In this article, we will discuss the 10 companies that just raised their guidance despite global economic headwinds.
Since the pandemic-induced recession, the global financial outlook looked bleak due to lockdowns and supply chain disruptions. In 2021, the world was set out on the road to recovery, which was again hampered by record inflation and rate hikes in 2022.
2022 Outlook
The inflation rate rose to 9.1% at the end of June 2022. In the prior month, it had peaked at a 40-year high of 8.6%, while the forecasts were looking at an 8.8% inflation. The gasoline prices surged by 59.9% and in turn, energy costs made a 41.6% leap. Furthermore, food costs grew by 10.4%, which was the highest increase since February 1981. Finally, the core CPI surge in May was estimated to be around 5.7%, while the actual rise was around 5.9%.
In all this commotion, according to a report by Edward Jones, the economy is on the road to recovery in 2022. The report reveals that the US economy has salvaged more than 80% of the jobs lost between March and April 2020 and expects the unemployment rate to fall below 4%, and wage growth will keep its upward trend throughout 2022. In addition, the inflation rate will stay above 3%, compared to the 2% average and is likely to drop in the second half of 2022.
Earnings Scheduled For June 30, 2022
June 30 is a significant date in the financial market. It is considered the end of a financial year and most of the government’s budgeting and finalized projects are disclosed on this date. For most companies, June 30 was the end of their fiscal quarter, or in some cases the financial year. UnitedHealth Group Incorporated (NYSE:UNH), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Abbott Laboratories (NYSE:ABT) are some of the significant companies that recently posted their quarterly reports and raised their guidance for the rest of the year.
Source:Pixabay
Our Methodology
The companies on this list recently announced the reports for the quarter ending on June 30, 2022. Furthermore, all of these companies raised their guidance for the rest of the year or FY 2023.
The stocks have been listed in ascending order of their market capitalization as of July 21, 2022.
These Companies Upped Guidance Despite Global Economic Headwinds
10. Aehr Test Systems (NASDAQ:AEHR)
Market Cap as of July 21: $334.92 million
Aehr Test Systems (NASDAQ:AEHR) is a California-based semiconductor equipment and materials company. The company provides test systems for burning-in and testing logic, optical, and memory integrated circuits. The company announced its Q4 2022 results on July 19 and provided its FY 2023 guidance. The full year ended on May 31.
Aehr Test Systems’s reported EPS was in-line with the estimates at $0.23. In the same quarter of the previous year, the non-GAAP net income was $930,000 or a diluted EPS of $0.04. Furthermore, the net sales of the company surged by 166% YoY to $20.3 million.
For FY 2022, Aehr Test Systems reported a net sales growth of 206% to $50.8 million from $16.6 million in FY 2021. The company reported a non-GAAP net loss of $3.2 million in FY 2021 and recorded a non-GAAP net income of $11.7 million in FY 2022.
Aehr Test Systems provided full-year guidance for FY2023. The revenues are expected to be at least $60 million to $70 million for FY 2023 ending on May 31, 2023. Due to the rising demand for silicon carbide in electric vehicles, the company expects the bookings to grow steadily in FY2023.
Aehr Test Systems is one of the companies that announced its quarterly results and updated its guidance along with UnitedHealth Group Incorporated, Taiwan Semiconductor Manufacturing Company Limited, and Abbott Laboratories.
9. Sonoco Products Company (NYSE:SON)
Market Cap as of July 21: $5.975 billion
Sonoco Products Company (NYSE:SON) is a South Carolina-based consumer packaging products company. It operates in North and South America, Europe, Australia, and Asia.
According to the Q2 2022 reports, Sonoco Products Company reported a non-GAAP EPS of $1.76, outperforming the estimates by 11 cents. The revenue of $1.91 billion was in-line with the analyst consensus. Furthermore, the company also declared a quarterly dividend of $0.49, to be paid out on September 9 to the shareholders on record as of August 10.
Owing to its Q2 results, Sonoco Products Company expects its base EPS to be between $1.35 and $1.45, compared to the estimated $1.15. Furthermore, the company raised its FY2022 base EPS guidance in the range of $6.20 to $6.30 from the previous outlook of $5.25 to $5.45. The FCF guidance remained unchanged at $365 million to $415 million.
