What to Watch in The Day Ahead; Wednesday, July 23

Tue Jul 22, 2014 2:29pm EDT
 
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(The Day Ahead is an email and PDF publication that includes the day's major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) AT&T is scheduled to report second-quarter earnings, the company's first since it announced a $48.5 billion bid for DirecTV in May. Investors will look for updates on the deal as the company switches to an equipment installment plan that reduces monthly service fees in an attempt to attract new subscribers. The company is expected to report an increase in subscribers but a reduction in margins. Revenue per user is expected to fall 4.4 percent. Facebook's sizzling mobile advertising business is expected to drive robust revenue growth in the second quarter. But Wall Street is keen on an update on Facebook's next act, particularly the nascent video ads and the Instagram photo ads that the company has started ramping up in recent months. PepsiCo is scheduled to report second-quarter earnings before the bell. The company's results will be closely watched after activist investor Nelson Peltz hinted at the possibility of a proxy fight last week. Boeing is expected to post strong second-quarter results. Investors will look for wider profit margins, a slowdown in deferred production costs for the 787 and updates on the 777X and 737 MAX programs. Boeing probably won't deliver its new, stretched 787, known as the 787-9, in time for inclusion in the quarter. Customer Air New Zealand is scheduled to fly that plane from Seattle on July 10. Gilead Sciences is scheduled to report second-quarter earnings amid a furor over the price of its new hepatitis C treatment Sovaldi, which is seen as a breakthrough cure for the liver destroying virus, but one that could place a huge burden on Medicaid, Medicare and other insurers. Wall Street is looking for $2.5 billion in sales in its second full quarter on the market after similar sales in the first quarter shattered previous pharmaceutical sales records for a new drug. Biogen Idec is expected to report significantly higher second-quarter sales and profit, with a focus on whether its oral multiple sclerosis drug Tecfidera can continue to outpace Wall Street expectations as it has in each quarter since its March 2013 approval. Investors are also looking for details on the launch of two recently approved hemophilia treatments - a new therapeutic area for the U.S. biotech - as well as updates on important drugs in development. Dow Chemical is expected to report a higher second-quarter profit, helped by continued margin expansion at its plastics unit. Dow is looking to raise as much as $6 billion from non-core asset sales by the end of 2015. Investors will be looking for updates on the asset sales. Dow has put up its epoxy business and some chlorine and derivatives assets for sale and is also looking to shed non-core businesses in its functional materials and performance materials units - two of its slowest-growing units. EMC Corp, the world's largest data storage equipment maker, is likely to report in-line second-quarter results. Analysts expect the company to report bookings and margins growth in its information storage unit. Analysts also expect EMC to reaffirm its full-year revenue forecast, as it benefits from new product launches and enterprise data center spending in the second half of the year. The market will have questions for Freeport McMoRan, scheduled to report earnings, on its discussions with the Indonesian government about copper exports, which have been halted since January. How Freeport plans to reduce its high debt levels will also be top of mind for the market. There have also been reports of buyers being interested in Freeport's Candelaria copper mine in South America. Northrop Grumman and General Dynamics are scheduled to report second-quarter results. The crisis in Ukraine and other emerging threats is expected to strengthen military equipment demand, which will likely provide a much-awaited reprieve from falling revenue. Investors will be watching for comment on any changes in the U.S. government's spending patterns. Results from industrial gas suppliers' Praxair and Air Products & Chemicals are expected to show a gain from increased prices and higher sales volumes. Air Products, scheduled to report third-quarter results, is banking on its cost cutting efforts to raise margins. Praxair, expected to report second-quarter earnings, is also looking to cut expenses, expects higher sales in South America and Asia, and of packaged gas. Eastern railroad Norfolk Southern is expected to report higher revenue and profit for the second quarter, helped by a recovery in thermal coal demand. The company is also likely to benefit from growing volumes in its intermodal business as the U.S. economy slowly recovers and customers opt for a far reaching and economical transportation network to enhance market reach. Investors will be looking forward to comments on whether the recovery in coal shipments is sustainable. Delta Air Lines is likely to report higher second-quarter results, as strong U.S. business and leisure demand helped offset some international weakness. The carrier's growth in unit revenue slowed in June from April and May because excess seats available on international routes hurt its ability to raise ticket prices. Analysts on average expect profit of $1.03 a share from Delta, compared with 98 cents a year earlier. ABB, a Swiss engineering company, is expected to report second-quarter results. The focus will be on how its efforts to fix its power systems business are going as well as the outlook for large orders. Investors will be looking for signs of progress in China when Qualcomm gives its quarterly report card. With smartphone sales losing steam in the U.S. and other developed countries, Qualcomm and its rivals are banking on new demand from customers in China, where carriers are rolling out their first LTE networks. Life-science tool maker Illumina is expected to report its second-quarter results. Analysts, on average, expect the company which makes gene sequencing products to earn 50 cents per share on revenue of $427.0 million. The company's results have beaten analysts' estimates for the last ten straight quarters. TripAdvisor is expected to report strong second-quarter results, helped by increased revenue from referrals to third-party sites for booking. TripAdvisor is benefiting from higher fees every time a user clicks through to a third-party booking site after the company changed its display to show prices more prominently. B/E Aerospace, the aircraft seat maker and parts distributor is expected to report better-than-expected second-quarter results driven by higher orders from aircraft makers. B/E Aerospace said in June it would split its company into two businesses. Investors will be looking out for further comment on the progress of the split and the company's full-year forecast. South Korea's LG Display, the world's biggest maker of liquid crystal displays, is expected to report its earnings for the second quarter. The company is expected to see a slight improvement versus the first quarter, though in annual terms profits likely shrank as demand for key products like TVs and tablets likely remained soft. The strength of the won during the quarter also likely weighed on the results. Analysts are more upbeat about the firm's prospects in the quarter. Whirlpool, the world's largest maker of home appliances, is expected to report quarterly earnings for the second quarter. After a three-year saga, the SEC is expected to vote to adopt long-awaited reforms aimed at reducing run risk on money funds similar to what happened in the 2008 financial crisis. The Treasury Dept is expected as well to announce tax fixes that will permit funds to float their shares without triggering burdensome rules that require investors to track their gains and losses. Separately, Barney Frank, the Dodd-Frank co-author, is expected to testify before the House Financial Services Committee to discuss the fourth anniversary of Dodd-Frank. The Mortgage Bankers Association is scheduled to report the seasonally adjusted index of mortgage application activity.(0700/1100) Canadian retail data is expected to show sales rose 0.6 percent in May from April, softer than the 1.1 percent gain seen a month earlier. Excluding autos, sales are expected to rise just 0.3 percent. (0830/1230) Raymond James Financial is scheduled to report its third-quarter results after market open. Analysts expect the St. Petersburg, Florida-based company to earn 76 cents per share, up from 65 cents a year ago. F5 Networks' results are expected to beat analysts' estimates with their third-quarter results. The company expects demand for its hardware and software products to remain strong, as its U.S. telecom clients beef up their networks to allow faster transfer of data-heavy files. Analysts say the company is also gaining market share for it products that secure data transferred on networks. Coca-Cola Femsa, Latin America's biggest Coke bottler, is likely to report second-quarter results. Separately, Brazilian pulp maker Fibria is expected to report second-quarter results. Higher exports and the sale of excess energy will bolster revenue for the world's largest wood pulp producer, but bond buybacks and weaker currency tailwinds may hurt results. Also reporting second-quarter results is, Mexican corn miller and tortilla maker Gruma. (Compiled By Nandi Kaul in Bangalore; Editing by Don Sebastian)