Top US stocks: Salesforce, Snowflake and Nordstrom

Salesforce and Snowflake report after the closing bell while Nordstorm, Dick’s Sporting Goods and Urban Outfitters continue to paint a buoyant picture for retailers. J&J’s coronavirus vaccine looks effective as a booster shot, while meme stocks are in play after soaring yesterday.

USA (1)

Salesforce

Salesforce is scheduled to release second quarter earnings after the closing bell today, with upbeat enterprise spending figures out from Microsoft and Amazon creating a buoyant mood as investors hope for a similar trend to play out for Salesforce’s marketing and cloud units.

Analysts are expecting revenue to rise to $6.23 billion from $5.15 billion but for adjusted EPS to fall to $0.92 from $1.44, in-line with the company’s guidance. The integration of Slack will also be under the spotlight since the acquisition completed in July, with the business set to contribute around $500 million in revenue over the full year.

Salesforce shares have been on the rise since the middle of May and hit its highest level since November on Monday. Brokers currently have a Buy rating on the stock and see over 8% potential upside from the share price.

Snowflake

Snowflake is also scheduled to release second quarter earnings once markets close today and is expected to continue to report strong topline growth as demand for cloud-based solutions continues to rise.  

The company has said product revenue should come between $235 and $240 million, representing 88% to 92% year-on-year growth. That would mark a slowdown from the 110% growth delivered in the first quarter. Wall Street is expecting total revenue of $256.5 million and for reported net loss per share of $0.67.

JPMorgan upped its target price on Snowflake this morning ahead of the results to $270 from $250. That followed on from Jefferies bumping up its target to $275 from $250 on Monday.

Nordstrom

Nordstrom beat expectations in the latest quarter as revenue benefited from its Anniversary sale, but flagged that it is suffering from supply chain problems that are expected to last for the foreseeable future.

Net sales more than doubled year-on-year in the second quarter to $3.56 billion, having been flattered by the fact stores were closed for half of the quarter of the year before due to lockdown, and also improved compared to the first quarter - but they remained 6% below pre-pandemic levels. Net earnings of $80 million turned from a $255 million loss last year. Both came in ahead of expectations, with results boosted by growth from its Anniversary sale.

Nordstrom also upgraded its guidance for the full year and said it is now targeting revenue growth of over 35% compared to its original target of 25%. Wall Street had forecast 29% topline growth this year. It also said it expects to post a better Ebit margin of 3% to 3.5% versus its previous target for around 3%.

Dick’s Sporting Goods

Dick’s Sporting Goods reported record sales and earnings in the second quarter, raised its guidance, bumped up its dividend and said it will make a special payout.

The company said net sales were up over 20% in the quarter to $3.27 billion, having jumped 45% the year before. Adjusted EPS jumped 58% to $5.08. The company raised its dividend by 21% to 43.75 cents, said it would make a special payout of $5.50 per share and upped its share buyback plan to a minimum of $400 million.

The company also raised its expectations for the full year and is now expecting adjusted EPS of $12.45 to $12.95, which would be between 108% to 244% higher than the year before. Net sales are expected to rise by one-third this year and come in 21% above pre-pandemic levels.

Urban Outfitters

Urban Outfitters also reported record sales and earnings in the latest quarter as sales continued to boom past pre-pandemic levels as demand for its core brands continued to grow.

Net sales jumped to a record of $1.16 billion from $803.3 million the year before, when it was hit by store closures. Still, revenue was over 20% higher than pre-pandemic levels seen in 2019. Net income leapt to $127.3 million from $34.4 million, or to $1.28 from $0.35 on a per share basis. That was well ahead of the $0.77 EPS forecast by Wall Street.

Urban Outfitters said its performance was ‘driven by extraordinary performance at all three brands’. Urban Outfitters, Anthropologie and Free People Group all delivered a large increase in sales that remain well above 2019 levels.

Johnson & Johnson

Johnson & Johnson said the latest data suggests its single-shot coronavirus vaccine could be used as an effective booster jab for those that have already received a dose of its vaccine.

The company launched a trial to examine the potential for its jab to be used as a booster and conducted two phase 1/2a studies involving people who have already had one of its vaccines. The latest results ‘demonstrate that a booster dose of the Johnson & Johnson COVID-19 vaccine generated a rapid and robust increase in spike-binding antibodies, nine-fold higher than 28 days after the primary single-dose vaccination.’

‘We look forward to discussing with public health officials a potential strategy for our Johnson & Johnson COVID-19 vaccine, boosting eight months or longer after the primary single-dose vaccination,’ J&J added.

Alphabet and Apple

South Korea stepped closer toward its ambitions to rein-in Google and Apple and their domination of the mobile app market after a parliamentary committee recommended politicians approve a law that would overhaul how commissions are charged on in-app purchases.

The recommendation paves the way for politicians to approve an amendment touted as the ‘Anti-Google law’ to the Telecommunications Business Act. A vote was scheduled for today but has been delayed until August 30.

Both Google and Apple have faced criticism from governments around the world for their monopoly over the mobile app market and the fact they force developers to use their payment systems for all in-app purchases and charge up to 30% in commission. However, South Korea is set to be the first to take formal action. The new law would allow developers to use other independent payment providers and enforce new laws that would require the US giants to prevent damage to users and protect their interest and rights.

Phillips 66

Phillips 66, the fourth largest oil refiner in the US, has put the smaller of its two refineries in Louisiana up for sale after it continued to generate losses and worries about the uncertain future for motor fuels, according to reports from Reuters.

The unnamed source said it is looking to sell its Alliance refinery in Belle Chasse that can has capacity to refine 255,600 barrels of oil per day. It comes after chief executive Greg Garland said the US refining business was set to be ‘smaller, not bigger’ going forward as it looks to shift toward higher growth areas like low-carbon fuels and electric car batteries.

GameStop and AMC

GameStop and AMC both surged higher yesterday and led a revival among meme stocks, leading to heavy losses for short sellers.

GameStop shares closed up over 28% while AMC surged over 20% yesterday, marking the largest one-day gain for GameStop in over five months while AMC booked its biggest one-day gain in over one month. The moves were in typical meme stock style with no obvious fundamental drivers driving the stocks higher, but trading volumes in both stocks were well above average. Analytics firm Ortex said the rally caused over $1 billion worth of losses for short sellers on the stock.

Data from Marketbeat suggests the short interest in both companies has steadily fallen since the middle of June, which may have spurred-on more interest as pressure reduces. The rally also saw other favourites among retail traders find higher ground yesterday, including Clover Health, ContextLogic and Blackberry.

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