3 Stocks To Watch In The Coming Week: JPMorgan Chase, Disney, Boeing
Investing.com | Apr 07, 2019 01:07AM ET
After posting their best first-quarter in 10 years, U.S. equity markets continued their upward journey during the past week. The comeback from December lows has been so strong and swift it’s making many analysts wonder what’s driving all this exuberance.
Technology stocks, which have led this recovery, have gained more than 30% since Christmas, during a time when profit forecasts are not too encouraging. Some meaningful progress in the U.S.-China trade talks appears to be the principle catalyst for the positive investor sentiment, along with the Fed's more dovish tone regarding rate hikes in 2019.
If this rebound is in fact all about the positive macro outlook, then investors are going to get some distraction next week when the banks kick off Q1 2019 earnings season. Below are the three large cap stocks worth monitoring for their company-specific developments:
h2 1. J.P.Morgan Chase/h2
Wall Street’s powerhouse commercial and investment bank, JPMorgan Chase & Co. (NYSE:JPM), will report first-quarter earnings on Friday, April 12, before the market opens. On average, analysts are expecting flat $2.37 a share profit, when compared with the same period a year ago, on sales of $28.54 billion.
Though shares of the nation's largest bank by assets gained about 8% this year, they've underperformed the broader market. Their lag comes on concerns that banks will find it tough to grow earnings in an environment where the central bank has signaled a pause in its monetary tightening.
Last quarter, JPM missed profit expectations after beating estimates in every quarter for nearly four years, according to Barclays research. A first-quarter beat now will be crucial to dispel the impression that the best of earnings momentum for banks is behind us.
JPMorgan, which has a strong presence in all major banking areas of the U.S. economy, is likely to benefit from the return to normalcy in markets during the first quarter. JPMorgan’s trading revenues declined 5.7% in the fourth-quarter, led by the fixed-income division where sales fell 16%.
h2 2. Disney/h2The Walt Disney Co. (NYSE:DIS) is another high-profile stock which could see some unusual activity this coming week, as the House of Mouse hosts its investor day on Thursday April 11. The event will focus on the company’s direct-to-consumer streaming services including its upcoming Disney+ initiative.
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This event has great significance for investors as it will provide more insight on the company’s plans regarding how this traditional media giant is setting itself up to take on Netflix (NASDAQ:NFLX). Disney plans to launch Disney+ later this year, its biggest push into the streaming video business, a way of making up for losses in its shrinking cable sales.
This service will package movies and TV shows from Marvel, Pixar and Star Wars, and from content assets obtained via its $71 billion takeover of Fox's entertainment portfolio. The presentation may try to create excitement for its new streaming services as well as pare down earnings expectations amid rising costs associated with this new push.
Despite these challenges, we like Disney’s shares. The company has a durable competitive advantage in this field with some great content assets that are hard to match. Trading at $115 as of Friday's close, Disney stock has trailed the broader gains across the market this year, but we think it’s a good long-term bet to make against Netflix.
h23. Boeing/h2
Shares of Boeing (NYSE:BA), the aviation giant that's still reeling from one of the worst crises in its corporate history after two fatal crashes involving its best-selling plane, may come under renewed selling pressure after the company said late Friday it is cutting production of its 737 MAX jetliner by 19% to 42 a month.
Airlines worldwide have grounded the 737 MAX after two of the aircraft crashed within the span of five months, killing all on board. To help restore investor confidence, Boeing said its board named a committee dedicated to reviewing the design and development of this aircraft.
“Safety is our responsibility, and we own it,” Boeing Chief Executive Officer Dennis Muilenburg said in a statement on Friday after markets finished the regular trading week. “When the MAX returns to the skies, we’ve promised our airline customers and their passengers and crews that it will be as safe as any airplane ever to fly.”
But the news is unlikely to help Boeing shares in the short-run as production cuts show the company anticipates a longer than expected time to recover from these disasters. Boeing shares fell 2.4% to $382.69 in after-hours trading on Friday. The stock has plummeted 7.2% since the March 10, Ethiopian Airlines crash. It's the second-worst performance among the 30-member mega cap stocks listed on the Dow Jones Industrial Average.
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