Several important PMI reports are due out next week including
data from the US, China and the eurozone.
Now that US Federal Reserve taper worries have been postponed
until 2014, investors are looking to China for any indication that
the nation's economy is picking up. Most expect to see better
figures from both China and the US next week as the two largest
economies gain momentum.
Key Earnings Reports
Next week investors will be waiting for several key earnings
reports including J.C. Penney Company (NYSE:
), Campbell Soup Company (NYSE:
), Green Mountain Coffee Roasters, Inc. (NASDAQ:
), Salesfore.com, Inc. (NYSE:
), and Home Depot, Inc. (NYSE:
J.C. Penney Company
JC Penney is expected to report a third quarter loss of $1.75 on
revenue of $2.08 billion, compared to last year's loss of $0.93 on
revenue of $2.93 billion.
The analyst team at Oppenheimer had a Perform rating on JC
Penney with a $7.00 price target on November 7. The firms report
was based on a "surprise release" issued by JC Penney which
detailed the company's progress on its turnaround efforts.
"Comp-store sales in October improved to +0.9%. Gross margin
pressures have eased as JCP has worked through clearance
merchandise. We view better trends at JCP as a meaningful step
forward for the chain. The company's turnaround, however, still has
a long ways to go. We indicated recently that sales/sq. ft at JCP
need to reach about $130 (from $108 currently) in order for the
company's business model to prove "cash sustainable."
Sterne Agee's report from the same day gave the company a
similar Neutral rating with a price target of $9.00. Analysts at
Sterne Agee believe the company is not improving at an acceptable
rate and chose to maintain its Neutral rating despite the JC Penney
"In the release, JCP reported that SSS improved 490 bps
sequentially from -4.0% in September to 0.9% in October - exactly
as it had forecasted back in mid-August and once again in early
October. At the same time, sales on jcp.com continue to improve,
increasing 37.6% YOY relative to a 25.3% lift in September. On the
positive side, average transaction value and UPT improved. On the
negative side, both AUR and traffic declined - the latter of which
is both disturbing and surprising."
Campbell Soup Company
Campbell Soup is expected to report third quarter EPS of $0.87
on revenue of $2.29 billion, compared to last year's EPS of $0.88
on revenue of $2.34 billion.
Morgan Stanley had an Underweight rating on Campbell Soup
Company with a $41.00 price target at the end of October. The
report was issued shortly after a meeting with Campbell's
management at which the company remained positive about the
sustainability of Soup growth.
"We recently met with NA President Mark Alexander and SVP
Finance Anthony DiSilvestro, and - despite our continued concerns
regarding structural headwinds in several key CPB categories - came
away with increased conviction that the company is committed to and
making some tangible progress in its efforts to return to
On November 11, Deutsche Bank had a Hold rating with a $45.00
price target. The analyst team at Deutsche Bank said acknowledged
the long term possibilities for the company, but remained cautious
as it will likely face several headwinds in the short term.
"We expect a focus on core soup trends vs. a tough US industry
backdrop. Investors will also look for an update on other key
businesses incl. the solid baking & snacking vs. troubled
beverages and foodservice. Last, commentary around recent M&A
activity (Plum/Kelsen acq., EU soup divestiture) or prospects will
likely be of interest."
Green Mountain Coffee Roasters, Inc.
Green Mountain Coffee is expected to report third quarter EPS of
$0.75 on revenue of $966.27 million, compared to last year's EPS of
$0.64 on revenue of $946.74 million.
Merrill Lynch had a Neutral rating on Green Mountain Coffee
Roasters with an $85.00 price objective on September 11. The report
was issued after Green Mountain's investor meeting at which
management expressed plans to enhance its hot beverage platforms as
well as expand into cold beverages.
"Key initiatives for expanding hot beverages are 1) Enhanced
retail presence emphasizing the Keurig umbrella brand, 2) expanding
the away from home channels, 3) convert unlicensed brands and
expand brand offerings (enabled by the introduction of Keurig 2.0
which could effectively re-close the system, 4) sharpen marketing
and make a regional push, and 5) begin international
At the same time, Canaccord Genuity had a more aggressive
stance, with a Buy rating and a $95.00 price target.
"We expect several years of strong revenue and earnings growth
driven by rising penetration of Keurig single-cup coffee makers in
North American households and expanded use into adjacencies such as
cold beverage and soups."