8. Rexford Industrial Realty, Inc. (NYSE:REXR)
Market Cap as of July 21: $8.632 billion
Rexford Industrial Realty, Inc. (NYSE:REXR) is an industrial REIT operating in Southern California. The company operates 252 properties with close to 28 million rentable square feet.
Rexford Industrial Realty, Inc. topped its Q2 2022 FFO estimates by $0.01 after reporting an FFO per share of $0.49. The company barely missed the revenue estimates by approximately $95,000 after generating $149.12 million. However, the revenues were up by $104 million, compared to the same quarter in 2021.
Rexford Industrial Realty, Inc. raised its core FFO per diluted share guidance to $1.87-$1.90 from the previous range of $1.84-1.88. The previous same property portfolio net operating income growth was expected to be 4.0% to 5.0%, which was raised to 5.75% to 6.25%.
Here is what Baron Funds had to say about Rexford Industrial Realty, Inc. in its Q4 2021 investor letter:
“Rexford Industrial Realty, Inc. contributed positively to performance during the fourth quarter. Rexford is a high-growth REIT that owns a portfolio of industrial warehouse properties concentrated in Southern California. Outperformance was driven by continued robust business fundamentals that led to better-than-expected third quarter financial results and raised full-year guidance. Rexford is also seeing accelerating acquisition activity, which is accretive to the company’s profitability.”
7. Knight-Swift Transportation Holdings Inc. (NYSE:KNX)
Market Cap as of July 21: $8.667 billion
Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is America’s fifth-largest trucking company. Moreover, the company sells non asset-based brokerage services.
According to the second-quarter 2022 reports, Knight-Swift Transportation Holdings Inc. surpassed its EPS estimates of $1.35 after recording an EPS of $1.41. The revenues also exceeded the estimates of $1.85 billion by $109.49 million. The revenues surged by 49% compared to the previous quarter, while the net income of $340 million represented a 66% growth on a QoQ basis. Knight-Swift Transportation Holdings Inc. exited the second quarter with $529 million of free cash flow and a reduction of $86 million in debt.
Looking forward, Knight-Swift Transportation Holdings Inc. revised its EPS guidance for FY 2022 to $5.30-$5.45 compared to the previous estimates of $5.20 to $5.40. The current full-year EPS consensus stands at $5.33.
6. Biogen Inc. (NASDAQ:BIIB)
Market Cap as of July 21: $31.28 billion
Biogen Inc. (NASDAQ:BIIB) is an American biotechnology company, specializing in therapies and treatments for patients with neurological and neurodegenerative diseases. After the company posted its Q2 results, RBC Capital analyst Brian Abrahams on July 20 maintained an Outperform rating on Biogen Inc.’s shares and lowered the price target to $259 from $264.
Biogen Inc. posted solid Q2 results on July 20, beating the analyst estimates of $4.07 by a significant margin of $1.18. The company also outperformed its revenue estimates after reporting $2.59 compared to the estimated $2.48.
Biogen Inc. raised its revenues and EPS guidance for FY 2022 after announcing its Q2 results. Priorly, the revenues for the year were expected to be $9.7 billion to $10 billion but were revised to $9.9 to $10.1 billion. The adjusted earnings per share are now expected to be between $15.25 and $16.75, up from $14.25 to $16.00. The adjusted SG&A and R&D expenses estimates remained unchanged at $2.3 billion-$2.4 billion and $2.2 billion-$2.3 billion, respectively.
UnitedHealth Group Incorporated, Taiwan Semiconductor Manufacturing Company Limited, and Abbott Laboratories, along with Biogen Inc. reported their quarterly results on June 30, 2022.
