Wall Street Breakfast: The Week Ahead

Welcome to Wall Street Brunch, our preview of stock market events for investors to watch during the upcoming week. You can also catch this article a day early by subscribing to the Stocks to Watch account for Saturday morning delivery. Podcast listener? Subscribe now to receive Wall Street Breakfast by 8:00 a.m. every trading day on Seeking Alpha, iTunes, Stitcher and Spotify (click the highlighted links).

What’s next after a head-spinning week of seismic moves in the stock market? Scientists are pretty much unanimous in predicting coronavirus cases in the U.S. will continue to climb, while doctors are publicly warning the severity of the outbreak in comparison to the normal flu season could strain hospitals. Amid the uncertainty, the Federal Reserve Open Committee will hold a meeting on March 17-18 and as usual will feature remarks from Fed Chair Jerome Powell at the end. What isn’t usual is that Powell could be talking about why the Fed did or didn’t move the federal funds target rate to zero. Earnings in the week ahead are on the light side, although FedEx (NYSE:FDX) steps into the spotlight, while the event and conference calendar is decidedly on the thin side. In what would normally be a social week of March Madness get-togethers and St. Patrick’s Day festivities, the social distancing focus will involve a large number of workers and students learning the ins and out of online collaboration tools like Slack (NYSE:WORK), Canvas (NYSE:INST) and Zoom Video (NASDAQ:ZM). The week is capped with a triple watching day on March 20 of futures and options contracts expirations/rollovers. It sure doesn’t seem like we need that extra dose of volatility.

Notable earnings reports: New Age Beverages (NASDAQ:NBEV), FuelCell Energy (NASDAQ:FCEL), Coupa Software (NASDAQ:COUP) and Revlon (NYSE:REV) on March 16; FedEx (FDX), Michaels Companies (NASDAQ:MIK) and Designed Brand (NYSE:DBI) on March 17; General Mills (NYSE:GIS), Five Below (NASDAQ:FIVE) and Futu Holdings (NASDAQ:FUTU) on March 18; Darden Restaurants (NYSE:DRI), Children’s Place (NASDAQ:PLCE), Lennar (NYSE:LEN), Crowdstrike (NASDAQ:OTC:CRWD), Momo (NASDAQ:MOMO) on March 19; Tiffany (NYSE:TIF) and Hibbett Sports (NASDAQ:HIBB) on March 20.
Go deeper: See Seeking Alpha’s complete list of earnings reporters.

Spotlight on FedEx: FedEx (FDX) is one of the first heavyweight multinationals to report earnings after the coronavirus acceleration in the U.S. Analysts project the shipper will report revenue of $16.9B, consisting of $8.7B from the FedEx Express segment, $5.6B from the ground segment and $1.7B from the freight segment. EPS of $1.48 is expected and operating margin is anticipated to come in at 3.1%. What about guidance? How FedEx models and discusses the coronavirus impact on the U.S. economy could swing UPS (NYSE:UPS) up or down and sway the transportation sector as a whole.

IPO watch: There are no new pricings on the calendar with the IPO market largely on standby. IPO share lockup periods expire on Envista (NYSE:NVST) and IGM Biosciences (NASDAQ:IGMS) on March 16, as well as Ping Identity (NYSE:PING) and Exagen (NASDAQ:XGN) on March 17.
Go deeper: Catch up on all the latest IPO news.

Projected dividend changes (quarterly): Good news so far in dividend world, with this week’s round of projections including no payout cuts. Watch for dividend adjustments on TJX Companies (NYSE:TJX) to $0.26 from $0.23, Cousins Properties (NYSE:CUZ) to $0.32 from $0.29, Fulton Financial (NASDAQ:FULT) to $0.14 from $0.13, Children’s Place (PLCE) to $0.60 from $0.56, Raytheon (NYSE:RTN) to $1.00 from $0.9425, Independent Bank (NASDAQ:IBTX) to $0.46 from $0.44, Williams-Sonoma (NYSE:WSM) to $0.50 from $0.48 and International Banc (NASDAQ:IBOC) to $0.57 from $0.55. Go deeper: Read the latest dividend analysis.

M&A tidbits: Shareholders of Habit Restaurants (NASDAQ:HABT) vote on the buyout by Yum Brands (NYSE:YUM) on March 18. The tender offer for Thoma Bravo’s acquisition of Instructure (INST) expires on March 20. The go-shop on the Fidelity National Financial (NYSE:FNF) acquisition of FGL Holdings (NYSE:FG) expires on March 20.

