August 4, 2015 / 7:12 PM / 2 years ago

What to Watch in the Day Ahead - Wednesday, Aug. 5

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Media company Twenty-First Century Fox Inc reports results for the first time since James Murdoch took over as CEO. Wall Street expects the company to post fourth-quarter earnings of 37 cents a share, down from 42 cents a year earlier, according to Thomson Reuters I/B/E/S. The company is facing a weaker advertising market, ratings declines at the Fox broadcast network and tough comparisons for its film studio.

Time Warner Inc reports its results for the second quarter. Analysts expect the company to post adjusted earnings of $1.03 a share, up from 98 cents a year earlier, according to Thomson Reuters I/B/E/S.

The pace of growth in the U.S. services sector is expected to have increased a little in July, compared to the gain in the previous month. Data from the Institute for Supply Management is likely to show services sector index to have increased to 56.2, just a little up from June’s reading of 56. (1000/1400) Also, financial firm Markit releases its reading of its Purchasing Managers Index for the services sector for the month of July. (0945/1345) Separately, the ADP National Employment Report is likely to show U.S. private employers added 215,000 jobs in July, down from previous month’s 237,000 additions. (0815/1215)

Tesla Motors Inc releases second-quarter results and investors will be looking for more information from CEO Elon Musk on the company’s rollout of its next new vehicle, the Model X crossover, as well as the status of the 2017 Model 3, the Nevada “gigafactory” and the first application of Tesla’s “Autopilot” self-driving software on the Model S sedan. Also under scrutiny will be the company’s cash burn rate in the quarter, as well as capital expenditures and R&D costs, compared with Model S unit volume and sales revenues.

Dish Network Corp, the No.2 U.S. satellite TV company, is expected to report second-quarter revenue and profit below analysts average estimate, according to Thomson Reuters StarMine. Dish has been losing pay-TV subscribers as rivals offer discounts to both new and existing customers in an increasingly competitive pay-TV market. The company has been attempting to woo young viewers away from their cable or satellite subscriptions to its less costly Sling TV streaming service, launched in January. Dish has amassed spectrum in recent years without building out infrastructure to offer its own wireless service. Investors will look for details on the company’s spectrum strategy.

HCA Holdings Inc, the largest U.S. for-profit hospital operator, is set to report better-than-expected second-quarter profit, according to Thomson Reuters StarMine, helped by an increase in hospital admissions and visits. U.S. hospitals have been reaping the benefits of Affordable Care Act with the rise in insurance coverage resulting in an increase in the number of medical bills being paid.

IT service provider Cognizant Technology Solutions Corp is expected to report second-quarter results slightly above analysts average estimate, according to Thomson Reuters StarMine. Cognizant has been benefiting from higher spending by clients in North America, especially in its healthcare unit, which accounts for nearly a third of its total revenue. The company said in May it expects the recent acquisition of healthcare IT services provider TriZetto and the implementation of the U.S. Affordable Care Act to drive growth this year.

CBS Corp, the owner of the CBS broadcast network and cable channel Showtime, is expected to report second-quarter revenue marginally below analysts average estimate, according to Thomson Reuters StarMine. The company has been struggling to increase revenue as advertising dollars shift to digital platforms. The report from the owner of the most-watched U.S. television network will also provide an update on the health of the country’s advertising market.

Sun Life Financial Inc is expected to report a rise in second-quarter profit, as the Canadian insurer expands its asset management business. Sun Life has been buying asset management and real estate investment businesses and investors will be keen to know about further growth plans in its wealth management business.

Canada’s Agrium Inc and U.S.-based CF Industries Holdings Inc, both nitrogen fertilizer producers, report second-quarter results. Of interest is an update on Agrium’s expanding potash and nitrogen production, and CF’s own nitrogen capacity expansion in the United States.

