We've reached the tail end of earnings season. However, there are still a handful of notable stragglers left to report – including memory chipmaker Micron Technology (MU, $58.71), slated on the earnings calendar to unveil its fiscal third-quarter results after the June 30 close.
Micron, like so many of its fellow semiconductor stocks, has struggled on the charts in the first half of 2022, down 37% for the year-to-date.
Still, MU remains a "top pick in semis" for UBS Global Research analyst Timothy Arcuri (Buy).
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"Amid macro concerns, we believe investors continue to overlook several key factors," Arcuri says. The analyst points to lower supply amid raw material shortages and a delay in equipment lead times, as well as demand that will be buoyed by a ramp up in new cloud server platforms in 2023. Arcuri says MU also remains the leader in NAND.
"Given all of these industry and MU-specific factors, we expect MU's [earnings per share] EPS to hold up very well," he adds.
For Micron's fiscal third quarter, analysts, on average, are calling for earnings of $2.46 per share, up 30.9% on a year-over-year (YoY) basis. Revenue is expected to arrive at $8.7 billion (+16.8% YoY).
China Lockdowns Likely Dragged on Nike Earnings
Nike (NKE, $111.43) is one of two Dow Jones stocks scheduled to report earnings this week, with the fiscal fourth-quarter results from the athletic apparel retailer due out after the June 27 close.
NKE stock has had a rough run in recent months – off 33% for the year-to-date. And the company's troubles have not been not limited to the charts.
"Nike's global trends were likely worse than expected in its fiscal fourth quarter due to much tougher China lockdowns than the company implied in its guidance," says Credit Suisse analyst Michael Binetti.
However, the analyst believes that while global supply chains remain tough, "consumer demand for the brand remains very strong, and we think Nike has been pushing harder to get inventory out to end markets in the U.S. & Europe to help offset transitory sluggish China trends in the quarter."
Binetti has an Outperform rating on the consumer discretionary stock – the equivalent of a Buy – and recently lowered his earnings per share outlook for Nike's fiscal fourth quarter to 84 cents from 95 cents to reflect the impact of China's lockdowns.
As for the Street: Consensus estimates are for Nike to report earnings of 81 cents per share (-12.9% YoY) and revenue of $12.1 billion (-2.2% YoY).
Walgreens Earnings on Tap, But Boots Sale in Focus
Walgreens Boots Alliance (WBA, $41.63) is the second Dow Jones component slated to report earnings this week. The drugstore chain is set to unveil its fiscal third quarter results ahead of the June 30 open.
Analysts are projecting a rough quarter for WBA due in part to a slowdown in COVID-19-related sales. Consensus estimates are for EPS of 92 cents (-33.3% YoY) and revenue of $32.0 billion (-5.9% YoY).
But what's likely to draw the bulk of attention is any color related to the company's plans for Boots. Late last year, WBA said it was undergoing a strategic review of the U.K.-based drugstore chain. And earlier this month, a Bloomberg report, citing people familiar with the matter, suggested a consortium of investors – including Apollo Global Management (APO) – made an offer for Boots.
The bid values Boots at over $6.3 billion, according to Deutsche Bank analyst George Hill (Hold). "The proposal offers WBA the option to retain a minority stake in Boots after any deal," Hill adds. "We do not expect Walgreens to fully harvest the full value of the sale price, and expect the company will maintain a minority position."
Walgreens Boots Alliance's recent sale of 6.0 million AmerisourceBergen (ABC) shares will also bring the company's cash flow into focus. The proceeds, according to WBA, will be used to pay down debt and support its strategic initiatives.
"As WBA continues unwinding its ABC stake, the company should see a significant influx of cash in the next twelve months, which will provide a lot of capital deployment flexibility as the company retrenches around its core U.S. business and leaves its empire building phase of most of the last decade behind it," Hill says.
WBA ended its most recently reported quarter with $669 million in free cash flow, or the money left over after a company has covered the capital expenditures needed to grow its business.
Karee Venema was long NKE as of this writing.
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