Top US stocks to watch: Facebook, PayPal and Boeing

Earnings season continues with markets digesting results from Apple, Microsoft, Alphabet, AMD, Starbucks, Boeing, Pfizer, McDonalds, CME Group, Bunge, and Spotify, with traders preparing for updates from Facebook and PayPal after the markets close.

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Facebook

Facebook is expected to continue delivering strong growth when it releases second-quarter results after the markets close today, having beaten expectations for four consecutive quarters.

Analysts are expecting Facebook’s quarterly revenue to rise to $27.87 billion from $18.68 billion the year before. Wall Street anticipates net income will jump to $8.73 billion from $5.17 billion and for EPS to surge to $3.03 from $1.80 the year before, with margins expected to continue improving.

Investors are also watching daily active users, which grew 8% in the first quarter, as people head back out to socialise and how lingering headwinds, such as regulatory pressure and the detrimental changes to Apple’s latest operating system, is impacting the business.

You can read our full preview ahead Facebook’s results here.

PayPal

PayPal will also release earnings after the closing bell today, with investors keen to see how the payments giant can perform as consumer spending increases and the global economy starts to reopen.

Analysts are expecting total payment volumes to rise by 33.9% compared to 49.8% in the first quarter. Active accounts growth is also expected to slow to 16.9% in the quarter from 20.6% in the previous three-month period.

Revenue is anticipated growing by 19% year-on-year but PayPal is expected to report GAAP EPS of $0.73 in the second quarter, down from $1.29 the year before.

Boeing

Boeing reported its first profit in almost two years when it released second quarter results today as demand for airplanes and services starts to rebound.

Revenue rose 44% year-on-year to $16.99 billion and the aircraft maker reported net earnings of $567 million, swinging from a $2.39 billion loss the year before. That was just enough to absorb the losses booked in the first quarter to allow it to squeeze out $6 million in net earnings during the first half compared to a $3.03 billion loss the year before. Core EPS came in at $0.40 from a $4.79 loss.

‘While our commercial market environment is improving, we’re closely monitoring COVID-19 case rates, vaccine distribution and global trade as key indicators for our industry’s stability,’ said president and CEO David Calhoun.

Pfizer

Pfizer reported strong topline growth in the second quarter thanks to demand for its coronavirus vaccine, prompting it to raise expectations for the rest of 2021.

Revenue rose 92% year-on-year to $18.97 billion from $9.86 billion the year before. Much of that was driven by demand for the Covid jab, with revenue rising 10% to $11.1 billion when it was excluded from the figures. Adjusted EPS jumped to $1.07 from $0.62 and reported EPS surged to $0.98 from $0.62.

Pfizer said it now expects annual revenue of $78.0 to $80.0 billion and adjusted EPS of $3.95 to $4.05. That has been raised as it now expects to make $33.5 billion in Covid vaccine sales this year compared to $26 billion previously.

McDonalds

McDonalds reported faster than expected growth in the second quarter as new products helped spur-on demand for the world’s favourite fast-food joint.

Same-store sales rose 40.5% in the second quarter and surpassed pre-pandemic levels of demand for the second consecutive quarter and beat the 39.8% increase expected by analysts. Net income more than quadrupled to $2.2 billion.

McDonalds said the introduction of new products, including the BTS celebrity meal and new crispy chicken sandwiches, twinned with higher sales of menu favourites like Chicken McNuggets, had delivered the strong set of results.

CME Group

Exchange operator CME Group said revenue and earnings stayed broadly flat in the second quarter despite reporting a 5% rise in average daily trading volumes driven by increased appetite for trading in interest rates, agricultural products and options.

Revenue nudged down to $1.17 billion in the second quarter from $1.18 billion the year before while diluted EPS of $1.64 was in-line with the $1.63 delivered the year before. Earnings came in just ahead of the $1.61 expected by analysts.

Bunge

Bunge raised its targets for the full year after outperforming expectations in the second quarter.

The agricultural commodities trader reported revenue of $15.39 billion compared to only $9.46 billion the year before when demand was hit by the pandemic. Adjusted EPS of $2.61 rose from $1.88 the year before. Analysts had expected $11.58 billion in revenue and EPS of $1.62.

