Eyes On The U.S. Jobs Report, Disney Shareholder Meeting And GE Spinoff

Summary:

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The marquee event in the week ahead will be the U.S. jobs report on April 5. Economists expect 216K nonfarm payroll jobs to have been added in March, which would be a deceleration from the 275K job additions in February. The unemployment rate is forecast to trickle down to 3.8% from 3.9%. Average hourly earnings are seen rising 0.3% month-over-month from 0.1%. Ahead of the jobs report, the JOLTS and ADP reports will also be closely watched. While the earnings calendar is razor-thin for the first week of the second quarter, the automobile sector will be closely watched as monthly deliveries or quarterly sales reports roll in from Tesla (TSLA), Rivian Automotive (RIVN), Lucid Group (LCID), General Motors (GM), Ford Motor (F), and Toyota Motor (TM). The corporate calendar includes a hotly contested shareholder meeting at Walt Disney (NYSE:DIS) and a flurry of drug data presentations at the American Association for Cancer Research Meeting.

Earnings spotlight: Monday, April 1 – PVH (PVH). See the full earnings calendar.

Earnings spotlight: Tuesday, April 2 – Cal-Maine Foods (CALM), Paychex (PAYX), and Dave & Buster’s (PLAY). See the full earnings calendar.

Earnings spotlight: Wednesday, April 3 – Acuity Brands (AYI), Levi Strauss (LEVI), BlackBerry (BB), and Sportsman’s Warehouse (SPWH). See the full earnings calendar.

Earnings spotlight: Thursday, April 4 – Lamb Weston (LW), Lindsay (LNN), and Conagra Brands (CAG). See the full earnings calendar.

Earnings spotlight: Friday, April 5 – Greenbrier (GBX). See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Trump Media & Technology (DJT). Short sellers have been under intense pressure with the stock and talk of a potential gamma squeeze continues. The stock symbol DJT was used in the past by Donald Trump’s hotel and casino company before a delisting by the NYSE for a share price of below $1.00. The most overbought stocks per their 14-day Relative Strength Index include Seafarer Exploration (OTCPK:SFRX), EMCOR (EME), and WK Kellogg (KLG). The most oversold stocks per their 14-day Relative Strength Index include Project Energy Reimagined Acquisition (PEGR), Sirius XM (SIRI), and Zevia (ZVIA).

IPO watch: No new IPOs are expected to launch in the week ahead. The quiet periods will expire on Ryde Group (RYDE) and Lucas GC (LGCL) to free up analysts to post ratings. Certain blocks of shares of SYLA Technologies (SYT) and Shengfeng Development (SFWL) will roll off their lockup period. Reddit (RDDT) will be on watch again as shares continue to gyrate after the IPO kicked off on March 21.

Electric vehicle deliveries: Tesla (TSLA) will report Q1 deliveries sometime during the first few days of the month. The shutdown of the electric vehicle maker’s Model Y factory near Berlin over the last few weeks due to an arson attack and soft demand in China during the Chinese New Year holiday are likely to have held back the overall deliveries tally. Sell-side sentiment has been bearish as of late and the consensus deliveries expectation for the quarter has dropped all the way down to 425K from 494K just a few months ago. By comparison, Tesla delivered 485K vehicles in Q4 and delivered 422,875 a year ago in Q1. Ahead of the big report, Baird warned that the consensus mark may still be too high. The firm sees Q1 deliveries for Tesla of 421K and Q2 deliveries of $445K vs. 512K consensus. Citi is also expecting a miss with deliveries, with its estimate recently cut to 430K. Goldman Sachs said other data points also suggest slower sales for Tesla to start the year. “Specifically, downloads of the Tesla app in the US and in Europe have declined sequentially when comparing the first two months of 1Q24 vs. 4Q23, and app downloads YTD are down yoy vs 1Q23 in the US per Sensor Tower data, updated analyst Mark Delaney). There have also been some reports that Tesla (TSLA) will scale back production at Giga Shanghai from operating six and a half days per week to five, which could impact the view for Q2 deliveries. HSBC went a step further and cut margin estimates on Tesla. Analyst Michael Tyndall noted that cheaper Teslas are not necessarily driving higher volumes. “We can see that these price cuts might be supported by cost improvements, but we are not convinced continued devaluation is what the market wants,” he noted. He also warned that Teslas have the dubious honor of being the fastest-depreciating vehicles in the U.S. over the last few months as professional buyers like Sixt and Hertz have elected to reduce their Tesla fleets due in part to uncertain used pricing. Even Wedbush Securities analyst Dan Ives is sounding the warning bell on Tesla (TSLA) on the view that the narrative is at a multi-year low, with Elon Musk and the company getting attacked by the bears from all directions. “But unlike other times, now it’s warranted as growth has been sluggish and margins showing compression with China a nightmare,” he noted. Ives said that the next few months could be critical for Musk to get Tesla through a turbulent period, otherwise darker days could be ahead. Trading on Tesla (TSLA) could also be impacted by how the deliveries reports from Chinese rivals NIO (NIO), Li Auto (LI), and XPeng (XPEV) shake out. Also, watch for EV pricing news from Chinese V players BYD Company (OTCPK:BYDDF) and Xiaomi (OTCPK:XIACF).

Investor events: The 2024 Sohn Investment Conference will be held in New York City on April 3. The conference has led to share price jumps for some smaller-sized stocks in the past after hedge funds made pitches. The spotlight will also burn bright on Walt Disney (DIS), with the media giant’s annual meeting taking place amid a proxy fight for board representation. Some of the notable companies presenting data at the American Association for Cancer Research Meeting include Black Diamond Therapeutics (BDTX), Illumina (ILMN), NeoGenomics (NEO), and Carisma Therapeutics (CARM).

Spinoff watch: The process of General Electric (NYSE:GE) breaking up into three separate companies focused on aerospace, healthcare and energy will continue next week. GE Vernova (GEV) will begin trading on April 2 after the power and renewable energy business completes its spinoff from General Electric (GE). For FY24, GE Vernova expects to generate revenue of $34B to$35B in revenues, see mid single-digit percentage growth in adjusted EBITDA margin, and churn up free cash flow of $700M to $1.1B. For FY 2025, GE Vernova guided for mid single-digit percentage organic revenue growth, high-single digit (low end) percentage growth in adjusted EBITDA margin, and free cash flow of $1.2B to $1.8B. By 2028, the company said it expects mid single-digit organic revenue growth, 10% growth in adjusted EBITDA margin, and 90% to 110% conversion in free cash flow. Ahead of the spinoff, J.P. Morgan analyst Seth Seifman was positive on GE Vernova, pointing to its rebounding margins and cash flow, and diversified exposure to the energy transition. S&P Dow Jones Indices updates that GE Vernova will be added to the S&P 500 Index.

Solventum will also start trading in the week ahead after being spun off from 3M (NYSE:MMM). The new company will separate 3M’s (MMM) relatively faster-growing business in health care as other segments such as industrial and consumer products lag. 3M (MMM) said the new company amassed $8.2B in revenues in FY 2023 and an estimated global addressable market of ~$93B. Seeking Alpha Investing Group Leader CashFlow Hunter warned that the individual business lines at Solventum have shown limited sales growth.