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Focus returns to Disney numbers, streaming after proxy battle. (0:18) First iPad update in 18 months expected. (1:59) Warren Buffett’s Q&A. (2:45)
The following is an abridged transcript:
Investors get a little breathing room this week, with the earnings calendar easing up some and fewer big economic indicators.
Disney (NYSE:DIS) results on Tuesday will be a highlight.
Analysts expect revenue of $22.2 billion and EPS of $1.10, with operating income of $3.51 billion. The Entertainment segment is forecast to pull in $10.32 billion in revenue, followed by $8.16 billion for the Experiences segment and $4.33 billion for the Sports segment.
On the streaming side, investors will be watching the net subscriber addition numbers for Disney+, ESPN+, and Hulu. Analysts say Disney needs subscriber growth over price increases due to heightened competition and macroeconomic pressures.
With the proxy process behind it, Morgan Stanley says Disney management will focus on operations, financial rigor, management succession and the implementation of a consistent long-term strategy.
Seeking Alpha Investing Group Leader Howard Jay Klein sees a potential buying opportunity on Disney if an earnings miss triggers a notable share price decline.
Among other notable earnings this week
On Monday, Tyson Foods (TSN), Vertex Pharmaceuticals (VRTX) and Palantir (PLTR) report results.
Along with Disney on Tuesday, McKesson (MCK), Ferrari (RACE), GlobalFoundries (GFS), Coupang (CPNG), Electronic Arts (EA), Rivian Automotive (RIVN) and Datadog (DDOG) are due.
Uber (UBER), Anheuser-Busch InBev (BUD), Airbnb (ABNB), Shopify (SHOP), Arm (ARM), Energy Transfer (ET), Trade Desk (TTD), Beyond Meat (BYND), Affirm (AFRM) and AMC Entertainment (AMC) weigh in on Wednesday.
Warner Bros. Discovery (WBD), Hyatt Hotels (H), Roblox (RBLX), Dropbox (DBX) and Genpact (G) it on Thursday.
On Friday, AMC Networks (AMCX) and Enbridge (ENB) wrap things up.
Apple (NASDAQ:AAPL) reported earnings last week, with a whopping $110 billion buyback overshadowing results (although they beat top and bottom line) and the overall shrinking of the business led by the decline in iPhone sales.
And Apple gets another chance to turn heads on Tuesday when it hosts a special event expected to focus on updates to iPad models. That event kicks off at the unusual time of 7 a.m. PT, maybe to lure as many international eyeballs as possible.
A new iPad Pro and an updated iPad Air are predicted to be unveiled. The iPad line was last updated a year-and-a-half ago. That’s the longest gap since it was introduced in 2010, according to Bloomberg, who says demand has been waning for two years since the spike during lockdown. Sales dropped 17% last quarter.
Warren Buffett’s Berkshire-Hathaway reported Saturday that its stake in Apple had fallen in value by more than 20% quarter-on-quarter, implying a reduction in the stake of around 13%. But in the Q&A Buffett said Apple’s attractiveness as an investment hasn’t changed since he first initiated a position in 2016 and that at the end of 2024 it would be “extremely likely that Apple is the largest common stock holding we have.”
Speaking of Buffett, Berkshire Q1 earnings dominated the weekend headlines. Among the highlights:
- Operating earnings rose 39% from the year-ago period with cash on the balance sheet rising to a record $189 billion. Buffett says he expects operating earnings to be up “modestly” this year.
- On the risks of AI and deepfakes to investors, Buffett said: “When you think of the potential for scamming people … If I was interested in investing in scamming, that is gonna be the growth industry of all time and it’s enabled, in a way” by AI.
- He mentioned recent fake of himself: “It was me and it was my voice and wearing the kind of clothes I’m wearing and my wife or my daughter wouldn’t have been able to detect any difference and it was delivering a message that no way came from me.”
- On succession, he said that in the event of his stepping down, his expected successor Greg Abel should be in charge of stock investing decisions.
- And he said he felt “extremely good” about the conglomerate’s stake in Japan’s five leading trading companies, but added that further investments in other countries were unlikely.
Looking to the economy,
A Goldilocks jobs report for April wrapped up a busy calendar last week.
Eric Merlis, managing director and co-head of global markets at Citizens, says “this was likely a welcome report for the Fed which will remain data dependent but with a slight shift toward focusing on the employment side of the dual mandate of maintaining low inflation and full employment.”
Monday brings the Fed’s April Senior Loan Officer Opinion Survey, or SLOOS. But while it will still be parsed there is less market-moving impact with Silicon Valley Bank’s collapse more than a year in the rearview mirror.
On Friday, the University of Michigan will issue its preliminary measure of May consumer sentiment.
Tony Pasquariello, head of hedge fund strategy at Goldman Sachs, says “If there’s a common theme that I detected in client dialogue, it’s that the US economy maintains plenty of forward momentum — particularly in nominal terms — with, again, some elements of unevenness.:
He adds that “the market needs to do some more work within this trading range … these are choppy waters … simplify your portfolio to highest quality and highest conviction assets, and do NOT fight the freight train that is US mega cap tech.”
Lastly in the Wall Street Research Corner
Goldman Sachs updated their stable growth stock basket. They rank these stocks on year-over-year variability of EBITDA growth, based on performance over the last 10 years.
These stocks may be good for investors who doubt the soft landing scenario.
Strategist David Kostin says: “Intuitively, stocks with stable growth typically perform best alongside decelerating economic growth.”
New stocks in the basket include Iridium Communications (IRDM), Altria (MO), Kinder Morgan (KMI), Charles River Labs (CRL), Verisk Analytics (VRSK), Accenture (CAN), SBA Communications (SBAC), IBM (IBM) and F5 (FFIV).