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Trending tickers: Apple | Shell | PacWest | Next

A look at the stocks making headlines on Thursday

 

Analysts expect Apple to report revenue of $92.6bn for the second quarter of 2023. Photo: Reuters / Carlos Barria.
Analysts expect Apple to report revenue of $92.6bn for the second quarter of 2023. Photo: Reuters / Carlos Barria. (Carlos Barria / reuters)

Apple (AAPL)

After the bell in the US, Apple will report its second-quarter earnings with investors expecting year-over-year revenue growth to be similar to the first-quarter (Q1), as previously stated by the tech giant.

It said on its last earnings call that sales of Macs and iPads would probably fall by double digits as a result of the “challenging” economic environment.

Analysts expect Apple to report revenue of $92.6bn (£73.64bn) for the second-quarter, a 4.8% decline from the $97.3bn it brought in during the same quarter last year. That's about in line with the 5% decline Apple posted in Q1.

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Read more: Apple could make or break Big Tech's earnings season

However, recent big tech earnings have so far managed to beat expectations. For example,

Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG, GOOGL), and Meta (META) all largely outperformed analysts’ estimates, despite pull backs in consumer and corporate spending.

“None of what's already been reported matters come Thursday night,” explained Deepwater Asset Management managing partner Gene Munster.

“And the reason is ... because [of] the size of Apple, and also it's been relatively stable too. It's done a better job of enduring this versus other tech, so if there is a problem, you can throw out all the good news from Microsoft and Google and Meta,” Munster added.

Shell (SHEL.L)

Shares in Shell were up nearly 2% at the time of writing in morning London trade after the energy giant reported a positive financial update.

It posted first-quarter adjusted earnings of $9.65bn, which beat analysts’ expectations for $8.14bn. It was also higher than its profit in the first-quarter of 2022 ($9.13bn), when Russia first invaded Ukraine.

Moreover, the oil giant kept its share buyback programme unchanged at $4bn over the next three months.

Read more: Shell makes nearly £1.4bn more than expected in opening quarter

Victoria Scholar, head of investment at Interactive Investor, said: “Strong trading amid the volatile price environment in Europe and America helped Shell’s earnings outpace analysts’ expectations and offset the impact of weaker oil and gas prices and lower refining margins. Its chemicals result also improved, driven by better margins thanks to lower utility and feedstock costs.

“Unlike BP, Shell maintained its share buyback programme, returning further cash to shareholders. Over the past year though, shares in Shell are up around 7.5%, underperforming BP which is up nearly 18%,” she added.

PacWest (PACW)

Shares in US mid-sized lender PacWest plunged more than 50% on Wednesday after traders digested media reports of a potential sale.

PacWest has since confirmed that it has been approached by partners and investors – and also noted that it is considering selling strategic assets.

The group also sought to reassure investors by saying it had not suffered out-of-the-ordinary deposit outflows, unlike rival First Republic Bank which saw depositors withdraw $100bn.

Read more: FTSE and European stocks open lower ahead of ECB rate decision

“Less than two months ago, PacWest received a $1.4bn cash injection from Atlas SP Partners following the collapse of SVB, which sparked negative reverberations across the sector,” Victoria Scholar highlighted.

Furthermore, she noted how First Republic Bank was rescued by JPMorgan with the Wall Street lender’s CEO Jamie Dimon saying this week that ‘there may be another smaller one’ ahead, referring to a risk of another potential banking collapse.

PacWest is the latest lender to fall victim to the turmoil in the US mid-cap banking sector with worried investors either cutting their holdings or adding to short positions which has punished its share price. PacWest has a heavy focus on commercial real estate lending, which has suffered on the back of the Fed’s aggressive rate hiking path after the longstanding punchbowl of cheap money was removed,” she added.

PacWest stock has tumbled from a 52-week high of $34.68 to a low of $6.42 at yesterday’s close.

Next (NXT.L)

Shares in fashion retailer Next rose 2.06% on Thursday morning on the FTSE 100 after traders were encouraged by its latest trading update.

The company maintained its guidance for annual profit after reporting a smaller decline in first-quarter sales of 0.7%, rather than the 2% fall it had expected, in the 13 weeks to 29 April.

The fashion retailer expects full year pre-tax profit to be £795m and earnings per share of 501.9p.

“While Next’s latest sales update was moderately ahead of its prior expectations, it is nothing to get excited about. Sales growth has stalled and the only area where it is making decent gains is from the income attached to customer credit accounts,” Russ Mould, investment director at AJ Bell, said.

Mould also noted that Next has a serious growth problem and said that while it may remain a profitable business, a company of its calibre is expected to show financial progression year after year.

“Repeated guidance for an 8.7% decline in full-year pre-tax profit suggests the business needs to pull a rabbit out of the hat to regain its mojo,” he added.

Watch: Apple Earnings: Here’s what to expect from the call

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