Stocks on Wall Street ended mostly lower on Friday, weighed down by a decline in shares of Nvidia (NASDAQ: NVDA), which dragged down the technology sector. Despite this, it was a generally positive week for the stock market. The Dow Jones Industrial Average rose 1.4% for its best weekly performance since May, the S&P 500 added 0.6%, while the Nasdaq Composite remained flat. The upcoming week is expected to be busy as investors evaluate the sustainability of the AI-driven rally on Wall Street and speculate on when the Federal Reserve might decide to cut interest rates.
The key economic event this week is Friday’s core PCE price index, the Fed’s preferred inflation gauge. This will be accompanied by a series of speeches from Fed officials, including Christopher Waller, Michelle Bowman, Mary Daly, Lisa Cook, and Patrick Harker. Investors have largely pushed back expectations for the Fed’s first rate cut to September, according to the Investing.com Fed Rate Monitor Tool.
In the earnings schedule, heavyweights such as FedEx (NYSE: FDX), Nike (NYSE: NKE), Micron (NASDAQ: MU), and Walgreens Boots Alliance (NASDAQ: WBA) are set to report. Here, we highlight one stock likely to be in demand and another that could see downside. The timeframe is for the week ahead, Monday, June 24 – Friday, June 28.
Stock to Buy: Micron (MU)
Micron is poised for a strong performance this week, as the memory-chip maker is expected to deliver robust earnings and an optimistic outlook, driven by high memory demand from cloud providers. The company is scheduled to release its fiscal third-quarter earnings report on Wednesday at 4:05 PM ET, followed by a call with CEO Sanjay Mehrotra at 5:00 PM ET.
Market participants anticipate significant movement in MU stock post-earnings, with an implied move of about 11% in either direction. Historically, Micron’s earnings have been catalysts for substantial stock movements, as seen with a 17% surge following its last quarterly report in March.
According to InvestingPro, 27 out of 28 analysts have revised their profit estimates upward in the past 90 days, reflecting strong growth prospects in artificial intelligence. Micron is projected to earn $0.53 per share, reversing a year-ago loss of $1.43 per share, with revenue expected to surge 77.6% year-over-year to $6.66 billion, driven by high-bandwidth memory sales to AI data centers.
Investors will closely watch Micron’s forward guidance. The company is expected to maintain an upbeat tone, highlighting its strategic position in the AI trend. MU stock ended Friday’s session at $139.54, near its all-time high of $157.50. At current levels, Micron has a market valuation of $154.5 billion, having gained 63.5% so far in 2024.
Micron boasts a strong ‘Financial Health Score’ from InvestingPro, reflecting its solid earnings and profitability outlook. Notably, the company has raised its annual dividend payout for three consecutive years.
Stock to Sell: Walgreens Boots Alliance (WBA)
In contrast, Walgreens Boots Alliance could face a challenging week, with potential for further downside as its earnings and guidance may disappoint due to the tough macro environment. Walgreens is set to report its fiscal third-quarter results on Thursday at 7:00 AM ET.
Market participants expect significant volatility in WBA stock post-earnings, with an implied move of about 10% in either direction. All 12 analysts surveyed by InvestingPro have cut their profit estimates in the past 90 days, reflecting a drop of roughly 40% from their initial expectations. Walgreens is forecasted to earn $0.72 per share, down 28% from $1.00 per share in the year-ago period, amid higher costs and declining operating margins. Revenue is expected to inch up 1.5% year-over-year to $35.94 billion.
There is a growing risk that Walgreens could lower its full-year earnings outlook as it continues to invest heavily in transforming from a retail pharmacy chain into a full-service healthcare provider. WBA stock closed Friday at $15.97, not far from its recent low of $14.62, the weakest level since December 1997. The company’s market cap stands at $13.8 billion, and shares have fallen 38.8% year-to-date.
Walgreens has a poor ‘Financial Health’ score of 1.5 out of 5.0 from InvestingPro, due to its significant debt burden and poor profit and sales growth prospects.
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