May 8, 2015 / 8:09 PM / 2 years ago

What to Watch in the Week Ahead and on Monday, May 11

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The bond markets will continue to adjust to the wild swings in European sovereign debt markets, and the coming quarterly refunding auctions of three-, 10- and 30-year Treasuries could also pressure bond yields in what is a relatively quiet week in terms of economic data and as the earnings calendar winds down. The S&P 500, meanwhile, is just a shade off of its all-time high with a number of retailers reporting results. After the jobs report showed strong hiring but weak wage growth, the expectation that the Fed will take a slow-go-it approach in boosting rates should help equities and continue the outperformance of three-to-seven-year bonds.

Network equipment maker Cisco Systems Inc is expected to report on Wednesday a rise in third-quarter revenue and profit, according to analysts’ average estimates. Strong demand for switching equipment and routers is expected to have offset weak spending by the company’s traditional telecom customers.

Department store operator Macy’s Inc warned in February that sales and margins in the first quarter would be hurt by disruptions at U.S. West Coast ports. The company, which is entering the off-price business, has said the first four pilot off-price stores will open in the fall in New York city. Investors will look out on Wednesday for details of the company’s plan for growing the new business. On the same day, department store operator J.C. Penney Co’s first-quarter sales are expected to miss estimate, according to Thomson Reuters StarMine data. Department store operator Kohl’s Corp on Thursday is expected to report a first-quarter profit that will likely beat the analysts’ average estimate, according to Thomson Reuters StarMine. Same-store sales are expected to grow, helped by the nationwide rollout of its loyalty program, upgraded beauty departments at its stores and more online and TV advertising. Investors will watch out for any reaction or comments on Macy’s entry into off-price retail.

The U.S. Treasury Department releases the budget statement for April on Tuesday. The Labor Department releases import and export data for April on Wednesday. Import prices are expected to have risen 0.3 percent in April after dropping 0.3 percent in March. Export prices are expected to have remained unchanged at 0.1 percent. On the same day, the Commerce Department is expected to report that retail sales rose 0.2 percent in April after increasing 0.9 percent in March. The Labor Department releases its producer price index data for April on Thursday. On Friday, the Federal Reserve Board releases its report of industrial production and capacity utilization for April. The data is expected to show industrial production increased 0.1 percent last month, after falling 0.6 percent in March.

Boeing Co holds its annual investor conference on Tuesday. Company executives will talk to analysts and investors at its Chicago headquarters, starting at 1000 ET (1400 GMT). On the agenda are presentations by CEO Jim McNerney, COO Dennis Muilenburg, CFO Greg Smith, Airplane CEO Ray Conner and Defense CEO Chris Chadwick.

On Friday, Brazil’s state-run Petroleo Brasileiro SA will likely report a sharp drop in profit in the first quarter after falling oil prices erased gains that came from lower cost fuel imports. A weaker Brazilian real against the U.S. dollar also drove up debt costs in local currency terms. A preliminary Reuters survey of analysts suggests profit will fall by more than 50 percent to 2.48 billion reals.

Chip gear-maker Applied Materials Inc is expected to post on Thursday a second-quarter profit slightly ahead of Wall Street’s expectations, according to Thomson Reuters StarMine data. Applied Materials is expected to benefit from a pick up in demand after antitrust concerns forced the company to scrap its bid for Japanese rival Tokyo Electron last month. Investors will be looking for management commentary on the company’s plans for the rest of 2015.

Symantec Corp, the maker of Norton antivirus software, is expected to report fourth-quarter results above analysts’ average estimates on Thursday, according to Thomson Reuters StarMine data. Symantec has been benefiting as governments and companies boost spending to protect their networks from increasingly sophisticated cyber attacks. The company has been seeking buyers for its storage business, Veritas, or the entire company, for several months, sources familiar told Reuters last month. Investors will look for comments on that and outlook for 2016.

