In this article, we discuss 10 most anticipated quarterly earnings releases to watch.
It is earnings season on Wall Street and the overall market situation has been complicated by the rise in interest rates and fears of an impending recession. According to data released by software firm FactSet, more than half of all companies on the benchmark S&P 500 have already released their earnings for the first three months of 2022. Despite growth concerns, a whopping 80% of these firms have reported earnings per share that are above analyst estimates. This number is 3% above the five-year average.
In April, FactSet had predicted that firms on the S&P 500 would report earnings growth of over 10% for the fifth straight quarter. In the last five years, the actual earnings of companies on the index have beaten estimated earnings by around 9%. On aggregate so far in the first quarter of 2022, this number is well-below average, clocking in at around 3.4%. FaceSet has attributed this weakness to the “comparison to unusually high earnings growth in Q1 2021 and continuing macroeconomic headwinds”.
Even large companies like Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), which comprise more than one-fifth of the total benchmark index along with two other tech giants, are dealing with inflationary headwinds as they report their earnings. Sectors like information technology, financials, communication services, and health care have all posted positive surprises, with consumer discretionary the standout loser so far.
Our Methodology
The companies that are expected to declare their earnings on Thursday, May 12, were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks were also considered.
Hedge fund sentiment was included as a classifier as well. The hedge fund sentiment around each stock was calculated using the data of around 900 elite hedge funds tracked by Insider Monkey in Q4 2021.
Speedcurve Performance Analytics
Most Anticipated Quarterly Earnings Releases to Watch
10. Veru Inc. (NASDAQ:VERU)
Number of Hedge Fund Holders: 8
Veru Inc. (NASDAQ:VERU) is a biopharma firm focused on the development of medicines for managing cancers. The stock has gained in recent weeks after the company announced positive results from a phase 3 trial of its investigational therapy, sabizabulin, as a treatment for COVID-19 patients. The US Food and Drug Administration has set up a meeting to discuss the pre-emergency use authorization for the drug. As virus cases surge in China, the new drug is attracting lots of global interest as well.
On April 12, Oppenheimer analyst Leland Gershell maintained an Outperform rating on Veru Inc. (NASDAQ:VERU) and raised the price target on the shares to $36 from $25, noting the value of pipeline drugs that presented “a substantial near-term revenue opportunity” for the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Perceptive Advisors is a leading shareholder in Veru Inc. (NASDAQ:VERU), with 4.4 million shares worth more than $26 million.
Just like Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Veru Inc. (NASDAQ:VERU) is one of the stocks that elite investors are monitoring.
9. Aurora Cannabis Inc. (NASDAQ:ACB)
Number of Hedge Fund Holders: 11
Aurora Cannabis Inc. (NASDAQ:ACB) makes and sells cannabis products. On April 11, the stock surged as authorities in New Jersey indicated that a select group of cannabis firms will be allowed to sell recreational marijuana products within weeks. The successful passage of the federal bill legalizing marijuana from the House has also boosted the shares ahead of the earnings. Aurora purchased rival TerraFarma for $38 million in March. The latter is a vertically integrated cannabis firm.
On February 11, Cantor Fitzgerald analyst Pablo Zuanic kept a Neutral rating on Aurora Cannabis Inc. (NASDAQ:ACB) stock but lowered the price target to C$7.60 from C$10.75, identifying cash gross profit growth and limited flow through of cost savings to the bottom line as some of the reasons behind the target decrease.
At the end of the fourth quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $69 million in Aurora Cannabis Inc. (NASDAQ: ACB), compared to 8 the preceding quarter worth $53 million.
8. Endava plc (NYSE:DAVA)
Number of Hedge Fund Holders: 14
Endava plc (NYSE:DAVA) provides technology services. On March 23, the company announced that it had launched its first operations in Canada. The firm intends to expand beyond the financial services sector in Canada in 2022. Analysts expect the company to grow at a compound annual growth rate of over 30% in the next few years, largely due to the diverse range of services it offers in the tech domain, that include products for the healthcare, mobility, and retail verticals.
