Next week US congress will make a decision about whether or not
to use military force in Syria, despite a lack of support from all
While France, Canada and Australia have backed President Obama's
plan to launch targeted military strikes in Syria, others, like the
UK, are not on board.
The Federal Reserve's tapering schedule will also play a large
role in markets next week as investors continue to try to predict
the bank's timeline ahead of its policy meeting. Strong data next
week could add to speculation that September will be the start date
for the bank to start reeling in its $85 billion per month bond
Strong PMI data from China this week has boosted confidence that
the nation's economy is picking up. Next week industrial
production, retail sales and inflation data will help paint a
better picture of how solid the recovery is.
After the Bank of Japan left interest rates unchanged this
month, new data will help determine whether or not the bank will
need to cut rates in the future. The BOJ governor was confident
that the Japanese economy was on the path to recovery, which could
push the government to raise the country's sales tax in April. Some
speculate that the Japanese government could announce its decision
about the tax hike over the weekend.
Key Earnings Reports
Next week investors will be waiting for several key earnings
reports including The Pep Boys Manny, Moe & Jack (NYSE:
); The Kroger Co. (NYSE:
), Ulta Salon, Cosmetics & Fragrance (NASDAQ:
), Unilife Corp (NASDAQ:
The Pep Boys Manny, Moe & Jack
On Tuesday, Pep Boys is expected to announce EPS of $0.19,
compared to last year's EPS of $0.12.
In June, the analyst team at Benchmark gave Pep Boys a Buy
rating with a price target of $15.00. Benchmark expects that the
company's revenue will increase by 4 percent and sees store units
increasing by 5 percent.
"The store unit increase would mainly be driven by the smaller
service centers, whose sales per store are more than 60% less than
the average supercenter. We expect comps to be back half of the
year loaded. Q4 should have upside potential as we anniversary the
mild winter of the past two years."
The Kroger Co.
On Thursday, Kroger is expected to announce EPS of $0.60,
compared to last year's EPS of $0.51.
The analyst team at Goldman Sachs downgraded Kroger's rating
from Neutral to Sell in July, citing flagging industry tailwinds
and the fact that the company's shares are trading at a premium
valuation with regard to their history. However, Goldman noted that
Kroger is still considered one of the top conventional grocers.
"We continue to view KR as best in-class among conventional
grocers due to its price leadership, superior loyalty program and
history of sustaining leading market share. However, KR shares are
up 73% vs. the S&P 500 +21% over the past twelve months, the
greatest relative outperformance other than into the recession of
2001 and amidst consolidation in 1998. While consolidation may
support EBITDA, we expect the waning benefits from the shift to
generics and muted inflation will weigh on the core. Given these
headwinds and evolving competition, we expect the multiple to
re-rate to long-term averages. The corresponding downside to our
price target prompts our downgrade."
Ulta Salon, Cosmetics & Fragrance
On Thursday, Ulta is expected to report EPS of $0.67, compared
to last year's EPS of $0.54.
In August, Piper Jaffray gave Ulta an Overweight rating with a
price target of $129.00 and encouraged investors to buy the stock
because of its long term growth potential.
"No doubt, we understand why folks would demonstrate concern
when a major global beauty company like Estee Lauder indicates the
prestige U.S. beauty market slowed in growth in their FQ4 (ended in
June) and is expected to grow slower than the global prestige
market's rate of 3%-4% in their FY14. That said, we believe the
slowdown is wrapped up more with the slowdown seen across the board
with U.S. department stores than the specialty stores segment (of
which ULTA is counted). We believe ULTA is in the business of
gaining share of mind and share of beauty wallet as it 1) expands
their door count, 2) expands their inclusion of prestige beauty
brands, and 3) expands their loyalty program."
On Tuesday, Unilife is expected to announce a loss of $0.13 per
share, compared to last year's loss of $0.21 per share.
On Wednesday, Cantor Fitzgerald gave Unilife a Buy rating with a
price target of $6.00. The aggressive rating is due to the
company's expectation of several supply contracts and clinical
development agreements which are expected to generate revenue in
2014. However, uncertainty caused Cantor Fitzgerald to lower the
"We continue to like UNIS' broad portfolio of customized drug
delivery systems and recurring revenue model that could lead to
profitability in relatively short order. However, this relies on
UNIS commercializing its much-discussed (yet elusive) development
pipeline, setting up FY:14 as a pivotal year for the company, in
our view. We reiterate our BUY rating on the potential from this
pipeline, but we lower our PT from $7.50 to $6 on increased
uncertainty over timing."
Key Economic Releases
Data from Asia will be prominent next week as investors size up
the Japanese and Chinese recoveries. Industrial production, retail
sales and inflation data from China will be highly anticipated as
strong data will confirm speculation that the nation's economy is
on the mend.
The Japanese sales tax hike will also play into markets next
week as data from the region will help determine whether or not the
BOJ will have to make changes to its economic policy in the
Earnings Expected From: Avid Technology, Inc. (NASDAQ:
), PVH Corp. (NYSE:
), MVC Capital, Inc. (NYSE:
) Economic Releases Expected: Australian business confidence, US
Earnings Expected From: The Pep Boys- Manny, Moe & Jack (NYSE:
), Unilife Corporation (NASDAQ:
), Oxford Industries, Inc. (NYSE:
) Economic Releases Expected: Italian GDP, French industrial
production, Indian imports and exports, Chinese retail sales and
Earnings Expected From: Accretive Health, Inc. (NYSE:
), Men's Wearhouse, Inc, (NYSE:
), Vera Bradley, Inc. (NASDAQ:
) Economic Releases Expected: Australian unemployment rate, French
current account, German CPI, British Unemployment rate, Reserve
Bank of New Zealand interest rate decision
Earnings Expected From: Converse Inc. (NASDAQ:
), Kroger Company (NYSE:
), Ulta Salon, Cosmetics & Fragrance (NASDAQ:
) Economic Releases Expected: Eurozone industrial production,
Italian industrial production, Spanish CPI, French CPI, Indian
industrial production, manufacturing output and CPI
No Notable Earnings Expected. Economic Releases Expected: US retail
sales, Japanese industrial production
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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