What to Watch in the Day Ahead - Tuesday, Feb. 3
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Holiday season visitors to theme parks are likely to help drive Dow component Walt Disney Co's first-quarter profit. Wall Street expects the media company to report earnings per share of $1.08, up from $1.03 a year earlier, according to Thomson Reuters I/B/E/S.
The U.S. auto industry will report January sales and analysts and industry officials will be watching to see what kind of start 2015 gets off to. Auto manufacturers are expected to report that sales dipped to 16.6 million units in January from 16.9 million units in December. (1330/1830) Separately, December Factory Orders are expected to have declined to 2.2 percent after falling 0.7 percent in November. (1000/1500) Biopharmaceutical company Gilead Sciences Inc reports fourth-quarter results, which will include sales for its expensive hepatitis C drugs Sovaldi and Harvoni. Investors are looking for information about the level of price discounting Gilead has done to secure formulary placement for its drugs. Competitor AbbVie launched sales of a its hepatitis C regimen late last year and, since then, several pharmacy benefit managers, insurers and other payers have announced contracts favoring one company over the other in terms of reimbursement priority. Medical device maker Edwards Lifesciences Corp is expected to report higher fourth-quarter profit and revenue and possibly update financial forecasts for 2015 reflecting foreign exchange impact. Investors will be eager for progress reports on trials aimed at expanding use of the company's important Sapien transcatheter heart valve replacement system and on potential approvals of next-generation versions.
United Parcel Service Inc will report fourth-quarter results less than two weeks after pre-announcing what was a disappointing peak season for the world's largest package delivery company. UPS was caught out by a surge in demand in December 2013 and spent $500 million last year to make sure it didn't happen again. But demand fell short and as a result UPS had high costs related to the people and equipment it had put in place to handle a surge. Analysts will be looking to see how UPS plans to handle this year's peak, as the company has said it will likely raise prices to cover costs.
Federal Reserve Bank of St. Louis President James Bullard speaks on "U.S. and International Economies and Monetary Policy" and participates in moderated discussion before the 10th Annual Delaware Economic Forecast hosted by the University of Delaware. (0950/1450) Later, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota speaks on "Thoughts on Monetary Policy and Community Banks" before the Minnesota Bankers Association Conference. (1245/1745)
Archer Daniels Midland Co, one of the world's top grain traders, reports fourth-quarter earnings for the first time under the leadership of new Chief Executive Juan Luciano. The company's former chief operating officer took charge on Jan. 1. Archer Daniels sold its global chocolate and cocoa business to different buyers in 2014 and paid $3 billion for a European natural flavorings company. Rounding out a year in which Aetna Inc faced massive changes in the health insurance market related to the national healthcare reform law, the third-largest insurer will report fourth-quarter earnings. Profit is expected to have fallen during the quarter, while revenue will be higher, according to analysts. Health insurer Centene Corp, which focuses on government health plans, is likely to report a better-than-expected fourth-quarter profit helped by higher enrollments under Obamacare, according to Thomson Reuters StarMine. The company is expected to benefit from reimbursements on health insurer tax, levied under Obamacare, which will offset any pressure from the severe flu season in the fourth quarter. Standard & Poor's parent, McGraw Hill Financial Inc, is expected to miss fourth-quarter estimates, according to Thomson Reuters StarMine data. Revenue at the company's rating unit, its main business, is expected to drop due to a fall in global debt activity for the fourth quarter. S&P is on the verge of reaching a $1.37 billion settlement deal with the Justice Department over claims that it knowingly inflated its rating of risky mortgage investments that helped spark the 2008 financial crisis, Reuters has reported, citing sources. The rating agency also agreed to pay $77 million in January to settle a series of civil charges and be barred for one year from rating commercial mortgage-backed securities. Revenue at U.S. automation and power supply systems maker Emerson Electric Co is expected to slip 0.4 percent when the company reports first-quarter results, according Thomson Reuters I/B/E/S. Investors will focus on the company's exposure to the slide in oil prices, along with a strengthening dollar's impact on its results. Eaton Corp, a maker of electrical and hydraulic products, has been hit as weak international sales offset strong demand at home. Analysts on average expect Eaton's revenue to have risen just 1 percent in the fourth quarter, according to Thomson Reuters I/B/E/S. The company said in October it expected average economic growth in its