The Week Ahead: Coca-Cola, Amazon, and Microsoft to Report Earnings

As another week of earnings begins, we await reports from Coca-Cola KO on Tuesday, Microsoft MSFT on Wednesday, and Amazon.com AMZN on Thursday. The industrials sector has a big week ahead with earnings from United Airlines Holdings UAL to be reported on Wednesday followed by American Airlines Group AAL and Southwest Airlines LUV on Thursday.

Although the wide-moat company reported a solid first quarter, Coca-Cola's management has foreshadowed a rough second quarter. The company, like many others, was not immune to the impacts of the coronavirus and uncertainty looms over Coca-Cola's near future.

Because of its focus on meeting customers' immediate needs during the pandemic, Microsoft has managed to drive revenue and margins on an impressive scale through Microsoft 365, including its Teams messaging service, gaming, and Azure cloud computing service. As one of two public cloud providers, we anticipate that this wide-moat company will continue to use its dominant position of on-premises architecture to allow customers to move to the cloud easily and at their own pace.

After bottoming out in mid-March amid early coronavirus fears, Amazon made an astounding rebound thanks to increases in its Prime member engagement and Amazon Web Services usage. We anticipate the wide-moat company will continue to expand its already massive scope. However, we believe investors should keep an eye on Amazon's current, and expensive, stock price.

No industry could outrun the impacts of the coronavirus, and it is no secret that the airline industry was among the groups that were hit the hardest. Our outlook for U.S. air travel is based on our healthcare team's research and forecast on the availability of a COVID-19 vaccine. So far, our near-term outlook remains bleak. After a 2020 revenue decline of over 65%, we anticipate United will recover more slowly than its peers in the airline industry because of its international exposure. American Airlines, which suffered a revenue decline of more than 70%, faces a challenging remainder of 2020 and potential debt burden in 2021. As for Southwest, we believe the company is well-positioned compared with its peers to endure the pandemic. Its business model, which is structured to be profitable in a lower-fare environment, sets up Southwest to recover more easily in the future.

We are also on the lookout for reports from TD Ameritrade AMTD on Tuesday and Tesla TSLA on Wednesday. At the end of the week, we expect to see reports from AT&T T and Intel INTC on Thursday followed by a report from Verizon Communications VZA on Friday.