Last week, investors got a first glimpse of 4th quarter 2021 earnings trends with reports from Delta Air Lines, JPMorgan Chase, Citigroup, Wells Fargo and asset management giant BlackRock.
This week the test will be Netflix which is due to report figures for the quarter and the year on January 20 (8 am Friday morning, Sydney time).
Earnings reports will dominate market thinking this week with few significant statistics due for release. US sharemarkets are closed today for a public holiday.
Besides Netflix, quarterly reports are expected from Bank of America, Goldman Sachs and Morgan Stanley – and a host of smaller banks. Procter and Gamble are also due to report, as is Intel and property group, Prologis.
Baker Hughes, CSX, Halliburton and Schlumberger are forecast to give us a good idea on the fortunes of the global oil and gas sector. Analysts reckon it will be the best performed of all 11 S&P 500 sectors, as it was in earlier quarters in 2021.
Netflix ended the year up more than 11% at $US602, well under the peak of $US701 but with Omicron reaching deeper into consumer and societal activity, analysts are looking for it to report a jump in subscriber numbers in the March quarter.
The company forecast a rise of nearly 8 million in total subscriber numbers in the December quarter – to 220 million from 213.56 million at the end of September. Most of the increase is forecast to come from non-North American markets.
Anything larger around 8 million or more than will see the shares surge but one analyst wrote last week that he saw a 2 million shortfall in this week’s report. US analysts reckon Netflix will add 8.6 million new subs in the 4th quarter but JP Morgan’s Doug Anmuth reportedly belies the figure will come in around 6.25 million against an earlier forecast of 8.8 million.
Analysts at MoffettNathanson said Thursday that Netflix may see weaker subscriber growth in the US and Canada for the fourth quarter of 2021 despite its strong content offerings and the hype of the South Korean series “Squid Game”.
The streaming service provider is expected to add around 550,000 subscribers in the US and Canada, “down from our prior more aggressive estimate,” said MoffettNathanson, along with projected additions of 3.1 million subscribers in Asia-Pacific, 2.2 million in Latin America and 2.7 million in Europe, the Middle East and Africa.
Netflix on Friday announced price rises for its three streaming products offered in the US and Canada of around 10%. The monthly cost for the basic US plan rose $US1 to $US9.99, the standard plan jumped from $US13.99 to $US15.49, and the premium plan rose $US2 to $US19.99. Canadian prices rose as well.
US analysts say S&P 500 companies are expected to post year-over-year earnings growth of about 23.1% for the final three months of 2021, after a better than expected near 40% increase in the previous month, according to Wall Street estimates and data provider FactSet.
John Butters, FactSet’s chief analyst, said nine of the 11 sectors represented in the S&P 500 are expected to report earnings growth for the fourth quarter, with energy, manufacturing and materials likely to lead the way.
The only sectors where profits are expected to shrink are utilities and the financial sector (which the weak reports on Friday from the trio of big banks confirmed).
This earnings season comes at a rough time for Wall Street at the start of 2022. With Covid omicron, high inflation and an outlook for several rate rises from the US Federal Reserve, the coming year will be rougher and tougher for many companies.
The easy comparisons with Covid-hit 2020 are over and comparisons will become increasing invidious as the year goes on – especially in the final six months.
