The three major U.S. equity indexes closed significantly higher on Monday, salving the wounds of Friday’s big sell-off. The Dow Jones industrials ended the day up 1.86%, the S&P 500 closed 2.65% higher and the Nasdaq jumped 3.43%. All 11 sectors closed higher, with consumer cyclicals (4.23%) and real estate (3.9%%) posting the biggest gains. Consumer staples (1.11%) and energy (1.22%) had the smallest gains.
The first economic data of note due this week is the monthly report on new housing starts and building permits on Wednesday. The monthly report on existing home sales is due Thursday.
All three major indexes were trading higher early in Tuesday’s regular session.
Before markets opened Tuesday morning, Goldman Sachs beat top-line and bottom-line estimates, but earnings per share (EPS) fell by more than 40% year over year and revenue dropped by 12%. CEO David Solomon also noted the bank’s restructuring, confirming that the investment banking and trading segments would be merged, as will the asset management and wealth management segments. Shares traded up more than 43%.
Johnson & Johnson beat estimates on both the top and bottom lines. The health care giant also guided fiscal-year EPS and revenues in line with consensus estimates. Shares traded down around 1%.
Lockheed Martin beat the consensus EPS estimate but fell short on revenue. The company still expects free cash flow of $6.1 billion, and it recently boosted its share buyback program to $14 billion. Shares traded higher by almost 3%.
After markets close on Tuesday, results from J.B. Hunt, Netflix and United Air Lines are due.
First thing Wednesday morning, Abbott Labs, ASML, Baker Hughes and Procter & Gamble will report quarterly results.
Here is a look at three companies set to report results after U.S. markets close Wednesday.
IBM
Shares of International Business Machines Corp. (NYSE: IBM) have slipped by around 9.1% over the past 12 months. The stock’s 52-week low and 52-week high were both posted about a year ago, and the shares have been trading in a fairly narrow range ever since.
Big Blue has acquired six companies so far this year, the most recent being a Dallas-based digital product engineering and services firm. In the two and a half years that CEO Arvind Krishna has led the company, IBM has acquired more than 25 companies, about half in the company’s consulting business.
Of 17 brokerages covering IBM stock, 10 have a Hold rating and six rate the shares at Buy or Strong Buy. At a recent share price of around $121.50, the implied upside based on a median price target of $140.00 is about 15.2%. At the high price target of $160.00, the implied upside is 31.7%.
Third-quarter revenue is expected to come in at $13.56 billion, which would be down 12.7% sequentially and 23.2% lower year over year. Adjusted EPS are forecast at $1.80, 22.1% sequentially, and down 28.6% year over year. The current full-year estimates call for EPS of $9.30, up 17.8%, on sales of $59.82 billion, up about 4.3%.
IBM stock trades at about 13.1 times expected 2022 EPS, 12.2 times estimated 2023 earnings of $9.97 and 11.5 times estimated 2024 earnings of $10.53 per share. The stock’s 52-week trading range is $114.56 to $144.94. IBM pays an annual dividend of $6.60 (yield of 5.43%), and total shareholder return for the past 12 months is negative 7.5%.
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