The Week Ahead: Earnings From Tech and Retail

Earnings season continues with large companies from technology and retail reporting this week.

Narrow-moat Workday WDAY reports Tuesday. The software-as-a-service provider produces a product portfolio focused on human capital and financial management software. The company has seen great success in quickly gaining traction with larger enterprises and maintained both its revenue outlook for fiscal 2020 and its long-term operating margin target. We maintain our fair value estimate of $183.

Salesforce.com CRM also announces third-quarter earnings Tuesday. At Dreamforce in late November, Salesforce forecast revenue growth of $34 billion to 35 billion in fiscal 2024, signifying a 20% annual growth. The wide-moat company announced new services from the MuleSoft acquisition to allow for better data integration among platforms and is hoping to showcase that growth in its release.

The business communication software Slack Technologies WORK reports Wednesday. After going public in June 2019, Slack released solid second-quarter earnings, and we maintain a $14 fair value estimate and no-moat rating. Last week, Microsoft MSFT announced the success of its Teams platform, stating it has over 20 million daily active users, which is a direct competitor to Slack. Slack is hoping to respond with strong third-quarter earnings.

Three-star Ulta Beauty ULTA reports Thursday. The firm suffered in the second quarter, along with the U.S. cosmetic market, as it scaled back on overall revenue growth for this fiscal year to between 9% and 12% and 4% for same-store sales. Ulta Beauty still maintains its narrow moat rating for its intangible brand asset and customer loyalty.

Top retail stock Lululemon Athletica LULU also reports Thursday. The luxury athleisure brand announced its priorities of production innovation, e-commerce, and market expansion specifically for men’s revenues and Asian countries in April 2019. Strong second-quarter earnings show growth in those categories, with men’s revenue climbing 35% and direct-to-consumer by 30%.

In other economic news, balance of trade releases Thursday and unemployment for November on Friday.