Bunge said it is now targeting annual EPS of at least $8.50 per share, having previously been aiming for closer to $7.50. It also said it now expects to deliver mid-cycle EPS of $7 going forward, up from just $5 beforehand as it takes new structural improvements in the oilseed market into account.

Spotify

Music streaming giant Spotify said it expects the strong growth in users to continue for the rest of the year as it reported a significant improvement in results in the second quarter.

Total monthly active users grew 22% year-on-year to 365 million, edging up 3% from the previous quarter. Notably, premium subscriber growth outpaced that of ad-supported users quarter-on-quarter. Revenue jumped 23% to $2.33 billion and it booked a $12 million operating profit compared to a $167 million loss the year before.

Spotify said it expects to end the third quarter with 377 to 382 million users and to have 400 to 407 million by the end of 2021. Third-quarter revenue should be between EUR2.31 and EUR2.51 billion and it is expecting to book between an $80 million operating loss and breakeven.

Apple

Apple headlined the corporate calendar yesterday when it released third quarter results after the markets closed, with growth driven by sales of its iPhone and demand for its services unit.

Revenue increased 36% year-on-year to hit a new all-time record of $81.4 billion while EPS of $1.30 was down from $2.58 the year before. It beat expectations on both measures, with Wall Street having forecast revenue of $73.3 billion and EPS of $1.01. The results were primarily driven by higher iPhone sales than expected amid the global shortage in chips.

‘Our record June quarter operating performance included new revenue records in each of our geographic segments, double-digit growth in each of our product categories, and a new all-time high for our installed base of active devices,’ said CFO Luca Maestri.

Alphabet

Alphabet, the owner of Google, reported record results in the second quarter yesterday as its leading position in search and video placed it perfectly to benefit from the spike in demand for online advertising as the economy reopens.

Revenue rose by an impressive 61% to $61.88 billion while quarterly profit came in at $27.26 per share from just $10.13 the year before. That comfortably beat expectations for revenue of $56.2 billion and EPS of $19.34.

Google advertising revenue was up nearly 70% year-on-year while YouTube’s ad revenue jumped almost 84%.

Microsoft

Microsoft also smashed expectations when it released fourth quarter results yesterday as all of its divisions reported strong growth.

Revenue increased 21% year-on-year to $46.2 billion and EPS jumped 49% to $2.17. Sales came in around $2 billion higher than expected while EPS was better than the $1.92 forecast by Wall Street. It reported growth across the board – sales of Office products and cloud services grew 25%, Intelligent Cloud jumped 30% and Personal Computing edged-up 9%.   

For the full year, Microsoft reported an 18% increase in revenue to $168.1 billion while EPS grew 40% to $8.05.

AMD

Advanced Micro Devices smashed expectations in the second quarter and posted a better-than-expected outlook for the rest of the year when it reported results yesterday.

Revenue almost doubled in the second quarter to $3.85 billion, ahead of the $3.62 billion expected by analysts, and said it was aiming for third quarter revenue of $4.1 billion – ahead of the $3.8 billion forecast. EPS of $0.63 was also well ahead of the $0.54 expected.

‘Our business performed exceptionally well in the second quarter as revenue and operating margin doubled and profitability more than tripled year-over-year,’ said president and CEO Lisa Su. ‘We are growing significantly faster than the market with strong demand across all of our businesses. We now expect our 2021 annual revenue to grow by approximately 60% year-over-year driven by strong execution and increased customer preference for our leadership products.’

Starbucks

Starbucks raised its guidance for the full year after delivering stellar growth and record earnings when it reported results late yesterday.

The coffee giant said revenue grew by 78% year-on-year in the second quarter to $7.5 billion as it came up against weak comparatives from the year before when lockdown hit. Comparable store sales were up 73% globally, with the core US market delivering slightly faster growth of 83%. It delivered a record non-GAAP EPS of $1.01 compared to a $0.46 loss the year before.

Starbucks said comparable store sales should grow 18% to 21% in the fourth quarter as the weaker comparatives fall away. That means it is now targeting annual comparable store sales growth of 20% to 21% rather than its previous target of 19% to 23%. Annual non-GAAP EPS should be between $2.97 and $3.02, up from $2.65 to $2.75 previously.

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