3 Upcoming Earnings Reports to Watch This Week

Subscribers to The Contrarian Edge received this commentary on Saturday, Oct. 17.

As promised, last week’s earnings almanac was just the beginning. Here are three names that could step into the earnings confessional this week and step out with headlines.

Split the G, Meta

It’s never fun being the first large-cap tech titan to step into the earnings confessional. There could be some major setback lurking that takes the whole market by surprise. Which is why the implied move of 6.9% next Wednesday for Meta Platforms Inc (NASDAQ:META) is interestingly lower than the historical move in the last two years.

Does someone know something?

META is looking to snap two-straight post-earnings selloffs, but the stock has shook those off with an impressive 36.8% post-earnings drift. There’s a hint of a bull flag pattern forming on the charts, too, around $720. Does the $2 trillion market cap level come into play? $700? The +10% year-to-date level?

These are questions swirling in my mind, but mostly I just can’t get image of Zuck “drinking” a Guiness out of my head.

Nothing Gold Can Stay (Up)

Newmont Corporation (NYSE:NEM) stock is up 20% year-over-year. A whole confluence of moving averages stepped up after the 12% drawdown from the Aug. 25 record high at $135.29. All systems go, right?

Eh. Seven of the last 12 post-earnings reactions have been to the downside, including a 6.2% selloff last October. In a world gripped by rate hike mania, gold miners can be a scary proposition; higher interest rates strengthen the dollar and push up Treasury yields, reducing demand for physical gold and safe-haven assets.

Maybe that’s why the rate of put buying has picked up lately.

If there’s a downside move, 21 of the 25 brokerages covering NEM maintain “buy” or better ratings, with zero “sells” on the books. Plus, the consensus 12-month price target of $140.47 is a nearly 20% premium from the stock’s Friday perch.

A bear note barrage could be in store next week.

Hardware, Hard Times

The days of falling 13 pennies short of $800 are long gone. Western Digital Corp (NASDAQ:WDC) has taken a 58% (!) haircut off that peak, and on Friday breached its 260-day moving average.

Western Digital has come within one standard deviation of this trendline six times in the last decade. The stock averages a 3.5% return one month later, with a 67% win rate.

That’s not nothin!

WDC’s 14-Day Relative Strength Index (RSI) now sits at 27.9, firmly in “oversold” territory. But, all the technical and contrarian signals in the world don’t mean a thing if the fundamentals aren’t there. And Western Digital has three-straight post-earnings moves to the downside, including a 13% selloff on Aug. 5.

The majority of analysts are bullish on WDC. After all, the equity is still up 96.5% on the year. But the average 12-month price target sits at $641, an area not seen since July. A shift has already begun; on Friday, Wells Fargo reiterated its “overweight” rating but trimmed its price target to $430 from $730 (!). The stock ended the week down 5.3%, trading at its lowest level since April.