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Promotions » This Week’s Results: Goldman Sachs, Netflix & More!

Promotions » Earnings season continues with Goldman Sachs, Netflix and more!

We are now in the early stages of the reporting season after a number of US banks released their earnings last Friday. On Tuesday they will be followed by Goldman Sachs and Morgan Stanley. This week’s main event will be the results of the streaming giant Netflix, as well as the results of United Airlines.

In the UK, fashion stocks lead the calendar thanks to expected results from Burberry and Boohoo.

Calendar for the week from January 16 to January 20:

Tuesday Jan 17 Goldman Sachs T4 Morgan Stanley T4 Interactive Brokers T4 Crest Nicholson Wednesday Jan 18 Alcoa T4 Charles Schwab T4 PNC Financial T4 Prologis T4 JB Hunt T4 Kinder Morgan T4 United Airlines T4 Burberry T3 Thursday Jan 19 Netflix T4 P&G T2 Premier Foods T3 Boohoo Friday, January 20 Schlumberger T4

netflix

Netflix stock will be a major test in the stock market this week as the company tries to reassure markets that it is back on track after a rough 2022. Remember, Netflix lost subscribers for the first time last year, in addition to Disney overtaking it and seeing its share price more than halve.

Since then, Netflix has launched a new ad-supported tier aimed at cracking down on password sharing, which has been warmly received in the markets, hoping it can revitalize growth and increase revenue. However, it will take time to make an impact, and Netflix needs to convince investors that its services are still in demand.

In the third quarter, Netflix added 2.4 million subscribers and said it would accelerate to 4.5 million in the fourth quarter, but not everyone is sure it will succeed. Netflix will no longer provide subscriber forecasts in the future as it focuses on revenue and other metrics as new pricing plans are introduced. Wall Street expects Netflix’s revenue to rise 1.6% year-on-year to $7.83 billion, while overall operating profit falls 43% to $362.4 million. Both forecasts are ahead of Netflix’s.

Goldman Sachs and Morgan Stanley

Goldman Sachs and Morgan Stanley will follow the results of their banking counterparts this week, and both are expecting a bigger earnings decline than most of their peers this season.

Goldman Sachs is expected to report a 15% drop in fourth-quarter revenue to $10.7 billion thanks to its investment banking division, which has seen a sharp drop in fees due to reduced appetite for new listings, mergers and acquisitions and new financing in an uncertain economic environment. perspectives. This, plus weaker asset management earnings, is expected to cut earnings per share by 48% to $5.59. Net income will also suffer due to an increase in provisions for possible loan losses by 88% to $645.8 million.

Wall Street expects Morgan Stanley’s revenue to decline 14% year-over-year in the fourth quarter due to the crash seen in investment banking over the past year, while diluted earnings per share are expected to fall 38% to $1.27 Loan loss allowances are not expected to have the same impact as its peers, but income from investment management and institutional securities is still under pressure. Fixed income trading should be a bright spot this quarter, along with a recovery in the asset management business.

United Airlines

United Airlines will follow in the footsteps of rival Delta Air Lines, which lost ground after its profit forecast disappointed markets as labor costs surged. Even as air travel demand continues to recover and rising prices have brought revenues back above pre-pandemic levels, the industry is struggling with rising costs to stay out of the red.

Recent operational problems, including a major disruption that recently halted thousands of US flights, have only exacerbated their problems.

United Airlines’ revenue is expected to increase 49% year-on-year to $12.3 billion in the fourth quarter, with adjusted earnings per share of $2.12 compared to a $1.60 loss last year.

United Airlines has an opportunity to shine by posting a more upbeat forecast than its rival this week, though markets fear Delta’s weaker forecast is a warning of what’s to come.

Procter & Gamble

The outlook for P&G could improve, although earnings this week, when the company is expected to report its first year-on-year sales decline since 2017 and a second straight quarter of earnings decline, could be tricky.

Analysts expect P&G to report a 1.2% drop in revenue to $20.7 billion in the fiscal second quarter and a 4.1% drop in earnings per share to $1.59. While beauty is expected to remain strong with organic growth further accelerating to 5%, demand for skincare, healthcare, home care and a range of other products is slowing down.

The drop in volumes is offset by rising prices. China’s exit from Covid-19 provides an opportunity to improve its outlook, and earnings should return to growth in the coming quarters. P&G currently expects a 1-3% decline in annual revenue (with 3-5% organic growth) and a 4% increase in earnings per share.

Burberry

So far, Burberry has had a good year despite challenging macro conditions, posting double-digit sales growth, improved margins and higher earnings in the first half of the financial year.

Retail sales are expected to rise more than 30% year-over-year to £942m in the third quarter, driven by higher full-price sales thanks to reduced discounts on the company’s products and growth seen during the busy holiday shopping season.

China will remain a liability during this period, but investors are hoping its discovery could turn it into a tailwind in 2023.

Bowhu

Boohoo said it intends to address operational issues as quickly as possible by improving supply chain and inventory management while cutting costs, but warned that revenues will remain under pressure as consumers cut their spending.

With that in mind, investors will be pleased if Refinitiv analysts’ forecast that Boohoo will report third-quarter sales of £516m, up from £506.2m the previous year, turns out to be accurate.

Its current targets are to keep its adjusted Ebitda margin between 3% and 5% for the full year as the company continues to face rising costs and falling demand. Rival ASOS recently impressed shareholders by demonstrating rapid progress on its reorganization plan, including cost cuts, and posting much better results in the second half of the financial year.

The near-term outlook will remain challenging, but both stocks have been rising since early 2023 on the hope that they could emerge once the recovery ends later this year. This increases the pressure on Boohoo, especially since its share price also lagged its rival in the first weeks of the new year.

Joshua Warner, FOREX.com » Official site

Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or solicitation to buy or sell any currency contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness and accepts no liability for any direct, indirect or consequential damages that may result from anyone relying to such information.

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