On February 17, Citi analyst Ashwin Shirvaikar kept a Buy rating on Endava plc (NYSE:DAVA) and lowered the price target to $180 from $195, noting that the firm continued to benefit from “a robust demand environment for digital transformation services”.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Driehaus Capital is a leading shareholder in Endava plc (NYSE:DAVA), with 737,067 shares worth more than $123 million.
In its Q4 2021 investor letter, Baron Funds highlighted a few stocks and Endava plc (NYSE:DAVA) was one of them. Here is what the fund said:
“Endava plc (NYSE:DAVA) provides consulting and outsourced software development for business customers. Shares outperformed after the company reported better-than-expected quarterly results with 55% revenue growth and 89% EPS growth. Full-year financial guidance was raised to reflect strong demand across all verticals and geographies. Management expects organic revenue growth to exceed 30% this year and 20% over the long term with upside from accretive acquisitions. We continue to own the stock because we believe Endava plc (NYSE:DAVA) will continue gaining share in a large global market for IT services.”
7. FIGS, Inc. (NYSE:FIGS)
Number of Hedge Fund Holders: 16
FIGS, Inc. (NYSE:FIGS) operates as a healthcare apparel and lifestyle company. In March, the company guided 2022 above market estimates, saying it expected net revenues to be up to $560 million in the year against consensus expectations of around $547 million. The revenues for the company have climbed 400% in the past three years, attesting to the success of the brand. The turnover in the medical field is also high, resulting in robust demand for the products of the company as new buyers enter the market.
On April 7, Truist analyst Beth Reed initiated coverage of FIGS, Inc. (NYSE:FIGS) stock with a Buy rating and a price target of $32, backing the firm to top $1 billion in sales by 2025 as it grows market share and offers an expanding suite of lifestyle products to health professionals.
At the end of the fourth quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $510 million in FIGS, Inc. (NYSE:FIGS), compared to 21 in the preceding quarter worth $821 million.
In its Q4 2021 investor letter, Baron Funds highlighted a few stocks and FIGS, Inc. (NYSE:FIGS) was one of them. Here is what the fund said:
“During the fourth quarter, the Fund increased its position in FIGS, Inc. (NYSE:FIGS), an IPO from earlier in the year, at what we believe were attractive prices for a longterm investment. Figs, a founder-led health care apparel and lifestyle brand, is one of the fastest growing and most profitable digitally native, direct-to-consumer companies in the world. The traditional health care apparel market underserved the needs of health care professionals by selling commoditized products through an antiquated distribution network. FIGS, Inc. (NYSE:FIGS) reimagined the health care professional’s uniform, engineering it for function and style. And by selling directly to consumers, Figs engages with customers in authentic and meaningful ways, giving the company a unique data advantage that the competition cannot replicate. This has enabled the company to maintain best-in-class customer acquisition costs even as it has scaled. With fewer than 2 million active customers out of 21 million health care professionals in the U.S., and even more internationally, we believe Figs has a long growth runway ahead.”
6. Himax Technologies, Inc. (NASDAQ:HIMX)
Number of Hedge Fund Holders: 20
Himax Technologies, Inc. (NASDAQ:HIMX) is a semiconductor firm. The firm has 3,023 active patents spread across a range of sectors in the auto space. The dividend yield of the stock, an important consideration for investors in light of soaring inflation, is expected to climb to 15% in the next few months, even as the profits the company makes fund capital spending on research and development. The profits have surged from around 25% in 2020 to almost double in 2021. A global chip shortage has helped provide margin optimization and pricing power as well.
On April 7, Nomura analyst Donnie Teng downgraded Himax Technologies, Inc. (NASDAQ:HIMX) stock to Neutral from Buy with a price target of $11, noting that the outlook for the firm was overshadowed by weaker end demand and pricing pressure.
Among the hedge funds being tracked by Insider Monkey, California-based investment firm Yiheng Capital is a leading shareholder in Himax Technologies, Inc. (NASDAQ:HIMX), with 8.9 million shares worth more than $142 million.
In addition to Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Himax Technologies, Inc. (NASDAQ:HIMX) is one of the stocks that hedge funds have their eye on.
