Cloud-computing company Salesforce is one of the major companies reporting next week. Photo: Richard B. Levine ·Richard B. Levine, Sipa US
Earnings season is all but over but some major names are yet to report. Investors have some high expectations for some of the key companies reporting next week such as Salesforce in the US and Dr Martens in the UK.
Business software maker Salesforce stock entered 2024 on a positive note but lost some momentum in recent weeks as it prepares to report its first-quarter results.
Wall Street analysts forecast that Salesforce will report quarterly earnings of $2.38 per share in its upcoming release, pointing to a year-over-year increase of 40.8%. It is anticipated that revenues will amount to $9.15bn, an increase of 11% compared to the year-ago quarter.
Further, current remaining performance obligations, or CRPO, is expected to climb 11% to $26.76bn. CRPO bookings are an aggregate of deferred revenue and order backlog and serve as a sales growth metric.
"The next catalyst is subscription revenue growth reacceleration from the current 10% outlook as we move through the year, from data cloud," said Bank of America analyst Brad Sills in a report.
CEO and chair Marc Benioff has pledged to “execute like hell” on the vendor’s Data Cloud offering.
“We have the data lake, we have the repository, we have the warehouse, but now it has deeply, also, integrated into the AI,” Benioff said. “That is why every customer must buy this product if they are going to achieve the nirvana that we can see for businesses … when you get data and AI working together. … Fiscal year ‘25 needs to be one thing – the year of Data Cloud.”
TD Cowen sustained its 'hold' rating on Salesforce with a steady stock price target of $330.00.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “After a year of getting fit, Salesforce is a leaner beast ahead of first-quarter earnings. Margin progression last year was impressive and guidance points to further improvements over the coming year. But, without as many cost-cutting levers to pull, margin growth will need to come organically.
“The macro-environment looks to have stabilised, and investors will now be looking for signs that subscription revenue growth can reaccelerate from the current c.10% guidance. AI will play a major part in that, and Salesforce is well-positioned to benefit given the amount of time customers spend on Slack, or its various other cloud products. But, with its Copilot tool still in beta mode and no benefit built into guidance for the coming year, it may take some time for AI to meaningfully drive top-line growth.”
Pets At Home (PETS.L) – reports on Wednesday 29 May
With its stock down 5.5% over the past three months, it is not exactly an investor’s darling pet supplies retailers has strong fundamentals and experienced an exceptional 20% net income growth over the past five years.
investors will be hoping looking for underlying profit before tax (PBT) of £132m, according to Hargreaves Lansdown. Markets will also be eagerly awaiting forward-looking guidance.
“Pets at Home has shown that it isn’t immune to a challenging consumer environment. Downgraded profit guidance following a weak third quarter didn’t come as much of a surprise to investors, as inflationary pressures caused consumers to rein in their spending on more lucrative pet accessories,” Guy Lawson-Johns, equity analyst at Hargreaves Lansdown, said.
“Utilising customer data insights and growing its online presence offer significant opportunities for growth, but these efforts don’t come cheap. Analysts are mindful that the group’s costs are growing and will be paying close attention to how investments will be sustainably funded,” he added.
Pets at Home owns 1,500 of the UK’s 5,000 veterinary practices. In March, the Competition and Markets Authority (CMA) launched a probe of the vets market amid concerns that pet owners are overpaying for treatments. A cap on vets' prescription fees is one of the measures being considered.
Pets at Home’s spokesperson has said: “We will continue to fully cooperate with the CMA to ensure our unique and pro-competitive business model of locally-owned vet practices is fully understood.
“Whilst our brand is national, our veterinary practices are led by individual entrepreneurial vets who have clinical and operational freedom and work tirelessly to always put pets needs first.”
Abercrombie & Fitch (ANF) - Reports on Wednesday 29 May
The US teen apparel brand is scheduled to post its earnings data before the market opens across the pond on Wednesday.
Analysts expect Abercrombie & Fitch to post earnings of $1.62 per share for the quarter, indicating a change of +315.4% from the year-ago quarter. For the current fiscal year, the consensus earnings estimate of $7.69 points to a change of +22.5% from the prior year, according to Zacks Equity Research.
The consensus sales estimate of $948.75m for the current quarter points to a year-over-year change of 13.5%. The $4.55bn and $4.75bn estimates for the current and next fiscal years indicate changes of 6.3% and 4.4%, respectively.
Views on the stock are mostly bullish, with Citigroup increasing their target price from $100.00 to $127.00 and giving the company a “neutral” rating in February. Jefferies increased their target price on 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%.
Iconic footwear brand Dr Martens braces for tough year ahead as it warned last month that it's US business is going so badly it needs to extend paying for additional storage space as it announced its chief executive departure.
The company said pre-tax profits could fall by around two-thirds due to plunging US wholesale revenues and its decision not to hike prices to offset rising costs. US wholesale revenues are forecast to tumble by double-digit percentages.
Derren Nathan, head of equity research at Hargreaves Lansdown , said: “Dr Martens’ shareholders are nursing heavy losses and weakness in the US, its biggest market, continues to be a concern. The recent trading update suggests that we shouldn’t see too much divergence from consensus forecasts which expect revenue to fall by 11%, to under £0.9bn. That’s largely driven by expected weakness in the wholesale division. Analysts are looking for operating profit of £125m, which would mark a fall of 34%.
“The iconic bootmaker has outlined several challenges for this year. It’s anticipating another double-digit decline in US wholesale revenue. The decision to hold back on price increases means the company will be unable to offset inflation. Dr Martens sees a potential two-thirds fall in pre-tax profits as the worst-case scenario but has not ruled out the possibility of an improvement. Markets will be watching out for further guidance.”
The chief executive, Kenny Wilson, who has spent six years at the helm, is to leave at the end of the financial year and will be replaced by Ije Nwokorie, who has served as chief brand officer in the past year, and previously worked as a senior director at Apple Retail.
Alex Rudolph, market analyst at IG, commented: “The next 12-18 months will prove critical for the footwear firm to stabilise performance. If challenges persist through 2025, its strategic reset could face deeper scrutiny even with a strong cultural lineage behind the Dr Martens name.”