Here is what Longleaf Partners Fund said about Biogen Inc. in its Q4 investor letter:
“Biogen (83%, 2.43%; 5%, 0.10%), a biotechnology company specializing in therapies for the treatment of neurological diseases, was a strong contributor before we exited the position in the first half. We began acquiring shares in January 2021, paying between 9- 11x FCF and a discount to our appraisal, even if the company’s promising drug pipeline turned out to be worth 0. After Biogen’s Alzheimer’s drug Aduhelm was approved in June, we quickly sold out after the stock’s price appreciated over 70% and briefly exceeded our appraisal of the value. We re-initiated a position in Biogen in December at a price below our original cost basis from January. The stock became very cheap once again after Aduhelm’s early sales disappointed due to its high initial cost before management correctly cut the price. We think Biogen’s core Multiple sclerosis (MS) and Biosimilars businesses are strong enough to create sustainable double-digit EPS growth, even if Aduhelm and the entire Alzheimer’s program is worth zero. We also expect a board led by large shareholders to continue the company’s accretive repurchase, while considering other beneficial corporate actions.”
5. Prologis, Inc. (NYSE:PLD)
Market Cap as of July 21: $91.995 billion
Prologis, Inc. (NYSE:PLD) is a California-based REIT, operating in 19 countries across 4 continents. The company focuses on warehouses located close to high urban areas.
For the second quarter of 2022, Prologis, Inc. reported an FFO per share of $1.11, mainly in line with the estimates, and 10% above the same quarter in the previous year. The rental revenue of $1.09 billion exceeded the estimates by $2.39 million. Furthermore, the total revenue of $1.25 billion was approximately $100 million more compared to the same quarter of 2021. At the end of the second quarter, Prologis, Inc. had $437.5 million of cash and cash equivalents, compared to $1.9 billion in Q1. Including the credit facilities and cash, the company’s liquidity added up to $5.2 billion.
Prologis, Inc. raised its FY2022 FFO guidance from $5.14 to $5.18 per share from the prior guidance of $5.10-$5.16. Previously, the forecast for the midpoint of average occupancy was 97.12%, which is now 97.50%. Same-store net operating income was previously estimated to be between 7.25% to 8.00%, which is now projected to be between 8.25% and 8.75%.
4. Elevance Health Inc. (NYSE:ELV)
Market Cap as of July 21: $109.883 billion
Through its subsidiaries, Elevance Health Inc. (NYSE:ELV) provides medical, digital, pharmacy, behavioural, clinical, and care solutions. The company has approximately 118 million customers and employs more than 98,000 people. Elevance Health Inc. was known as Anthem Inc. till June 2022.
For the financial quarter ending June 30, Elevance Health Inc. reported an adjusted EPS of $8.04, compared to the estimated $7.74. The revenues were $38.48 billion, outperforming the estimates by $429.21 million. The operating cash flow of the company was recorded at $2.5 billion, surging by $769 million from the prior-year quarter. Medical enrollment increased to 47.1 million members, representing a 6.1% YoY growth. Furthermore, the company announced a dividend of $1.28 for Q3 2022 to be paid out by September 23 to the shareholders of record on September 9.
Elevance Health Inc. raised its guidance for FY 2022 adjusted EPS to $28.70 compared to the previous guidance of $28.40.
Here is what Baron Funds said about Elevance Health Inc. in its Q1 2022 investor letter:
“We initiated a position in Anthem, Inc. (NYSE:ANTM) (which recently announced plans to change its name to Elevance Health), one of the largest health benefits companies in the U.S. in terms of medical membership, serving more than 45 million medical members through its affiliated health plans. Anthem serves its members through the Blue Cross and Blue Shield brand name. Similar to many managed care peers, Anthem generates its revenue from the U.S. (which avoids risks related to foreign country exposure) and has pricing power (which enables it to more than offset inflation). More specific to Anthem, the company has multiple growth drivers, including its Medicare Advantage business, its in-house pharmacy benefit management business, and its Diversified Business Group, which includes behavioral health, advanced analytics, and complex and chronic care services. Over the long term, management targets 12% to 15% annual EPS growth. We think Anthem is a high-quality growth company trading at a reasonable valuation.”
3. Abbott Laboratories (NYSE:ABT)
Market Cap as of July 21: $191.833 billion
Abbott Laboratories is an American multinational healthcare company. The company has four basic segments – established pharmaceutical products, diagnostic products, nutritional products, and medical devices.
Abbott Laboratories announced its second-quarter 2022 results on July 20. The reported EPS of $1.43 topped the analyst estimates by 25.29%, representing a 22.2% YoY growth. The company generated a revenue of $11.26 billion, outperforming the estimates of $10.40 billion by $856.54 million. The revenues for the quarter showed 10.1% YoY growth. Moreover, organic sales increased by 14.3% YoY.
