Gilead Sciences (NASDAQ:GILD)
Health Care - Biotechnology | Reports February 7, after the close.
The Estimize consensus is looking for earnings per share of $2.50, six cents above the sell-side consensus and 23% lower than the same period a year earlier. That estimate has decreased 11% since Gilead’s last quarterly report. Revenue is anticipated to decrease 15% to $7.2 billion, $50M above Wall Street.
What to Watch: Wednesday’s report will once again highlight the performance of new HIV and HBV products but above all else, the HCV franchise will draw most of the attention. In the third quarter, sales of Harvoni, Sovaldi and Epclusa fell to $3.3 billion compared to $4.8 billion from a year earlier. Management blamed the decline in Harvoni and Sovaldi sales on the introduction of Epclusa in key U.S. and European market but the more likely culprit is Merck's (NYSE:MRK) entry into the Hep C market. Merck’s aggressive pricing strategy stole a considerable amount of the Hep C market that Gilead once cornered.
Offsetting some of these losses was a strong performance from HIV and other antiviral products. Sales from the two jumped to $3.5 billion from $2.9 billion a year primarily due to an uptake in tenofovir alafenamide based products. This trend should provide some support in the fourth quarter as well. Gilead also recently launched its first HBV drug, Vemlidy, which should start to contribute meaningfully to the top line.
Besides the question of drug sales, Gilead face the threat that President Trump decimates drug pricing in the biotech and pharmaceutical industry. Any indication that financial performance will be hurt in fiscal 2017 from the new administration could ignite a sharp sell off Wednesday afternoon.
Walt Disney Company (NYSE:DIS)
Consumer Discretionary - Media | Reports February 7, after the close.
The Estimize consensus is looking for earnings per share of $1.51, 4 cents above the Wall Street consensus and down 7% from the same period last year. That estimate has decreased 6% since Disney’s most recent report in October. Revenue is anticipated to come in at $15.3B, 1% higher than the year-ago results, and $50M higher than the sell-side’s consensus.
What to Watch: As always, ESPN subscription numbers fall front and center when Disney announces quarterly results. The multimedia sports network continues to face an uphill battle in light of cord-cutting behaviors and wider adoption of skinny bundles. Operating income from Cable Networks decreased $207 million during Q4 due to decreases at ESPN and Disney Channel. Growth at Freeform (formerly ABC Family) helped offset some of these losses through lower programming and production costs, and a decrease in marketing expenses. Income from broadcasting, on the other hand, increased $60 million to $224 million, on greater program sales from shows such as Luke Cage and Quantico. However, the overall performance of media networks is still predicated on the performance of ESPN, which otherwise looks bleak.
Beyond media, performance in Studio Entertainment and Parks and Resorts continues to excel on the back of blockbuster movies that also translate to attractions at the theme parks. Studio entertainment is likely to see a huge uptake in Q1 from the roaring success of Star War Rogue One. And while the economy improves and travel trends start to pick up that plays into the hands of Parks and Resorts. Both divisions posted positive growth in the fourth quarter and remain on track to do so again.
Disney also generates a large portion of total revenue from consumer products and interactive media which includes licensed merchandise. Sales from this division saw considerable pressure last quarter as revenue dropped 15% and income declined 5%. The company quickly pointed to currency headwinds and the discontinuation of the Infinity console game business for the lackluster performance. With the dollar trending close to a short term high, it’s unlikely Disney does a complete 180 this quarter.
Whole Foods Market (NASDAQ:WFM)
Consumer Staples - Food & Staples Retailing | Reports February 8, after the close.
The Estimize consensus calls for EPS of $0.41, 1 cent above the Wall Street consensus. Revenue expectations of $4.984 billion are in-line with the sell-side consensus. Expectations have decreased 7% since last quarter, putting YoY growth expectations at -9% for EPS and 3% for sales.
What to watch: In Q4, Whole Foods will once again try to shake its “whole paycheck” reputation that remains despite their efforts to shake it. It’s ability to innovate in a very crowded grocery space bodes well for the chain, especially in the form of it’s 365 stores which have been well received. There were initially fears that the 365 stores will cannibalize Whole Food’s core business rather than confront competitive threats from the likes of Sprouts (NASDAQ:SFM), Kroger (NYSE:KR) and even Trader Joe’s.
Comparable store sales are still struggling, down 2.6% in for the last two quarters, but an improvement from -3% in FQ2 2016. Margin contractions have also been worrisome for investors. On the plus side, the company announced in its last report that it was more than 50% of the way to cutting annual costs of by $300M, which they proposed in 2016.
Twitter (NYSE:TWTR)
Information Technology - Internet Software & Services | Reports February 9, before the open.
The Estimize consensus is looking for earnings per share of $0.14 on $739.6 billion in revenue, above Wall Street by 2 cents on the bottom-line and $2M on the top. Compared to a year earlier, this reflects a 12% decrease in earnings and a 5% increase on sales. Earnings estimates have fallen 7% the last quarter, while revenues increased 1%.
What to Watch: As with all social-media companies, investors in Twitter will be mainly focusing on user growth when the company reports on Thursday. Monthly active users (MAUs) have been stagnant for several quarters now, only coming in at 317 million in the third quarter, a measly 1% increase QoQ and 3% YoY. The company is not even in the top 3 when it comes to DAU and MAU; Facebook (NASDAQ:FB), Instagram and Snapchat are all ahead of Twitter.
Twitter is trying to offset lagging user growth by capitalizing on the popularity of online video, a strategy already used by Facebook, You Tube, Instagram and others. Twitter is also actively trying to re-engage its user base through strategic content partnerships, specifically with live streaming video. Investor’s will be looking for confirmation that Twitter’s contract with the NFL to stream Thursday Night Football along with normal CBS/NBC programming was successful this fall and winter. During the first few weeks of the initiative this strategy was extremely successful in re-engaging and adding new users. Additional live streams of major events this year such as the presidential debates and Olympics also helped to drive engagement.
Perhaps nothing has been more beneficial to Twitter than President Trump’s presence on the platform throughout and following the election. He often shares his policy proposals on the social-media tool, and when publicly traded companies are mentioned it can send the stock either soaring or plummeting depending on what is said. It’s possible that President Trump could solve Twitter’s engagement problem.
NVIDIA Corporation (NASDAQ:NVDA)
Information Technology - Semiconductors | Reports February 9, after the close.
The Estimize consensus calls for EPS of $0.90, 6 cents above the Wall Street consensus. The Revenue expectation of $2.14 billion is $30M above sell-side consensus. Expectations have increased 48% since last quarter, putting YoY growth expectations at 123% for EPS and 48% for sales.
What to watch: NVIDIA posted one of the largest beats, percent-wise, last earnings season among all the companies in the S&P 500. Earnings for the third quarter topped analysts’ estimates by over 50% while sales trumped those very same expectations by 18%. Management credited strong growth on the continued success of its core GPU business and significant progress made in VR, self driving cars and data center computers. NVidia has left very little reason to believe that any of these businesses will take a step back in future quarters.
The chipmaker success has been tied to wider adoption of its GPUs not only by gamers but in high growth markets such as data centers, automotive and virtual reality. It also hasn’t hurt that PC gaming is one of the highest grossing forms of entertainment with many gamers relying on high end chips produced by NVIDIA.
Some near-term concerns include increasing competition, namely AMD, and unrealistically high expectations. If Nvidia doesn’t meet or beat analysts estimates this quarter it would naturally hurt its stock.