Stocks To Watch: Citigroup, Wells Fargo And JPMorgan Lead off Earnings Season
Stocks To Watch: Citigroup, Wells Fargo And JPMorgan Lead off Earnings Season
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Inflation will be in the spotlight next week with the CPI report for December due out on January 12. The headline consumer price index reading for December is expected to cool to +6.7% from +7.1% in November and be up 0.1% on a month-over-month comparison. Core CPI is forecast to be up 5.6% and up 0.2% month-over-month. Bank of America expects both core goods and energy prices to have declined again in December, but food inflation and core services inflation to have remained stickier. The focus from market watchers will be if the CPI update alters the consensus view that the Federal Reserve will hike interest rates by 50 points in February and another 25 points in March before going on hold at a terminal rate of 5.0% to 5.25%. The corporate calendar will have its first busy week of the year with the ICR Conference in Orlando and JPMorgan Healthcare Conference in San Francisco expected to see waves of earnings pre-announcements and guidance updates. Meanwhile, the earnings season officially kicks off on Friday with major banks and financial institutions stepping into the earnings confessional. Wells Fargo (WFC), JPMorgan Chase (JPM), Morgan Stanley (MS), Citigroup (C) and PNC Financial Services Group (PNC) are all scheduled to release quarterly results. Also watch the airline sector with monthly traffic reports due in and Delta Air Lines (DAL) to lead off the earnings season at the end of the week.
Earnings spotlight: Monday, January 9 – Jefferies (NYSE:JEF), PriceSmart (PSMT), and Tilray (TLRY).
Earnings spotlight: Tuesday, January 10 – Albertsons Companies (NYSE:ACI) and Bed Bath & Beyond (NASDAQ:BBBY).
Earnings spotlight: Wednesday, January 11 – KB Home (NYSE:KBH).
Earnings spotlight: Friday, January 13 – UnitedHealth Group (UNH), JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), BlackRock (BLK), Citigroup (C), Bank of New York (BK), and Delta Air Lines (DAL).
IPO watch: Rhodium Enterprises (RHDM) and Skyward Specialty Insurance Group (SKWD) could price their IPOs and start trading next week. IPO lockup periods expire for blocks of shares of Nano Labs (NA), ILAG (NASDAQ:ILAG), and Netcapital (NCPL). All three stocks trade below their IPO pricing levels.
ICR Preview: The biggest conference of the year takes place in Miami with ICR running from January 9 through 11. Analysts thinks the conference could lead to some key earnings pre-announcements and guidance updates. The presentations will give investors and analysts another chance to hear how retailers navigated through inventory and promotional pressure during the holiday season. Boot Barn (BOOT) already released its preliminary results for the holiday quarter, but many more retailers are expected to post updates. MKM Partners expects a “respectable, yet not great, pace of sales growth this holiday season.” As part of its preview, BMO Capital Markets and JPMorgan both circled Lululemon Athletica (NASDAQ:LULU) as a company that could raise guidance at ICR. American Eagle Outfitters (NYSE:AEO), Urban Outfitters (URBN), Macy’s (NYSE:M), Five Below (FIVE), On Holding (ONON), and Planet Fitness (PLNT) are some of the stocks that could see share price jolts off of ICR updates. In the restaurant sector, Shake Shack’s (NYSE:SHAK) ICR update is seen potentially being a catalyst if the unit development and sales momentum updates are solid. Meanwhile, Nordstrom (JWN) and Best Buy (BBY) have timed their holiday sales releases during ICR in the past. If there is one central theme to watch at ICR, BMO Capital analyst Siegel said it will be the merits of a clean inventory balance versus the pricing power erosion it cost to get there.
Bank earnings preview: Major U.S. banks will kick off the earnings season with investors set to focus sharply on credit card delinquencies, the level of bad loan provision, and the read on the mortgage industry. JPMorgan expects the big banks to show continued solid net interest income growth but slower than Q3, led by sharply higher rates and good loan growth. Consumer credit cards trends are expected to show a slowdown. Evercore forecasts investment banking will be down ~60% year-over-year for the quarter, while trading could be up around 10%. On the credit front, the firm sees expect higher credit costs due to some loan growth and a softer outlook for the economy plus some banks taking mark to market hits on some leveraged loans. Meanwhile, Bank of America is looking past earnings for a clearing event for the sector in the form of a credit cycle, re-steepening in the Treasury yield curve, or soft landing for the economy before fund managers revisit the group. In the near term, higher-than-expected interest rates are said to pose a significant risk to the outlook for credit quality, loan growth and net interest margins. Ahead of the rush of earnings reports from major banks, Wells Fargo analyst Mike Mayo highlighted Bank of America (BAC) as the top banking pick for 2023 and thinks U.S. Bancorp and PNC Financial (PNC) are also best in class.
Corporate events: Arrowhead Pharmaceuticals (NASDAQ:ARWR) will present topline data from the Sequoia Phase 2 study evaluating fazirsiran and provide an outline of a Phase 3 study on January 9. Sutro Biopharma (STRO) will also host a conference call and webcast to present data from its Phase 1 dose-expansion trial and a registrational path forward for STRO-002. Genius Group Limited (NYSE:GNS) will host a virtual investor meeting on January 10 to provide an update on the business and its subsidiaries. Shareholders with Jack Creek Investment Corp. (NASDAQ:JCIC) will vote on January 12 on the SPAC deal to take Bridger Aerospace public. The aerial firefighting company is expected to be called Bridger Aerospace Group Holdings and be listed on the NASDAQ Capital Market under the ticker symbol BAER. Check out Seeking Alpha’s Catalyst Watch for more events scheduled for next week.
Notable conferences: The ICR Conference is not the only blockbuster of the week with the JPMorgan Healthcare conference in San Francisco expected to dominate the healthcare sector with presentations scheduled from dozens of major players, including Bristol Myers Squibb (BMY), Centene (CNC), Merck (MRK), and Walgreen Boots Alliance (NASDAQ:WBA). The JPM conference has been the setting for M&A announcements in healthcare in the past. Investors could also expect some notable updates at the Needham Growth Conference from a long list of companies that includes Petco (WOOF), TrueCar (TRUE), Sportradar (NASDAQ:SRAD), and Upwork (UPWK).
Barron’s mentions: Philip Morris International (PM) gets the nod from the publication this week as a stock that looks like a buy. Recent deals made by the tobacco multinational are said to have re-invigorated the bull case. For starters, the November acquisition of Swedish Match is seen further cementing Philip Morris’ global leadership in oral nicotine and add to the reduced-risk product portfolio of what it calls reduced-risk products. Meanwhile, the deal with Altria (MO) to nab the rights to sell Philip Morris’ flagship IQOS product in the U.S. is notable as marking PM’s first return to the domestic market since the two companies split in 2008. The upshot is that Philip Morris (PM) could have a longer and brighter future than many investors had feared.
Sources: EDGAR, Bloomberg, CNBC, Reuters
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.