Head of Saxo Strats
Summary: Our earnings focus next week is Nike, FedEx, and Carnival, and with recent sell-side analyst upgrades on Nike the pressure is on to deliver on the outlook for 2023. For FedEx the situation is completely opposite with revenue expectations having come down to zero growth over the two next quarters suggesting a hangover for the logistics company following the boom days of the pandemic. In today's earnings watch we are also taking a look Adobe earnings which were releases last night and positively surprised investors.
Can Nike deliver on recent rise in expectations?
The Q3 earnings season is done and we find ourselves in the transition period to the Q4 figures which will begin to roll in around mid-January. In the meantime, earnings releases are still being released from companies which fiscal year does not following the calendar year. Next week’s most important earnings release is Nike which has recently seen several sell-side analysts increasing their price target and betting on margin recovery in 2023. Nike report FY23 Q2 (ending 30 November) on Tuesday with revenue expected at $12.6bn up 11% y/y, but it is really the outlook for the holiday season quarter ending in February 2023 that is the most interesting. Is the consumer still keeping up its spending on discretionary items such as those Nike is selling. Analysts covering Nike seem more optimistic on 2023 that the US banking CEOs on the industry conference last week suggesting US consumer spending is coming down.
The list below shows the most important earnings releases next week. Except from Nike earnings described above, FedEx and Carnival earnings are also key to watch. FedEx is now on the backside of the pandemic boom in logistics and expectations for revenue growth has collapsed to zero revenue growth over the next two quarters which in real terms is very low expectations. This means that the bar is set low for FedEx when it reports earnings on Tuesday. The cruise line operator Carnival is reporting earnings on Wednesday and is still riding the strong rebound wave from the pandemic lows with revenue growth expected at 206% y/y for the quarter that ended in November.
Adobe sounds confident on Figma acquisition
Adobe, the software maker of creative content creation, reported FY22 Q4 (ending 2 December) revenue of $4.5bn which was in line with estimates and adjusted EPS of $3.60 vs est. $3.50 was better than expected. The recent cost reductions have already improved profitability relative to consensus so that was a positive thing for investors. However, the 2023 revenue outlook at $19.2bn was a bit below estimates, so why were shares up 5% in extended trading when overall results and the outlook were mixed at best? Management sounded very confident on its acquisition of Figma, which is a fast growing competitor, which investors believe is crucial for Adobe to maintain its long-term growth prospects. Adobe expects the Figma acquisition to go through in 2023. 2024: The wasted year
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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