Business

Salesforce.com, Pure Storage And The Nasdaq’s November Hurdle: Investing Action Plan

November 24, 2023

As November winds down, the market is steering toward possibly its strongest month of the year. The Dow is up more than 7% for the month, easily topping June’s 4.6% advance. The S&P 500 has climbed nearly 9%, after jumping more than 6% in both January and June. The question is can the Nasdaq, up almost 11%, hold its ground in order to outdo January’s 10.7% gain?

Against that backdrop, Salesforce.com (CRM) one of the Dow Jones earnings season stragglers, prepares to report. A trio of cybersecurity leaders delivers results, along with discount & variety retailers. Intuit (INTU), La-Z-Boy (LZB), Pure Storage (PSTG) and Dell Technologies (DELL<strong>) are just a few reporting names ending the week near buy points.

Stocks To Watch: Five Stocks, Five Bullish Bases

With the market running hotter in recent weeks, many leaders are extended. But Palo Alto Networks (PANW), Eli Lilly (LLY), Google parent Alphabet (GOOGL), Mastercard (MA) and Marriott (MAR) are holding around buy points. All have formed flat bases. That means these stocks have paused to consolidate, but refused to give up much ground. Most in those groups also have peers that are setting up or already have broken out, showing strength in their industry. PANW stock has been flirting with a second breakout, after a mid-October breakout failed. Marriott is getting close, with Lilly and Mastercard not far behind. Google stock has already cleared an early entry.

Economic Calendar: Gauging The Mood For 2024

Key inflation, jobs and spending data in the coming week may shed light on whether the economy is softening enough for a pivot to rate cuts in early 2024. Personal income and outlays for October, out Thursday, will feature the Fed’s primary inflation gauge, the PCE price index. Expectations are for a tame reading. Still, differences between the two gauges leaves room for a surprise. After a soft retail sales report, the PCE report will show whether spending on services is also moderating. Initial jobless claims, also on Thursday, will be in focus after recent volatility that could signal a long-expected upturn. However, the holiday-shortened week will lower confidence in the signal.

Blue Chip Earnings: Outlook Key For ‘New’ Salesforce.com

Salesforce.com shares sit on a gain of nearly 69% as it readies its Q3 report for next Wednesday. The customer relationship management and cloud computing pioneer has recently worked to make itself a player in the burgeoning field of artificial intelligence. The company has wrestled with cost and workforce cuts amid pressure from activist investors, and revenue growth is expected to slow in 2024. That means that outlook and any additional detail on AI initiatives will be crucial. Citi lifted the stock’s price target to 247 on Friday — about 10% above current levels. CRM stock is well up the right side of a double-bottom base, about 2% below a 228.79 buy point.

Cybersecurity: Cyber Leaders To Report

A trio of cybersecurity companies report earnings this week. Cloud security company Zscaler (ZS) reports after the close on Monday. Analysts polled by FactSet expect a 69% adjusted earnings increase, to 49 cents a share, with sales up 33% to $473 million. CrowdStrike (CRWD) reports late Tuesday. Analysts expect adjusted earnings to increase 85% to 74 cents per share and sales to rise 34% to $777 million. Finally, identity management firm Okta (OKTA) reports late Wednesday. Adjusted earnings are expected to rise to 30 cents per share, from a break-even quarter last year. Analysts project a 16% sales increase, to $560 million.

Retail Earnings: Discounting The Holidays

Dollar Tree (DLTR) reports earnings on Wednesday, Big Lots (BIG) on Thursday, while Dollar General (DG) weighs in the following week. Analysts expect Dollar General and Dollar Tree to report sharp earnings drops atop increased sales. Big Lots’ losses are seen worsening on weak sales. But Deutsche Bank this month raised its price target on Dollar General (to 133) and kept a buy rating. Goldman Sachs upgraded DLTR to buy with a 137 target in mid-October. Dollar General is up 18% since the end of September.

Data Storage: Optimism In A Choppy Market

Despite a choppy market projected for data services providers through Q4, JPMorgan remains”cautiously optimistic” on Pure Storage heading into its late Wednesday report. JPMorgan set its price target at 45, about 21% above Friday’s level. NetApp (NTAP) reports fiscal Q2 earnings late Tuesday. Analysts expect adjusted earnings of $1.39 per share and revenue of $1.5 billion, according to FactSet. That would mark a 6% earnings decrease and 8% sales decline. NTAP stock has gained 30% this year. Pure Storage is just below a handle buy point in an 11-week base.

