Tuesday, February 5, 2013

The Key Earnings For This Week

Another big week for earnings and I will try and highlight some on the more interesting results to look at. These articles are quite popular so please let me know if there are any particular companies readers want covered with write ups in the week and I’ll try and get them done. There is no fixed theme or sector prevalent in this week’s earnings however I note there are a lot of stocks that I’ve held before. It will be another busy week of research.


The week kicks off with one of the market's favorite defensive household goods companies Clorox giving numbers. Another defensive, MWI Veterinary Supply, also gives results. I like the sector it operates in but I am not sure about its evaluation.  Yum! Brands will also give results and I think they need to be watched closely after McDonalds disappointed with its Chinese sales. Regal Beloit is a company that doesn’t get much attention but it is exposed to some favorable markets in energy and housing.

My pick of the day is Akme Packet (NASDAQ: APKT) of which there is some discussion linked here. It is the industry leader in Session Border Controllers, a key component of Voice over LTE (VoLTE). The carriers are talking a lot about spending on LTE and the investment thesis for APKT is that carriers should start to ramp up orders from APKT around the mid-year in order to begin rolling out the technology at the end of 2013/start 2014. Listen to the commentary carefully.


Tuesday says a few defensive growth companies reporting. I like Myriad Genetics but it needs to demonstrate it can grow revenues outside of the BRAC Analysis test. Hain Celestial is one of those healthy food plays but I can’t help thinking this theme is becoming tired and a look at the fundamentals doesn’t suggest great value.

The darling of defensive growth, Church & Dwight, also gives numbers and I’m looking out for any ‘disappointments’ here. I say this because it looks fair value right now and it will need a hiccup to make it look cheap. Eaton and Estee Lauder also give numbers.

Allergan (NYSE: AGN) is a very attractive stock. I’ve sold out of my position on evaluation grounds, but it is still worth following closely. Earnings expectations and some more details found here. AGN is pretty good at hitting product sales guidance and I think there could be upside here. Johnson & Johnson reported good numbers in ophthalmology so AGN can expect to do well too. As for Botox , the key is to expand its indications. Indeed the Map Pharmaceuticals acquisition is intended to support AGN’s growing neurology franchise


Accuray has had a tough time of it lately with competitors stepping up into its product categories. CVS Caremark has been very strong and its evaluation now looks fair to me. However its results are worth looking at particularly to see how many Express Scripts customers it will keep from Walgreen. Equifax will be worth watching closely because its credit checking numbers are a great indication of the strength of lending in the US.

The last three highlights are a telecoms testing company Ixia, auto parts retailer O’Reilly Automotive and Nu-Skin Enterprises . The latter will forever get lumped together with Herbalife and others thanks to having similarities with its business model.


A couple of bellwethers in Kraft and Sprint Nextel (NYSE: S) will report in Thursday. Sprint is interesting because the telco market will want to see what it is saying about its spending plans. If AT&T and Verizon are anything to go by, it will be increasing spending on areas like wireless and 100G networking.  Sprint is aggressively rolling out its LTE network in order to play catch-up with Verizon and some spending was planned to be pushed into 2013 due to some timing issues in 2012. It will be interesting to see if this causes capital spending to rise notably this year. If it does it would be a good sign for telco spending. Riverbed Technology investors will also be interested in telco because it is a key vertical for its WAN Optimization products.

Sanofi (NYSE: SNY) will also give results. I like the stock and think it is the pick of the high yield big pharma sector.  Sanofi has a lot of regulatory decisions due in Q1 2013 with things like Lxyumia for diabetes (EU and US), Zaltrap for colorectal cancer (EU), and Aubagio for multiple sclerosis (EU) due in Q1. It appears that a decision on Lemtrada for multiple sclerosis (US) will now be due in the second half. Any updates on these short term catalysts will be closely followed


This Friday is a lot more interesting than most with diagnostic device company Alere giving results. Lab Corp also gives results and investors can see how it is progressing by comparing it to Quest Diagnostics linked here.  My main focus will be on Beacon Roofing Supply (NASDAQ: BECN). This is one of those quiet companies in a relatively boring industry that actually has a lot of growth prospects from doing boring things like consolidating the fragmented roofing supply market and generating synergies in the process. BECN didn’t bake much from Sandy into its numbers so there could be some upside here. However, I think the key metric to follow is pricing. I sold out of this on evaluation grounds but will keep an eye out for any weakness.

And finally Sirona Dental Systems will report and I’m expecting strong numbers here from its CERE CAD/CAM system sales.

No comments:

Post a Comment