Wall Street experienced a significant downturn recently, triggered by a weaker-than-expected July jobs report, fostering concerns of an impending economic downturn.
The major indexes — Dow Jones Industrial Average and S&P 500 — both witnessed a 2.1% decline, while the tech-focused Nasdaq Composite plummeted by 3.4% during the week.
The week ahead promises to be eventful as investors navigate economic indicators and interest rate trajectories.
The economic schedule appears light, with a spotlight on jobless claims data and anticipated speeches from Federal Reserve district governors Mary Daly and Tom Barkin.
The upcoming week also sets the stage for earnings updates from key players like Walt Disney, Eli Lilly, Super Micro Computer, and others.
In the healthcare arena, Eli Lilly, known for Zepbound and Mounjaro, will be divulging its financial results, offering insights into its performance.
Irrespective of market direction, let’s delve into one stock projected to shine and another likely to face challenges in the coming week, specifically from Monday, August 5, to Friday, August 9.
Upbeat Stock: Eli Lilly
Eli Lilly is poised for a robust showing this week, expected to deliver strong revenue and earnings growth, buoyed by the success of its diabetes and obesity medications.
The Indiana-based healthcare giant is slated to unveil its Q2 earnings before the market opens on Thursday at 6:45AM ET.
Analysts foresee a significant movement in LLY stock post-announcement, with options market indicating a potential 8% swing either way. Historically, earnings have been pivotal in triggering notable stock fluctuations, with the company witnessing a 5% surge after its last quarterly report in April.
Notably, a majority of analysts covering Eli Lilly have raised their profit and sales projections, reflecting an expected 12% improvement from initial estimates.
Market consensus predicts earnings per share of $2.77 for Eli Lilly, representing a 31.3% jump from Q2 2023 figures, underpinned by effective cost management driving margin expansion.
Revenue is forecasted to climb by 20.2% year-over-year to $9.99 billion, showcasing the continued success of Lilly’s key drugs, particularly Mounjaro in the diabetes and obesity treatment segments.
Investor focus will also gravitate towards updates on Eli Lilly’s pipeline, notably the progress of the Alzheimer’s treatment Donanemab, a potential revenue booster upon FDA approval.
With shares closing at $804.46 on Friday, Eli Lilly is not far from its mid-July peak of $966.10, valued at $724 billion, solidifying its position as a stalwart in the healthcare domain.
Eli Lilly’s stock has outpaced the broader market this year, surging by 38%, a momentum attributed to stellar sales growth and sound financial fundamentals, supported by 54 years of consistent dividends.
Challenged Stock: Disney
Contrarily, Disney is poised for a challenging week, with potential downside risk looming as its forthcoming earnings release is expected to disappoint investors amidst lackluster performance in its streaming and linear TV segments.
The California-headquartered entertainment conglomerate is likely to offer cautious guidance, reflecting industry headwinds in streaming and uncertainties surrounding its theme parks and media networks.
Disney’s Q3 earnings report is slated for pre-market release on Wednesday at 6:30AM ET, with options trading implying a 6% potential swing in DIS shares post-announcement.
Analyst revisions for Disney have been predominantly pessimistic, with 16 out of 17 analysts reducing their EPS estimates in the past 90 days, indicating challenging times ahead.
Market forecasts anticipate Disney to report earnings of $1.19 per share for the quarter, a 15.5% uptick from the previous year, with revenue expected to grow by 3.3% to $23.1 billion.
All eyes will be on Disney+ and ESPN+ subscriber metrics, with a slight decline anticipated as consumers tighten spending on media services.
Post-earnings, CEO Bob Iger is likely to address several hurdles facing Disney, including slowing subscriber growth for Disney+, operational disturbances in its theme parks, and underperforming box office figures.
Disney’s stock concluded Friday at $89.57, nearing a four-year low of $78.73 from October 2023, totaling a market cap of $163.3 billion.
Disney shares have lagged the market significantly in 2024, down by approximately 1% year-to-date.
Stay informed with InvestingPro to align your trading decisions with market trends and stay ahead of the curve.