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What to Watch in The Day Ahead; Wednesday, April 23
April 22, 2014 / 7:02 PM / 3 years ago

What to Watch in The Day Ahead; Wednesday, April 23

(The Day Ahead is an email and PDF publication that includes the day’s major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) New home sales probably rebounded in March after falling by 3.3 percent in February. The Commerce Department is expected to report that new single-family home sales were up to a 450,000-unit pace last month from 440,000 units in February. (1000/1400)

Boeing’s first-quarter results are expected to be hit by fewer deliveries of its 787 jet, caused by foul-ups at its production plant in Charleston, South Carolina. Much of that is factored in, and some analysts have already trimmed their price targets for Boeing’s stock. However, the company has set very modest performance goals for 2014, so it is likely to beat its “forecast” in the quarter, despite the 787 weakness and continued defense pressure due to budget cuts.

Procter & Gamble, the world’s largest maker of household products, is scheduled to report third-quarter earnings, giving Wall Street a read on consumer demand in a variety of product segments, but also in a number of different markets under pressure from geopolitical events.

Investors may pay little heed to Apple’s quarterly numbers, which may again highlight the twin challenges of slowing revenue growth and margin compression after years of torrid expansion. Instead, Wall Street wants some hint of what’s coming from the fabled Apple gizmo-lab later this year - which they’re unlikely to get when Apple reports second-quarter results. They may have to be content with the latest glimpse into how the company is doing in the all-important growth market of China. (1630/2030)

Qualcomm’s fiscal second-quarter results are expected to show the mobile chipmaker’s slowest revenue growth in more than three years as demand for smartphones cools. Smartphone makers are increasing their focus on China, where consumers favor low-cost handsets that are less profitable to make and sell than high-end devices such as the iPhone. But China Mobile’s rollout of its new 4G network this year also offers an opportunity to Qualcomm, which dominates the technology used on China Mobile’s network despite attempts by rivals to catch up.

Mobile ads are expected to continue to drive strong revenue growth at Facebook when it reports first-quarter results after markets close. But following the back-to-back multi-billion dollar acquisitions of WhatsApp and Oculus, investors will be looking for details on Facebook’s product strategy and on its ongoing M&A spending plans. Wall Street will also be eager for an update on the contribution of recent advertising initiatives in video and on Facebook’s Instagram photo-sharing app.

Delta Air Lines is expected to report higher first-quarter earnings as it offsets the negative effect of winter storms with cost controls and revenue enhancement measures such as seat and food fees. Investors will be listening for comments on the revenue outlook to assess whether demand has improved in the current quarter.

Biotechnology company Biogen Idec is expected to report higher first-quarter profit on the strength of its new multiple sclerosis drug, Tecfidera. Investors will be looking to the company to update its full-year forecast after an initial outlook projected earnings below Wall Street expectations.

Dow Chemical is likely to post results for the first quarter before the bell. The chemicals conglomerate said a recent run-up in natural gas prices would likely hurt margins at its performance plastics and performance materials units in the first quarter. The company could also be hurt by a slow start to the planting season in North America. The focus this quarter will be on the company’s asset sales and activist shareholder Daniel Loeb’s demands to separate its slow-growing petrochemical businesses from specialty chemicals.

EMC Corp, the world’s largest data storage equipment maker, is expected to report first-quarter profit slightly below expectations, according to StarMine estimates. The company has said it approved a restructuring plan consisting of job cuts that would be “substantially” completed by the end of the first quarter and result in a charge of $100 million-$120 million. However, analysts expect the company’s performance to improve during the year due to a gradual recovery in technology spending.

Texas Instruments is scheduled to report first-quarter results after the bell. Investors will be looking for stronger demand for chips used in cars, consumer electronics and industrial machinery. The chipmaker’s stock has been rewarded for its focus on returning free cash to shareholders, but its growth has been limited by a tepid global economy and lean inventory management by customers.

General Dynamics is expected to post first-quarter results before the bell. In the previous quarter, the company posted higher-than-expected results and pledged to buy back 11.4 million of its outstanding shares in the first quarter.

Thermo Fisher Scientific, the world’s largest laboratory equipment maker, is expected to report first-quarter results before the bell.