5. Joby Aviation, Inc. (NYSE:JOBY)
Number of Hedge Fund Holders: 23
Joby Aviation, Inc. (NYSE:JOBY) is an air mobility firm. In March, the firm guided free cash flow guidance for 2022 to around $360 million, surprising analysts. It has also made progress in relation to the certification and manufacturing process of aircrafts, boosting confidence in the stock further. On March 18, the firm announced the completion of the first systems review by the Federal Aviation Administration. The firm said the approvals granted by the FAA had given it confidence in the preliminary production design and defined path towards certification.
On April 28, JPMorgan analyst Bill Peterson initiated coverage of Joby Aviation, Inc. (NYSE:JOBY) with a Neutral rating and a price target of $7, noting the firm was a first mover in the emerging electric vertical takeoff and landing industry with leadership priced into the stock.
At the end of the fourth quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $134 million in Joby Aviation, Inc. (NYSE:JOBY), compared to 21 in the preceding quarter worth $231 million.
4. Toast, Inc. (NYSE:TOST)
Number of Hedge Fund Holders: 34
Toast, Inc. (NYSE:TOST) provides tech services for the restaurant industry. In earnings results for the fourth quarter of 2021, the company beat market expectations on earnings per share and revenue by $0.36 and $24 million respectively. Some of the growth catalysts for the stock, per an analysis by Baird, include “above-GDP growth vertical, increasing software modules per restaurant, the secular shift to payments, inflation benefits and the potential for international expansion”.
On April 4, Wells Fargo analyst Jeff Cantwell initiated coverage of Toast, Inc. (NYSE:TOST) stock with an Overweight rating and a price target of $29, underlining that the firm had a “unique software and payments platform” and forecast sustained share gains in the restaurant sector.
At the end of the fourth quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Aurora Cannabis Inc. (NASDAQ: ACB), compared to 38 the preceding quarter worth $567 million.
In its Q3 2021 investor letter, Baron Funds highlighted a few stocks and Toast, Inc. (NYSE:TOST) was one of them. Here is what the fund said:
“Toast, Inc. (NYSE:TOST) is a cloud-based end-to-end technology platform purpose-built for the restaurant industry. Its platform provides a comprehensive suite of cloud software products and financial technology solutions to its customers to connect front-of-house with back-of-house operations across all customer channels. Toast’s core module is its point-of-sale software solution and requires all customers to use Toast, Inc. (NYSE:TOST) as their payment processor. Customers then have the option to bundle or add-on additional modules across operations, digital ordering and delivery, marketing and loyalty, team management, and back office. Toast today powers 48,000 restaurants within the 860,000 U.S. restaurant industry, largely focusing on small- and medium-sized (“SMB”) restaurant customers (generally fewer than 10 locations but up to 50), with some larger enterprise customers as well. Toast is the clear market leader in SMB restaurant technology with the best product offering and only full, end-to-end platform. We believe that as restaurants continue to invest in technology at an accelerated pace emerging from COVID, Toast will be a big beneficiary given its leading market position and best-in-class product. At less than 6% penetration of U.S. restaurants and 3% penetration of its $15 billion recurring-revenue TAM, Toast has a long runway for growth by signing on additional locations to the platform and increasing the attach rate of its value-add modules. Only 54% of customers today use 4 or more of Toast’s 10-plus modules, each of which provide significant value to the customer and would drive Toast’s recurring revenue stream higher.”
3. Affirm Holdings, Inc. (NASDAQ:AFRM)
Number of Hedge Fund Holders: 41
Affirm Holdings, Inc. (NASDAQ:AFRM) owns and runs an ecommerce platform. The stock has gained in recent weeks on the back of a massive investment from GIC, a sovereign wealth fund based in Singapore. The investment came despite a more than 60% drop in the share price of the company over the past year as a result of investor concerns around growth stocks. There has also been takeover speculation around the firm with investment bank Goldman Sachs at the top of a potential list of buyers.
