year. Adjusted earnings per ADR are expected to come in at $0.24, down 34.4% sequentially but 11.1% higher year over year. For the full 2023 fiscal year, earnings per ADR are forecast at $1.07, down 16.4%, on revenue of $74.09 billion, up 0.6%.
TSMC ADRs trade at 15.9 times expected 2023 EPS, 13.0 times estimated 2024 earnings of $1.30 and 11.3 times estimated 2025 earnings of $1.50 per share. The 52-week range is $59.43 to $101.00, and the company pays an annual dividend of $1.79 (yield of 2.03%). Total shareholder return for the past 12 months was negative 9.65%.
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