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The Dow Jones industrial average, S&P 500 index and Nasdaq composite all ended the week below their 50-day moving averages, closing below that key support line for the first time in 2017.
Netflix (NFLX), United Airlines (UAL) and Barracuda Networks (CUDA) report earnings after Monday’s market close. But geopolitical concerns will remain high for investors going into the new week, following a failed North Korea missile test in defiance of President Trump and global powers. Trump has sent warships to the region and has left open the possibility of military action.
Earnings per share likely soared to 37 cents vs. 6 cents a year earlier, with revenue up 35% to $2.64 billion. But analysts and investors likely will closer attention to subscriber growth and subscriber forecasts. Goldman Sachs has said Netflix may have topped 100 million customers worldwide.
Streaming TV services are becoming far more widespread, with Alphabet (GOOGL) rolling out YouTube TV in some big cities this month, joining offerings from Dish Network (DISH) (Sling TV), Sony (SNE) (PlayStation Vue) and AT&T (T) (DirecTV Now), with Hulu’s live TV service coming soon. But that could make Netflix and Amazon (AMZN) Prime Video more attractive, given that streaming TV tends to be far cheaper than traditional cable.
Netflix shares fell 0.6% to 142.92 in Thursday’s stock market trading, closing below their 50-day moving average for the first time since Sept. 26.
IBD’S TAKE: Netflix and the other FANG+ stocks (Facebook, Amazon, Netflix and Alphabet’s Google, plus Apple) have a huge impact on the Nasdaq and broader market. But the FANG+ stocks are facing key technical tests.
EPS likely fell 70% to 37 cents, reflecting higher fuel costs. Analysts estimate revenue grew 2% to $8.375 billion. Unit revenue should be “approximately flat,” United has said. United Airlines faced global outrage last week over a video showing a passenger violently dragged off an overbooked plane. That will likely be a notable part of the United’s Tuesday morning conference call.
United Airlines stock fell 2.55% for the week, not out of line with airline stocks generally.
Delta Air Lines (DAL) reported mixed Q1 results but gave a generally positive Q2 outlook. Delta initially spiked Wednesday on the news, but shares reversed and then fell Thursday to a five-month low. Delta stock lost 2.5% for the week.
The cybersecurity operator is expected to report flat profit of 15 cents a share with revenue up nearly 6% vs. a year earlier. However, Barracuda has blown out earnings estimates by 67%, 82% and 61.5% and 57% in the prior four quarters.
Barracuda shares have been consolidating for the past six months with a potential buy point of 26.79. The stock has been trading tightly around its 50-day line for the past several weeks, closing Thursday at 23.16.
The New York Federal Reserve will release its Empire State manufacturing index for April at 8:30 a.m. ET. Economists expect the regional factory gauge to show a reading of 15, close to March’s strong 16.4 reading.
The National Association of Home Builders releases its Housing Market Index at 10 a.m. ET. Economists expect the sentiment index to dip to 70 from March’s 71. Readings over 50 signal growth.
The Empire manufacturing index and NAHB gauge are among the earliest economic reports for the current month. But they are both “soft” data reflecting sentiment and anecdotal reports vs. “hard” data of actual sales or production. Soft data have been stronger than hard data in recent months.
On Tuesday, investors will get a “hard” look at factories and home building, with March industrial production and housing starts reports.