Teladoc stock (NYSE: TDOC)
According to StreetAccount estimates, the telehealth company beat Wall Street revenue projections for the previous quarter on Tuesday, but reported a larger-than-expected loss per share. In premarket trading, shares were down more than 9%.
“Despite continued progress toward its growth objectives, we believe there is little the company can do in the near term to meet lofty investor expectations,” the note said.
Deutsche Bank expressed concern about user growth, noting that membership increased by only 1% year over year. According to the bank, this could be a continuing issue as the pool of potential corporate customers shrinks.
“We believe TDOC’s business and shares may be at an inflection point as new large logo clients that move the needle will be more difficult to find, and utilization growth is unlikely to match the expansion of 2020/21,” the note stated.
The firm reduced its price target for the stock from $225 to $153 per share. On Tuesday, the stock closed at $151 per share, but was trading near $137 in premarket action.
Boeing stock (NYSE: BA)
With problems mounting in its 787 Dreamliner program, the question now is how long the losing streak will last.
Boeing revealed a manufacturing flaw in a new area of the twin-aisle jetliners earlier this month, slashing its delivery forecast to fewer than half of the Dreamliners in inventory that haven’t been handed over to customers. In June, CEO Dave Calhoun predicted that the company would deliver the “lion’s share” of its approximately 100 Dreamliners this year.
Boeing’s problems with the 787 Dreamliner aren’t the only ones. Earlier this year, Boeing reported additional 777X delays, as well as issues with its Air Force One program.
“Every quarter, there is something new,” said Credit Suisse senior aerospace equity analyst Robert Spingarn.
Investors should pay close attention to Calhoun’s comments on the latest issues as well as the company’s plan to address those issues as well as the fallout from the Max and Covid-19 crises.
Simultaneously, the company has received a slew of large orders for its 737 Max — the plane was only cleared for flight in November after crashes in 2018 and 2019 killed 346 people.
Analysts predict that revenue will increase by 40% from last year’s pitiful sales during the height of the Covid-19 pandemic. However, the company will almost certainly face questions about the pace of recovery and when it expects to generate cash.
Its stock is down 7.2 percent this quarter as of Tuesday’s close, compared to the S&P 500’s gain of 2.4 percent. The aerospace company is expected to post an adjusted loss of 81 cents per share, according to Wall Street.
When Boeing releases its earnings, investors should keep the following in mind:
Loss of a 787 Dreamliner forward?
Boeing halted Dreamliner deliveries in May for the second time in less than a year to address manufacturing flaws. It stated that it intends to “temporarily” reduce its production rate to less than five per month, which may increase costs.
Because the majority of an aircraft’s price is paid when the manufacturer hands it over to customers, this deprives Boeing of much-needed cash. Aside from the inspections and potential repairs, Boeing is awaiting approval from the Federal Aviation Administration on its inspection method.
According to Credit Suisse’s Spingarn, the 787 problems raise the question of whether the FAA is looking harder at Boeing because of the Max crashes, or if Boeing changed its manufacturing process.
Whatever the cause, an extended pause and additional work raise the prospect of Boeing reporting a forward loss on the program.
American Airlines had hoped to receive 11 Dreamliners this year, but the majority of them have been delayed. “We don’t know when they’ll arrive, but we’re working with Boeing to try to get those,” CFO Derek Kerr said last week during an earnings call.
In the first half of 2021, Boeing delivered 14 Dreamliners, compared to 36 at the same time last year.
Concerns about covid persist.
Since vaccines were widely distributed in the spring, air travel has increased in the United States. Airlines such as Southwest, United, and Alaska have ordered hundreds of Max jets to replace older planes and prepare for future growth as the pandemic fades.
Investors should keep an eye out for comments from Boeing about the Max’s production rate, which it expects to increase to 31 per month by 2022.
Ryanair said on Monday that if the price is right, it would consider purchasing the Max 10, the largest model.
Boeing requires more airlines to recoup their losses in order to fuel new orders.
However, despite the fact that case counts in the United States and elsewhere are still lower than the peak earlier this year, the highly contagious delta variant is keeping many travel restrictions in place. This could reduce demand for long-range jetliners used on international routes.
The Centers for Disease Control and Prevention reversed earlier advice on Tuesday, recommending that even people who are fully vaccinated wear masks indoors in Covid hot spots.
