Stocks to watch next week: Salesforce, Pets at Home, Abercrombie & Fitch and Dr. Martens

The offices of Salesforce, a cloud computing company, are seen in Midtown Manhattan in New York on Tuesday, March 20, 2018.  Salesforce announced it will buy Mulesoft in a deal worth $6.5 billion.  (Photo by Richard B. Levine)

Cloud computing company Salesforce is one of the major companies reporting next week. Photo: Richard B. Levine (Richard B. Levine, Sipa USA)

Earnings season is all but over, but some big names have yet to report. Investors have high expectations for some of the key companies that will report next week, such as Salesforce in the US and Dr. Martens in the UK.

Here’s what to look out for:

Enterprise software maker Salesforce Stock entered 2024 on a positive note, but lost some momentum in recent weeks as the company prepared to report first-quarter results.

Wall Street analysts predict that Salesforce will report quarterly earnings of $2.38 per share in the upcoming release, indicating a year-over-year increase of 40.8%. Sales are expected to reach $9.15 billion, an increase of 11% compared to the previous year’s quarter.

In addition, current remaining performance obligations (CRPO) are expected to increase 11% to $26.76 billion. CRPO bookings are an aggregation of deferred revenue and order backlogs and serve as a measure of revenue growth.

“The next catalyst is an acceleration in subscription revenue growth from the current 10% outlook as we move through the year from the data cloud,” Bank of America analyst Brad Sills said in a report.

CEO and chairman Marc Benioff has promised to “take a crack at it” on the vendor’s Data Cloud offering.

“We have the data lake, we have the repository, we have the warehouse, but now it’s also deeply integrated into the AI,” Benioff said. “That’s why every customer needs to buy this product if they want to reach the nirvana that we can see for companies… when you make data and AI work together. … Financial year ’25 must be one thing: the year of the Data Cloud.”

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TD Cowen maintained its hold rating on Salesforce with a stable price target of $330.00.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: “After a year of fitness, Salesforce is a lean beast, better than its first quarter profits. Margin growth last year was impressive and the outlook points to further improvements in the year ahead. But without so many cost-saving measures, margin growth will have to come about organically.

“The macro environment appears to have stabilized and investors will now look for signs that subscription revenue growth may accelerate again from the current guidance of around 10%. AI will play an important role in this, and Salesforce is well positioned to benefit given the amount of time customers spend on Slack or its various other cloud products. But because the Copilot tool is still in beta mode and there is no benefit built into the guidance for the coming year, it may take some time before AI can meaningfully drive revenue growth.”

With its share price down 5.5% in the past three months, it’s hardly the darling of investor pet supply stores, which have strong fundamentals and have experienced exceptional net profit growth of 20% over the past five years.

According to Hargreaves Lansdown, investors will be hoping for an underlying profit before tax (PBT) of £132m. The markets will also eagerly await forward-looking guidance.

“Pets at Home has shown that it is not immune to a challenging consumer environment. The lowered earnings expectations following a weak third quarter were not much of a surprise to investors as inflationary pressures caused consumers to rein in their spending on more lucrative pet accessories,” said Guy Lawson-Johns, equity analyst at Hargreaves Lansdown.

“Leveraging insights from customer data and expanding online presence offer significant growth opportunities, but these efforts don’t come cheap. Analysts are aware that the group’s costs are rising and will keep a close eye on how investments will be sustainably financed,” he added.

Pets at Home owns 1,500 of Britain’s 5,000 veterinary practices. In March, the Competition and Markets Authority (CMA) launched an investigation into the veterinary market amid concerns that pet owners are paying too much for treatments. A cap on veterinary prescription costs is one of the measures being considered.

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The Pets at Home spokesperson said: “We will continue to work fully with the CMA to ensure our unique and pro-competitive business model of local veterinary practices is fully understood.

“While our brand is national, our veterinary practices are led by individual enterprising veterinarians who have clinical and operational freedom and work tirelessly to always put the needs of pets first.”

The US teen clothing brand will release its earnings data on Wednesday before the market opens across the pond.

Analysts expect Abercrombie & Fitch to post earnings of $1.62 per share for the quarter, marking a change of +315.4% from the prior-year quarter. For the current fiscal year, the consensus forecast of $7.69 indicates a change of +22.5% from the prior year, according to Zacks Equity Research.

The consensus revenue estimate of $948.75 million for the current quarter indicates a year-over-year change of 13.5%. The estimates of $4.55 billion and $4.75 billion for the current and next budget years indicate changes of 6.3% and 4.4%, respectively.

Opinions on the stock are largely bullish, with Citigroup raising its price target from $100.00 to $127.00 and giving the company a ‘neutral’ rating in February. Jefferies raised its price target for Abercrombie & Fitch from $149 to $155 and gave the company a buy rating in a research note in March.

According to data from MarketBeat.com, the stock has a consensus rating of Moderate Buy and a consensus target price of $139.29.

Over the past month, shares of this teen clothing retailer have returned 23.3%.

The iconic shoe brand Dr. Martens is bracing for a tough year ahead as it warned last month that its US operations are doing so poorly that it will have to extend payments for extra storage space as it announced the departure of its CEO.

The company said pre-tax profits could fall by about two-thirds due to declining U.S. wholesale revenues and the decision not to raise prices to offset rising costs. U.S. wholesale revenues are expected to decline by double digits.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Dr. Martens is facing heavy losses and weakness in the US, its largest market, remains a concern. The recent trading update suggests we shouldn’t deviate too much from consensus forecasts, which expect sales to fall 11% to below £0.9 billion. This is largely caused by the expected weakness in the wholesale division. Analysts expect an operating profit of £125 million, which would represent a decline of 34%.

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“The iconic shoe maker has outlined several challenges for this year. The company expects another double-digit decline in U.S. wholesale revenues. The decision to withhold price increases means the company cannot offset inflation. Dr. Martens sees a potential decline in pre-tax profits by two-thirds as the worst-case scenario, but does not rule out the possibility of an improvement. The markets will be looking for further guidance.”

The CEO, Kenny Wilson, who has been at the helm for six years, will leave at the end of the financial year and will be replaced by Ije Nwokorie, who has served as Chief Brand Officer for the past year and previously worked as Chief Brand Officer. a senior director at Apple Retail.

Alex Rudolph, market analyst at IG, commented: “The next twelve to eighteen months will prove crucial for the footwear company to stabilize performance. If challenges persist until 2025, its strategic reset may face deeper scrutiny, even if there is a strong cultural lineage behind the Dr. name. Martens is sitting.”

Other companies reporting next week include:

Wednesday May 29

Pershing Square Holdings (PSH.L)

Telecom Italy (TITR.MI)

Agilent (A)

HP Inc (HPQ)

Tough (CHWY)

American eagle (AEO)

Thursday May 30

Car dealer (AUTO.L)

Renewi (RWI.L)

Londonmetric Property (LMP.L)

CostCo (COST)

Dell (DELL)

Marvell Technology (MRVL)

Dollar General (DG)

Best Buy (BBY)

Birkenstock (BIRK)

Spacing (GPS)

Noordstrom (JWN)

Kohl’s (KHP.F)

Footlocker (FL)

You can read Yahoo Finance’s full agenda here.

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