April 21, 2014 / 7:13 PM / 3 years ago

What to Watch in The Day Ahead; Tuesday, April 22

(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) United Technologies is scheduled to report first-quarter results. The large U.S. manufacturer of elevators, climate control systems, jet engines and other aerospace equipment told investors last month that first-quarter earnings were likely to fall short of the average analyst estimate.

Property and casualty insurer Travelers Cos is expected to post first-quarter results above estimates, according to StarMine data. Travelers has benefited from lower disaster losses and rising insurance rates. Investors, however, will be interested to know whether the company’s ability to hike premium rates is showing any signs of slowing.

McDonald’s Corp is likely to blame extreme winter weather for weakness when it reports first-quarter earnings. Analysts will be expecting the management to explain why it can’t seem to get any sales growth.

AT&T is scheduled to report first-quarter results. In the previous quarter, its wireless subscriber growth and its free cash flow target lagged well behind analyst estimates.

Home resales were likely flat in March, after falling 0.4 percent in February, the National Association of Realtors is expected to report. Sales of previously owned homes are expected to have declined to 4.55 million units in March from February’s 4.60 million units. (1000/1400)

Comcast, which is trying to win approval from U.S. regulators for its $45.3 billion takeover of Time Warner Cable, is expected to report first-quarter results before the bell. Investors will be listening for any commentary on what it plans to do with divestitures related to the deal and whether it can post another sequential gain in video subscriber growth.

Amgen is expected to report first-quarter results after the bell. Sales likely received a boost from the rheumatoid arthritis drug, Enbrel, for which the company regained full rights following the end of a revenue-sharing arrangement with Pfizer. Investors will be looking for an update to full-year forecast after what was seen as a conservative outlook issued in January, as well as details on the biotech company’s developmental pipeline and plans for seeking approvals for its high profile new cholesterol drug, evolocumab.

Gilead Sciences is likely to post first-quarter results. It posted a better-than-expected quarterly profit in the fourth quarter as sales of its flagship HIV drugs beat Wall Street estimates. (1605/2005)

Lockheed Martin, maker of F-35 fighter jets, satellites and warships, is scheduled to report first-quarter results before the markets open. It had forecast higher earnings in 2014 after charges linked to U.S. defense budget cuts and workforce reductions depressed earnings in the fourth quarter.

BNY Mellon is scheduled to report first-quarter results before the bell. In the fourth quarter, its profit rose slightly, meeting Wall Street expectations, but higher staff expenses weighed on results even as a buoyant stock market lifted investment management and performance fees.

The U.S. Supreme Court will hear arguments in a case that is likely to determine the fate of online TV startup Aereo Inc. The court will hear an appeal filed by the four major broadcasters, who say the service steals copyrighted content. Walt Disney Co’s ABC Network, CBS Broadcasting Inc, Comcast Corp’s NBCUniversal and Twenty-First Century Fox Inc appealed a decision by the 2nd U.S. Circuit Court of Appeals in April that denied their request to shut Aereo down while litigation moves forward. Aereo, backed by Diller’s IAC/InterActiveCorp, charges users a low monthly fee to watch live or recorded broadcast TV channels on computers or mobile devices. Aereo does not pay the broadcasters. The case is being closely watched in the media and tech industry not just because of interest in whether Aereo can disrupt the marketplace but due to concerns that a ruling against the company could call into question cloud computing services, in which personal files, including TV shows, are stored remotely on the Internet.

Virtualization software maker VMware is likely to report a first-quarter profit that is in line with estimates or slightly better-than-expected, helped by higher license revenue. However, the company is facing intensified competition from Microsoft, Cisco, Red Hat and NetApp who have been investing to improve their offerings in the fast-growing market. Last quarter, VMware reaffirmed its full-year revenue forecast of $5.94 billion-$6.1 billion, largely below the average analyst estimate of $5.95 billion.

Advertising company Omnicom is scheduled to post first-quarter results before the bell. It is expected to benefit from strong growth in its domestic market, which is also its largest revenue source. Omnicom said in February that its $35.1 billion merger with France’s Publicis Groupe, which was scheduled to close early this year, will close in the third quarter. Rival Interpublic is also likely to report first-quarter results that are expected to benefit from a pick-up in spending in Europe and customer accounts it won in 2013.

