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Investors will be watching the U.S. debt ceiling showdown again as the threat of a government default of some sort becomes more real. Unless an extension or agreement is hammered out in Washington, analysts warn potential negative scenarios include Congress raising the debt ceiling just past the point the U.S. Treasury can make timely payments on its obligations, near-term debt service prioritization over other domestic payments, a short default on coupons, and a prolonged and damaging delay in debt service. UBS warned that the initial shock of moving past the X-date for making payments on time would have nonlinear effects that grow, particularly in the payment prioritization scenario with falling government expenditures. Against that uncertain backdrop, several Federal Reserve board members are on the speech circuit next week and the minutes of the last FOMC meeting will be released.
Meanwhile, the earnings calendar features big reports from Nvidia (NASDAQ:NVDA) (preview) with a focus on AI potential, DICK’S Sporting Goods (DKS) (analysis) looking to boost the sporting goods sector after the Foot Locker (FL) debacle, and Lowe’s (LOW) (preview) following up a rough earnings report from rival Home Depot (HD). The earnings slate is heavily weighted toward retail sector with AutoZone (AZO), Williams-Sonoma (WSM), Ulta Beauty (ULTA), Kohl’s (KSS), American Eagle (AEO), Gap (GPS), Dollar Tree (DLTR), BJ’s Wholesale Club (BJ), Costco Wholesale Corp. (COST) (analysis) and Burlington Stores (BURL) also heading into the earnings confessional. On the event calendar, the Microsoft (MSFT) developers conference and the first abstracts arriving from the American Society of Clinical Oncology Annual Meeting could create some headlines.
Earnings spotlight: Monday, May 22 – Global-e Online (GLBE) and Zoom Video (ZM).
Earnings spotlight: Tuesday, May 23 – Lowe’s (LOW), Intuit (INTU), BJ’s Wholesale (BJ), AutoZone (AZO), DICK’S Sporting Goods (DKS), Palo Alto Networks (PANW), Williams-Sonoma (WSM).
Earnings spotlight: Wednesday, May 24 – Bank of Montreal (BMO), Kohl’s (KSS), Analog Devices (ADI), Nvidia (NVDA), Snowflake (SNOW), and American Eagle Outfitters (AEO).
Earnings spotlight: Thursday, May 25 – Royal Bank of Canada (RY), Best Buy (BBY), Dollar Tree (DLTR), Ralph Lauren (RL), Autodesk (ADSK), and Costco (COST).
Earnings spotlight: Friday, May 26 – Big Lots (BIG).
Volatility watch: Stocks singled out as short squeeze candidates in the near term include Digimarc (DMRC), Cabaletta Bio (CABA), Celsius Holdings (CELH), Zentalis Pharma (ZNTL), and AppLovin (APP), Options trading volume is elevated in general on Mullen Automotive (MULN) and Rain Oncology (RAIN).
IPO watch: Atmus Filtration Technologies (ATMU) is expected to start trading on May 25 after pricing its IPO. The biotech firm is currently developing treatment candidates for various skin conditions. Analyst coverage on Interactive Strength (NASDAQ:TRNR) is expected to start during the week.
Dividend watch: Companies forecast to boost their quarterly payouts include Insperity (NSP) to $0.58 from $0.52, Medtronic (MDT) to $0.73 from $0.68, Lowe’s (LOW) to $1.10 from $1.05, Flowers Foods (FLO) to $0.23 from $0.22, and American Tower (AMT) to $1.61 from $1.56. See Seeking Alpha’s list of Quick Dividend Stock Picks.
Spotlight on healthcare: The American Thoracic Society conference will continue to run until May 24. Gossamer Bio (NASDAQ:GOSS), Verona Pharma (VRNA), and Galecto (GLTO) are some of the companies highlighted by analysts as potentially seeing some share price movements following their presentations. AnaptysBio (NASDAQ:ANAB) will hold a BTLA Agonist R&D event on May 25. Updates on the company’s pipeline have led to share price rallies in the past. Near the end of the week, abstracts will be released ahead of the full 2023 American Society of Clinical Oncology Annual Meeting, taking place on June 2-6 in Chicago.