Monday

PDD Holdings (PDD) reports earnings early Tuesday. Analysts expect the China-based e-commerce company to post adjusted earnings of $1.25 per share and sales of $7.7 billion, according to FactSet. That would mark a 4% earnings increase and 57% revenue increase. U.S.-listed PDD stock has gained 43% this year, with its Temu shopping platform expanding rapidly.

Tuesday

Data analytics and cybersecurity firm Splunk (SPLK) reports fiscal 2024 third-quarter earnings after market close on Tuesday. Analysts expect adjusted earnings of $1.15 per share and revenue of $1 billion. That would mark a 38% earnings increase and 11% sales rise. Cisco Systems (CSCO) has a pending deal to acquire SPLK, so Splunk will not host an earnings call or provide guidance.

Workday (WDAY) plans to release its fiscal third-quarter results late Tuesday. The provider of enterprise cloud applications for finance and human resources is seen earning $1.41 a share, up 42% year over year, on sales of $1.85 billion, up 16%.

Hewlett Packard Enterprise (HPE) will post its fiscal fourth-quarter results late Tuesday. Analysts expect the enterprise computer firm to earn 50 cents a share, down 12% year over year, on sales of $7.37 billion, down 6%.

Intuit (INTU) will issue its fiscal first-quarter results late Tuesday. Wall Street predicts the financial software firm will earn $1.98 a share, up 19% year over year, on sales of $2.88 billion, up 11%. The stock is in a buy range above a double-bottom base buy point.

Wednesday

La-Z-Boy (LZB) announces fiscal second-quarter 2024 earnings and revenue late Wednesday. Wall Street predicts profit will slide 41% to 62 cents per share with a sales decline of 18% to $502 million. LZB has averaged a fraction of an earnings gain over the last three quarters and has gained more than 8% in November. The stock is reclined in a double bottom base, just below a 32.57 entry.

Foot Locker (FL) reports early Wednesday. The footwear retailer is likely to report an 83% EPS collapse on a 10% sales drop. That would mark the seventh consecutive quarter of earnings declines, with more pain seen in the current fiscal quarter ending in January.

Synopsys (SNPS) plans to announce its fiscal fourth-quarter earnings late Wednesday. Analysts see the chip design software maker earning $3.04 a share, up 59% year over year, on sales of $1.58 billion, up 23%.

Thursday

Marvell Technology (MRVL) has scheduled the release of its fiscal third-quarter results for late Thursday. The chipmaker is expected to earn 40 cents a share, down 30% from a year earlier, on sales of $1.4 billion, down 9%.

Dell Technologies (DELL) will release its fiscal third-quarter earnings report late Thursday. Wall Street is modeling earnings of $1.46 a share, down 37% year over year, on sales of $23.01 billion, down 7%, for the computer maker. The stock is narrowly extended after a Nov. 6 breakout.

Ulta Beauty (ULTA) reports late Thursday. Analysts project a 7% EPS decline despite a 6% revenue gain. That would mark the third straight quarter of slowing sales growth. Ulta shares are up 9% from a late-October low, down about 13% this year. Peer ELF Beauty (ELF) has climbed more than 19% since its Nov. 1 report.

Kroger (KR) announced more than a year ago it would pay $24.6 billion to join forces with the country’s second-largest grocery chain, Boise, Idaho-based Albertsons. Investors will be tuned to Kroger’s Q3 report on Thursday, awaiting compliance news ahead of the deal’s targeted close in early 2024. Analysts see EPS effectively flat and another downtick in sales. The stock, in which Berkshire Hathaway (BRKB) holds a 7% share, has been trending lower since August.

Titan Machinery (TITN) reports fiscal third-quarter 2024 earnings and revenue early Thursday. Analysts forecast EPS dropping 16% to $1.53 while sales increase 9% to $727 million. Titan Machinery has averaged 19% earnings growth over the last three quarters even as the stock has fallen 34% on the year, underperforming the broader market.