On Sunday, Germans will head to the polls to determine whether
or not Angela Merkel and her coalition government will be returned
to power. Although Merkel is widely favored to be re-elected, her
coalition partners may not be so lucky. If new parties are awarded
seats in parliament, the uncertainty in the largest European
economy could weigh on markets.
Key Earnings Reports
Next week investors will be waiting for several key earnings
reports including BlackBerry (NASDAQ:
), Accenture plc. (NYSE:
), Nike, Inc. (NYSE:
), Jabil Circuit, Inc. (NYSE:
), Bed Bath & Beyond Inc. (NASDAQ:
BlackBerry expected to report a loss of $0.15 per share on
revenue of $3.06 billion, compared to last year's loss of $0.27 per
share on revenue of $2.78 billion.
At the beginning of September, the analyst team at Canaccord
Genuity gave BlackBerry a Sell rating with a target of $8.00,
citing weak sales and the strong probability that BlackBerry 10
will not be competitive in the market.
"Our global surveys indicate very weak Z10, Q10, and Q5 sales
along with sharply declining legacy BB7 sales.Given the weak
BlackBerry smartphone sell-through trends, our conversations with
global distributors also indicate high levels of BlackBerry
smartphone channel inventory, leading us to lower our F2014/15
BlackBerry smartphone sell-in estimates. We believe the special
committee formed by
BlackBerry's board to explore strategic alternatives such as
joint ventures, strategic partnerships, or a sale of BlackBerry is
consistent with our belief BlackBerry will ultimately end up
selling the company due to the difficult competitive smartphone
market and low probability BlackBerry 10 can return BlackBerry to
sustained profitability. We maintain our SELL rating and $8 price
On September 12th, Jefferies gave BlackBerry a Buy rating with a
price target of $15.00. The firm said BlackBerry's board will
likely face three options:
"1) a potential LBO bid; 2) a strategic bid for the whole; 3)
breaking the company into three pieces; 4) selling the company as a
whole. A combination of options is also possible. We believe
Microsoft's acquisition of Nokia's handset business makes
Microsoft's potential acquisition of BBRY more likely rather than
less. We think BBRY's strategic review process will be complete by
Accenture is expected to report EPS of $1.00 on revenue of $6.89
billion, compared to last year's EPS of $0.88 on revenue of $6.84
Goldman Sachs gave Accenture a Buy rating with a 12 month price
target of $85.00. Goldman is predicting a modest recovery in
revenue growth and cited significant cash flow and capital
allocation among the reasons for the positive rating.
"We reiterate our Buy rating on ACN given its unique global IT
services positioning, significant cash flow, and capital
allocation. Although recent results have disappointed we believe
the model remains structurally sound and look for improved
performance headed into FY14 as cyclical demand and revenue
conversion pressures abate."
Jefferies was more conservative and gave Accenture an In-line
rating with a price target of $71.00 on Friday.
"Key to ACN's print on 9/26 will be initial F14 guidance. We
expect the new CFO to naturally provide an outlook on the
conservative side, but feel that Street estimates are generally
well-calibrated. After lowering the near-term bar last quarter, we
could see a little upside in F4Q results, and we also anticipate a
dividend hike, as is typical on the F4Q call. ACN remains a
premiere global franchise, but we maintain our Hold rating given
Nike is expected to report EPS of $0.78 on revenue of $6.97
billion, compared to last year's EPS of $0.64 on revenue of $6.47
Piper Jaffray gave Nike a Neutral rating with a price target of
$71.00 last week. The analyst team noted several upcoming events
that could positively affect the company's shares as reason to
raise the 12 month price target, but declined to increase Nike's
"We believe the next several weeks potentially offer a
compelling trade opportunity for NKE shares on the long side. The
following events over the next four weeks could all be positive
catalysts for NKE shares: Dick's Sporting Goods analyst day on
September 18th, Nike's FQ1 earnings in late September, Nike's
analyst day on October 9 and NKE shares being added to the DJIA on
September 23. Furthermore, we believe product innovation such as
Flyknit, mildly improving macroeconomic conditions in China and
several global sporting events in 2014 provide a favorable
backdrop. Lastly, NKE's earnings multiple relative to UA is
approaching its historic low, which has typically been a good
indicator of NKE's relative outperformance. We have raised our
12-month price target from $64 to $71, but are maintaining our
Neutral rating given valuation."
On September 18th, Wedbush took a similar stance on Nike shares,
giving them a Neutral rating with a $64.00 price target.