Nvidia earnings preview: The biggest earnings story in the tech sector next week may be the Nvidia (NVDA) report with AI buzz helping to push up shares more than 100% year-to-date. The investing thesis on Nvidia (NVDA) now hinges partially on the AI component with the company’s full-stack hardware/software platform called the cornerstone to an expanding AI ecosystem. Gaming channel inventory has normalized and is poised for accelerated growth into the second half for the Santa Clara-based tech giant, while the auto-related business is also seen heading in the right direction. The Jensen Huang-led company was also recently boosted by the announcement of additional details on its new low-priced GPUs. Ahead of the report, analysts have lifted EPS and revenue estimates upward a net of 15 and 7 times, respectively, in the 90 days. Nvidia has beaten EPS estimates in 6 of the past 8 quarters, rising above revenue expectations in 100% of those reports. Options trading implies a 7% swing up or down after the report hits. Nvidia rallied 14% after its last earnings report.
DICK’S earnings preview: DICK’S Sporting Goods (DKS) will report earnings on May 23 with the sporting goods sector in upheaval following a weak print and outlook from Foot Locker (FL). Analysts think DICK’S was likely able to offset any slowdown in traffic with higher average ticket given its better inventory of higher price point items compared to a year ago. Options trading implies a 9% swing up or down after the DICK’S spills numbers. After its last earnings report, DICK’S broke 11% higher. Academy Sports and Outdoors (ASO) and Best Buy (BBY) are two stocks with a high degree of correlation with DICK’S on earnings day.
Corporate events: The three-day Microsoft (MSFT) developers conference will begin on May 23. The event will cover many of the new Microsoft (MSFT) APIs, products and services on the way, as well as feature sessions on Nvidia’s (NVDA) AI Enterprise, the Nvidia H100 GPU-powered VM series for generative AI, and the new Nvidia Omniverse Cloud on Azure. Thermo Fisher Scientific (NYSE:TMO) and Luna Innovations (NASDAQ:LUNA) will both hold Investor Day events on May 24. A busy slate of events on May 25 includes the McDonald’s (MCD) annual meeting, Zoetis (ZTS) Investor Day, Microvast Holdings (MVST), and a talk by Ford (F) CEO Jim Farley at the Morgan Stanley Sustainable Finance Summit. Check out Seeking Alpha’s Catalyst Watch for more events scheduled for next week.
Quant ratings: Stocks with recent quant rating changes include ImmunoGen (IMGN) to Strong Buy from Hold, Amgen (AMGN) to Buy from Hold, and Mister Car Wash (MCW) to Sell from Hold. See the stocks with the very highest rated Seeking Alpha Quant Ratings.
Space launches: A Rocket Lab (NASDAQ:RKLB) Electron rocket will launch the third pair of small CubeSats for NASA’s TROPICS mission on May 22. The TROPICS mission will measure environmental and inner-core conditions for tropical cyclones. On Wall Street, Bank of America recently reiterated a Buy rating on Rocket Lab (RKLB) and noted it is the only small launcher to successfully deliver customer satellites into orbit in this year. The launch outperformance is expected to continue and lead to improved cash flow and investor interest.
Barron’s mentions: The energy sector made the cover this week with a roundtable of investment advisers pulling out stock recommendations for investors to consider. The consensus view from the experts is that after a potential global recession plays out, higher prices are on the way as global energy demand outstrips supply. OPEC is also expected to take action at next month’s meeting if oil is at its current price range or potentially even lower. Against that backdrop, Pickering Energy Partners’ Dan Pickering recommended that investors take an 85%-15% split between conventional and energy-transition names. Shell (SHEL), TotalEnergies (TTE), Exxon Mobil (XOM), Antero Resources (AR), Permian Resources (PR), Diamondback Energy (FANG), Diamond Offshore Drilling (DO), and Diamondback Energy (FANG) were mentioned as some of the picks by the full roundtable. Also featured in the issue this weekend, the drop in Anheuser-Busch InBev’s (BUD) share price is discussed in depth. The sell-off is said to make the beer stock attractive considering the global giant gets just 30% of its profits from the U.S. and Canada, while generating 50% of its profits from Central and South America, where Bud Light is not a major factor. BUD’s improved balance sheet is also noted to have let the company boost its dividend.
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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