Analyst/investor meetings: There is a smattering of meetings this week that could include some guidance updates. The schedule includes Rite Aid (NYSE:RAD) and Kohl’s (NYSE:KSS) on March 16, Manhattan Associates (NASDAQ:MANH) and American Express (NYSE:AXP) on March 17, Square (NYSE:SQ) and British American Tobacco (NYSE:BTI) on March 18, as well as Hershey (NYSE:HSY) and Walmex (OTCPK:WMMVF) on March 19.

Space Summit 2020: The Space Summit will pick up the global conversation from last year’s event in New York and bring it to Australia. It will convene leading players from the private sector, government, civil society and academia to discuss the next steps for the space economy. The focus could throw a spotlight back on SpaceX (SPACE) and Virgin Galactic (NYSE:SPCE). For investors interested in the space economy, a catch-all investment is the Procure Space ETF (NASDAQ:UFO). Top holdings include Maxar Technologies (NYSE:MAXR), Garmin (NASDAQ:GRMN), Trimble (NASDAQ:TRMB), Viasat (NASDAQ:VSAT), Eutelsat Communications (OTCPK:EUTLF), Iridium Communications (NASDAQ:IRDM) and Inmarsat (OTCPK:IMASF).

Microsoft: Keep an eye on Microsoft (NASDAQ:MSFT) after Friday’s post-close announcement of Bill Gates’s exit from the board sent shares down 2% in AH trading. Wedbush Securities analyst Dan Ives isn’t getting pushed off his Outperform rating on MSFT due to the development, saying the Gates move is an indication in the confidence in CEO Satya Nadella and his transformation of Microsoft into a cloud behemoth with Azure and Office 365 front and center.

Toyota: While business activity slows down in the U.S., it’s a different story in China. Toyota (NYSE:TM) says that production at its vehicle plant in Guangzhou, China is scheduled to return to normal next week after a month-long halt due to the coronavirus outbreak. The Toyota Camry/Yaris plant in southeast China will return to production levels from before the outbreak accelerated last month.

Forward thinking: Jefferies is calling out ten stocks that it sees as the best candidates to rebound from the market shellacking. The screen of stocks was for names with a market cap larger than $2B, an estimated 12-month gain of more than 20% and a current price-to-book ratio that is near the 15-year low. The Jefferies list includes Salesforce (NYSE:CRM), Cognizant Tech (NASDAQ:CTSH), Eastman Chemical (NYSE:EMN), Walgreens Boots Alliance (NASDAQ:WBA), L3Harris Technologies (NYSE:LHX), Accenture (NYSE:ACN), Bristol-Myers Squibb (NYSE:BMY), CVS Health (NYSE:CVS), AT&T (NYSE:T) and Microchip Technology (NASDAQ:MCHP).

Restaurants: The restaurant sector has been battered over fears of just how steep the traffic drops will be in the U.S. for March and April. While some of the share price drops over the last month have been stunning (Dine Brands (NYSE:DIN) -60%, Brinker (NYSE:EAT) -60%, Darden (DRI) -50%, Denny’s (NASDAQ:DENN) -50%, Cheesecake Factory (NASDAQ:CAKE) -46%, Cracker Barrel (NASDAQ:CBRL) -42%)) some analysts see it as overdone. UBS’ Dennis Geiger says in his assessment of the beat-up sector that his firm prefers heavily franchised business models like McDonald’s (NYSE:MCD) and Domino’s Pizza (NYSE:DPZ) featuring lower operating leverage and carryout/delivery emphasis. The firm also sees Restaurant Brands (NYSE:QSR) and Yum Brands (YUM) as resilient business models due to their scale, diversification and quality brands to support defensive growth. Within casual dining, Darden Restaurants (DRI) and Texas Roadhouse (NASDAQ:TXRH) are called out as quality businesses, with strong balance sheets and other resilient attributes. Investors also could consider the impact of the coronavirus outbreak on food delivery services. Orders for Instacart (ICART), Postmates (POSTM) and DoorDash (DOORD) have surged in recent weeks as more people have stayed at home, while Amazon (NASDAQ:AMZN) notified customers that Prime Now deliveries would take longer than usual because of the rising demand. Does a wide outbreak raise concerns over ordering delivery or boost demand even further?