Keurig Green Mountain Inc, the maker of K-Cup single-serve coffee pods, releases third-quarter results and analysts expect the company to post adjusted earnings of 79 cents a share, down from 99 cents a year earlier, according to Thomson Reuters I/B/E/S. During second quarter the company cut its full-year sales and profit forecasts.

Discovery Communications Inc, the operator of channels such as Animal Planet and TLC, is expected to report second-quarter results slightly above analysts average estimate, according to Thomson Reuters StarMine. Discovery’s international networks, which account for nearly half of total revenue, have seen steady growth. However, all eyes will be on the impact of rising costs and a strengthening dollar in the coming quarters.

Luxury apparel retailer Ralph Lauren Corp is expected to report a drop in first-quarter profit and sales, according to Thomson Reuters I/B/E/S. Sales have suffered due to intense competition from fast-fashion retailers, a strong dollar, and weak demand for its clothes in North America, its biggest market. The company has had to resort to discounts to drive sales and is investing in growing its e-commerce channel to attract tech-savvy shoppers. But traffic to its stores has declined steadily. Investors will look for forecast, comments on pricing in regions affected by foreign exchange and further initiatives in e-commerce.

Wearable fitness device maker Fitbit Inc is expected to post second-quarter revenue above Wall Street’s estimates, according to Thomson Reuters StarMine, in its first report as a public company. Fitbit is expected to benefit from strong demand in the U.S. connected activity tracker market, in which the company has an 85 percent share. Founded in 2007, the company said its 2014 revenue had tripled from a year earlier. Investors will closely watch this earnings report to see if Fitbit can sustain that momentum.

Barrick Gold Corp, the world’s biggest gold producer is expected to report a drop in second-quarter earnings on a weaker gold price and as costs hit their highest level of the year. The market’s focus will be on Barrick’s progress in meeting its target of cutting debt by at least $3 billion this year. To this end, the Toronto-based miner may announce details of further planned asset sales or other measures to help it cut debt.

Refiner HollyFrontier Corp is expected to report a rise in second-quarter profit, helped by higher gasoline demand and improved refining margins. A 50 percent fall in crude prices since June 2014 has propped up refining margins. Investors will look for comments on refinery utilization rates in the second half of the year, when gasoline demand is typically low.

Canada’s Brookfield Infrastructure Partners LP releases its earnings for the second quarter as it waits to see if Australian rail freight company Asciano will accept a A$9 billion takeover proposal. Investors will look whether the company will raise its offer in the light of a lower Australian dollar and demands from Asciano shareholders for more money.

Herbalife Ltd, the weight-loss and nutritional products maker, is expected to report second-quarter profit and sales below Wall Street’s estimates, according to Thomson Reuters StarMine. The company is likely to have been hurt by the strengthening dollar, along with ongoing issues of low sales, problems in China and allegations of a pyramid scheme over the past quarters. Investors will be looking to see the extent of the company’s recovery plans and for any revisions to its full-year forecast.

WellCare Health Plans Inc’s second-quarter results are expected to beat analysts average estimate, according to Thomson Reuters StarMine, as the health insurer keeps medical costs low and adds more members. WellCare specializes in government-sponsored plans such as Medicaid and Medicare Advantage. Analysts have reported stable medical utilization trends for both Medicaid and Medicare Advantage for the quarter, which has helped other larger insurers such as Anthem and Humana beat estimates.

No. 3 U.S. hamburger chain Wendy’s Co is expected to report second-quarter profit and sales below analysts average estimate, according to Thomson Reuters StarMine, hurt by higher beef costs and intense competition in North America, much like market leader McDonald‘s. Wendy’s remain among a handful of U.S. restaurant chains which have not completely expanded into the breakfast category. Investors will be looking ahead to any comments on this, particularly as the company seems to be struggling to attract customers. The company had also planned to start testing antibiotic-free chicken products later this year, according to media reports.

