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FedEx, Oracle, Micron, Nike, and OverStock – A Look At The Week Ahead
There will be some prominent earnings this week with Oracle, FedEx, Nike, and Micron. But the headliner will be the FOMC meeting which concludes on Wednesday afternoon, with Jay Powell’s first press conference to follow. Expectations are for the Fed to raise rates by 25 bps, and that is widely expected. The key will be around hints of future rate hikes and inflation.
GDPNow forecast for the first quarter has slowed considerably, suggesting first-quarter GDP growth of only 1.8 percent. When looking at the computation, it seems that the part of the GDP model that has fallen the most is the PCE (Inflation) and that should not come as a surprise given recent data.
FedEx stock hasn’t performed particularly well, with the stock up by only 1 percent on the year. Analysts are looking for fiscal third-quarter results to show that revenue climbed by 7.8 percent to $16.17 billion, while earnings are expected to rise by 32.7 percent to $3.12. For the fiscal fourth quarter, the street is looking for revenue guidance of $16.81 billion, with earnings of $4.86 per share.
The technical setup in the stock is not overly bullish or bearish, as the stock appears to be in a period of consolidation. But based on the configuration, I would lean with the risk of shares falling over the coming weeks, backs towards technical support of $237.60.
Oracle has gone nowhere since last summer, and with the stock trading near its highs, it has a good shot of breaking out this time around. Analysts are expecting the company to post fiscal third-quarter earnings grew by 4.6 percent to $0.72 per share, while revenue is supposed to have climbed by 5.5 percent to $9.77 billion. Fourth quarter estimates are calling for revenue of $11.22 billion, and earnings of $0.90 per share.
I noted on Friday, the buying activity in the April options, which may be a sign someone is betting heading into results the stock will rise, while it would be interesting to see if that buyer of the calls comes back on Monday before results.
The technical setup in the chart is bullish, with the stock having a strong possibility of breaking out. It would only need to rise above $53.50 for me to think of it as a breakout.
Nike stock has started to shows signs of cracking these days, and these results will be a big deal. According to estimates, analysts are looking for earnings to fall by 22 percent in the third quarter to $0.53, and revenue to fall 5 percent to $8.85 billion. The big thing will be North American sales, and how those are projecting going forward. Investors are betting on a big come back in North America, and a meaningful pick in business from the World Cup in June. For the fiscal fourth quarter analyst are looking for revenue of $9.35 billion, and earnings of $0.72.
The chart doesn’t look all that great, and I could really see shares falling after results, and a decline below $65 likely sends the stock towards $57 and $59.
Micron we have focused on a lot lately, and there aren’t many stocks that have better chart setups than Micron. The momentum is apparently behind them, and they are having a pre-earnings run-up like Netflix and Amazon, and it makes my gut say we could continue to see the stock run.
Despite all the big upgrades on Micron in recent days, the earnings and revenue estimates for this year next have only climbed marginally, in a range between 3 and 7 percent, not huge when considering the stock is up 47 percent.
I still can’t figure out why analysts see no revenue growth for a company that is the middle of what could be a big growth period for Micron. With increases in the cloud, AI, mobile, and even autonomous driving, chips and especially memory are likely to be part of that growth cycle, but yet, analysts consensus estimates forecasting no revenue growth through 2020? It is a bit of a mystery to me, and when reading a lot of the analyst comments in recent days, the upgrades seem to be slanted more towards multiple expansion than earnings and revenue growth.
I think for Micron this will be a very big quarter, and there is a lot baked into this run-up, so guidance will be a big deal, and commentary around margins will be the biggest part. The way those analysts estimate trend now, it suggest the company can’t hold margins over the longer-term and that may be an issue.
I have been done a good job calling Micron’s direction in the past, and the stocks just seems and feel vulnerable here. To be honest to this point I haven’t even been seeing the huge option bets like in the past. I will keep watching this one very closely into Thursday.
I know nothing on this company, and after looking at the chart, and the estimates, it will stay that way. The chart looks horrible. The only thing keeping it from falling to around $30 is the 200-day moving average. RSI is still trending lower and is just about ready to hit oversold levels. Volume is starting to ramp-up which means a capitulation moment is likely approaching soon.
The stock is projected to loss money through 2022, and the revenue growth rates look fairly low. Nothing excites me here, certainly not enough to chance it.
Again, this is a quick look at this company, as I got some decent requests to do so. So take it for what it is worth.
Good Luck this week.
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Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
© 2018 Mott Capital Management, LLC. Use, publication or reproduction in any media prohibited without the permission of the copyright holder.
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.
Tags: #sp500 #oracle #micron #overstock #fedex #nike