Stock Market Futures Edge Higher Ahead Of Corporate Earnings
U.S. stock futures are on the recovery in early morning trading on Tuesday this week. This follows a bumpy start to the current trading week. Even as a plethora of major names are set to report earnings, worries about the overall state of the world persist. Between surging consumer prices to ongoing supply chain disruptions and global shortages, there is plenty weighing on markets now. Not to mention, year-over-year comparisons this time round would be versus a time when the economic reopening was going full throttle. As such, investors could be tempering their expectations for the current season.
Commenting on this is Rhys Williams, the chief strategist over at Spouting Rock Asset Management. Williams starts by saying, “I do think that we’re potentially in for a tough earning season, only because when people gave guidance [last quarter], the input costs have clearly gotten worse than they expected.” He continues, “So you have further increases in costs. And then at the same time, the consumer has gotten a little rockier in the month of March. So I expect that there will be some revenue misses.” In closing the strategist notes that all this could signal possible earnings letdowns for the current batch of financial releases. By his estimates, there will “certainly” be much more than compared to the previous four to five quarters.
Nonetheless, even with these factors at play, investors will still likely be keeping an eye on the top stock market news today. On this front, we have plenty to consider today. As of 4:09 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading higher by 0.33%, 0.34%, and 0.38% respectively.
Netflix Earnings On Tap After The Closing Bell: What To Watch
Among the top names set to report earnings in the stock market today would be Netflix (NASDAQ: NFLX). After today’s closing bell, the streaming industry titan is set to post its first fiscal quarter results. To put things into perspective, Wall Street estimates currently point towards a total revenue of $7.94 billion alongside earnings of $2.95 per share. This would represent a 10% year-over-year increase in revenue but a sizable dip in earnings per share year-over-year. In terms of revenue, it would be in line with Netflix’s prior outlook for the quarter. Financials aside, there are also other key metrics to consider later today.
Overall, the main highlight during Netflix’s earnings call will be its subscriber count. As most would expect, investors and analysts alike are looking out for more signs of deceleration on this front. After all, Netflix’s surge in popularity during the pandemic would likely be stabilizing over two years later. As it stands, consensus estimates are suggesting a possible 2.51 million added subscribers for the first quarter. While impressive at face value, it would represent the lowest level since Q2 2021. Should this be the case, it would leave Netflix with a total subscriber base of over 224 million. With all eyes on Netflix today, NFLX stock could likely see some action as well.
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IBM Earnings Preview
Another firm to consider on the earnings front today would be International Business Machines (NYSE: IBM) or IBM, for short. With IBM being arguably among the largest names in the enterprise tech space today, IBM stock would be in focus. Similar to Netflix, the tech goliath is set to report its latest quarterly financials after today’s market close. For now, word on Wall Street suggests that IBM could post an earnings of $1.39 per share on revenue of $13.84 billion. To point out, this would translate to year-over-year dips of over 21% across both measures. While companies may not be rushing to upgrade their tech as much now, IBM’s offerings still remain relevant. Accordingly, services and tech that were adopted during the pandemic require maintenance and continued support from the company.
Despite the year-over-year deceleration, analysts seem to be optimistic about IBM’s current prospects. Notably, Morgan Stanley (NYSE: MS) analyst Erik Woodring upgraded IBM stock just last week. The bank now has an Overweight rating on the stock, raising it from Equal-Weight. On top of that, Woodring also has a $150 price target on it, citing IBM as a “solid defensive play.” Moreover, the analyst also adds that IBM will likely “outperform in a scenario of IT hardware budget cuts.” This would make sense seeing as a majority of IBM’s sales come from recurring revenue sources. As such, I could see investors considering IBM stock in the stock market today.
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Zendesk On The Rise After Reports Of Potential Sale Pressures From Activist Investor
In other tech-related news, shares of customer relations software company Zendesk (NYSE: ZEN) are gaining attention now. For the most part, this is likely a result of the latest reports surrounding the company. Diving right in, Bloomberg sources suggest that Zendesk is exploring a sale as pressure mounts from activist investors Jana Partners. The report goes on to note that Zendesk is working with Qatalyst Partners advising it and is beginning to contact possible buyers. While Zendesk has yet to make any decisions, software firms and private equity entities are among the potential buyers.
In the larger scheme of things, this move follows a push from Jana Partners. The firm is currently insisting on either adding Jana members to the Zendesk board or an overall sale. Back in February, Zendesk did reject a takeover offer from a consortium of firms. The likes of which would have valued Zendesk between $127 and $132 per share. Regardless, as with most instances of potential news of a sale, the company’s shares are now gaining. The question now is whether investors should be jumping onto ZEN stock because of this.
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Notable Stock Market Earnings To Consider Today
Aside from all this, there is also a wide selection of companies reporting their earnings today. In the pre-market, we have Halliburton (NYSE: HAL), Johnson & Johnson (NYSE: JNJ), and Lockheed Martin (NYSE: LMT). Additionally, the likes of Silvergate (NYSE: SI) and Truist (NYSE: TFC) are representing the financial sector today as well.
Alternatively, in the post-market, there is no shortage of exciting earnings to note as well. Aside from Netflix and IBM, Interactive Brokers (NASDAQ: IBKR), Marten (NASDAQ: MRTN), First Horizon (NYSE: FHN), and Rexford Industrial (NYSE: REXR) are on tap. All in all, the current flurry of news and earnings today will likely be keeping investors on their toes.
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