"While our bias remains long, and we have admittedly missed
opportunities to become more constructive, nevertheless, we raise
our target to $64. We apply a peak 20x forward multiple on our
calendar 2014 estimate of $3.15 (which yields a $63 target). We
also apply an above-peak 15x EV/EBITDA multiple to our calendar
2013 EBITDA estimate of ~$4.0b (which yields a price target of
$63). On an absolute basis, our revised DCF is based on a WACC of
6.5%, a takeout multiple of 14x and a beta of 0.6 yields a $65
Jabil Circuit, Inc.
Jabil Circuit is expected to report EPS of $0.54 on revenue of
$4.53 billion, compared to last year's EPS of $0.54 on revenue of
Merrill Lynch gave Jabil Circuit a Buy rating with a $25.00
price objective in mid March despite near term risks due to lower
revenue at BlackBerry and Apple.
"In the near term we see headwinds of lower revenues from
Blackberry, and lower than expected revenues from Apple (lack of a
low priced phone). Accordingly, we are modestly adjusting our
near-term revenue and EPS estimates lower (~0.05 impact from each
in F14). Given these changes, our prior above consensus estimates
are now slightly below consensus. However, we remain optimistic
about the longer-term mix shift towards higher margin DMS
(Diversified Manufacturing Services) business and see cash flows
improving significantly as capex starts to drop sharply in F14. We
would be particularly aggressive buyers on any possible weakness
after the company reports earnings on Sep 25th"
Bed Bath & Beyond Inc.
Bed Bath & Beyond is expected to report EPS of $1.15 on
revenue of $2.81 billion, compared to last year's EPS of $0.98 on
revenue of $2.59 billion.
Deutsche Bank gave Bed Bath & Beyond a Hold rating with a
$78.00 price target, citing the stock's recent
"BBBY reports 2Q13 on September 25th, after market. We are
modelling a 3.2% comp, in line with consensus and guidance of
2%-4%. We are also in line on EPS at $1.15 vs guidance of
$1.11-$1.16. We don't believe the quarter sets up for much upside.
Our model implies a flattish comp and a slight acceleration on a
stacked basis as industry growth of 4.5% is a bit better than last
quarter. But, expectations are low, as indicated by recent stock
underperformance, reducing near term downside risk. We maintain our
Wedbush gave Bed Bath & Beyond an Outperform rating with an
$85.00 price target this week, noting that the company is expected
to have solid growth over the long term.
"On a longer-term basis, we believe BBBY is a solid growth story
and should continue to benefit from industry dominance, good
visibility for cross-merchandising opportunities (HBA, food),
future growth potential for newer concepts, and strong balance
sheet and cash flow. The company is investing aggressively in its
new online platforms, and is complementing these efforts with the
roll-out of a new POS system to enhance multi-channel capabilities.
Against easier comparisons in 2013, and accounting for adjustments,
we believe valuation is attractive at these levels, especially
versus peers trading at higher multiples."
Key Economic Releases
German elections will be key next week as investors look to see
who gains seats in parliament. Although Angela Merkel is likely to
be reelected, her coalition could struggle to be reinstated. If
Merkel and her coalition partners do not return to power, the
uncertainty could take down recent progress in Europe's
PMI data from across Europe will also come in to focus as
investors look for clues about the state of the eurozone's economy.
Most are anticipating generally positive data that will contribute
to mounting evidence of the strength of the regions recovery.
Housing data from the US is also likely to be at the top of
investors' minds; many are expecting to see new home sales at their
highest level in six years.
Earnings Releases Expected: Red Hat, Inc. (NYSE:
), S&W Seed Company (NASDAQ:
) Economic Releases Expected: Flash PMI for China, France, Germany,
the eurozone and the US, Results of German federal government
Earnings Expected From: CarMax Inc (NYSE:
) Economic Releases Expected: US consumer confidence, Italian
international trade data
Earnings Expected From: Jabil Circuit, Inc. (NYSE:
), Bed Bath & Beyond (NASDAQ:
), AutoZone, Inc. (NYSE:
), Synnex Corporation (NYSE:
) Economic Releases Expected: US new home sales, housing starts,
and durable goods; German and French business sentiment and
consumer sentiment, Italian consumer confidence,
Earnings Expected From: Nike, Inc. (NYSE:
), Accenture plc. (NYSE:
) Economic Releases Expected: US Pending Home Sales and initial
jobless claims; French consumer confidence,
Earnings Expected From: BlackBerry (NASDAQ:
), Vail Resorts, Inc. (NYSE:
) Economic Releases Expected: US Consumer Sentiment and Personal
Income, Japanese inflation data
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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