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Earnings week: Amazon, AMD, Eli Lilly, Apple, and Novo Nordisk Earnings week: Amazon, AMD, Eli Lilly, Apple, and Novo Nordisk Earnings week: Amazon, AMD, Eli Lilly, Apple, and Novo Nordisk

Earnings week: Amazon, AMD, Eli Lilly, Apple, and Novo Nordisk

Equities 5 minutes to read
PG
Peter Garnry

Head of Equity Strategy

Key points

  • Philips sleep apnea settlement: Philips shares soared by 43% following a Q1 earnings report highlighted by a $1.1 billion early settlement with US authorities over sleep apnea therapy machines. This settlement resolved uncertainties and provided clearer visibility on future profitability, although revenue and operating income met expectations without surpassing them.

  • Q1 earnings season overview: The US earnings season is seeing a positive trend among mega caps with a 9.1% earnings surprise and a modest 1.3% revenue surprise for the S&P 500. However, European companies are experiencing weaker results with a 6.5% earnings surprise and a 0.6% revenue miss

  • Upcoming earnings week overview: This week is packed with over 300 earnings reports across major global indices. Key releases include Amazon, which might show significant growth in its cloud and advertising segments, AMD, with its MI300 GPU forecast as a highlight despite overall slow growth, and Eli Lilly, which is anticipated to see continued strong performance from its obesity drug Zepbound. Apple and Novo Nordisk are also on watch, with Apple facing regulatory and market challenges, and Novo Nordisk driving growth with its obesity treatments, though both face high market expectations.

 

Q1 earnings surprise to the upside, Philips shares surge 43%

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.

Philips share price | Source: Saxo

Key earnings this week

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.

  • Amazon (Tuesday, aft-mkt): Estimates point to revenue of $142.6bn up 12% YoY and EPS of $1.19 up 200% YoY as Amazon is growing itself out of its self-inflicted pain during the pandemic when the retailer overinvested. The biggest potential upsides to Q1 earnings come from the cloud business (AWS) and advertising on its platform as the global advertising market is still running hot.

  • AMD (Tuesday, aft-mkt): Expected to deliver revenue of $5.4bn up 2% YoY which will likely be a surprise to many as that represents a meagre growth rate compared to Nvidia. AMD is temporarily hit by weak consumer electronics markets and weakness in its Clients and Servers segment, but its rising MI300 GPU 2024 outlook which was latest put at $3.5bn vs prior $2bn is the bright spot investors are focusing on.

  • Eli Lilly (Tuesday, bef-mkt): Analysts expect revenue of $8.9bn up 28% YoY and EPS of $2.44 up 54% YoY as its Zepbound obesity drug is likely to dominate growth once again with management recently saying revenue would accelerate in the second half of the year as supply improves. Eli Lilly is expected long-term to grow revenue from current $34.1bn to $70.4bn in 2027 on top of the operating margin expanding by 14%-points. While enormous growth is expected the market is also aggressively pricing it making the stock one of the most aggressively priced stocks in the S&P 500.

  • Apple (Thursday, aft-mkt): The once invincible technology company is under pressure from EU regulation and weaker Chinese demand as Chinese consumers are preferring local smartphone brands. Analysts expect revenue of $90.3bn down 5% YoY and EPS of $1.50 down 1% YoY. Outside the iPhone weakness, which IDC projected saw 10% drop in shipments in the previous fiscal quarter, the Services segment is expected to show solid growth and if there is an upside surprise this is where it could come from. Any updates on client adoption of AR/VR could also be a positive surprise for investors.

  • Novo Nordisk (Thursday, bef-mkt): Revenue is expected at DKK 63.7bn up 19% YoY and EPS of DKK 5.21 up 19% YoY driven by another strong quarter for its obesity drugs Wegovy and Ozympic (diabetes 2 drug but used as an alternative to Wegovy because they share the same active GLP-1 substance). Like Eli Lilly, the valuation is at the absolute high end of the range in Europe leaving no room for a disappointment on the outlook for demand and production.

The list below highlights all the key earnings releases this week.

  • Monday: Philips, BBVA, NXP Semiconductors

  • Tuesday: Stryker, Amazon, AMD, Starbucks, Mondelez, Eli Lilly, Coca-Cola, McDonald’s HSBC, Eaton, Cameco, Mercedes-Benz Group, Volkswagen, Adidas, Banco Santander, PayPal, Super Micro Computer

  • Wednesday: Qualcomm, Mastercard, Pfizer, ADP, Barrick Gold, Franco-Nevada, GSK, Estee Lauder, DoorDash, AIG, Kraft Heinz

  • Thursday: Novo Nordisk, Linde, Booking, Apple, Amgen, Shell, ConocoPhillips, Cigna, Regeneron Pharmaceuticals, National Australia Bank, Macquarie Group, Vestas, Mærsk, Ørsted, Genmab, Pandora, Universal Music, ING, ArcelorMittal, Coinbase, Fortinet, Block, Moderna, Cloudflare

  • Friday: Novonesis, Danske Bank, Credit Agricole, Societe Generale, Intesa Sanpaolo, MercadoLibre, Monster Beverage

  • Weekend: Berkshire Hathaway

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