FELE - Stocks To Watch: Eyes On Chipmakers Tesla Netflix And BrightSpring IPO

2024-01-20 10:00:00 ET

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The tech sector will be in focus in the week ahead after a sizzling few sessions led by strength in chip stocks Nvidia (NVDA), AMD (AMD), Broadcom (AVGO), Arm Holdings (ARM), and Micron Technology (MU). Growth indicators will be in focus next week, with key releases including the preliminary Q4 GDP reading in the U.S. and the global flash PMIs. Central banks will also be busy, with monetary policy statements and interest rate decision expected from the Bank of Japan, European Central Bank, and Bank of Canada. In the U.S., Federal Reserve members will be in a blackout period of no public talks ahead of the next FOMC meeting on January 30-31. The earnings calendar is very busy, with Tesla (TSLA) ( preview ), Netflix (NFLX) ( analysis ), Visa (V) ( analysis ), and American Airlines Group (AAL) ( preview ) just a few of the notable companies due to report.

Earnings spotlight: Monday January 22 - Brown & Brown (BRO), United Airlines Holdings (UAL), and Zions Bancorporation (ZION).

Earnings spotlight: Tuesday, January 23 - Johnson & Johnson (JNJ), Procter & Gamble (PG), Netflix (NFLX), Verizon Communications (VZ), Texas Instruments (TXN), General Electric (GE), and Lockheed Martin (LMT).

Earnings spotlight: Wednesday, January 24 - Tesla (TSLA), Abbott Laboratories (ABT), IBM (IBM), AT&T (T), General Dynamics (GD), Las Vegas Sands (LVS), and CSX (CSX).

Earnings spotlight: Thursday, January 25 - Visa (V), Intel (INTC), Comcast (CMCSA), Union Pacific (UNP), American Airlines Group (AAL), Southwest Airlines (LUV), Levi Strauss (LEVI) and Alaska Air Group (ALK).

Earnings spotlight: Friday, January 26 - American Express (AXP), Colgate-Palmolive (CL), Norfolk Southern (NSC), and Autoliv (ALV).

Volatility watch: Options trading volume is still high on Spirit Airlines (SAVE) following the news that the Department of Justice blocked its merger with JetBlue Airways (JBLU). The regulatory shadow in the airline sector is also impacting trading on merger partners Hawaiian Holdings (HA) and Alaska Airlines (ALK). Annovis Bio (ANVS) has also seen more options bets placed on it recently than normal activity. Virgin Galactic (SPCE) and EVgo (EVGO) both have an elevated level of short interest outstanding on them ahead of the earnings season. The most overbought stocks per their 14-day relative strength index include Phunware (PHUN), Juniper (JNPR), and Drone Delivery Canada (TAKOF). The most oversold stocks per their 14-day Relative Strength Index include Spirit Airlines (SAVE), PNM Resources (PNM), and Alternus Clean Energy (ALCE).

IPO watch: BrightSpring Health Services (BTSG) is expected to start trading next week. The independent provider of home and community-based healthcare services is offering 53.3M shares in an expected range of $15.00 to $18.00. IPO lockup periods expire for blocks of shares of Warrantee (WRNT), Cadrenal Therapeutics (CVKD), Earlyworks (ELWS), Janover (JNVR), and ParaZero Technologies (PRZO). The analyst's quiet period expires on NB (NBBK) to free up analysts to post ratings. Investors will also be watching for developments with social media giant Reddit (REDDIT) which reportedly intends to launch its initial public offering in March, nearly three years after first hiring IPO advisers.

Dividend watch: Companies forecast to increase their quarterly dividend payouts include Nexstar Media (NXST) to $1.54 from $1.35, Elevance Health (ELV) to $1.67 from $1.48, Blackstone (BX) to $0.90 from $0.80, Franklin Electric (FELE) to $0.25 from $0.225, and Comcast (CMCSA) to $0.31 from $0.29.

Tesla preview: Electric vehicle maker Tesla (TSLA) will report Q4 earnings on January 24. The Austin-based company is expected to report revenue of $25.8B and EPS of $0.74. The recent price cuts on some Tesla models in key regions have the gross margin line being closely watched. Tesla is forecast to report a gross margin rate of 18.1% vs. 17.9% in Q3 and 16.0% a year ago. Free cash flow is anticipated to come in at $1.45B for the quarter. Looking ahead, Barclays thinks the most central theme for Tesla in 2024 is that it faces volume pressure in a demand-constrained environment. The reality is that 2024 could be the first time that Tesla's production volume will likely be more a function of demand than of reaching full production capacity. The firm expects Tesla to deliver 1.97M units in 2024, which is below the current consensus estimate of 2.1M units and far off from the 50% CAGR target laid out by Tesla several years ago. Options trading implies a swing in share price of 7% after the Tesla earnings report is released. Notably, Tesla fell 9% after its last earnings report. The stocks that have correlated the closest to Tesla on earnings day over the last year are Rivian Automotive (RIVN) and Polestar Automotive (PSNY).

Netflix preview: Streaming giant Netflix (NFLX) will report earnings on January 23. Consensus estimates for the quarter stand at $8.71B for revenue and EPS of $2.24. The company is expected to have added 8.93M net streaming subscribers during the quarter to end with a total count of 256.1M subscribers. Analysts have been warming up to Netflix (NFLX) ahead of the report. UBS boosted its price target to $560 and kept a Buy rating in place. The firm called Netflix the main beneficiary as the industry increases prices, consolidates platforms, cuts spending, and renews the focus on licensing. Seaport Research raised its price target to $541 from $482 and Piper Sandler hiked its PT to $475. 30 out of the last 36 EPS revisions on Netflix have been to the upward side. Options trading implies a share price swing of 8% after the report drops. Netflix rallied 16% after its last earnings report.

Investor events: The three-day TD Securities Global Mining Conference will include participation from Arizona Sonoran Copper Company (ASCUF), Endeavor Group Holdings (EDR), E3 Lithium Limited (ETL:CA), Lithium Royalty Corp. (LIRC:CA), Pan American Silver Corp. (PAAS), Piedmont Lithium (PLL), 10x Genomics (TXG), and Wheaton Precious Metals (WPM). In the consumer sector, the Jefferies Consumer Summit will include presentations by BJ's Restaurants (BJRI), Xponential Fitness (XPOF), and First Watch Restaurant Group (FWRG). Restaurant operator Jack in the Box (JACK) will hold its 2024 Investor Day event on January 24, with presentations scheduled from top management.

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