The Week Ahead – December 06, 2022

Energy

The energy market is in focus next week in the wake of an OPEC+ meeting that began over the weekend.

Investors will react to the group’s update on production plans, as well factor in the impact of European Union’s sanctions on the purchases of Russia’s seaborne crude exports and a potential G-7 price cap on Russian oil.

Global Banks

Global central banks will also be in the spotlight with the Reserve Bank of Australia and the Bank of Canada both anticipated to raise interest rates, although FOMC members in the U.S. will be quiet as a part of a blackout period ahead of the December 14-15 meeting.

New York Fed President John Williams said he thinks the FOMC has a ways to go on raising rates.

Economists think last Friday’s strong jobs report is likely to generate more calls for a 75 -point hike from some Fed officials at the December meeting. Fed watchers will also key on the upcoming producer price index report next week as an inflation gauge.

Corporate Earnings Updates

Outside the focus on oil and interest rates, key earnings reports for the week ahead include updates from AutoZone (NYSE:AZO), Costco (NASDAQ:COST), and Lululemon (NASDAQ:LULU). A busy week of corporate events includes key investor meetings for Southwest Airlines (LUV), Norfolk Southern (NSC), and Glencore (OTCPK:GLCNF), as well as a wave of tech and media companies appearing at the UBS Global TMT Conference.

Monday, December 5 – GitLab (NASDAQ:GTLB).

GitLab (NASDAQ:GTLB) shares surged nearly 18% in premarket trading on Tuesday as the DevOps software company posted third-quarter results that blew away expectations and raised its revenue forecast for the full-year.

Tuesday, December 6 – AutoZone (AZO), MongoDB (MDB), Signet Jewelers (SIG), Stitch Fix (SFIX), and Guidewire Software (NYSE:GWRE).

Stocks lacked a clear direction in Tuesday’s premarket trading following a sharp decline in the previous session. Wall Street has shown caution in recent days ahead of the Federal Reserve’s policy meeting next week.

Here are some stocks to watch on Tuesday:

• AutoZone (NYSE:AZO) reported Q1 earnings that topped expectations. Revenue also exceeded forecasts, rising nearly 9% to reach $3.99B. The auto parts retailer reported domestic same-store sales that rose 5.6% for the quarter.
• Signet Jewelers (SIG) climbed in premarket trading following the release of its quarterly report, with the stock advancing nearly 8%. The company reported Q3 non-GAAP EPS of $0.74, topping estimates by $0.42, with revenue climbing nearly 7% to $1.6B. The jewelry retailer also raised its 2023 revenue forecast, saying it now expects a top-line figure of $7.77B-$7.84B. Previously, the company had predicted a range between $7.6B and $7.7B.
• Fisker (FSR) revealed stock purchases by the EV maker’s top executive. The firm said its CEO Henrik Fisker and its CFO/COO Geeta Gupta-Fisker have purchased 33.7K shares of the company’s Class A common stock.
• MongoDB (MDB) is scheduled to report its quarterly results after the closing bell. The database program provider is expected to report a loss of $0.17 per share. Meanwhile, revenue is projected to rise 34% from last year to reach nearly $305M.
• Toll Brothers (TOL) is also set to announce its financial figures in the post-market period. Earnings at the homebuilder are projected to rise to $3.94 per share. The company is also estimated to post revenue at $3.21B.

Wednesday, December 7 – Brown-Forman (BF.A), Campbell Soup (NYSE:CPB), GameStop (GME).

Thursday, December 8 – Costco (COST), Broadcom (NASDAQ:AVGO), Lululemon (LULU), Chewy (NYSE:CHWY), and Vail Resorts (MTN).

Lululemon earnings preview: Lululemon Athletica (LULU) will report earnings after the closing bell on December 8. The consensus marks for the quarter are for revenue of $1.81B to be reported by the company and EPS of $1.96. LULU is typically an earnings superstar. The athletic apparel juggernaut has topped revenue expectations in nine of the last ten quarters and analysts have been pushing their profit estimates higher over the last 90 days despite the persistent inflation headwinds in the mix. On the Lululemon conference call, look for an update on holiday sales momentum and potentially some discussion from management on new verticals for LULU in tennis, golf, hiking, and footwear.

Friday, December 9 – Li Auto (LI).

IPOs

Another slow week is anticipated for the IPO market with only Erayak Power Solution (RAYA) on the watch for a public debut. 

Barron’s Mentions

AbbVie (NYSE:ABBV) is the subject of a positive writeup this week with the publication making the case that concerns over Humira patent expirations are overshadowing underlying strength. For starters, the pharma giant is noted to have plenty of profitable products that have begun to fill the gap left by Humira’s decline. There are also billions in sales coming in from new Skyrizi and Rinvoq, which treat psoriasis and arthritis, respectively. The Chicago-based company is also continuing to develop its hematologic oncology, which is projected to generate $7B in sales by 2025. Meanwhile, AbbVie’s ample free cash is expected to make its attractive dividend nearly ironclad. On the valuation front, even after a 20% year-to-date rally, AbbVie is said to look cheap for new investors.