Offshore driller Transocean Ltd is expected to report a much lower profit for the second quarter as day rates continue to fall due to spending cuts by E&P companies. Transocean has scrapped many of its older and less capable rigs to cope with the downturn in the oil market. The company, which operates the world’s biggest offshore fleet, had cut its annual dividend by 80 percent. Investors will look out for any comments on the company renewing contracts and updates on plans for its older rigs. The company is also expected to comment on its strategy to cope with high debt.

Website-hosting and domain-registration company GoDaddy Inc is expected to report second-quarter earnings slightly ahead of analysts average estimate, according to Thomson Reuters StarMine. The company, which went public in April 2015, is expected to benefit from a growing customer base and as more of its products are being adopted internationally, boosting average revenue per user. About 9 million of its 12.7 million customers are in the United States. Investors will be looking for comments around growth in the company’s customer base and updates on entering new markets and how they plan on penetrating existing markets further.

XPO Logistics Inc’s revenue has soared in the past few quarters as its strategy of growing through acquisitions pays off. XPO became the world’s second-largest freight brokerage provider after its purchase of French-based Norbert Dentressangle in April. The company, which reported total revenue of nearly $2.5 billion last year, has said since it was on track to achieve $9.5 billion in sales this year, mainly due to the acquisition. When the company will post its second-quarter earnings, investors will be looking for comments on what XPO’s dealbook looks like for the rest of the year, given the company still has some cash it raised from parties led by Singapore’s GIC.

Offshore rig contractor Rowan Cos Plc is expected to report a higher second-quarter profit, helped by resilient demand for some high-tech rigs and lowered prices. Rowan, which deployed three new ultra-deepwater rigs earlier this year, has said that it has extended hire periods, reduced prices and amended other contract terms to retain customers. Investors will be looking for commentary on future rig demand and pricing.

Kindred Healthcare Inc is slated to report a better-than-expected second-quarter profit, according to Thomson Reuters StarMine, due to a rise in admissions in its health and hospice business. The business provides medical care and other services to patients in their homes or other residential settings. Kindred expanded its footprint in this business by buying Gentiva Health Services Inc for $1.8 billion last year, enhancing its position as a provider of post-acute care and rehabilitation services. The company, which gets significant revenue from its hospital division, has been able to reduce losses as more patients gets covered under medical insurance provided by Obamacare.

The Securities and Exchange Commission will at long last adopt a rule championed by unions and loathed by companies that is required by the 2010 Dodd Frank Wall Street reform law. It will force companies to give shareholders a sense of how well their workers are paid relative to the CEO, by disclosing a ratio of median worker pay to CEO pay.

Data from the Statistics Canada is expected to show a trade deficit of C$2.80 billion in June, compared to a C$3.34 billion shortfall in May. May’s reading was the eighth consecutive month of deficits. (0830/1230)

Sunrun, which installs and maintains solar panels for homes, will start trading on the Nasdaq. The solar energy company had about 79,000 customers in 13 U.S. states as of March 31. The residential solar market in the country has grown dramatically in recent years, largely due to cheap prices for panels, particularly those made in China.

A reading of the Chile’s IMACEC economic activity index, which encompasses about 90 percent of the economy tallied in gross domestic product figures, is expected to have increased 2.4 percent in June from the same month a year ago, compared to a rise of 0.8 percent in May. Separately, the Purchasing Managers Index (PMI) for Brazilian Services sector is due to be released.

LIVECHAT: MACRO VIEW: Elwin de Groot, senior market economist, Rabobank Elwin de Groot, senior market economist at Rabobank joins us at 0500 ET/0900 GMT to discuss what could trip markets up as the summer lull gets into full swing. With the Federal Reserve poised to raise rates, fears over the Chinese economy growing and Greek bailout talks underway, there are plenty of candidates. To join the conversation, click here bit.ly/1kTxdKD

(All analysts’ estimates are according to Thomson Reuters StarMine, unless mentioned otherwise)

Compiled by Sourav Bose in Bengaluru; Editing by Savio D'Souza

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