Next week, the standoff between the West and Russia over the
annexation of Crimea will likely continue to weigh on investors'
minds. With both the US and Europe starting to ramp up pressure on
Russia through economic sanctions, many wonder if the new
restrictions will start to affect their economies.
Key Earnings Reports
Next week investors will be waiting for several key earnings
reports including Walgreen (NYSE:
), Accenture plc. (NYSE:
), GameStop (NYSE:
), and BlackBerry (NASDAQ:
Walgreens is expected to report second quarter EPS of $0.93 on
revenue of $19.57 billion, compared to last year's EPS of $0.96 on
revenue of $18.65 billion.
On March 5, JP Morgan gave Walgreen an Overweight rating, noting
that the company's same store sales came in above expectations.
"This morning, WAG reported February SSS which were above our
expectations on an overall basis (pharmacy came in above our
estimate and Retail Metrics consensus while front end matched our
estimate and was above consensus). Total sales of $6.05B were
slightly above our $6.03B estimate. The comparable script trend
(adjusted for calendar shifts, cough/cold/flu and flu shot impacts)
rebounded in February versus a somewhat weaker January. Front end
SSS exceeded consensus despite traffic remaining in negative
territory for the third straight month after two consecutive months
of positive comps. In our view, the results were solid despite the
impact of weather (which is expected to contribute to higher
SG&A in the quarter), and we would expect a favorable stock
On March 19, Morgan Stanley also gave Walgreens an Overweight
rating and said management commentary will be key for the stock's
"When WAG reports earnings next week on 3/25, we expect results
to come in below expectations as captured by our quarterly ests.
(MS $0.86, cons $0.92), negatively impacted by weather and
promotional activity/traffic, key focus will not be on the print
but on mgmt comments regarding timing of closing step 2 of AB
transaction, pace of synergies, and the idea of redomiciling/ tax
Deutsche Bank gave Walgreens a Buy rating with an $80.00 price
target on March 5th, citing the company's impressive February sales
"Walgreens reported its February sales results, the last month
of its Fiscal Q2, with total sales of $6.05 billion for February
and $19.61 billion for Q2. F2Q sales of $19.61 billion is ahead of
the consensus estimate of $19.53 billion, which is approximately 1c
to EPS. Front end comp sales growth of 2.0% despite a negative
impact of 0.6% from cold weather, continues solid front end growth
despite the current promotional environment. We are updating our
F2Q revenue to $19.61 billion and our F2Q EPS estimate is $0.94,
ahead of consensus for $0.93. We maintain our Buy rating on WAG
shares and increase our price target to $80."
Accenture is expected to report second quarter EPS of $1.04 on
revenue of $7.21 billion, compared to last year's EPS of $1.00 on
revenue of $7.06 billion.
Merrill Lynch gave Accenture a neutral rating with an $85.00
price objective on March 13th.
The analyst team at Merrill Lynch noted that emerging markets
remained a near term risk for the company, but that the overall
growth is likely to continue at a slow and steady pace.
"In June 2013, an unexpected slowdown in Brazil caught Accenture
and investors by surprise. Accenture continues to face challenges
in Brazil. BofAML economists now forecast just 1.6% YoY real GDP
growth in 2014 in Brazil. Russia's political issues are also well
known. BofAML has lowered its real GDP forecast to 1.7% in 2014 for
Russia. In 4Q13, IBM's Services division saw mixed trends in its
growth markets, particularly China. Recent declines in exports
(down 2% YoY in Jan/Feb) have heightened China growth
S&P Capital IQ gave Accenture a Buy rating with an $88.00
price target on March 15th. The analysts at S&P see the company
as well positioned in the industry over the long term.
"We look for revenue growth of 3.5% in FY 14 (Aug.), given some
weakness in the first half of the fiscal year. We look for improved
performance in the third and fourth quarters, reflecting the strong
bookings ACN has posted recently. We point to the $4.3 billion
booked in consulting in the November quarter, which was the second
largest in recent memory. We see some near-term softness in certain
segments, but we believe new contracts are ramping up. For FY 15,
we see a 6.5% revenue gain."
GameStop is expected to report fourth quarter EPS of $1.93 on
revenue of $3.79 billion, compared to last year's EPS of $2.16 on
revenue of $3.56 billion.
Merrill Lynch gave GameStop a neutral rating with a $43.00 price
objective on March 18. The analysts at Merrill Lynch noted that the
competition from Walmart would provide a challenge for the company
in the future.