Almost every major aviation authority in the world has recertified the 737 Max for flight. China stands out as a notable exception. A decision by Chinese aviation authorities to allow the 737 Max to fly again and resume deliveries would benefit Boeing’s cash flow.
The company will also be asked about lingering trade tensions between the United States and China, as well as its outlook for future aircraft sales.
Starbucks stock (NASDAQ: SBUX)
A year ago, the coffee behemoth saw a drop in customer traffic as office workers stayed at home, skipping their usual morning routines. The company lost an estimated $3.1 billion in revenue during its fiscal third quarter of 2020. Since then, the company has steadily improved, though there have been some setbacks. High vaccination rates aided its recovery in the United States last quarter, but lockdowns and travel restrictions in other regions dragged down revenue.
Starbucks stock has increased by more than 17% this year, giving the company a market value of $147 billion.
Starbucks has fewer publicly traded direct competitors since Dunkin’ Donuts went private, but its stock is relatively expensive compared to other fast-food peers. Starbucks shares are currently trading at approximately 42 times forward earnings, while Restaurant Brands International (owner of Tim Hortons) and McDonald’s are trading at less than 30 times forward earnings, respectively.
Starbucks is also gaining favor on Wall Street. According to Refinitiv, the stock currently has 22 buy ratings, up from 19 three months ago. Baird upgraded the stock to outperform and increased its price target from $117 to $142 per share on July 23, citing signs of improved sales across the U.S. coffee category and Starbucks’ quick recovery.
Refinitiv polled Wall Street analysts predict 77 cents per share on $7.28 billion in revenue for the company’s fiscal third quarter.
As Starbucks releases its latest earnings report, investors should focus on four key areas:
- Increased customer traffic
Restaurant executives have stated that customers are spending more on each order but visiting less frequently throughout the pandemic. Starbucks is no exception. Last quarter, the average transaction total was 21% higher than the previous year. Traffic, on the other hand, was down 10%.
Starbucks visits have been increasing sequentially every month since the beginning of the year, according to traffic analytics firm Placer.ai. According to the firm’s data, traffic fell only 3.1 percent in June compared to the same period two years ago.
Starbucks’ digital sales are a major source of traffic. Mobile orders accounted for 26 percent of transactions at company-owned cafes in the United States last quarter, up from 18 percent the previous year.
To increase excitement and visits, the company has also added new menu items. In March, for example, it added Oatly’s oat substitute to menus across the country. However, due to supply issues, many customers were unable to order the dairy alternative.
- Problems with the supply chain
Starbucks has reportedly faced a shortage of oat milk in recent months. According to the Wall Street Journal, the company was also in need of disposable cups and the syrups it uses to flavor its coffee drinks in June.
Later that month, CEO Kevin Johnson denied that the company was experiencing a shortage of cups or coffee. Nonetheless, Johnson acknowledged that some of its food items, such as breakfast sandwiches, had supply chain issues.
- The delta variant of Covid-19
According to a data analysis of Johns Hopkins University data, the seven-day average of new Covid cases surpassed 62,000. This is a 57 percent increase from the previous week. The Covid delta variant has been identified as the source of the outbreak by health officials.
According to people familiar with the situation, the Centers for Disease Control and Prevention is also expected to recommend on Tuesday that fully vaccinated people wear masks indoors in areas with high Covid-19 transmission rates. Meanwhile, Los Angeles County has reinstated its indoor mask mandate, raising fears that harsher restrictions will be reinstated if new Covid cases do not slow down.
Furthermore, while the United States is Starbucks’ largest market, the global coffee giant maintains a significant presence in other countries, making it even more vulnerable to the impact of the variant. Starbucks’ second-largest market, China, has seen a resurgence of cases associated with the delta variant, resulting in new local lockdowns.
- Fiscal 2021 projections
Investors should also keep an eye on whether the company raises its fiscal 2021 outlook again, with one quarter remaining in the year. Nonetheless, uncertainty about the delta variant may cause the company’s outlook to be more conservative.
According to the company’s second-quarter earnings call in April, Starbucks executives expect to earn $2.65 to $2.75 per share in fiscal 2021. It anticipates earnings of $2.90 to $3 per share on an adjusted basis. Revenue for the full year is expected to range between $28.5 billion and $29.3 billion. Wall Street expects the company to earn $3 per share and generate $28.8 billion in revenue in fiscal 2021.