- Retail gross sales, Fed audio system, Q3 earnings will likely be in focus this week.
- Netflix is a purchase with upbeat revenue and subscriber development anticipated.
- Walgreens Boots Alliance is a promote with disappointing earnings, steerage on deck.
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U.S. shares ended greater on Friday to cap off their fifth successful week in a row, as traders digested the primary batch of third-quarter earnings and continued to evaluate the Federal Reserve’s price plans for the months forward.
For the week, the benchmark and the blue-chip climbed 1.1% and 1.2%, respectively. Each averages hit contemporary all-time highs and closed at data. The tech-heavy added 1.1%.
Supply: Investing.com
The vacation-shortened week forward – which can see the U.S. inventory market closed on Monday in observance of Colombus Day – is predicted to be one other busy one as traders assess the outlook for the financial system, rates of interest and company earnings.
Most necessary on the financial calendar will likely be Thursday’s U.S. retail gross sales report for September, with economists estimating a headline improve of 0.3% after gross sales rose 0.1% throughout the prior month.
Supply: Investing.com
That will likely be accompanied by a heavy slate of Fed audio system, with the likes of district governors Neel Kashkari, Christopher Waller, Mary Daly, and Adriana Kugler all set to make public appearances.
As of Sunday morning, traders see an 86% likelihood of the Fed reducing charges by 25 foundation factors at its November 7 coverage assembly, and a 14% likelihood of no motion, in response to Investing.com’s .
In the meantime, third-quarter earnings season shifts into excessive gear, with Netflix (NASDAQ:) main the cost. Different high-profile corporations reporting embody Financial institution of America (NYSE:), Citigroup (NYSE:), Goldman Sachs (NYSE:), Morgan Stanley (NYSE:), American Specific (NYSE:), Johnson & Johnson (NYSE:), UnitedHealth (NYSE:), Procter & Gamble (NYSE:), Walgreens Boots Alliance (NASDAQ:), United Airways (NASDAQ:), ASML (AS:), and Taiwan Semiconductor (NYSE:).
No matter which course the market goes, under I spotlight one inventory more likely to be in demand and one other which might see contemporary draw back. Keep in mind although, my timeframe is simply for the week forward, Monday, October 14 – Friday, October 18.
Inventory To Purchase: Netflix
I foresee one other robust efficiency for Netflix’s inventory this week, because the streaming big’s third quarter earnings report will simply beat estimates because of favorable client demand traits and an enhancing elementary outlook.
The Los Gatos, California-based Web tv community is scheduled to launch its Q3 replace after the U.S. market closes on Thursday at 4:00PM ET. A name with co-CEO’s Ted Sarandos and Greg Peters is about for five:00PM ET.
Market members count on a large swing in NFLX inventory after the print drops, in response to the choices market, with a doable implied transfer of seven.9% in both course.
Revenue estimates have been revised upward 29 occasions within the final 90 days, reflecting rising confidence amongst analysts. Solely two downward revisions have been famous, underscoring Wall Avenue’s bullish sentiment towards Netflix.
The corporate’s current cost-cutting measures, together with its skill to drive subscriber development, have positioned it as a dominant participant within the streaming area.
Supply: InvestingPro
Netflix is seen incomes $4.53 per share, leaping 37% from EPS of $3.11 within the year-ago interval. In the meantime, income is forecast to extend 14.3% year-over-year to $9.76 billion.
If confirmed, this might signify the best quarterly gross sales in Netflix’s 27-year historical past, pushed by robust demand for its lower-cost, ad-supported tier and the corporate’s ongoing crackdown on password sharing, a transfer that has pushed extra customers to enroll in their very own accounts.
As such, I reckon Netflix will keep its stable tempo of internet streaming subscriber additions and simply high Wall Avenue estimates of about 4.2 million new international subscribers added throughout the third quarter.
NFLX inventory hit a brand new all-time excessive of $736 on Friday earlier than ending at $722.79. At present ranges, Netflix has a market cap of $310.2 billion.
Supply: Investing.com
Shares are up 48.4% within the 12 months to this point.
InvestingPro highlights Netflix’s promising outlook, emphasizing its favorable positioning within the streaming business, which has allowed it to leverage a resilient enterprise mannequin and robust revenue development.
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Inventory to Promote: Walgreens Boots Alliance
In distinction, Walgreens Boots Alliance is about to ship a disappointing earnings report when it updates traders on its fiscal fourth quarter earlier than the market opens on Tuesday at 7:00AM ET.
The retail pharmacy big has been struggling to navigate a difficult macroeconomic setting, and the outlook for the inventory stays bleak.
In response to the choices market, merchants are pricing in a swing of about 7.5% in both course for Walgreens inventory following the print.
Earnings have been catalysts for outsized swings in shares this 12 months, as per information from InvestingPro, with WBA gapping down a large 22.7% when the corporate final reported quarterly numbers in late June.
Analysts count on a pointy decline in earnings, with forecasts calling for a drop of roughly 53% in comparison with preliminary estimates from 90 days in the past. This vital downward revision displays the quite a few challenges going through Walgreens, together with weaker client demand, rising labor prices, and protracted inflationary pressures.
Supply: InvestingPro
Wall Avenue sees Walgreens incomes $0.36 per share, in comparison with EPS of $0.67 within the year-ago interval, amid greater price pressures and declining working margins.
In the meantime, income is forecast to inch up 0.4% year-over-year to $35.55 billion, because it offers with low client spending as a result of difficult retail setting.
Including to its woes, Walgreens is predicted to offer mushy steerage for the upcoming fiscal 12 months because it struggles to adapt to the rise in reputation of on-line pharmacy and direct to client platforms, that are each seen as posing a risk to Walgreens’ enterprise.
WBA inventory ended at $9.21 on Friday, not removed from a current low of $8.22, which was the weakest degree since September 1996. At its present valuation, the Deerfield, Illinois-based retail drugstore chain operator and pharmacy providers supplier has a market cap of $7.9 billion.
Supply: Investing.com
Shares – which have been faraway from the Dow Jones Industrial Common earlier this 12 months – are down 64.7% in 2024.
Not surprisingly, Walgreens has a below-average InvestingPro ‘Monetary Well being’ rating of 1.8 out of 5.0 because of worries over its weak profitability outlook and vital debt load.
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Disclosure: On the time of writing, I’m lengthy on the S&P 500, and the through the SPDR® S&P 500 ETF, and the Invesco QQQ Belief ETF. I’m additionally lengthy on the Know-how Choose Sector SPDR ETF (NYSE:).
I repeatedly rebalance my portfolio of particular person shares and ETFs primarily based on ongoing danger evaluation of each the macroeconomic setting and corporations’ financials.
The views mentioned on this article are solely the opinion of the writer and shouldn’t be taken as funding recommendation.
Observe Jesse Cohen on X/Twitter @JesseCohenInv for extra inventory market evaluation and perception.