On April 6, Piper Sandler analyst Kevin Barker maintained a Neutral rating on Affirm Holdings, Inc. (NASDAQ:AFRM) and lowered the price target on the stock to $58 from $65. The new target still implied a 42% upside potential in the shares.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Melvin Capital Management is a leading shareholder in Affirm Holdings, Inc. (NASDAQ:AFRM), with 3.2 million shares worth more than $321 million.
In its Q3 2021 investor letter, Bireme Capital highlighted a few stocks and Affirm Holdings, Inc. (NASDAQ:AFRM) was one of them. Here is what the fund said:
“We opened a more idiosyncratic short position in a company called Affirm (AFRM) in Q4.
Affirm Holdings, Inc. (NASDAQ:AFRM) is a “Buy Now, Pay Later” (BNPL) company founded by former PayPal CTO and cofounder Max Levchin. They provide installment loans to consumers, partnering with retail companies looking to drive higher sales. They have two primary products: a zero-fee installment loan for consumers with the best credit scores, and a more traditional product with 20%+ interest rates for subprime borrowers. Their stated plan is to disrupt the credit industry with more transparent, lower-fee loans.
At a roughly $28b market cap at the start of 2022, Affirm Holdings, Inc. (NASDAQ:AFRM) stock was priced at more than 20x trailing sales, a steep price for a money-losing lender. While their early lead in online BNPL transactions and partnerships with fast-growing retailers like Peloton has fueled significant historical growth, a wave of competition has arrived.”
2. Six Flags Entertainment Corporation (NYSE:SIX)
Number of Hedge Fund Holders: 46
Six Flags Entertainment Corporation (NYSE:SIX) owns and runs entertainment parks. The stock has made a steady comeback over the past few months as vacation demand surges despite oil and war fears globally. In late April, data from Delta Airlines indicated record bookings growth ahead of the summer travel season. The company has still not returned to pre-pandemic levels of profit, which gives it plenty of room for growth in the holiday season. Analysts expect the firm to grow earnings by 19% in 2023.
On April 25, Rosenblatt analyst Barton Crockett initiated coverage of Six Flags Entertainment Corporation (NYSE:SIX) stock with a Buy rating and a price target of $56, saying there was “merit” in the growth approach of the new CEO of the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm H Partners Management is a leading shareholder in Six Flags Entertainment Corporation (NYSE:SIX), with 8.9 million shares worth more than $380 million.
1. Tapestry, Inc. (NYSE:TPR)
Number of Hedge Fund Holders: 48
Tapestry, Inc. (NYSE:TPR) markets luxury accessories and branded lifestyle products. The three key brands through which the firm operates include Coach, Kate Spade, and Stuart Weitzman. The Coach brand is steadily making gains across North America and even in China, and the Kate Spade brand is growing at a rapid pace with revenues expected to double in the coming years. The management of the company expects Kate Spade to reach $2 billion in revenue within the next few years.
On April 19, Barclays analyst Adrienne Yih kept an Overweight rating on Tapestry, Inc. (NYSE:TPR) stock and raised the price target to $53 from $51, noting that demand was still outstripping the supply for the firm.
At the end of the fourth quarter of 2021, 48 hedge funds in the database of Insider Monkey held stakes worth $827 million in Tapestry, Inc. (NYSE:TPR), compared to 41 in the preceding quarter worth $887 million.
In its Q3 2021 investor letter, Ariel Investments highlighted a few stocks and Tapestry, Inc. (NYSE:TPR) was one of them. Here is what the fund said:
“Luxury accessory and lifestyle brand, Tapestry, Inc. (NYSE:TPR) was the top contributor to performance over the trailing one-year period. Revenue improvement across all three brands with a notable increase in consumer demand, particularly for the Coach business, triple-digit growth in e-commerce, and better than expected pricing, drove margins higher. Looking ahead, we expect Tapestry’s supply chain and SKU rationalization initiatives to continue to deliver margin expansion. Together, with early signs of improved receptivity for the Kate Spade brand, we believe a significant value creation opportunity lies ahead.”
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Disclosure. None. 10 Most Anticipated Quarterly Earnings Releases to Watch is originally published on Insider Monkey.
