Earnings Preview: Astra Zeneca, Walt Disney & Uber

Last week was all about earnings reports from big tech, this week we will see how well the non-tech sectors are performing with results from Astra Zeneca in the UK, Walt Disney and Uber in the US. These corporate earnings will give us a steer on the strength of the consumer, and also if healthcare stocks can recover after a weak 6 months.

Can Astra Zeneca shine without a weight loss drug?

Looking at AstraZeneca first, it reports earnings on Thursday, before the London market opens. Ahead of this report, its share price has come under pressure, and is down by 1.75% YTD. The market is expecting EPS of $0.76 per share. This is stronger than a year earlier when EPS was $0.69. It is worth noting that AstraZeneca exceeded earnings expectations for each of the last four quarters, so the bias is to the upside for this report. The key drivers of earnings in 2023 are likely to be AstraZeneca’s cancer and diabetes drugs. It does not have a weight loss drug on sale like Novo Nordisk’s Wegovy, however, it has a weight loss pill that is currently in the testing phase. If this drug is approved, then it could super charge AZ’s earnings in the future and could give it a slice of the lucrative weight loss drug pie.

Until then, AZ is likely to lag behind Novo Nordisk and Eli Lily, the two biggest producers of weight loss drugs that have seen huge sales growth and massive revenues last year. While Astra Zeneca makes strides into the obesity drug market, sales of its cancer drugs are expected to remain strong. Its development of a weight loss pill could push up operating costs for last year, and we will also be looking out for guidance for Q1 2024. In December the FDA in the US, approved two AZ drugs, including breast cancer drug capivasertib, so we will be looking for an update on how these drugs have been performing and forecasts for their future revenues. Another earnings beat could give AZ’s stock price a boost after a poor start to the year.

Can Disney+ catch up with Netflix?

Walt Disney is also scheduled to post earnings on Wednesday after the US market closes. The market is expecting earnings growth, with EPS expected to come in at $1 per share, up1% from a year ago. However, revenues are expected to be $23.685bn expected. Investors will be wondering if Disney’s streaming business, Disney +, can play catch up with Netflix, which saw huge subscriber growth and bumper revenues last quarter. Disney + has struggled, so any positive surprises on this front would likely boost the share price. Disney old/ new CEO Bob Iger has said that he wants to focus on creative, and analysts will be looking to see if this has paid off. Investors would also welcome an update on what creative content is in the pipeline, especially after the poor performance of Disney’s ‘Wish’, a film that was released in the second half of 2023. The entertainment industry is under pressure, and several activist shareholders have targeted Disney’s board.

This could be the last chance saloon for Iger and co, so if the results disappoint, these shareholders could force through some painful change at Disney as we move through 2024. It is worth noting that Walt Disney’s share price has risen by more than 7.5% this year, which is higher than the overall market, the S&P 500 is up by 4.3% YTD. Even with its strong start to the year, Disney is still 11% lower than a year ago. If earnings beat estimates, then we could see further upside for the share price.

Can Uber justify its share price rally?

Uber will also report results for Q4 and 2023 as a whole on Wednesday. Its share price has had a strong rally at the start of 2024, and it is significantly higher than the overall market, with a YTD gain of more than 13%. Earnings are expected to come in at $9.76bn, which is a 5% QoQ increase, and EPS is expected to rise by 14% to $0.39. Thus, there is a lot of good news baked into the Uber share price already, and it may have to deliver a major positive surprise for its share price to extend the recent rally.

Investors will want to see its gross margin being maintained at approx. 30%.

Operating expenses remained flat in Q2 and Q3, can that last in Q4?

If yes, then Uber could see another quarter of net profit growth. However, as we mention, the bar is high for Uber. Analysts will scrutinise costs, especially as the company has extended marketing operations in recent months. They also want to see how well Uber can generate revenues when there is so much competition in its way. Also, will a slowing global economy potentially harm its future revenues and profits? If there are any disappointments within these results, then we could see Uber’s share price come under pressure.