Ingersoll-Rand, the maker of Trane air conditioners and Thermo King mobile refrigeration units, is likely to report lower-than-expected first-quarter results as higher mortgage rates and rising house prices continue to put the U.S. housing market under pressure. A colder-than-usual winter in the United States is also likely to hurt the company’s sales. (0700/1100)

TD Ameritrade is expected to report second-quarter results. The fast-growing discount broker depends more than rivals Charles Schwab and E*Trade on active trading by clients to stoke its earnings. Investors are getting nervous because early results from Schwab and some full-service broker-dealers showed less exuberant trading volumes than expected.

Ericsson, the world’s biggest mobile telecom gear maker, is expected to report a large increase in first-quarter profit. Investors will be looking for margin development and signs that demand is continuing to pick up in both Europe and China as the company clinches more lucrative contracts to build up network capacity.

Norfolk Southern is likely to post first-quarter results. Kansas City Southern and Union Pacific both said last week that coal shipments in the first quarter had been higher than expected as severe winter weather and climbing prices of natural gas led to lower coal inventories. Investors will be looking for similar comments from Norfolk Southern and also whether the railroad expects the strength in coal shipments to continue this year. While the company’s agriculture business is expected to have shipped more grain after a bumper corn crop last year, its automotive business is likely to report weak shipments as U.S. auto demand fell during January and February. (0800/1200)

Industrial gas supplier Praxair is scheduled to report first-quarter results before the bell. The company had forecast earnings of $1.48-$1.53 per share for the quarter, below the average analyst estimate of $1.57 per share at the time, citing the impact of a strong U.S. dollar as half of its revenue is generated outside North America.

Johnson Controls is expected to report second-quarter results before the markets open. For one of the biggest suppliers of auto parts, rising auto production should help offset weak demand for temperature controls products for this quarter. But investors will be looking for commentary on its temperature controls business, where JCI has been strengthening its product offering through acquisitions and partnerships, while shedding assets in its automotive business.

Northrop Grumman, a maker of surveillance drones and other military equipment, is expected to post first-quarter results before the bell. In the previous quarter, its earnings were higher than expected despite a drop in revenue and the company had said share buybacks would drive earnings per share higher in 2014.

Citrix Systems is likely to announce first-quarter results after the bell. The virtualization software maker had forecast first-quarter and 2014 earnings far below the average analyst estimate in January, citing “uneven” closure of some contracts. Sales of licenses for its desktop virtualization software are expected to have stayed slow in the quarter as new customer additions lag. While demand for its mobility solutions grew, analysts said revenue from its XenApp desktop virtualization software was unlikely to accelerate until the fourth quarter, when a new version of the product would become available.

Xilinx, a maker of programmable chips, is likely to post fourth-quarter results that are in line with expectations or slightly below them, according to StarMine estimates. Analysts say Xilinx, which is highly exposed to the communications market, will benefit due to low inventory and higher telecom carrier spending. Investors will look for commentary on the current quarter, the communications industry and its effect on Xilinx.

Network gear maker F5 Networks’ second-quarter results are expected to beat analysts’ expectations, according to StarMine data. The company, which counts Facebook, Pandora, MakeMyTrip and the U.S. government as customers, had forecast strong revenue growth driven by sales of its data traffic management products in North America and Europe.

Gannett, the largest newspaper chain in the United States, is scheduled to report first-quarter earnings before the bell. On the newspaper side, it should be more of the same: declines in advertising with a modest lift in subscription revenue. The real story will be its broadcast segment, which has ballooned in size since its Belo acquisition, and whether Gannett will go the way of News Corp and Tribune and separate its business units.

ManpowerGroup, the world’s third-largest staffing company, is likely to see an increase in first-quarter profit, driven by a stabilizing economy in Europe. The European Commission has also raised its growth outlook for the Eurozone in 2014, indications that the company could witness an increase in hiring from the region. Manpower also derived a significant portion of its revenue from the placement of temporary workers last year, which could continue in the current quarter.

Statistics Canada is scheduled to release retail sales data for February. A Reuters survey of analysts predicts a 0.4 percent increase on the heels of a 1.3 percent climb in January, but this would still leave sales below November’s level, since bad weather depressed December sales by 1.9 percent. (Compiled By Shashwat Sharma)

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