Out of the four segments of Abbott Laboratories, diagnostic products reported the highest organic growth at 36.9%. Diabetes care products’ sales increased by 19.4% on a YoY basis, followed by established pharmaceuticals at 9.2%, and medical devices’ organic sales improved by 7.5%. Nutrition products sales went down by 4.5% on an organic basis. In addition, Abbott Laboratories’s gross profit represented a 19.9% YoY growth to $6.32 billion, while the gross margins surged to 56.2%.
Abbott Laboratories raised its 2022 EPS guidance after the Q2 reports. The full-year adjusted earnings from continuing operations are expected to be at least $4.90. Priorly, it was expected to be at least $4.70.
Here is what Diamond Hill Capital had to say about Abbott Laboratories in its first-quarter 2021 investor letter:
“Abbott Labs announced a recall of its infant formula brand Similac® in the US. Though the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company’s prospects over the long run because, in our view, it is one of the highest quality names in health care with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in the medical device business. Abbott continues to launch innovative products in key strategic areas (such as diabetes, structural heart and diagnostics), which should help drive not only revenue growth but margin expansion.”
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Market Cap as of July 21: $451.234 billion
Taiwan Semiconductor Manufacturing Company Limited is one of the world’s most valuable semiconductor companies, headquartered in Hsinchu Science Park, Taiwan. The company operates globally and employs more than 54,000 people.
For the second quarter, analysts estimated an EPS of $1.50 for Taiwan Semiconductor Manufacturing Company Limited. The company surpassed the estimates after posting an EPS of $1.55. Furthermore, the reported revenue of $17.83 billion outperformed the estimates by 1.87%. The net sales rose by 8.8% QoQ and 43.5% on a YoY basis.
Taiwan Semiconductor Manufacturing Company Limited’s net profit climbed by 76% to $7.95 billion and the company also raised its Q3 and full-year revenue guidance despite the lags in chip demand. The company expects its FY 2022 revenue to grow by 35% compared to the prior year. Previously, the growth was expected to be around 30%. Taiwan Semiconductor Manufacturing Company Limited expects its Q3 revenues to be around $19.8 billion to $20.6 billion, representing a 33% surge from the same quarter in the previous year.
Taiwan Semiconductor Manufacturing Company Limited was one of the companies Baron Funds discussed in its Q1 2022 investor letter. Here is what the firm said:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Ltd. detracted in the first quarter due to rising geopolitical tensions, macroeconomic uncertainties, and concerns over softening demand for consumer electronics. We retain conviction that Taiwan Semi’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, and IoT, will allow the company to deliver above its 15% to 20% revenue growth target over the next several years.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Market Cap as of July 21: $482.483 billion
UnitedHealth Group Incorporated is an American multinational diversified healthcare and insurance company. In 2022, the company ranks 5th on the Fortune 500 list.
For the second quarter of 2022, UnitedHealth Group Incorporated reported an EPS of $5.57, exceeding the estimates by 36 cents and beating the revenue estimates of $79.68 billion by $652.11 million. Moreover, the company’s revenue rose by 12.6% on a YoY basis. The main growth driver for the company was its Optum sector which showed an 18% YoY growth to $45.1 billion.
UnitedHealth Group Incorporated raised its adjusted earnings guidance for the full-year 2022. The company expects an EPS of $21.40 to $21.90, which was previously expected to be $21.20 to $21.70.
Baron Funds mentioned UnitedHealth Group Incorporated in its Q1 2022 investor letter. Here is what it said:
“UnitedHealth Group Incorporated is a leading diversified health and well- being company whose divisions include insurance arm UnitedHealthcare and Optum, which offers care delivery and other services. Shares increased on a fourth quarter beat and a reaffirmation of what is likely conservative guidance for 2022. We believe UnitedHealth leads the healthcare industry in innovation and execution, as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
You can also take a look at 10 Oil Stocks to Sell Before the Recession Begins and 10 Best Artificial Intelligence Stocks to Invest In That Are Under $10.
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This article is originally published at Insider Monkey.
