Our Head of North American Research, Gary Christie gives us a look at notable U.S. equity news last week and some potential earnings movers for the week of June 20th.
The S&P 500 improved by 4.41% last week. Looking at the index from a technical perspective, The S&P 500 confirmed a bullish falling wedge continuation pattern. Prices have broken above the 50-day moving average. As long as 05/22 gap support holds at 2850 we anticipate a test of record highs at 2954.
Looking at the Dow Jones Transportation index, prices have rebounded above the 20-day moving average and a declining trend line. U.S. markets are improving.
The VIX remains above key support at 14.5 indicating heightened volatility remains even with the positive rebound in equity markets this week.
EQUITY SHAKERS AND MOVERS: These stocks had the biggest moves last week and may have some volatility in this weeks trading.
Sherwin Williams (SHW +13.11% WoW to $474.46) announced that Steven Wunning, former president of Caterpillar (CAT +3.93% WoW to $124.52), will replace John Stropki as Lead Director of the Board, effective immediately. Mr. Stropki "passed away unexpectedly on May 11th 2019".
Advanced Micro Devices (AMD +18.27% WoW to $32.42) was upgraded to "equal-weight" from "underweight" at Morgan Stanley.
Campbell Soup (CPB +18.63% WoW to $43.08) reported 3Q adj. EPS of $0.56 (estimated $0.47) vs. $0.70 a year ago on net sales up 12% YoY at $2.39B (forecasted $2.36B). Gross margin on an adj. basis improved to 33.4% (expected 30.3%) from 32% in the previous year. The Co raised its FY guidance on adj. EPS to $2.5-$2.55 vs. prior view of $2.45-$2.53 and expects FY net sales of $9.08B-$9.13B.
Brown Forman (BF/B +13.14% WoW to $56.55) posted 4Q diluted EPS of $0.33 (estimated $0.3) vs. $0.23 a year ago on net sales increasing by 1.5% YoY to $744M (forecasted $760.4M). The Co sees 2020 EPS of $1.75-$1.85 (expected $1.81) and expects underlying net sales growing by 5%-7%.
Looking at this weeks earnings announcements, here is what to expect,
Company Earnings Preview:
HRB: On Tuesday, H&R Block is expected to announce 4Q EPS of $4.17 vs. $5.43 last year with revenues of $2.3B from $2.4B the previous year. Looking at a short-term chart, the RSI is below 50. The MACD is below its signal line and positive. The MACD must penetrate its zero line to expect further downside. Moreover, the stock is below its 20 day MA (26.98) but above its 50 day MA (26.11). We expect further advance towards $24.50 with a stop loss of $27.50.
AVGO: On Thursday, Broadcom is anticipated to release 2Q EPS of $5.18 vs. $4.88 last year with revenues of $5.7B compared to $5.0B in the prior year. Technically speaking, the RSI is below 50. The MACD is negative and above its signal line. The configuration is mixed. Moreover, the share stands below its 20 and 50 day MA (respectively at 275.05 and 296.06). We further expect upside towards $295.4. An ideal stop loss is set at $255.2.
ADBE: On June 18th, Adobe is likely to unveil 2Q EPS of $1.78 vs. $1.66 last year with revenues of $2.7B from $2.2B a year earlier. In other news, the Co was upgraded to "overweight" from "equal-weight" at Morgan Stanley. From a chartist point of view, the RSI is below its neutrality area at 50. The MACD is below its signal line and negative. The configuration is negative. Moreover, the share stands below its 20 and 50 day MA (respectively at 275.6 and 273.78). Finally, Adobe Systems is trading below its lower daily Bollinger band (standing at 264.42). We are looking at a target of $234.9 and a stop loss at $283.4.
ORCL: On June 19th, Oracle is awaited to post 4Q EPS of $1.08 vs. $0.99 last year with revenues of $10.9B compared to $11.3B in the previous year. From a technical point of view, the RSI is below its neutrality area at 50. The MACD is below its signal line and negative. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (respectively at 53.2 and 53.86). We expect further downside towards $48.2. An ideal stop loss is set $53.3
Happy trading,
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