Netflix, Procter & Gamble, And Taiwan Semi Headline Big Week Of Earnings

Summary:

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The focus of investors next week will be on the retail sales print and industrial production report to gauge the economy ahead of the Federal Reserve’s next policy meeting on November 7. Options trading on the federal funds contract implies a 90% probability of a 25-point rate cut, despite some recent conflicting economic data. As for bond yields, Seeking Alpha Investing Group Leader Lawrence Fuller thinks the two-year Treasury yield’s recent rise to 4% is likely a short-term market emotion, and it should decline towards 3.5% as data confirms a soft landing. In Europe, the European Central Bank is expected to fire off a 25-point interest rate cut following recent lower-than-expected inflation readings.

Earnings heat up in the week ahead, with Netflix (NASDAQ:NFLX), Procter & Gamble (NYSE:PG) (bull view) (cautious view), Taiwan Semiconductor (TSM) are some of the notable companies due to report. The healthcare sector will also be in focus, with UnitedHealth (UNH), Johnson & Johnson (JNJ), and Abbott Laboratories (ABT) all lined up to report. Aggregate earnings are expected to reach a new all-time high for the second straight quarter, with a current estimate of $511.4 billion in Q3, surpassing last quarter’s actual figure of $504.8 billion, per data from Lipper Alpha Insight. However, Q3 earnings were noted to face tougher year-over-year comparisons, resulting in an expected growth rate of 5.0%, down from the 13.2% seen last quarter. Analysts expect the energy sector to see some of the sharpest cuts in guidance alongside the quarterly corporate earnings updates. The event schedule for the week ahead is headlined by the Lenovo Tech World event. Investors will also have their eyes on Pfizer (PFE), with CEO Albert Bourla and at least one other director planning to meet with Starboard Value.

Earnings spotlight: Tuesday, October 15 – Charles Schwab (SCHW), UnitedHealth Group (UNH), Johnson & Johnson (JNJ), Bank of America (BAC), Goldman Sachs (GS), Citigroup (C), Rio Tinto (RIO), PNC Financial (PNC), State Street (STT), Walgreens Boots Alliance (WBA), and United Airlines (UAL). See the full earnings calendar.

Earnings spotlight: Wednesday, October 16 – Abbott Laboratories (ABT), Morgan Stanley (MS), U.S. Bancorp (USB), CSX (CSX), and Discover Financial (DFS). See the full earnings calendar.

Earnings spotlight: Thursday, October 17 – Netflix (NFLX), Blackstone (BX), Travelers (TRV), and KeyCorp (KEY). See the full earnings calendar.

Earnings spotlight: Friday, October 18 – Procter & Gamble (PG), American Express (AXP), and Regions Financial (RF). See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Trump Media & Technology Group (DJT) and WW International (WW). The most overbought stocks per their 14-day relative strength index include Duckhorn Portfolio (NAPA), US Goldmining (USGO), and AppLovin (APP). The most oversold stocks per their 14-day Relative Strength Index include VERSES AI (OTCQB:VRSSF), enVVeno Medical (NVNO), and Humana (HUM). Short interest is elevated on Scholar Rock Holding (SRRK) and Blink Charging (BLNK) ahead of the earnings season.

IPO watch: Hong Kong-based Samfine Creation Holdings Group (SFHG) is expected to start trading after pricing its IPO. The IPO lockup periods expire during the week for blocks of shares of Ibotta (IBTA), Centuri Holdings (CTRI), Serve Robotics (SERV), Tungray Technologies (TRSG), Junee (JUNE), Top Wealth Group Holding (TWG), and Mingteng International (MTEN).

Dividend watch: Companies that have an ex-dividend date coming next week include AbbVie (ABBV), PNC Financial (PNC), H.B. Fuller (FUL), and Colgate-Palmolive (CL). Companies forecast to increase their quarterly dividend payouts include Armstrong World (AWI) to $0.314 from $0.28, Penske Automotive (PAG) to $1.14 from $1.07, Middlesex Water (MSEX) to $0.3425 from $0.3250, Blackstone (BX) to $0.86 from $0.82, and Brown & Brown (BRO) to $0.135 from $0.130. Read through some of the dividend stock picks from Seeking Alpha analysts.

Investor events: Lenovo (OTCPK:LNVGY) will hold its Tech World 2024 event. The company is expected to highlight its comprehensive portfolio of AI solutions, services, and devices. The event will also feature a high-profile group of speakers, including from Lenovo CEO Yuanqing Yang Nvidia (NVDA) CEO Jensen Huang, Intel (INTC) CEO Pat Gelsinger, Microsoft (MSFT) CEO Satya Nadella, Meta (META) CEO Mark Zuckerberg, AMD CEO Dr. Lis Su, and Qualcomm (QCOM) CEO Christinao Amon. Adobe (ADBE) will hold a Q&A session with company leadership at the Adobe Max event. British American Tobacco (NYSE:BTI) will hold it Capital Markets Day in Southampton, UK. The tobacco stock has rallied in the past following similar events. Other notable investor events include Ulta Beauty’s (ULTA) Investor Day, Cytokinetics’ (CYTK) Analyst Day Republic Services’ (RSG) Business Update Call, and SentinelOne’s (S) Investor Technology Session at OneCon.

Netflix earnings preview: Netflix (NFLX) will report earnings on October 17. The streaming giant is forecast to report revenue of $9.76 billion, EPS of $5.11, and an adjusted operating margin of 27.7%. Subscriber growth will be a key focus, with analysts forecasting nearly 286 million active subscribers by quarter’s end, a net increase of about 4.2 million from the previous quarter. That growth is partly attributed to Netflix’s successful crackdown on password sharing. While most analysts maintain a bullish outlook, some express caution. Barclays recently downgraded the stock to Underweight, citing concerns about future growth pathways. Additionally, Citi analysts question the company’s ability to achieve $25 earnings per share in 2025, as some bulls predict. Oppenheimer said the company remains “the dominant streaming platform” and maintains the largest market share of U.S. TV viewership. The firm believes NFLX’s initiatives, such as password sharing rules, advertising, and optimizing subscriber plan choices, will drive subscriber growth and average revenue per membership, leading to higher revenue. Oppenheimer noted that the company announced an increase to the Premium tier in the U.S., UK, and France last October and now anticipates a hike in Premium pricing for other regions, and more importantly, an 8%–15% increase to the Standard plan. On Seeking Alpha, Pearl Gray Equity and Research argued that additional upside is in store for NFLX amid resilient fundamental growth, overlooked value drivers, and promising valuation metrics.

Procter & Gamble preview: Procter & Gamble (PG) will report earnings on October 18. Analysts expect the household products giant to report revenue of $21.9 billion and EPS of $1.90. The key metric to watch is organic sales growth, which is forecast to be up 2.2% year-over-year, split between incremental pricing and volume gains. P&G is forecast to report an adjusted gross margin rate of 52.4% for the quarter. The P&G update from management on the upcoming conference call could be of interest to peers Church & Dwight (CHD), Kimberly-Clark (KMB), Colgate-Palmolive (CL), and Clorox (CLX). Glatfelter (GLT) derives 16% of its revenue from P&G and could be impacted as well. On Seeking Alpha, Millennial Dividends thinks PG’s recession-resistant business model makes it an excellent defensive investment, but not at today’s price.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.