Credit card issuer Discover Financial’s first-quarter results are expected to top estimates, according to StarMine data. Discover, like American Express and Capital One, is expected to benefit from lower loan-loss reserves and reduction in expenses. Discover plans to buy back $2.40 billion of common shares through the next two years, after it cleared the U.S. Federal Reserve’s stress test last month.

Yum Brands is expected to report first-quarter results after the bell. The KFC parent said last month it was monitoring the return of bird flu in its top market of China, and while it had not seen a meaningful impact on national sales, hard-hit areas had experienced some softening in demand.

Xerox Corp is likely to post first-quarter results. Profit at Xerox’s services business, which brings in more than half the company’s revenue, could increase in the quarter due to the ongoing cost reduction in the segment. However, revenue growth in the business could remain challenged as new projects take time to ramp up. (0700/1100)

Network gear maker Juniper Networks is likely to post better-than-expected first-quarter results after the markets close, according to StarMine data. The company is expected to benefit from higher spending on equipment by telecom companies. Juniper has also been under pressure from shareholder Elliott Management, which has urged it to cut costs, buy back shares and consider slimming down to focus on its core business of making routers and switches for carriers such as Verizon and AT&T.

Harley-Davidson is expected to report first-quarter earnings before the bell. Although the first quarter is typically a slow one for the U.S. motorcycle maker, this year’s long and unusually cold winter will likely weigh on its results.

Canadian Pacific Railway and Canadian National Railway are scheduled to report first-quarter results. Canada’s two main railroads likely took a hit during the first quarter of 2014 due to an unusually cold and challenging winter. Canadian National and Canadian Pacific are already under pressure by the federal government and grain shippers to clear a massive backlog and delivery record volumes of grain. Both companies are also facing new government legislation that could dictate future grain and other commodity shipments. Investors will likely be interested in what impact the Keystone delay will have on its crude by rail business.

Canada’s biggest diversified miner Teck Resources is expected to report results for the first quarter. Teck is likely to update the market on its cost-cutting initiatives, and investors may also be looking for additional detail on potential deals. The company is in a strong position to make an acquisition, with some C$2.5 billion in cash on hand as of Feb. 12 and Chief Executive Don Lindsay has said the company is interested in buying a copper project or mine, but also not confining itself strictly to copper.

Pilots at JetBlue Airways end month-long voting on whether to join the Air Line Pilots Association union, and the results are expected to be disclosed. A vote for unionization could potentially raise labor expenses for JetBlue, which has struggled to contain overall costs. Pilots at the carrier have rejected unionization in two previous votes.

Mortgage insurer MGIC Investment Corp’s first-quarter results are expected to benefit from an improving U.S. housing market. Rising house prices mean fewer homeowners have loans that exceed the value of their property, reducing delinquencies. Mortgage insurers such as MGIC, Radian Group Inc and life insurer Genworth Financial Inc’s mortgage unit protect lenders in cases where homebuyers make down payments below a certain threshold. But, rising housing prices in states like California have indicated towards a strong spring selling season.

Arch Coal is likely to report a bigger first-quarter loss as prices for both metallurgical, or steel making, coal, and thermal coal used to generate electricity remain depressed due to insufficient demand. However, Arch coal has said it expects a recovery in thermal coal markets with utilities switching back to coal due to a recent run-up in natural gas prices. The focus this quarter will be on the company’s cost-cutting efforts.

AK Steel is expected to report a bigger first-quarter loss as an unplanned blast furnace outage in its Kentucky plant is likely to drag shipments down by 10-12 percent. A harsher-than-usual winter has pushed up costs of natural gas, which is used to power blast furnaces, and is expected to hurt margins. Investors will look for comments on pricing as U.S. steel prices have slightly recovered over the last month. Earlier in April, AK Steel said it would increase prices for all of its stainless steel products, effective May 4.

Statistics Canada is scheduled to report wholesale trade data for February. Analysts surveyed by Reuters expect a 0.7 percent increase in February after January’s 0.8 percent rise.

Argentine government is scheduled to release February economic activity data and March trade balance data. (Compiled By Shashwat Sharma)

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