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All eyes will be on the retail sector next week with big reports due out from Home Depot (NYSE:HD), Lowe’s (LOW), Walmart (NYSE:WMT), Target (NYSE:TGT), and Macy’s (M). The retailers step up to the earnings plate with investors looking for signs of the health of the U.S. consumers and just how promotional the holiday season may be with inventory an issue. Economic reports due out include a broad update on October retail sales and a read on producer prices. On the geopolitical front, President Biden will meet Chinese leader Xi Jinping on the sidelines of the G20 Summit. White House officials said the talks will cover a range of regional and global issues. Some of those discussions could have stock market implications even if no formal agreements are made. On the corporate calendar, General Motors (NYSE:GM) and Procter & Gamble (PG) will hold investors events that analysts have circled as potential share price catalysts.
IPO watch: IPOs that could price and start trading next week include KWESST Micro Systems (KWE:CA) and Bullfrog AI Holdings (BFAI). The quiet period ends on Prime Medicine (NASDAQ:PRME) on November 14 to free up analysts to post ratings.
Retail on display: The retail sector will be under a bright spotlight next week with Walmart (WMT), Target (TGT), Home Depot (HD), Lowe’s (LOW), Macy’s (M) and Foot Locker (FL) all due to report earnings and update on consumer spending trends. Heading into the earnings prints, Evercore ISI thinks expectations have been reeled in on home improvement retailers HD and LOW due to the higher level of mortgage rates and recent softness seen with vendor earnings. The firm also issued a Negative Tactical Trade Call on Target (TGT) due to what it expects to be a soft comparable sales and EPS report from the retailer, with excessive inventory build, compressed discretionary demand, supply chain volatility, and inflation still in the mix. Walmart (WMT) heads into its earnings day with investors and analysts more confident. Deutsche Bank named Walmart a top pick just ahead of the report. Analyst Krisztina Katai joined the growing chorus of Walmart bulls that see the stock as a defensive winner that will continue to outperform in the rough macro backdrop. “We think value-focused retailers will continue to gain market share next year on accelerating trade down,” noted Katai on the near-term setup. While WMT is seen performing well during the economic downturn due to its value draw, a change in purchasing habits or further increases in labor costs are seen as posing potential headwinds for investors. A key point to watch with Walmart will be the update on pricing, which could also impact the grocery sector if the retailer giant is less aggressive on taking pricing. Morgan Stanley has also tipped that an update on Walmart+ subscriber growth could be a catalyst. In general, Morgan Stanley thinks the macro backdrop still favors defensive-positioned retailers like Walmart (WMT), Dollar General (DG), and AutoZone (AZO). “While valuations of more cyclical retailers are optically attractive, we think ’23 estimates are likely heading lower for many of them,” noted the analyst team. Aside from the earnings reports from the retail heavyweights, the October Retail Sales report will also be closely watched. Headline and core retail sales are both expected to rise in what could be a shot in the arm for the sector.
To the Moon: NASA has set a two-hour launch window on November 16 for its Artemis 1 launch. The unmanned launch will be the first of NASA’s Artemis missions that seek to bring astronauts back to the moon for the first time since 1972. The goal is to establish a presence there before sending people to Mars. The launch also will be the first flight of Space Launch System (SLS), a 322-foot-tall rocket, and the Orion spacecraft that will carry a human crew in future lunar missions. Boeing (BA), Northrop Grumman (NOC) and Aerojet Rocketdyne Holdings (NYSE:AJRD) worked together to build parts of the SLS rocket. Lockheed Martin (NYSE:LMT) oversaw the development of Orion. The European Space Agency, Jacobs Engineering Group (J) and the United Launch Alliance, a joint venture between Lockheed and Boeing, also participated in building the spacecraft. Artemis 1 was originally supposed to launch in late August, but the target date was pushed back by glitches and then Hurricane Ian and Tropical Storm Nicole. NASA officials said if Artemis 1 cannot fly on November 16, the next launch opportunity will be November 19. A major goal of the Artemis program is to land the first woman and next man on the Moon by 2024. A successful launch is seen as analysts being supportive of stocks in the broader space sector, which has seen share price declines in 2022. Some of the active companies are privately held SpaceX (SPACE), Astra Space (NASDAQ:ASTR), Leidos Holdings (LDOS), Virgin Galactic (SPCE), Maxar Technologies (MAXR), and Rocket Lab USA (NASDAQ:RKLB).
