Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Chief Investment Strategist
In our US earnings scorecard note on Friday we highlighted that the US earnings season is progressing well among the mega caps with on average decent upside surprise to both revenue and earnings. For the S&P 500 the earnings surprise has been 9.1% in aggregate terms and 1.3% for revenue with around 81% of companies surprising to the upside on earnings. In the European earnings season the earnings surprise has been less at 6.5% while revenue has actually missed estimates by 0.6%.
An earnings releases that is grabbing the attention of market in today’s session is the Q1 result from Dutch based Philips. The health technology company is up 43% after announcing an early $1.1bn settlement with the US authorities over its sleep apnea therapy machines providing more visibility on profitability going forward. In terms of revenue and operating income the company delivered according to estimates so investors are just relieved that the uncertainty around the sleep apnea case can finally be put to rest. Analysts have FY25 estimates on revenue at €19.8bn vs €18.1bn in the previous 12 months and EBITDA of €3.4bn vs €2.9bn in the previous 12 months. On a FY25 forward basis, Philip is valued at EV/EBITDA of 9.2 vs 9.3 for the European Stoxx 600 Index. The question is now whether investors are willing to pay a premium over the market for Philip shares like they have done in the past.
This week presents more than 300 earnings releases across major indices in North America, Asia, and Europe. In terms of market impact there are five earnings releases that we will highlight for investors. AMD as a preview to Nvidia earnings. Amazon on cloud growth and US retail demand. Apple on digital consumer demand. Eli Lilly and Novo Nordisk are the two frontrunners in the new class of obesity drugs that is seeing incredible demand.
The list below highlights all the key earnings releases this week.