February 3, 2015 / 7:34 PM / in 3 years

What to Watch in the Day Ahead - Wednesday, Feb. 4

(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) Merck & Co is expected to report lower fourth-quarter earnings, hurt by generic competition for its Singulair asthma drug and its Nasonex allergy treatment. Investors will be paying far greater attention to the No. 2 U.S. drugmaker’s earnings forecast for 2015, and whether it will be badly dented by the stronger dollar. Focus will also be on company’s comments on progress in testing its array of experimental drugs, especially its cancer treatments that work by harnessing the immune system.

Botox maker Allergan Inc is expected to report a fourth-quarter profit that edges past analysts’ estimates, its first results since signing a deal to sell itself to Ireland-based Actavis for $66 billion. The company had forecast a 20 percent rise in earnings for the fourth quarter as it tried to fend off a hostile bid from activist investor William Ackman and Canadian drugmaker Valeant Pharmaceuticals International Inc. Investors will look for updates on the Actavis deal, a key factor in how shareholder may vote at Allergan’s annual shareholder meeting on March 10.

General Motors Co reports fourth-quarter results and investors will be looking at how the No. 1 U.S. automaker ended the year. They will look for answers on pricing at home, updates on the company’s outlook to return to profits in Europe in 2016.

Weak sales of lung drug Advair is expected to weigh on profits of GlaxoSmithKline in the fourth quarter, bringing to an end a disappointing year for Britain’s biggest drugmaker. The company is now banking on a $20 billion asset swap with Novartis to revive its fortunes.

The ADP national employment report will likely show private payrolls rose 225,000 in January after rising 241,000 in December. (0815/1315) Later, the Institute for Supply Management releases its service index which is expected to have little changed at 56.3 in January. (1000/1500)

Federal Reserve Board Governor Jerome Powell gives opening remarks before the Economic Growth and Regulatory Paperwork Reduction Act Outreach Meeting in Dallas. (1000/1500) Separately, Federal Reserve Bank of Cleveland President Loretta Mester speaks on the economy before the Ohio Bankers League annual Economic Summit. (1245/1745)

Film and TV company Twenty-First Century Fox Inc, controlled by Rupert Murdoch, is expected to report second-quarter revenue slightly ahead of analysts’ average estimate, according to Thomson Reuters StarMine data. The company had a slew of hit film releases during the holiday quarter, such as “Exodus: Gods and Kings”, “Night at the Museum: Secrets of the Tomb” and “Gone Girl”. Analysts speculate that despite strong revenue growth, the company’s profit could fall due to a strong dollar.

KFC owner Yum! Brands Inc will issue an update on its recovery in China, when it reports fourth-quarter earnings. The biggest Western restaurant operator in China had previously said it could take six to nine months for a recovery in China where sales took a hit from a meat scandal involving rival McDonald’s major regional supplier.

A strong dollar is likely to hurt U.S. life insurer Prudential Financial Inc’s fourth-quarter results as it earns more than half its revenue from international operations, mainly Japan. Prudential has been pushing to advance its retirement and financial security business. The company could benefit in the coming quarters from a decision by lawmakers to give the Federal Reserve leeway to tailor the capital requirements on big insurers.

Humana Inc is expected to report higher fourth-quarter earnings from a year ago while its annual results may decline partly due to government pressure on payments for Medicare services. The company has struggled with the economics of its individual insurance business after the government overhauled the market and introduced new exchanges.

Due to higher spending by financial services and healthcare clients, IT services provider Cognizant Technology Solutions Corp is expected to post fourth-quarter revenue marginally above expectations. Earlier this month, India’s third-largest IT services exporter Wipro said it expects higher technology spending by western clients to boost sales in its next fiscal year.

Motorola Solutions Inc is expected to report fourth-quarter profit well above analysts’ average estimates due to cost cuts. However, the maker of walkie-talkies and radio systems is expected to report lower-than-expected revenue due to weak government spending. The company had said it would cut costs by more than $200 million in 2014 and was on track to save $300 million by the end of 2015.

Whirlpool Corporation, the world’s largest maker of home appliances, reports fourth-quarter results. A housing recovery in the United States had lifted sales of its washers and dryers, cooktops, stoves and refrigerators in the third quarter and Europe sales remained resilient despite economic woes. Investors will be interested to know the impact of low oil prices on consumer spending and how sales fared in Europe.

Under Armour Inc fourth-quarter profit is expected to be above analysts’ average estimate. The sports apparel maker had warned in October that sales growth would slow next year due to waning demand for its popular outdoor clothing designed to retain body heat. The company, which gets about 6 percent of revenue outside the United States, said gross margin would fall in the fourth quarter due, in part, to the stronger dollar. Under Armour dislodged Adidas as the no. 2 sportswear brand in the United States last year, after Nike.

The Canadian clothing maker Gildan Activewear Inc is expected to post a loss in the first-quarter after cutting prices at its printwear business to boost demand. Gildan’s printwear unit makes T-shirts and other apparel that are imprinted by screenprinters. Its branded clothing line includes Gold Toe socks and Secret and Silks pantyhose. Allstate Corp, the largest publicly traded home and auto insurer in the United States, is expected to report better-than-expected fourth-quarter earnings, according to Thomson Reuters StarMine. The company, which exceeded Wall Street expectations in the first three quarters of 2014, is likely to end the year on a high. Higher income from premiums and lower catastrophe losses are likely to boost profit. Investors will be looking for comments on company’s plans on expansion beyond core businesses, given that it has been criticized for straying away from core business.

Data analytics software maker Tableau Software Inc’s fourth-quarter profit is expected to beat the average analyst estimate, according to Thomson Reuters StarMine data. The company, which competes with Qlik Technologies and Splunk, has been benefiting from strong customer growth as it expands internationally. A growing number of big orders is expected to boost profit. Investors will look for details on the company’s outlook for 2015.

Offshore drilling contractor Noble Corp is expected to report a lower fourth-quarter profit, hurt by a nearly 60 percent slide in oil prices since June. Oil producers are spending less and slowing exploration, hurting companies such as Noble that provide rigs and drilling services.

Mexico’s national statistics agency releases gross fixed investment data for November. The measure of spending on machinery, equipment and new construction is expected to have risen to 5.20 percent from the same month a year earlier. (0900/1400) (Compiled By Astha Rawat in Bengaluru; Edited by Don Sebastian)

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