December 2, 2023

Signing out of account, Standby…
The summer fireworks are still popping in the U.S. equity markets. Here are three names reporting later this month that look primed to be prime time Q2 movers.
As summer days go, the July 4th holiday swiftly passed a while back, but the fireworks are still popping in the U.S. equity markets.
Some of the more explosive booms have come in response to second-quarter earnings reports. From Walt Disney and PayPal to Uber and Enphase Energy, companies across several industries have impressed with far better than expected earnings and outlooks.
Although earnings season is winding down, there are probably more surprises in store for investors. Here are three names reporting later this month that look primed to be prime-time Q2 movers.
When Nordstrom (NYSE: JWN) reports after the close on Tuesday (8/23), it will become the latest department store operator to offer clues as to the financial health of the American consumer. Thus far, we’ve heard two dramatically different stories.
Dillard’s posted flat comparable store sales but blew away earnings estimates. This told us that the current discretionary spending environment is resilient. The company noted strong sales of cosmetics and men’s clothing. A few days later, Kohl’s painted a gloomier picture of how inflation is impacting consumer purchases and inventory levels.
With Nordstrom, Wall Street has set the bar rather high with sales and EPS expected to increase 8% and 63% year-over-year respectively. It’s hard to say how things turned out but what’s almost certain is that Nordstrom will be volatile. In the wake of the company’s last four reports, the stock has swung wildly—big drops on the 2Q21 and 3Q21 reports and big jumps on the 4Q21 and 1Q22 reports.
This time around the options market is pricing in another double-digit percentage move with Nordstrom trading in the mid-$20’s. Should the retailer surprise to the upside or offer better than expected guidance, the stock’s 23% short float could put things in the short squeeze department.
Marvell Technology, Inc. (NASDAQ: MRVL) is slated to release Q2 results post-market on Thursday (8/25). Analysts are forecasting that the semiconductor maker grew its top line by 41% and EPS by 65%.
The lofty expectations are based on what has been an improved operating environment for U.S. chip makers in 2022. Last quarter, Marvell recorded its highest quarterly sales ever driven by strong demand for data center products—which swelled to represent nearly 50% of total sales. This quarter the company is also expected to get a major boost from its latest acquisitions, Innovium and Inphi.
With the semiconductor industry well into recovery mode, Marvell’s lineup of storage, networking, and connectivity solutions have been in high demand from data center and 5G infrastructure customers. The removal of kinks in the supply chain is allowing more of that demand to be fulfilled, setting the stage for another strong year of growth.
After a 71% surge in 2021 earnings sent Marvell shares to a record high, the tech-unfriendly market that is 2022 erased those gains. Heading into Thursday’s report, the stock is down nearly 40% year-to-date, making it one of the Nasdaq-100’s worst performers. Semiconductor peer Nvidia, which also reports this week, recently warned of weak demand in its gaming division, dragging its stock and much of the industry lower.
So with Marvell back in the low-$50’s and the market braced for disappointment, a bullish report could be a refreshing change of pace. And given the earnings beat history here, Marvell is as well-equipped as any chip maker to ignite a reversal.
CrowdStrike Holdings, Inc. (NASDAQ: CRWD) is another technology name that could deliver some impressive Q2 growth. The cybersecurity leader is a beneficiary of increasing demand for software solutions that protect enterprises from data breaches. Its cloud-based Falcon platform hosts an expanding lineup of modules that is translating to greater recurring revenue streams. Revenues are expected to be up more than 50% this year.
The artificially-intelligence (AI) powered Falcon protects on-premise, cloud-based, and virtualized workloads that run on PC’s, servers, and Internet-of-Things (IoT) devices. More than half of the Fortune 500 uses the platform, including three-fourths of the top 20 U.S. banks. Yet the most compelling argument for CrowdStrike is that more than 70% of customers subscribe to four or more Falcon modules. Last quarter, the number of customers using six or more modules more than doubled. Translation: increasing subscription-based revenue.
CrowdStrike presently offers 22 cloud modules to multiple security end markets, with corporate workload security being its largest. Demand from this market typically makes or breaks quarterly performances and will likely do so again this week.
In its latest quarterly update, management hiked its full year revenue and profit guidance after favorable cross-selling trends and seeing its customer base climb to nearly 18,000. This along with a steady uptrend in gross margins positions CrowdStrike to beat the Street’s Q2 earnings forecast and continue its rebound from May 2022 lows.
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Gabrielle Bienasz
The Staff of Entrepreneur Media, Inc.
R.L. Adams
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