Oppenheimer Healthcare Conference: FDA Commissioner Scott Gottlieb was scheduled to be the keynote speaker of the event that features a large number of smallcap and midcap healthcare companies. Despite the coronavirus outbreak, investors may still hear online presentations or press release updates from the list of planned participants. That list includes Concert Pharmaceuticals (NASDAQ:CNCE), BioLineRx (NASDAQ:BLRX), BioLife Solutions (NASDAQ:BLFS), Verrica Pharmaceuticals (NASDAQ:VRCA), Innate Pharma (NASDAQ:IPHA), Salarius Pharmaceuticals (NASDAQ:SLRX), VolitionRx (NYSEMKT:VNRX), Amedisys (NASDAQ:AMED), Viking Therapeutic (NASDAQ:VKTX), Marinus Pharmaceuticals (NASDAQ:MRNS), Iovance Biotherapeutics (NASDAQ:IOVA), Constellation Pharmaceuticals (NASDAQ:CNST), Kura Oncology (NASDAQ:KURA), Homology Medicines (NASDAQ:FIXX), Nuance Communications (NASDAQ:NUAN), Exelixis (NASDAQ:EXEL), Aldeyra Therapeutics (NASDAQ:ALDX), Moderna (NASDAQ:MRNA), PolarityTE (NASDAQ:PTE), Otonomy (NASDAQ:OTIC), Invitae (NYSE:NVTA), Cooper Companies (NYSE:COO), Brainsway (NASDAQ:BWAY), LeMaitre Vascular (NASDAQ:LMAT), Cue Biopharma (NASDAQ:CUE), Intec Pharma (NASDAQ:NTEC), AngioDynamics (NASDAQ:ANGO), Fate Therapeutics (NASDAQ:FATE), Marker Therapeutics (NASDAQ:MRKR), UroGen Pharma (NASDAQ:URGN), X4 Pharmaceuticals (NASDAQ:XFOR), Millendo Therapeutics (NASDAQ:MLND) and Arrowhead Pharmaceuticals (NASDAQ:ARWR).

Business updates: Blueprint Medicines (NASDAQ:BPMC) plans to host a live conference call on March 16 to report updated data from Part 1 of the Phase 2 Pionner trial of avapritinib in patients with indolent systemic mastocytosis. McKesson (NYSE:MCK) has a call scheduled for March 17 to discuss the completion of Change Healthcare spinoff. Shares of McKesson are down 21% over the last month.

Stock splits: Telus (NYSE:TU) is scheduled to execute a 2-for-1 stock split on March 17. The company says the split will enhance its trading liquidity, double the shares outstanding to approximately 1.2B and improve the affordability of shares for smaller retail investors.

Barron’s mentions: There is a warning that the coronavirus outbreak poses an existential threat to airlines amid the widespread collapse in supply chains, trade, business and social activity. Spirit Airlines (NYSE:SAVE) is singled out as an airline that might not survive. The publication names seven stocks that could prosper amid the slump in oil prices. Concho Resources (NYSE:CXO), Cabot Oil & Gas (NYSE:COG), Phillips 66 (NYSE:PSX), Euronav (NYSE:EURN), International Seaways (NYSE:INSW), Scorpio Tankers (NYSE:STNG) and Valero Energy (NYSE:VLO) make the list. A Barron’s roundtable was convened to address what stocks look cheap amid the coronavirus-instigated rout. The list of long-term picks includes Applied Materials (NASDAQ:AMAT),Becton Dickinson (NYSE:BDX), Charles Schwab (NYSE:SCHW), Phillips 66 (PSX), Ingevity (NYSE:NGVT), UnitedHealth Group (NYSE:UNH), Merck (NYSE:MRK), Amgen (NASDAQ:AMGN), CME Group (NASDAQ:CME), Quaker Chemical (NYSE:KWR), West Pharmaceutical Services (NYSE:WST), Illumina (NASDAQ:ILMN), Herc Holdings (NYSE:HRI), Crane (NYSE:CR). In a big picture look, economist Ed Yardeni is trotted out to issue a prediction that the S&P 500 Index will swing to as low as 2,300 before recovering to 2,900 by the end of the year. “If you have cash, this is the time to buy quality names, some of the dividend-yielding stocks. They’re trashing utilities, consumer staples, quality companies that pay dividends and have always paid dividends in recessions,” reasons Yardeni.

Sources: EDGAR, CNBC, Bloomberg, Wired, Reuters

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