Hamburger chain Shake Shack Inc is expected to report on Wednesday first-quarter profit below estimates, according to Thomson Reuters Starmine, primarily due to slower same-restaurant sales growth. The company had forecast slower same-restaurant sales to continue into 2015, and investors will be looking out for comments on the same. On Thursday, restaurant chain operator El Pollo Loco Holdings Inc is expected to slightly miss first-quarter revenue estimates, according to Thomson Reuters Starmine, but investors will be looking at any cut to its comparable restaurants sales forecast for the year. Investors will also be comparing the company’s performance to other restaurants that debuted last year. Real estate website operator Zillow Group Inc is expected to report first-quarter revenue below the average analyst estimate on Tuesday. Zillow completed the acqusisition of Trulia in February, but the lengthy Federal Trade Commission review may have crimped the smaller rival’s ability to sell, analysts said. Zillow forecast lower-than-expected 2015 revenue in April, citing Trulia’s challenged agent ad sales and called 2015 a transition year. Investors will be looking for more clarity on Trulia’s contribution to Zillow’s earnings.

On Tuesday, web hosting company GoDaddy Inc will report its first quarterly results since its debut in April. GoDaddy manages about 59 million Internet domains, nearly a fifth of the world’s total, and has since expanded into new areas and made an international push. Its revenue grew about 52 percent in the past three years to nearly $1.39 billion.

King Digital Entertainment Plc, the creator of “Candy Crush”, is expected to report first-quarter revenue above analysts’ estimate on Thursday, according to Thomson Reuters StarMine data, driven by higher bookings for its games. Analysts expect the decline in bookings from the popular “Candy Crush Saga” to be offset by bookings from other franchises like “Candy Crush Soda Saga”.

On Friday, prominent investment managers who oversee trillions of dollars tell U.S. regulators what stocks they owned at the end of the first quarter in their quarterly 13-F filings. These give other investors and the public a rare glimpse into what sectors and companies the smart money set, including Bill Ackman, Warren Buffett, Daniel Loeb, Andreas Halvorsen, Chase Coleman, Carl Icahn and David Tepper, bought at the start of 2015 when oil prices were low and talk of an eventual interest rate hike by the U.S. Federal Reserve dominated trading.

On Thursday, Mexico’s National Statistics Institute will release industrial production data for March, after the gauge picked up in February as manufacturing mining and utilities sectors grew.

MONDAY, MAY 11

Wall Street expects satellite TV company Dish Network Corp to report a higher first-quarter profit as it benefits from its video streaming service, Sling TV. The company, which has been struggling with a mature Pay TV business, reached a new agreement with Time Warner last month that will allow Dish subscribers continued access to Turner Broadcasting and HBO programming. Investors will look for commentary on the success of Sling TV as well as whether the company has added subscribers in the first quarter.

Generic drugmaker Actavis Plc is expected to report first-quarter profit and revenue a little above analysts’ average expectations, according to Thomson Reuters StarMine, as the company continues to integrate its $66 billion purchase, Allergan Inc. Actavis, which will change its name to Allergan, is now focusing on branded drugs, which command a higher price than generics. New drugs for women, anti-infectives and bowel drugs are expected to push the company’s sales above the Street view. Investors will also look for any updates on the progress of the deal and the full-year forecast for the combined entity.

Milk processor Dean Foods Co’s first-quarter sales are likely to have been hurt by weak demand, as retailers do not seem to be passing on the benefit of falling milk prices to consumers. Consumers also seem to be increasingly turning to private label milk brands, which are getting cheaper. The company said it is combining its 31 regional and local brands of milk under one national brand, DairyPure, which it is promoting as antibiotic free and sourced from cows free of growth hormones, in an effort to regain market share. Investors will be looking for details on the brand consolidation and efforts to overcome weak and sporadic sales growth, which had been largely attributed to high raw milk prices over the last two years.

Web-hosting and cloud services company Rackspace Hosting Inc is expected to post a first-quarter profit above the average analyst estimate, according to Thomson Reuters StarMine. The company has been benefiting from strong industry spending on cloud services. Investors will look for updates on the Rackspace’s outlook for the rest of 2015.

Fuel cell maker Plug Power Inc is expected to report a smaller first-quarter loss, helped by higher demand for its fuel cell systems that replace lead-acid batteries to power forklifts without burning fuel. The company has been on investors’ radar for uneven revenue recognition due to a delay in order deliveries. Investors will be keen to know about the company’s initiatives to bring down costs and turn profitable on an EBITDA basis.

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Compiled by Ayesha Sruti Ahmed in Bengaluru; Editing by Sriraj Kalluvila

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