First-quarter earnings season kicks off later this week. Among the notable names on the earnings.
The first three months of 2022 will be remembered as a period of extreme volatility for stocks. In addition to red-hot levels of inflation and supply-chain challenges carried over from 2021, Russia’s attack on Ukraine sent markets into a tailspin – and catapulted commodities prices higher.
Monday, 18 April
Bank of America
Bank of America Corp. (BAC) has staged a sharp recovery from the pandemic. In 2021, it posted triple-digit earnings growth in the first half of the year and double-digit growth in the second. But the bank’s pandemic rebound faces headwinds and could end quickly.
While interest rate hikes by the Federal Reserve this year will bolster Bank of America’s net interest margin, the economy risks slipping back into a recession if the Fed tightens too hard, too fast.
Investors will be watching to see if Bank of America can maintain the strong financial performance last year when it reports earnings on April 18, 2022, for Q1 FY 2022.2 Analysts are not optimistic.
They expect the bank’s earnings per share (EPS) to decline for the first time since the final quarter of FY 2020 as revenue rises at a sluggish pace.
Bank of America’s financial performance may depend on actions by the Federal Reserve. Rising inflation has prompted the Fed to act faster than originally expected in raising interest rates. Last month, the Fed hiked its key interest rate for the first time since 2018.
Fed officials also laid out an aggressive rate hike schedule that could see interest rates rise significantly higher by the end of the year.4 Since then, the Fed has indicated that it may be even more aggressive with rate hikes
Charles Schwab
Bank of America’s financial performance may depend on actions by the Federal Reserve. Rising inflation has prompted the Fed to act faster than originally expected in raising interest rates. Last month, the Fed hiked its key interest rate for the first time since 2018.
Fed officials also laid out an aggressive rate hike schedule that could see interest rates rise significantly higher by the end of the year.4 Since then, the Fed has indicated that it may be even more aggressive with rate hikes.
Charles Schwab’s revenues for full-year 2021 were $18.5 billion, 58% more than the year-ago figure. Notably, the growth was in part driven by the acquisition of TD Ameritrade in the fourth quarter of 2020, and in part due to the organic growth in 2021.
It resulted in a 31% rise in NII, a 23% increase in asset management & administration fees, and around a 2x jump in the trading revenues. Further, total client assets improved 22% y-o-y to around $8.1 trillion in the year.
Tuesday, 19 Apr
Netflix
Netflix is poised to report quarterly results next week, and analysts are bracing for a possible hit to subscriber numbers after the streaming giant announced it was exiting Russia. Yahoo Finance’s own Allie Canal is here with more. So Allie, what kind of impact is Wall Street talking about here potentially?
It is expecting earnings per share (EPS) to come in at $2.95 with revenues coming in at $7.94 billion. The streamer did suspend operations in Russia at the beginning of March amid the invasion of Ukraine and it’s largely expected they are going to take a hit from the ongoing geopolitical crisis.
A lot of analysts are going to be looking for that subscriber growth figure, especially because it’s estimated that around one million subscribers could have dropped out from Russia because of the aforementioned ban.
Also, heading into the next few quarters, what’s that subscriber growth looking like? Are they going to be able to keep up with those demands?
IBM
IBM is gearing up for earnings as well, with its first-quarter report due out after the close on Tuesday, April 19. In the last two years, the stock has averaged a 5% post-earnings swing, regardless of direction.
This time around, the options pits are pricing in something similar at 5.1%. Of these eight quarters, five next-day sessions finished positive, including a 5.7% jump this past January.
The stock is seeing a surge in call volume straight out of the gate this morning. So far, 8,403 calls have crossed the tape — three times the intraday average — in comparison to 2,558 puts. The April 130 call is the most popular, expiring at the end of the day today.
IBM shares closed marginally higher after Morgan Stanley upgraded the stock to overweight and said the company is a good “place to hide” in the current economic backdrop. The bank also raised its price target in the technology stock.
BofA analyst Wamsi Mohan is also bullish on IBM although he lowered estimates ahead of the company’s Q1 earnings report that is due next Tuesday.
Wednesday, 20 April
Johnson & Johnson
Johnson & Johnson will kick off the earnings season on April 19, followed by Abbott Laboratories and Intuitive Surgical. As in earlier quarters, the companies’ presence at the vanguard of the reporting season will make them bellwethers for the broader industry.
The analysts and investors scrutinize the results for implications for Medtech companies that report in the coming weeks. Analysts at Bank of America set the scene in a note to investors on Monday.
Johnson & Johnson will be the first company to provide results that shed light on those questions. The continuation of the COVID-19 pandemic, particularly in China and other parts of Asia, has tempered analyst expectations about the performance of J&J’s medical device unit.
Earlier this month, J.P. Morgan analysts forecast J&J will miss the consensus sales forecast by $557 million, primarily because of a shortfall in its MedTech business.
Thursday, 21 April
Intuitive
Intuitive, which will report results on April 21, has limited exposure to China. Analysts at Bank of America put China’s share of Intuitive procedures at 4%, suggesting the company can weather disruption in the country if volumes rebound in the U.S.
The analysts are upbeat about Intuitive’s prospects, naming the company as one of their top picks going into the quarter.
The bullish assessment reflects a belief that the 10.9% procedure growth expected by Wall Street “looks like a low bar looking at -sequential growth”.
Yet, like other high-tech Medtech companies, the robotic surgery specialist needs semiconductors, as an ongoing shortage has affected the medical device sector and a host of other industries.
Friday, 22 April
American Express
American Express (NYSE:AXP) is scheduled to post its quarterly earnings results before the market opens on Friday, April 22nd. Analysts expect American Express to post earnings of $2.41 per share for the quarter. American Express has set its FY22 guidance at $9.25-9.65 EPS.Individual interested in participating in the company’s earnings conference call can do so using this link.
American Express last released its quarterly earnings results on Tuesday, January 25th. The payment services company reported $2.18 earnings per share for the quarter, beating the Thomson Reuters’ consensus estimate of $1.78 by $0.40.
The firm had revenue of $12.15 billion for the quarter, compared to analysts’ expectations of $11.55 billion. American Express had a net margin of 18.92% and a return on equity of 33.20%. The business’s revenue was up 29.9% on a year-over-year basis.
During the same period in the prior year, the firm earned $1.76 EPS. On average, analysts expect American Express to post $10 EPS for the current fiscal year and $11 EPS for the next fiscal year.
