Household names as disparate as Apple Inc., Airbnb Inc. and Starbucks Corp. are expected to strip away the gloss of the latest economic data with their results this week, painting a more muted picture of US consumer health.
Though the US economy grew in the third quarter at the fastest pace in nearly two years, households are dialing back on spending, a retreat that’s also expected to show up in the earnings of VF Corp., owner of the Vans and North Face brands. Corporate results overall have been underwhelming so far this quarter, compounding concerns surrounding the Israel-Hamas war; the S&P 500 index entered “correction” territory on Friday.
China’s slowdown will be another major theme this week, with Apple and its supplier Qualcomm Inc. set to reveal the impact of sagging iPhone sales in the world’s second-largest economy.
The week will also throw a spotlight on the divergent fortunes of drugmakers Moderna Inc. and Eli Lilly & Co. The former is grappling with falling demand for its Covid shot, while the latter is boosted by expectations for its weight-loss drug.
Monday: VF Corp. (VFC US) will see its fifth straight quarter of falling sales. Sales in the Americas will shrink, but will grow in Europe and Asia, BI said. Investors will seek updates on the company’s ongoing business review and the activist-investor push for the divestment of brands such as Timberland.
Tuesday: Advanced Micro Devices (AMD US) profit is poised to rise, snapping four straight quarters of contraction, BI said. Despite improvement in its data center segment, AMD may still struggle to meet its goal of growing that part of its business by 50% from mid- to end-year, TD Cowen said.
- The number of paying users on Match’s (MTCH US) dating services is forecast to fall 5.5%, the fourth straight quarterly decline, with the steepest losses coming from the Americas. New weekly subscription plans could aid net user additions, but the shorter-term plans could intensify churn in the following quarter, KeyBanc said.
- Caterpillar’s (CAT US) adjusted earnings per share could increase 21%, down from 78% in the prior quarter. In spite of slowing profit growth, results could still be better than expected on favorable pricing and strong execution, BI said.
Wednesday: Qualcomm’s (QCOM US) revenue is likely to fall 25%, the fourth consecutive double-digit contraction, amid lackluster smartphone sales particularly in China. Operating margins should hold up given recently announced layoffs and other cost cuts, BI said. Qualcomm’s new chips could help it gain market share in the months ahead.
- PayPal’s (PYPL US) transaction margin will shrink for the third successive quarter, but Citi expects the metric to “meaningfully” improve going forward.
- Airbnb (ABNB US) is seen chalking up 16% adjusted earnings growth, down from 75% the prior quarter. Listings supply and room-night growth could be further constrained by curbs on short-term rentals, adopted by New York City and now under consideration in Canada, BI noted. The platform still sees strong traffic, but average daily rates could decline as travel demand tapers on rising geopolitical tensions amid the Israel-Hamas conflict.
- Mondelez (MDLZ US) is showing strength versus its large-cap peers based on its retail sales performance in US tracked channels, Jefferies said. Revenue could rise 14% in the quarter. The impact of weight-loss drugs such as Ozempic on the Oreo maker remains to be seen, though Walmart has already reported changes in consumer behaviors.
- Electronic Arts’ (EA US) quarterly net bookings are forecast at $1.8 billion — the upper end of its guidance range — as gamers flock to its newly launched EA Sports FC 24 game, BI said. A 10% decline in players of its Apex Legends game will weigh on earnings, seen dipping 14% from a year ago on an adjusted basis.
- Estee Lauder (EL US) is expected to post its first quarterly loss in more than three years with a 20 cent loss per share. Weaker China sales as well as softening consumer demand in the Americas and Europe are raising concerns over inventory levels, BI said.
- SolarEdge (SEDG US) has cut its third-quarter sales outlook by more than $100 million from the lower end of the previous range, citing substantial cancellations and delayed orders.
Thursday: Moderna’s (MRNA US) pre-market report comes on the heels of Pfizer slashing its annual sales guidance by $9 billion because of dwindling demand for Covid treatments. Moderna is expected to report a loss of $1.90 per share, compared with a profit in the previous year. Attention will turn to the vaccine maker’s efforts to prove that its messenger RNA technology will work against other diseases including cancer.
- All eyes will be on how much Eli Lilly (LLY US) makes from its Mounjaro weight-loss drug and whether it can keep up with demand. The appetite suppressant is expected to have generated $1.26 billion in sales in the quarter, lifting total revenue by 30%.
- Apple (AAPL US) sales will be flat compared with a year ago, though adjusted earnings could rise 8%. Investors will seek guidance on phone demand, particularly in China, where early sales of the latest iPhone model have disappointed.
- Starbucks (SBUX US) could miss the consensus estimate of 6.3% growth in quarterly same-store sales, weighed down by weakening US consumer sentiment, BI said.
- Fox Corp. (FOXA US) will reveal a 23% plunge in adjusted Ebitda in its first quarterly results since the announcement of Rupert Murdoch’s imminent departure from the helm of the media empire. Its new NFL deal, which resulted in an 80% jump in yearly fees, contributed to the profit decline, BI said.
- Paramount’s (PARA US) subscription revenue rose 40%, with sign-ups boosted by the start of the NFL season and the integration of the Showtime cable network into its streaming service, BI said. Free cash flow will turn positive after four quarters with expenses cut by actor strikes that have already delayed its film releases.
- Shopify (SHOP US) will see 22% topline growth, boosted by its platform for larger merchants and non-US business user base, Baird said. Looking ahead, Citi has cut its fiscal year 2024 earnings estimates for Shopify, warning of waning consumer confidence.
- Booking (BKNG US) revenue will grow 20%, while smaller rival Expedia (EXPE US) will eke out a 6.8% sales gain. Though strong, travel demand is easing from its peak, and margins will shrink in tandem with slower earnings growth, BI said.
- Block’s (SQ US) third-quarter results will reveal the impact of the recent outage on its Square platform. Its key Cash App segment is poised for a 26% rise in revenue with a 12% rise in active monthly users. Citi thinks Block executives may be “inclined to discuss potential restructuring” given the focus on operating efficiency.
Friday: No notable earnings.
Author: Gabriel Sanchez, Redd Brown, Rachel Phua and Ignacio Gonzalez
