Top US stocks to watch: Twitter, Snap and Intel
Joshua Warner July 22, 2021 8:42 AM
Earnings season continues with results out from American and Southwest Airlines, AT&T, Dow, Union Pacific, Biogen, DR Horton and Domino’s and we explain what to expect ahead of quarterly results from Twitter, Snap and Intel later today.
Twitter is scheduled to release second-quarter results after the markets close today, with Wall Street expecting strong growth in users and to hit the top end of its guidance.
Twitter has said revenue will be between $980.0 million and $1.08 billion in the second quarter and that it will book an operating loss of $120 million to $170 million. That would compare to the $683.4 million in revenue and $124 million loss reported in the second quarter of 2020. Analysts are expecting Twitter to hit the upper-end of that range with revenue of $1.06 billion, according to a Reuters-compiled consensus. Monetizeable daily active users are expected to grow by 10% in the quarter.
Building on the company’s guidance, the consensus is expecting its net loss to narrow to $96.4 million from the $1.22 billion loss reported the year before, and for the diluted loss per share to follow by shrinking to $0.13 from $1.56.
Read our full preview ahead of Twitter’s earnings.
Snap, the owner of Snapchat, will also release second quarter results later today and analysts are expecting it to beat its own guidance and for quarterly growth in users to hold steady from the first.
Snap has said it is aiming to deliver second-quarter revenue of between $820 million and $840 million and that adjusted Ebitda could come in anywhere from a $20 million loss to breakeven. That compares favourably to the year before, when it reported $454 million in revenue and a $96 million loss. Notably, analysts are expecting Snap to beat its targets with revenue of $845.5 million and adjusted Ebitda of $2.6 million.
Wall Street expects the 22% year-on-year growth in daily active users (DAUs) reported in the first quarter to hold steady in the second. That should see DAUs rise to 290.6 million at the end of June from 280.0 million at the end of March.
Read our full preview ahead of Snap’s earnings.
Intel will also be reporting second quarter results this afternoon and is expected to report significantly lower revenue and earnings.
Intel has said it is targeting non-GAAP revenue of around $17.8 billion in the quarter and analysts are expecting it to meet that target. That will be down from $19.72 billion the year before. GAAP EPS is guided to come in at $1.05 compared to $1.19 the year before, but analysts think it will slightly miss expectations with earnings of $1.03.
Also watch for any changes to Intel’s outlook after it was raised back in April, with the company targeting annual revenue of $77 billion and EPS of $4.00. That would compare to last year’s $77.86 billion in revenue and $4.94 in EPS.
American Airlines posted a significant improvement in results in the second quarter as the travel industry starts to recover from the pandemic, and said it expects capacity to be equal to 85% of pre-pandemic levels in the third.
The airline said revenue came in at $7.5 billion, a marked improvement from the $1.62 billion delivered the year before when the majority of travel remained grounded. More importantly, that is 87% higher than what was delivered in the first quarter. It squeezed-out adjusted EPS of $0.03 after booking a $1.69 loss the year before.
The company said it is aiming for capacity to be 15% to 20% lower than pre-pandemic levels in the third quarter and for revenue to be down around 20% compared to the third quarter of 2019. It also raised its target to cut debt by $15 billion by 2025, up from a previous goal of $8 to $10 billion.
Meanwhile, Southwest Airlines also posted second quarter results that also showed a significant improvement in revenue and a return to profit.
Revenue came in at $4.0 billion, a marked improvement from the $1.00 billion delivered last year as the pandemic bit but still some 32% below pre-pandemic levels. Southwest said it was the best improvement in revenue in the last four quarters. It reported EPS of $0.57 per share compared to a $1.63 loss the year before.
It said it generated its first monthly net profit and returned to positive free cashflow for the first time in June since the pandemic began. It said it expects revenue in July to be 10% to 15% lower than pre-pandemic levels, better than its previous forecast for a 15% to 20% fall. August revenue will be 12% to 17% below pre-pandemic levels.
Biogen posted significantly lower revenue and profits today as it released a strong defence of its Alzheimer’s drug.
Revenue in the second quarter fell 25% to $2.77 billion, predominantly driven by lower sales of its multiple sclerosis drug. EPS came in at $2.99, down from $9.59 the year before. For the first half, revenue dropped to $4.44 billion from $5.70 billion and EPS plunged to $5.68 from $17.61. The company upgraded its revenue target for the full year to $10.65 to $10.85 billion from a previous range of $10.45 to $10.75 billion, and left its EPS goal unchanged at $17.50 to $19.00.
Biogen also released a separate statement defending its controversial Alzheimer’s drug ADUHELM after hospitals, insurers and other key stakeholders debated over its effectiveness and whether it should have been approved by regulators. It said there has been ‘extensive misinformation and misunderstanding’ about the drug and its approval.
AT&T beat expectations in the second quarter as it added considerably more phone subscribers than expected, prompting it to raise topline guidance for the rest of the year.