"WMT announced today that, as of March 26, consumers will be
able to trade in games in Walmart and Sam's Club stores, as well as
online. In return, consumers will receive store credit that can be
used across WMT's formats. Later this year, WMT will begin selling
"certified pre-owned" games. The logistics and refurbishment
process will be handled by CExchange, an online CE refurb retailer,
focused primarily on CE and mobile products. While we view this as
another multiple headwind to GME, ultimately, we do not think that
it bears a meaningful risk to their used-gaming business (27% of
sales, 44% of GP), as it is a very difficult business to scale and
manage. We note that, in 2011, BBY entered the used-gaming business
and was largely unsuccessful. GME management has stated that BBY's
entry had no impact to their business and we believe the same will
be true with WMT."
Credit Suisse had a similar view on March 5th with a neutral
rating and a $46.00 price target.
"Risks to our $46 target price are: GME faces significant risk
from the large discounters and consumer electronics retailers as
they expand in the video game business due to the new gaming cycle.
As well, GameStop faces risk to the extent that the US consumer
slows down spending from its current rate and is exposed to
European macro factors as the company has store locations
S&P Capital gave GameStop a strong Buy rating with a $60.00
price target on February 1st as the firm is expecting to see strong
growth in gaming sales.
"We see FY 15 (Jan.) revenues increasing 8.1%, to $9.8 billion,
from the $9.1 billion we expect in FY 14. Our forecast reflects
strong growth in new video game hardware sales following the
November 2013 release of two new game consoles. We expect the new
console launches to drive increased trade-in activity and growth in
sales of used video game products. We also see growth in sales of
digital content and mobile devices."
BlackBerry is expected to report a fourth quarter loss of $0.56
per share on revenue of $1.13 billion, compared to last year's EPS
of $0.22 on revenue of $2.68 billion.
S&P Capital IQ gave Blackberry a hold rating on March 15th
with at $10.00 price target. The firm was concerned about
Blackberry's difficult road ahead as it has faced a huge loss of
"Our hold recommendation on the shares reflects our concern
regarding subscriber losses and difficulty in rebuilding enterprise
relationships. BlackBerry recently agreed to sell $1.25 billion of
convertible notes to a group of investors including Fairfax
Financial. We believe the appointment of CEO John Chen is a
positive for the company as he has already made several key hires.
We expect the company to focus on physical keyboards, security, and
monetizing software. However, we believe the company still has a
long way to go to rebuild its relationships with enterprises,
particularly those that have already left the platform."
Wells Fargo gave BlackBerry a market perform rating on February
19th, nothing that the company will need to change course in order
"With a potential sale of the company less likely in the
near-term, we believe BBRY will likely look at other strategic
alternatives (further restructuring, potential divestitures,
aggressively target multi-platform strategy, etal). Upside risk
could come from potential strategic actions."
Investors will be focused primarily on US economic data this
week after the US Federal Reserve surprised markets by insinuating
that it plans to increase its interest rate sooner than expected.
Fed Chair Janet Yellen's address following the meeting led most to
believe that the bank sees the US economy as strong enough to stand
on its own as early as next year. After a spate of poor economic
data, which was largely attributed to the nation's severe winter,
most are anxious to see further data like GDP and PMI figures to
get a better picture of the US' economic health.
Earnings Releases Expected: Renesola Ltd. (NYSE:
), Exa (NASDAQ:
), Sonic (NASDAQ:
) Economic Releases Expected: US manufacturing PMI, eurozone
manufacturing PMI, eurozone services PMI, German manufacturing PMI,
German services PMI, French manufacturing PMI, French services PMI
Earnings Expected: Walgreen (NYSE:
), PVH (NYSE:
), Steelcase (NYSE:
), Landec (NASDAQ:
) Economic Releases Expected: US new home sales, US redbook,
British PPI, British CPI, German IFO business climate index
Earnings Expected: Francesca's Holdings (NASDAQ:
), Lindsay (NYSE:
), Paychex (NASDAQ:
) Economic Releases Expected: New Zealand trade balance, US
crude oil inventory data, US durable goods orders, British GDP,
British current account, Italian retail sales, Italian consumer
Earnings Expected From: Lululemon Athletica (NASDAQ:
), Accenture plc (NYSE:
), UTi Worldwide (NASDAQ:
), Gamestop (NYSE:
), Restoration Hardware (NYSE:
), Red Hat (NYSE:
) Economic Releases Expected: British consumer confidence,
Japanese retail sales, Japanese CPI, Japanese unemployment rate, US
GDP, British retail sales, French consumer confidence
Earnings Expected From: Blackberry (NASDAQ:
), LGI Homes (NASDAQ:
) Economic Releases Expected: German CPI, eurozone business
climate, eurozone consumer inflation expectation, eurozone consumer
confidence, Italian PPI, French GDP, French PPI
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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