global markets of 2 percent in 2014, down from its prior estimate of 3 percent. Investors will be looking for comments about growth in 2015 and on the markets that Eaton expects will drive growth this year. Oilfield equipment provider National Oilwell Varco Inc is expected to report lower fourth-quarter revenue as orders for new drilling equipment slow amid a steep fall in crude oil prices. The company's customers, oil producers, are slashing budgets and slowing exploration activity. Analysts expect the company's oversized exposure to the drilling equipment market to result in a pronounced decline in orders this year. Coal miner Arch Coal Inc is expected to report a lower fourth-quarter profit hurt by lower pricing due to a supply glut and sluggish demand from China. Weak demand from Europe and Asia, especially China, has weighed on metallurgical coal prices, while prices for power-generating thermal coal have been depressed as utilities switch to abundantly available natural gas, a cheaper alternative. Investors will look for comments on further cost cuts, details on efforts to clear a backlog of coal stuck in the Powder River Basin in Wyoming and Montana due to slow rail deliveries. Investor will be looking for an update on the Chipotle Mexican Grill Inc's 'carnitas' supplies when the company reports fourth-quarter earnings. In January, the burrito seller suspended pork sales at about one-third of its roughly 1,700 U.S. restaurants due to animal-welfare concerns, a move expected to hurt sales in the current quarter. USA Today publisher Gannett Co is expected to report better-than-expected fourth-quarter revenue. Gannet has said it will spin off its print group. Analysts agree that there is a lack of long-term value in the publishing business, which relies too heavily on revenue from local newspapers. Its broadcast television operations may be headed the same direction as the newspaper business before long due to the increasing popularity of digital streaming. Analysts will be looking for outlook and further restructuring. Newspaper publisher New York Times Co is expected to report lower-than-expected fourth-quarter revenue, according to Thomson Reuters StarMine data. The company warned last quarter that it expected a mid-single digit percentage decrease in advertising revenue. The New York Times, like many newspaper and magazine publishers, has been under relentless pressure to replace an evaporating pool of print advertising dollars with digital ads and money from subscriptions. On Jan. 23, New York Magazine reported on its website that Michael Bloomberg was interested in buying the company. Spirit Aerosystems, an aircraft parts maker, is likely to report lower a fourth-quarter profit on Tuesday, following the sale of its Gulfstream wings contract to rival Triumph Group in December. Spirit said it would incur a loss of $1.45-$1.65 per share on the transaction and also pay Triumph $160 million. Investors will look for comments on how the sale of the business will play out and the company's guidance for 2015. Video game publisher Take-Two Interactive Software Inc is expected to report third-quarter revenue and profit ahead of the Wall Street estimate, according to Thomson Reuters StarMine data. The company, which raised its fiscal year 2015 forecast last quarter, released four new titles, including "NBA 2K15" and "Borderlands: The Pre-Sequel" in the holiday quarter. Media mogul Barry Diller's IAC/InterActive Corp is expected to post fourth-quarter results above expectations on Tuesday, according to Thomson Reuters StarMine data. The company, which owns mobile dating app Tinder and internet brands such as Investopedia, has been benefiting from higher subscriptions across its dating sites such as OkCupid.com and Match.com. Subscriber growth in video-sharing site Vimeo is also expected to boost revenue. Investors will be looking for commentary on how Tinder has fared after a paid version with more features was announced in November. The No. 3 U.S. hamburger chain, Wendy's Co, intends to present its preliminary 2014 results and 2015 outlook at its 2015 Investor Day in Dublin, Ohio. Investors will keep an eye out for comments on input costs, particularly of beef. Wendy's, like market leader McDonald's Corp, has been struggling in an increasingly competitive fast-food market and has been investing heavily to spruce up its restaurants and expand its menu offerings. Brazil's statistics agency is expected to report that industrial output contracted 2.5 percent, declining further from previous month when it dropped 0.7 percent. Manufacturers have consistently been the weakest link in Brazil's economy as they struggle with competition from abroad, high tax, labor costs and poor infrastructure. (0600/1100) Mexico's HSBC Purchasing Managers' Index will reveal factory sentiment for December after the indicator rose to a two-year high in November. (1030/1530) On the same day, Mexico's central bank will release its January growth and inflation survey of analysts, who predicted growth of 2.19 percent last year and 3.5 percent this year in a prior poll. (Compiled By Astha Rawat in Bengaluru; Editing by Saumyadeb Chakrabarty)
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