The company added 789,000 net postpaid phone subscribers in the quarter, smashing the 278,000 expected by the markets and a welcome turnaround after shedding customers during the pandemic last year. Revenue rose 7.6% to $44.0 billion and was also ahead of the $42.67 billion expected by analysts. EPS rose to $0.21 from $0.17.
The company said it now expects to deliver annual revenue growth of 2% to 3%, up from its previous 1% target. It also said it expects its streaming service HBO Max to grow faster than previously expected, aiming to have 70 to 73 million subscribers by the end of the year.
Chemicals giant Dow said it expects earnings to continue to improve going forward after delivering better-than-expected results in the second quarter.
Net sales of $13.89 billion rose from just $8.35 billion the year before and beat the $13.07 billion expected by Wall Street. Adjusted net operating income of $2.72 per share compared favourably to the $0.26 loss booked the year before and was ahead of the $2.45 expected by analysts. Dow is aiming for net sales of $13.75 to $14.25 billion in the third quarter, which was also more buoyant than the $12.64 billion forecast by the markets.
‘Looking ahead, we expect earnings momentum from additional improvements in consumer spending, international travel and industrial production. As the economic recovery broadens around the world, Dow is well positioned to continue capturing value with our differentiated materials science portfolio and participation in fast-growing end markets,’ said Dow.
Housebuilder DR Horton posted strong revenue and earnings growth in the third quarter of its financial year, but warned it was slowing the pace of sales even though it is struggling to keep up with unprecedented levels of demand.
Revenue jumped 35% in the period to $7.3 billion and EPS leapt 78% to $3.06. That was driven by a 35% increase in the number of homes sold and higher prices delivering better margins. DR Horton is aiming for annual revenue of $27.6 to $28.1 billion based on selling 83,000 to 84,500 homes. That would compare to the $20.31 billion in revenue and 65,388 homes sold last year during the pandemic.
‘Housing market conditions remain very robust, with homebuyer demand exceeding our current capacity to deliver homes across all of our markets. As our top priority is to consistently fulfill our commitments to our homebuyers, we have slowed our home sales pace to more closely align to our current production levels, while building out the infrastructure needed to support a higher level of home starts. We are also selling homes later in the construction cycle when we can better ensure the certainty of the home close date for our homebuyers,’ DR Horton warned.
Railroad company Union Pacific said productivity hit record levels in the second quarter as revenue and earnings both jumped higher, although warned challenging conditions will continue this year.
Revenue jumped 30% in the second quarter to $5.5 billion as volumes of everything from chemicals to oil improved by 22% and EPS increased to $2.72 from $1.67 the year before.
Union Pacific warned that the disruptions happening in its supply chain will continue into the second half but said the strong demand for freight transport will continue.
Domino’s Pizza continues to grow in popularity as sales continued to deliver strong double-digit growth in the US and overseas, although earnings struggled to keep up with topline growth.
Global retail sales were up 21.6% in the second quarter and US same store sales increased 3.5%. It said the US business continues to build momentum while the international business also performed well with same store sales growth of 13.9%. It has now delivered an impressive 110 consecutive quarters of international same store sales growth and 41 consecutive quarters of growth for the US unit.
Diluted EPS inched-up to $3.06 from $2.99 the year before. For the first-half, EPS remained broadly flat year-on-year at $6.06.
Steelmaker Cleveland-Cliffs, a favourite among Reddit traders, released second quarter results today revealing record revenue and profits.
Revenue jumped to $5.0 billion from juts $1.1 billion the year before and it turned to earnings of $1.33 per share from a $0.31 loss the year before. Revenue hit analyst expectations but EPS came in below the $1.48 expected by Wall Street. Adjusted EBITDA of $1.4 billion swing from an $82 million loss.
The company said it is aiming to deliver $1.8 billion in adjusted Ebitda in the third quarter and said it remains on course to make a significant reduction in debt this year as steel demand and prices continue to boom.
Visa said it has agreed to buy international payments firm Currencycloud in a deal that values the UK firm at £700 million.
Visa already owns a stake in the company and has been working with it for years. Currencycloud is used by banks and other institutions to provide foreign exchange and cross-border payment services.
‘Currencycloud will strengthen Visa’s existing foreign exchange capabilities by extending them to better serve financial institutions, fintechs and partners while enabling new use cases and payment flows. Currencycloud will accelerate the time-to-market and improve payment transparency for clients looking to offer flexible, digital-first, international payment services that provide better visibility and control to consumers and businesses around the world,’ said Visa.
Mining giant BHP Group has revealed it has signed a nickel supply agreement with Tesla.
The miner will supply the battery material from its Nickel West asset in Western Australia, which is thought to have grabbed the carmaker’s attention thanks to it being one of the most sustainable and lowest carbon emitting nickel projects in the world. The pair will also work together to make the overall battery supply chain more sustainable.
The news came after Tesla’s chief executive Elon Musk tweeted that his private firm SpaceX holds bitcoin and that Tesla is likely to start accepting the cryptocurrency as payment again as mining becomes more sustainable.
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