Nvidia earnings preview: Nvidia (NVDA) is lined up to report earnings in November with the Street anticipating revenue of $5.80B (-18% Y/Y) and EPS of $0.70 (-40% Y/Y) will be reported. AI chip restrictions in China will undoubtedly be pointed to as a major Q3 headwind, although Bank of America thinks NVDA was able to partially fulfill customer demand by using lower-spec Ampere products, perhaps even leveraging existing inventory. Traders will be closely watching the Q4 revenue guidance from the chipmaker. The guidance could show a sequential improvement even with year-over-year growth still in negative territory. Nvidia (NVDA) is noted to still trade at a juicy premium that keeps general market volatility and rising interest rate developments a major factor. Options trading implies a move up or down of 8% for NVDA after the earnings report drops. Shares of NVDA gained 4.0% the last time earnings came around.
Corporate events: Planet Fitness (NYSE:PLNT) will host an Investor Day on November 15 with presentations from the senior executive leadership team on the company’s strategic vision, operating and growth strategy, and multi-year financial targets. SPAC deals will be in focus with Tiga Acquisition (TINV) shareholders voting on the deal to take social networking app Grinder public and Frazier Lifesciences Acquisition Corporation (FLAC) shareholders voting on the deal to take biotech firm NewAmsterdam Pharma public. General Motors Company (GM) will host an Investor Day event on November 17. Citi expects the event to be a positive catalyst for shares as it could provide much-needed clarity across the key fronts of growth and resilience. “If investors can walk away feeling better about 2023 macro resilience and with more granularity across several imminent growth levers, we think the stock can work from here,” previewed the firm. Procter & Gamble Company (PG) has its P&G Investor Day event also scheduled for November 17. The event has prompted analyst upgrades in the past. Read about more events next week that lead to share price moves in Seeking Alpha’s Catalyst Watch.
Notable conferences: Analysts have circled the Nareit REITworld Annual Conference as one of the headliners of the week due to the current macroeconomic backdrop and sharp rise in interest rates. Some of the companies that have confirmed they will make an appearance include Sabra Health Care REIT (SBRA), Independence Realty Trust (IRT), Uniti Group (UNIT), and LTC Properties (LTC). Other notable conferences scheduled for the week include the Guggenheim 4th Annual Immunology and Neurology Conference, the Deutsche Bank Industrials Conference, the Stifel’s Healthcare Conference, the RBC Capital Markets Global Technology, Internet, Media and Telecommunications, Jefferies 2022 Global Healthcare Conference, and the Needham Virtual Security, Networking, and Communications Conference.
Barron’s mentions: Bumble (NASDAQ:BMBL) received a positive writeup in this week’s issue after shares took an earnings tumble earlier a few days ago. The breakdown is that Bumble’s numbers might be better than they look at first glance considering the strong U.S. dollar shaved about $6M off the company’s guidance and product delays are expected to work themselves out. The publication noted that Bumble grew its total paying user base by 400K to 3.3M and has launched new features and options. Bumble’s place in the dating-app ecosystem is said to be strong and the stock trade at an attractive valuation. Meanwhile, the cover story delves into used auto dealer Tricolor Auto Group, which serves Spanish-speaking communities in Texas and California. While BlackRock (BLK) took a $90M stake in the private company last year and its ESG credentials have helped it raise money from some of the nation’s highest-profile banks, the customer service record shows a litany of complaints that undercut the ESG distinction.
Sources: EDGAR, Bloomberg, CNBC, Reuters