Dell, Amphenol placed on ‘Positive Catalyst Watch’ ahead of earnings: JP Morgan

Dell Technologies (NYSE:DELL) and Amphenol (NYSE:APH) were placed on J.P. Morgan’s “Positive Catalyst Watch” ahead of third quarter earnings, while Lumentum Holdings (NASDAQ:LITE) and Qualcomm (NASDAQ:QCOM) appeared on the “Negative Catalyst Watch” list.

Amphenol is expected to benefit from an artificial intelligence opportunity, despite some concerns related to high-end merchant GPU-based server racks.

“Separate to the AI datacenter content discussion, we expect a favorable outlook from a cyclical recovery, albeit not pronounced, in most end-markets outside of Autos as well as margin progression through volume leverage and acquisition synergies – together driving a favorable outlook,” said J.P. Morgan analysts, led by Samik Chatterjee, in a Monday note.

Amphenol is scheduled to release its third quarter financial results on October 23. A consensus of analysts expects the company to report adjusted earnings per share of $0.45 on revenue of $3.81B.

Dell’s next earnings report is not expected until November 26. Analysts expected Dell to report adjusted earnings per share of $2.04 on revenue of $24.7B.

“In conjunction with revenue and margin upsides from a recovery in traditional IT infrastructure, we expect the rapid expansion of the pipeline in relation to AI servers highlighted on the prior earnings call to translate into a robust backlog reassuring investors around sustainability of AI demand,” Chatterjee noted.

Meanwhile, Lumentum has an Overweight rating by J.P. Morgan and is in a good position long-term due to datacenter demand.

“That said, while the premium valuation of 37x P/E is partly explained by the trough earnings on account of recent headwinds in relation to Telco and traditional datacenter demand, at a modest premium to the long-term earnings multiple current valuations would still imply visibility into $4 of earnings power – relative to which visibility will remain limited until we see more margin upsides from stronger ramp in EML volumes,” Chatterjee said.

Lumentum is slated to release its financial results on November 7. A consensus expects adjusted earnings per share of $0.12 on revenue of $325M.

Qualcomm will deliver its latest earnings report on November 6. Analysts are calling for adjusted earnings per share of $2.57 on revenue of $9.93B.

J.P. Morgan anticipates a disappointing guide for the second quarter of fiscal year 2025 from the maker of semiconductors and wireless telecommunication products.

“Despite the more favorable set up for a Dec-Q guide, we see a more challenging set up for the March-Q, where we expect the company to imply a guide materially below current consensus for +10% y/y revenue growth,” Chatterjee noted. “The driver of the softer than consensus growth for March-25 quarter (F2Q25) is the absence of inventory refill tailwinds from Android OEMs which will constrain Smartphone revenues to expand at the pace of sell-through and content growth offset by loss of Huawei revenues on a y/y basis.”