Earnings Preview: Goldman and Morgan Stanley Have A Big Job This Week
Stocks tested their July lows and bounced back on Thursday in a very volatile session. Lehman Brothers Holdings
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The panic spread to other financial companies including Washington Mutual
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As for earnings this week, investors may be looking to Goldman Sachs
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Despite slashing their estimates in recent weeks, analysts are expecting Goldman Sachs and Morgan Stanley to report a quarterly profit. FedEx Corp.
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PowerRating) and Best Buy
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PowerRating) should give investors an idea about any improvement in consumer and business spending when they release results this week.
Before the open Tuesday, Goldman Sachs is expected to report a profit of $1.87 per share, down 69% from a year ago, on sales of $6.4 billion, according to Thomson Reuters estimates. A month ago, analysts were forecasting a profit of $3.33 per share for the quarter. Looking back at historical session-to-session performance following earnings, MidnightTrader.com has found the issue is mixed.
However, the near-term trend is narrowing one, with three narrowing or reversing events in the past three out of the four quarters. Shorts may want to watch any upside moves for where a ceiling could develop in the after-hours. On June 17, shares rose 1.6% in the pre-market after the company’s results beat the Street. Shares reversed course in the regular session, ending down 1.4%.
On Wednesday, Morgan Stanley is expected to report a quarterly profit of $0.78 per share, down 43% from a year ago, on sales of $6.3 billion, according to analyst estimates. A month ago, analysts were forecasting a profit of $0.94 per share.
Morgan shares usually narrow their pre-market earnings-based move in the regular day session. It has done so in five of the seven events we have tracked. On June 18, the stocks slide 6.6% in the pre-market despite its second-quarter results beating the Street. The stock reversed course in the regular session, trading up 0.3%.
On Thursday, Palm Inc.
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PowerRating) is set to release results after the close of trading and is expected to report a loss of $0.18 per share on revenue of $323.0 million. The stock caught some positive attention last week after some analysts said the stock has more upside than its rivals. In the near term, shares favors cutting back their evening performance in next-day trade, doing so in three of the last four quarters.
The exception was last quarter when the stock fell 4.4% in after-hours trading after the company missed analyst estimates. The loss widened in the following regular session, dropping 8.2%. Longs may want to watch for where possible floors develop in the evening hours for entry targets to catch narrowing trend bounces.
Cassie Slane is a Senior Editor at www.MidnightTrader.com.