Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia in the coming days.
AU reporting season
The AU reporting season kicks off this week with some significant names. Notably Transurban, QBE, REA, Mirvac and AMP.
We’re anticipating a mixed bag of results across that spread of companies.
Over the last six months, QBE Insurance Group Ltd has been leaning into embracing AI to improve efficiencies, having found success from a North American trial. Their AI assistant has cut broker submission review times by 65% since rollout and now, the company plans to further leverage gen AI to support underwriting activities within its Australian operations.
Widespread AI hype – along with stability elsewhere in the company’s operations, will have investors hoping for some solid results come Friday.
Mirvac Group’s earnings on Thursday may be a very different story. The stock is down 35% over the last five years, which will be wearing thin on investors – even those used to holding onto property developer stocks for extended periods.
Property developers in Australia are still in rough waters, broadly speaking, with inflation and material costs keeping progress sluggish. In fact, there are 40,000 new homes across Australia that developers are yet to commence building and there doesn’t seem to be any significant regulation or initiatives to provide relief on the horizon.
For the daring, another round of disappointing earnings may be a clear sign to buy, given the increased optimism that the RBA will not hike interest rates again before year’s end, potentially leading to a more fruitful year for developers in 2025.
US stock earnings: Disney + Uber
This week, plenty of eyes will be on quarterly earnings reports for US giants Walt Disney (NYSE:DIS) Co and Uber Technologoies Inc.
Disney's stock plummeted in May after the company fell short of consensus revenue estimates for fiscal Q2. However, its streaming services turned a profit for the first time during this period and the success of recent blockbuster releases such as Inside Out 2 and Deadpool & Wolverine might offer some financial buoyancy.
The entertainment giant recently laid off 2% of its Television workforce, changes which are part of an effort to adapt to a rapidly evolving media landscape which favours streaming platforms.
Disney expects its combined streaming services to be profitable in Q4, with further improvements in profitability to follow. Wall Street anticipates that Disney will report a YoY increase in earnings this week. As such, any deviation from the consensus outlook could cause a notable shift in stock price.
Despite a surprising net loss in Q1, estimates for Uber's Q2 results anticipate YoY revenue and profit growth. New initiatives, including discounted Uber One subscriptions for college students and an extended partnership with Costco (NASDAQ:COST), are expected to potentially boost revenue. It will be interesting to see how these new business sectors contribute to the company's results.
However, an impending fare cut announcement has left drivers and investors apprehensive. While Uber claims these changes are due to the current economic environment and local market conditions, the timing, which ties in with Australia’s minimum gig work standards that are set to take effect from August 26, has stirred debate, which could reflect in the company’s Q3 earnings report.
What's next for CrowdStrike?
Since last month’s faulty product update which caused havoc around the globe, Crowdstrike’s reputation has taken a pretty hefty dent. While most businesses have since recovered from the outage, there will be repercussions for CrowdStrike. The brand damage that this will have caused at a critical period for the cyber security space is yet to fully be observed.
Crowdstrike’s valuation also remains lofty, trading at 58x forward earnings, which may be justified by the industry's growth and the firm’s strong development. That said, analysts are still extremely bullish. The recent weakness has seen some price target downgrades, but its return potential has also increased significantly.
CrowdStrike’s recent earnings report was strong, with revenue rising 33% year-over-year to US$921 million and full-year guidance upgraded. However, this financial strength might be overshadowed for now.
The upcoming quarterly report, due August 27, will be critical and the next two quarters are going to be tricky. The outage has likely impacted new bookings, with new customers hesitant to sign deals and sales teams focusing on existing business. The challenge now is navigating potential lawsuits, with Delta Air Lines (NYSE:DAL) already announcing it is seeking damages.
The positive aspect is CrowdStrike’s quick and transparent response, which should help mitigate some damage and financial impact. Investors might consider a ‘sit and wait’ approach, evaluating the next earnings call.
A strong performance could boost the stock, while a weak response may create a potential lower entry point for investors. Much of the bad news might already be priced in and CEO George Kurtz’s proactive response offers confidence that the growth story remains intact.