SUPERNEWS

Macro

Earnings Alert: FMC, NRG, Microchip Face Sharp EPS Cuts

Over 60% of S&P 500 companies beat expectations, but analysts cut forecasts for FMC Corporation and NRG Energy amid higher interest rates.

By Barry Stearns

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5/1, 15:14 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Apple Inc.
Advanced Micro Devices, Inc.
Amazon.com, Inc.
FMC Corporation
McDonald's Corporation
Microchip Technology Incorporated
Match Group, Inc.
NRG Energy, Inc.
Pfizer, Inc.
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Key Takeaway

  • FMC Corporation, NRG Energy, and Microchip Technology lead with the most significant drops in EPS estimates, signaling potential investor caution.
  • NRG Energy's stock performance may be at risk despite a 40% year-to-date increase, as it nears analysts' price target with a looming CEO decision.
  • Match Group's EPS estimates fell over 16% in three months; despite a 13% drop in 2024, analysts see a potential 40% upside.

Earnings Season Insights

The current earnings season has revealed a strong performance across the board, with over 60% of S&P 500 companies surpassing Wall Street's expectations. However, the landscape is not without its challenges, as higher interest rates begin to impact corporate profits and consumer behavior. CNBC Pro's analysis highlights stocks with significantly lowered earnings estimates, pointing to potential areas of concern for investors. Among these, FMC Corporation and NRG Energy have seen the most considerable downward revisions, signaling potential volatility ahead.

Analysts Turn Bearish on Select Stocks

NRG Energy has experienced a dramatic cut in earnings per share estimates, nearly halving over three months. This adjustment comes despite the stock's 40% year-to-date increase, now teetering close to its average price target. The anticipation around electricity demand for the AI revolution has buoyed NRG, yet the absence of a new CEO introduces uncertainty. Match Group also faces skepticism, with a notable decline in earnings estimates and a significant drop in its stock price this year, despite a potential upside according to the average price target.

Tech Sector Faces Headwinds

The technology sector is bracing for a downturn, with futures indicating a lower open on Wall Street due to disappointing tech earnings. Companies like Advanced Micro Devices and Super Micro Computer have issued lukewarm forecasts and concerns over capital needs, respectively, leading to premarket declines. This sector's performance is crucial, as it has been a significant driver of market trends, with the broader implications for the S&P 500 and Nasdaq 100 indices.

High Stakes in Upcoming Earnings

This week marks a pivotal moment in the earnings season, with major companies like Apple, Amazon, McDonald's, and Pfizer set to report. The outcomes of these reports are eagerly anticipated, given the strong performance seen thus far, with 80% of reporting S&P 500 companies beating expectations. The focus will be on whether these giants can maintain the momentum, especially in the tech sector, where AI and cloud computing investments are under the microscope. Amazon and Apple, in particular, face high expectations given their significant roles in driving market sentiment.

Street Views

  • Don Bilson, Gordon-Haskett (Neutral on NRG Energy):

    "So long as the stock continues to work, investors can’t really fault the company for easing into this important decision."