Top US stocks: Peloton, Dell and Workday

Peloton, Dell and Workday release earnings after the closing bell, Coty expects growth to accelerate, brokers become more bullish on Salesforce and Snowflake, Lordstown Motors gets a new CEO, and reports say TSMC plans to hike prices while JOYY could be taken private.

USA (1)

Peloton

Peloton is scheduled to release fourth quarter and full year results after the closing bell today, with investors keenly looking out for how the recall of its treadmills in May and increased investment in shipping will weigh on profitability.

The company issued a voluntary recall of up to 125,000 treadmills after regulators flagged safety concerns, which is expected to cost $165 million in lost sales and refunds. Peloton is expected to report fourth quarter revenue of $921.6 million and a net loss of $139.6 million. That would compare to the $607.1 million in revenue and a $89.1 million profit the year before. Delivering its target to end the year with 2.3 million connected subscribers will be key.

Peloton looked to be firing on all cylinders before the recall. It smashed expectations in the third quarter and delivered record revenue and its third consecutive quarterly profit as it continued to benefit from the boom in demand for stay-at-home exercise equipment since the pandemic began.

You can read our full preview ahead of the Peloton earnings here.  

Dell

Computer giant Dell will release second quarter earnings after markets close today, with expectations high after the company delivered record results in the last quarter and reported a ‘substantial acceleration in digital transformation across the globe’.

Analysts are expecting revenue to rise to $25.5 billion from $22.8 billion the year before and adjusted operating profit it expected to hold broadly flat year-on-year at $2.6 billion after hitting a record of $2.7 billion in the first quarter. Adjusted diluted EPS is set to come in at $2.03 from $1.92 the year before.

The global shortage in chips and the threat posed by the spread of the Delta variant still pose a threat to Dell’s ability to deliver, but it is expected to continue outperforming rivals such as HP.

Workday

Workday will also release second quarter earnings later, having raised expectations earlier this year after delivering strong growth as companies tap into the company’s expertise to digitally transform their businesses.

Analysts are expecting revenue to rise to $1.24 billion from $1.06 billion the year before, with adjusted operating income to dip to $247.5 million from $257.7 million. The reported loss per share at the bottom-line is expected to widen to $0.25 from $0.12.

Buoyant enterprise spending figures out from the likes of Amazon and Microsoft bodes well for Workday’s cloud-based finance and HR products that both saw demand hit last year when the pandemic erupted. Investors will be hoping that uptake of its finance product will pick up after being hit by lengthy delays.

Coty

Cosmetics company Coty managed to squeeze out its first year of sales growth in three years and said it was encouraged by the recovery in demand for fragrances as consumers start shopping again.

Net revenue increased almost 90% year-on-year to $1.06 billion and came in ahead of the $1.01 billion forecast, as numbers were flattered by weak comparatives from when restrictions hindered sales last year. That allowed annual revenue to come in just above the top end of its guidance range. It booked a fourth quarter loss of $0.22 per share compared to a $0.48 loss the year before.

Like-for-like sales for the year came in at 3.5% and Coty said it is aiming to deliver growth in the ‘high teens’ in the first quarter and ‘low teens’ over the full financial year. That guidance has been underpinned by momentum building for the fragrance market in the US and China, with some signs of recovery in EMEA.

Salesforce

Salesforce breezed past Wall Street expectations when it published second quarter earnings yesterday, forecasting that the move to hybrid working and reopening of offices will continue to drive demand for its cloud-based software.

Revenue rose 23% to $6.34 billion while adjusted EPS rose to $1.48 from $1.44. The topline beat the $6.23 billion expected by analysts and earnings were much better than anticipated considering Salesforce had guided for a fall to $0.92. The company said its Customer 360 platform is now ‘fuelled by a herd of unicorns perfectly designed for this all-digital world’ after snapping up the likes of Tableau, Mulesoft and, most recently, Slack.

Salesforce said it expects third quarter revenue of between $6.78 to $6.79 billion, representing around 25% year-on-year growth, and for adjusted EPS of $0.91 to $0.92. A number of brokers raised their target prices following the update and the average target price of $290.91 implies there is up to 11.5% potential upside from the current share price.

Snowflake

A number of brokers raised their target price on cloud data firm Snowflake after the company beat its own guidance and analyst expectations when it released second quarter earnings yesterday.

Product revenue more than doubled year-on-year to $254.6 million, coming in well ahead of the $235 to $240 million guided by the company. Total revenue followed and came in at $272.2 million, beating the $256.5 million forecast by analysts. The company said it is expecting growth to slow to 89% to 92% in the third quarter to a range of $280 to $285 million.

‘Snowflake saw continued momentum in Q2 with triple-digit growth in product revenue, reflecting strength in customer consumption,” said chief executive and chairman Frank Slootman. ‘While increasing net revenue retention rate to 169%, we also boosted gross margin and operating margin efficiency while our adjusted free cash flow was positive for the third quarter in a row.’

The performance prompted a number of brokers to upgrade their target price, which on average sits at $313.15 – some 6.5% above the current share price.

TSMC

The world’s largest chipmaker TSMC is planning to hike prices late this year or possibly in 2022, according to reports from the Wall Street Journal, threatening to intensify the situation amid the global shortage and lead to higher prices for consumer electronics.

The report suggested TSMC was looking to raise the price of its most advanced chips by 10% and its less advanced chips used in cars and electronics to be hiked 20%, citing unnamed sources. That could also feed through to its customers such as Apple, and poses a question about who will absorb or pay for any price increases.

JOYY

JOYY’s two top shareholders are plotting to take the company private in an $8 billion deal, according to reports from Reuters.

The move has been prompted by the belief that the US market is undervaluing the Chinese social media company, with its value trading significantly below its net asset value in recent months. The report suggests chairman David Li and Lei Jun, the founder of Xiaomi, are looking to offer $75 to $100 per share to take the company private. The stock currently trades at below $57.

Boeing

India has given the green light for Boeing 737 MAX aircraft to take to the skies once again after being grounded for almost two-and-a-half years following safety concerns and two fatal crashes.

India has taken longer to reinstate the planes with around 175 countries having approved the aircraft safe to fly already, but the country is regarded as a key travel market for the company. China is thought to be the last major market that is still grounding the aircraft.

Lordstown Motors

Lordstown Motors has appointed Daniel Ninivaggi as its new chief executive with immediate effect.

Ninivaggi was previously the CEO of Icahn Enterprises and has held senior positions within the automotive and transportation industries, working for the likes of Lear and Federal Mogul Holdings. Lordstown’s founder and former CEO, alongside its CFO, resigned in June after a report from short seller Hindenburg claimed the company had misled investors.

‘I believe the demand for full-size electric pickup trucks will be strong and the Endurance truck, with its innovative wheel hub motor design, has the opportunity to capture a meaningful share of the market. With an absolute focus on execution, I look forward to working with the talented Lordstown management team, our suppliers and other partners to bring the Endurance to market and maximize the value of our assets,’ said the new CEO.

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