To The Moon

What to Expect in the Week Ahead (GS, JNJ, TSM, and NFLX Earnings; Retail Sales and Housing Starts)

Earnings in the week ahead could be the next catalyst for a broadening market

$Johnson & Johnson(JNJ)$   is expected to announce its fiscal Q2 earnings before the markets open on Wednesday, July 17.

Ahead of the event, analysts expect Johnson & Johnson to report a profit of $2.73 per share, down 2.5% from $2.80 per share reported in the year-ago quarter. The company has consistently surpassed Wall Street's EPS estimates over the past four quarters.

Its adjusted EPS for the last reported quarter increased 12.4% year over year to $2.71 per share, beating the consensus estimate by 2.7%, as sales in its medical devices business surged.

Looking ahead to fiscal 2024, analysts expect Johnson & Johnson to report an EPS of $10.62, up 7.1% from $9.92 in fiscal 2023. Its fiscal 2025 EPS is expected to grow 2.7% annually to $10.91.

$Taiwan Semiconductor Manufacturing(TSM)$   is scheduled to report second-quarter earnings on July 18, when it will also update its outlook and plans for the current quarter and the rest of the year.

Taiwan Semiconductor Manufacturing Co, whose customers include $Apple(AAPL)$   and $NVIDIA Corp(NVDA)$   has benefited from the surge towards AI that has helped it weather the tapering off of pandemic-led demand and pushed TSMC's share price to a record high.

Revenue in the April-June period of this year came in at T$673.51 billion ($20.67 billion), according to Reuters, compared with an LSEG SmartEstimate, drawn from 21 analysts, of T$654.27 billion. That represents growth of 32% on-year, compared with $15.68 billion in the year-ago period.

On its most recent earnings call in April, Taiwan Semiconductor Manufacturing Co forecast second quarter revenue in a range of between $19.6 billion to $20.4 billion. For June alone, TSMC reported that revenue rose 33% year-on-year to T$207.87 billion.

$Netflix(NFLX)$   will reveal its April through June 2024 financial results after the stock market closes on Thursday, 18 July 2024. Investors want to know if the popular streaming service can keep attracting lots of new subscribers, make the most of its ad-supported plans, and remain the top streaming platform.

Netflix expects its revenue to increase 16% year-over-year (YoY) to $9.49 billion in the second quarter of 2024 but analysts predict Netflix's Q2 revenue will be slightly higher at $9.53 billion. In the first quarter of 2024, Netflix's revenue was $9.37 billion, up 15% from the prior year.

Regarding earnings, Netflix forecasts net income of $2.06 billion, or $4.68 per share, for the second quarter of 2024 whereas analysts estimate Netflix's Q2 earnings per share will reach $4.74. For comparison, in Q2 2023, Netflix reported net income of $1.48 billion, or $3.29 per share. Netflix's net income in Q1 2024 was $2.3 billion, or $5.28 per share.

Retail sales, housing starts and industrial production in the coming week

In the US, several consumer goods companies are reporting a less-ebullient demand picture, and we could see evidence of that in June retail sales, which were also held back by a software issue for car dealers. If ex-auto sales are also disappointing, it would be another piece of mounting evidence that the Fed should be giving serious consideration towards a July rate cut, even if odds are that they’ve already talked themselves into an unnecessary wait until September. Otherwise, it’s not a big week on the economic calendar, leaving equity markets paying more attention to earnings calls.

U.S. retail sales likely edged lower in June, given auto sales and sales at gas stations were down. Control sales should hold flat during that month.

Analysts expect U.S. industrial production to inch higher by 0.3% in June with higher output in the manufacturing and mining sectors offsetting lower output in the utility sector.

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