Salesforce.com is expected to report third quarter EPS of $0.09
on revenue of $1.05 billion, compared to last year's EPS of $0.08
on revenue of $788.40 million.
Goldman Sachs has a Buy rating on Salesforce.com with a $60.00
price target and expects the company to provide better than
expected projections for FY15.
"We reiterate our CL-Buy. Given the scarcity value of strong
secular growth opportunities with expanding addressable markets, we
see salesforce.com as well positioned as we move closer to CY14.
Further, not only do we expect another strong quarter, but we see
30% bookings growth in FY15. Our 12-month price target is $60 (DCF,
EV/bookings, P/CFO). At around $56, CRM trades at 43x and 35x our
CY13 and CY14 CFO per share estimates of $1.31 and $1.59 (consensus
$1.35 and $1.65)."
Oppenheimer has an Outperform rating on Salesforce.com with a
$60.00 price target, citing strong business trends and upcoming
innovations for their optimism.
"Recent checks point to healthy demand trends for salesforce.com
and suggest the force.com platform business is "taking off," with
ASPs on the rise, partially aided by a price increase instituted
from bundling of products. On balance, some partners experienced
softer close rates last month as a byproduct of the federal
shutdown. We therefore think 3Q results and guidance could provide
less upside than seen last quarter. Bottom Line: CRM remains the
best long-term growth investment in our software universe, in our
view, and continues to benefit from an escalating SaaS opportunity
in the enterprise market. We believe strong growth in 2014 with
less M&A will lift CRM's margins, while new sales leadership
should improve productivity and put upward pressure on
Home Depot, Inc.
Home Depot is expected to report third quarter EPS of $0.89,
compared to last year's EPS of $0.74.
JP Morgan has an Overweight rating on Home Depot with an $86.00
price target on November 13, citing positive sales performance as
well as favorable seasonality for their confidence.
"Overall, we believe trends were generally (and relatively)
strong throughout the quarter and the category has many favorable
dynamics at its back including favorable macro tailwinds, depressed
share (Figures 3-6) in a durable goods category (that is subject to
maintenance and replacement cycle dynamics, e.g., appliance
shipments up DD YTD), and the duopolistic nature of the industry.
Indeed, HD and LOW should continue to have some of the best comps
in mid to large cap, exgrowth retail."
As of November 7, Merrill Lynch had Home Depot a $90.00 price
objective and reiterated its Buy rating.
"Our 12-month price objective of $90 is based on 20x our 2014E
EPS. Over the past five years, Home Depot shares have traded
between approximately 10x and 20x. We believe the shares should
trade at the upper end of this range based on further upside to our
estimates given consistent execution and strong industry
fundamentals. Downside risks are further weakening in the housing
market, deterioration in the competitive landscape, unseasonable
weather and poor execution in supply chain upgrades. Upside risks
are a noticeable acceleration in the housing market or further
acceleration in same-store sales trends."
European data will be closely followed next week after data from
last week showed that the eurozone's recovery was sputtering.
Several important PMI figures will be released from nations like
Germany and France and investors will be watching for the region's
November data for fresh clues about the bloc's economic health.
Earnings Releases Expected: Tyson Foods, Inc. (NYSE:
), UGI Corporation (NYSE:
), Salesforce.com Inc (NYSE: CRM Economic Releases Expected: Hong
Kong unemployment rate, eurozone current account, Spanish current
Earnings Expected From: Home Depot, Inc. (NYSE:
), Campbell Soup Company (NYSE:
), Valspar Corporation (NYSE:
) Economic Releases Expected: German ZEW economic sentiment, US
Redbook, Norwegian GDP, Japanese trade balance, New Zealand PPI
Earnings Expected From: J.C. Penny Company (NYSE:
), Green Mountain Coffee Roasters, Inc. (NASDAQ:
) Economic Releases Expected: German PPI, US CPI, US retail sales,
US existing home sales, Chinese manufacturing PMI
Earnings Expected From: No notable releases expected Economic
Releases Expected: French manufacturing and services PMI, German
manufacturing and services PMI, eurozone manufacturing and services
PMI, US PPI, US manufacturing PMI, eurozone consumer confidence
Earnings Expected From: Epizyme (NASDAQ:
), Dyax Corp (NASDAQ:
) Economic Releases Expected: German GDP, German
business climate index, Italian retail sales.
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