The three major U.S. equity indexes closed higher Thursday. The Dow Jones industrials added 0.98%, the S&P 500 rose by 1.41% and the Nasdaq jumped 1.67. All 11 sectors ended the day with gains, led by materials (2.3%) and communications services (2.0%). All three major indexes traded slightly lower in Friday’s premarket session.
Before U.S. markets opened on Friday, the monthly report on personal consumption and expenditures (PCE) showed that core PCE inflation (the Federal Reserve’s favored inflation measure) rose by 0.1% month over month in July, less than the expected 0.3% increase and way below June’s increase of 0.6%. The year-over-year increase dipped from 4.8% in June to 4.6%. Fed Chair Jerome Powell is due to speak at the bank’s Jackson Hole symposium later in the morning, and his words will be carefully parsed for hints about the size of further interest rate hikes.
After markets closed Thursday, Workday reported better-than-expected earnings per share (EPS) and revenue. The company also reiterated prior guidance. Shares traded up more than 10% Friday morning.
Dell beat the consensus EPS estimate but missed on revenue as demand for personal computers slipped. The stock traded down about 4.3% Friday.
Affirm beat estimates on both the top and bottom lines but issued downside guidance for the current quarter and for the 2023 fiscal year. The stock plunged more than 13% Friday morning.
Farfetch beat top-line and bottom-line estimates and, coupled with the company’s purchase earlier this week of a minority stake in rival online luxury goods seller Yoox, shares gained more than 12% in Friday’s premarket session.
Here is a preview of three companies set to report results on Monday or Tuesday morning.
Baidu
Beijing-based Baidu Inc. (NASDAQ: BIDU) is China’s premier search engine, and like its U.S. counterpart, it has been developing a quantum computer. On Thursday, the company announced that it has completed work on a 10-qubit processor and that its first quantum computer will be available to paying customers. The shares have bounced back from a trough in mid-May to trade down just 2.6% for the past year. The company reports quarterly results before markets open on Tuesday.
Of 35 brokerages covering the stock, 29 have a Buy or Strong Buy rating on the shares and the other six rate the stock at Hold. At a recent price of around $151.00 a share, the stock’s upside potential based on a median price target of $195.10 is about 29.2%. At a high price target of $271.14, the upside potential is nearly 80%.
Analysts expect Baidu to post second-quarter 2022 revenue of $4.23 billion, which would be a sequential decline of 2.6% and a 13.0% drop year over year. Adjusted EPS are forecast at $1.58, down 10.7% sequentially and by 38.9% year over year. For the full 2022 fiscal year, the consensus estimate calls for EPS of $7.32, up nearly 600% year over year, and revenue of $18.59 billion, down 5.1%.
The company’s stock trades at 20.6 times expected 2022 EPS, 13.8 times estimated 2023 earnings of $8.98 and 14.0 times estimated 2024 earnings of $10.75 per share. The stock’s 52-week range is $101.62 to $182.60. Baidu does not pay a dividend, and total shareholder return for the past year was negative 2.7%.
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