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Business

Lockheed Martin Stock Is Falling After Solid Earnings. What Investors Should Know.

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Shares of Lockheed Martin are up 7.3% year to date.


Luca Barioulet/AFP via Getty Images

Defense giant

Lockheed Martin

cruised past Wall Street second-quarter earnings expectations—with one caveat—and raised its full-year earnings guidance. Still, shares tumbled Monday.

For the quarter, Lockheed (ticker: LMT) reported $6.52 in per-share earnings from $17 billion in sales, in line with Wall Street’s expectations for $6.53 in per-share earnings from $17 billion in sales. But Lockheed recorded a $0.61 per-share charge related to “performance issues experienced on a classified program” at its jet-making franchise Aeronautics. These kinds of expenses, labeled as a special charge by Lockheed, typically don’t repeat.

Removing that 61-cent charge makes Lockheed’s quarter look solid. What’s more, the company raised its full-year guidance. Lockheed now expects to earn about $26.85 for full-year 2021, up from the guidance of $26.55 given in April.

Lockheed has raised full-year earnings guidance when reporting both its first- and second-quarter numbers.

“Lockheed’s execution over recent years has been so good that we can’t even remember when the last time was that we saw the company take an operating charge,” wrote Vertical Research Partners analyst
Rob Stallard
in a Monday report. “We would imagine that investors had been expecting the usual ‘beat and raise’ performance for 2Q, and so today’s inline result with no change to the operating guidance is likely to prove a disappointment.”

That looks like a good call. Lockheed stock was down more than 3% in early trading. The

S&P 500

and

Dow Jones Industrial Average

were about flat. But Stallard recommends buying the dip: “Should the stock sell-off heavily, then this could be a good entry point.” He rates shares Buy and has a $443 price target for the stock.

“In my first year leading our company, I’m proud of the extraordinary resolve demonstrated by our 114,000 team members to rise above the challenges of the pandemic in support of our customers, our nation and our allies.” said
James Taiclet,
Lockheed Martin chairman, president and CEO. “Our teams continue to deliver on key platform programs while also advancing technologies critical for 21st century deterrence and scientific discovery.”

Taiclet seems pleased. Sales grew in each of the company’s segments: aeronautics, missiles, helicopters, and space systems. Total sales grew about 5% year over year.

Lockheed management scheduled a conference call for analysts and investors at 11 a.m. eastern. Investors will want to hear about the defense budget and its impact on Lockheed sales as well as the outlook for profit margins.

Year to date, Lockheed stock is up 7.3%, trailing behind the comparable 17.5% gain of the

S&P 500.

Lockheed stock, however, trades for 13.6 times estimated 2022 earnings. The S&P 500 trades for 20.5 times estimated 2022 earnings.

Write to Al Root at allen.root@dowjones.com

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Business

U.S. Retail Sales Rose in June

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U.S. shoppers boosted retail spending in June as the economy more broadly reopened and auto dealers navigated supply disruptions.

Retail sales—a measure of purchases at stores, at restaurants and online—rose 0.6% last month compared with May, the Commerce Department reported Friday.

Auto sales, which have shown signs of slowing amid supply-chain disruptions that have limited the number of vehicles for sale, weighed on overall retail sales in June. Excluding autos—a sometimes volatile category of products—sales rose 1.3% in the same period. Auto sales, meanwhile, fell by 2%.

Retail spending had slowed in late spring after surging earlier in the year from the impact of federal coronavirus aid to households. June’s increase marks a pickup in consumer spending.

Consumers in June spent more on products and services associated with the resumption of outside activities as governments ended many remaining Covid-19 restrictions. Sales rose strongly at restaurants and bars and clothing and accessories stores. Meanwhile, sales fell in categories that benefited from strong demand earlier in the pandemic as Americans stayed at home. Sales at furniture, sporting goods and building materials stores fell.

Supply-chain disruptions have limited the number of vehicles for sale.



Photo:

David Paul Morris/Bloomberg News

“Fast forward to June, it’s almost a perfect flip-flop,” said

Tim Quinlan,

senior economist at Wells Fargo. Consumers are now thinking “anywhere but home,” which should benefit retailers in industries that were hard-hit earlier on, he said.

Ann Leadbetter, co-owner of Meriwether Cider in the Boise, Idaho, area, said business has picked up at the cidery’s two locations since mask mandates were lifted earlier this spring. Once that restriction was eased, Ms. Leadbetter said she felt comfortable returning seating to the inside bar areas. She also has noticed a pickup in tourists and events, which she said is particularly helping the business’s location in downtown Boise.

“We anticipate an uptick when the weather warms up anyway, but this has been even better than the usual seasonal uptick that we’ve had in past springs and summers,” Ms. Leadbetter said. “Even if it levels out, it’ll be better than 2020, and it’s already a lot better even than 2019.”

Many economists have said they expect consumers to shift spending away from purchases of goods, particularly big-ticket items, to the services sector as the end of pandemic-related restrictions allows the economy to open more fully and Americans to resume outside activities.

A Bank of America tracker of credit- and debit-card spending showed consumers in June boosted expenditures at restaurants by 2.7% and on lodging by 7.8% compared with May, on a seasonally adjusted basis. Spending for clothing, general merchandise and at department stores also rose strongly, while spending on furniture fell.

“Sectors that were buoyed by the pandemic are slowing down a little bit, but not to a degree that I’d be concerned about,” said Felipe Chacon, an economist at payments company Square. “Household finances have been bolstered by a few rounds of stimulus spending, so it bodes pretty well,” for retail sales broadly, he said.

The National Retail Federation, a trade association, in June lifted its forecast for annual retail sales this year to between $4.44 trillion and $4.56 trillion, from $4.33 trillion to $4.44 trillion previously.

Katherine Cullen,

senior director of industry and consumer insights at the trade group, said the upwardly revised forecast reflected a strong pickup in the overall economy and better-than-expected retail sales growth.

She expects goods retailers that offer products related to activities in the services sector, such as traveling, to see further strength in the coming months. She also forecasts brisk back-to-school sales as families stock up on products they didn’t need last year because many students were learning remotely.

Economists have said they expected consumers to shift spending from goods to services like dining out as pandemic restrictions are lifted.



Photo:

Stephen Zenner/Zuma Press

Still, some retailers have said that challenges attracting workers for open positions and supply-chain disruptions are placing constraints on business.

A semiconductor shortage helped drive up prices for autos in June. The Federal Reserve on Thursday reported that U.S. manufacturing output fell slightly last month, as motor vehicle and parts production dropped sharply.

Alan Guyes, co-owner of electronics retailer Audiotronics in Roanoke, Va., said demand has been robust since last summer for items such as televisions, smart speakers and sound bars, with in-store traffic picking up in recent months as the pandemic has eased. But he said he often encounters customers looking for products that are either unavailable or on several-months’ backlog because of supply-chain issues ranging from input shortages to long shipping times.

“It’s frustrating, obviously. Some days, it’s a lost sale. Customers are frustrated. We’re all used to being able to ‘just in time’ anything,” he said, referring to the ability to obtain products at or close to the time they are needed.

Federal Reserve Chairman

Jerome Powell

has said he expects upward price pressures to ease as supply-chain issues and friction associated with the economy ramping up are resolved.

Mr. Quinlan of Wells Fargo said he doesn’t expect price increases to deter Americans from spending for now.

“Right now, consumers are price takers,” Mr. Quinlan said, noting many households have cash on hand from savings during the pandemic and the start of monthly payments of the expanded child tax credit.

“The pent-up demand is so great,” for spending on items like vacations, rental cars and flights, he said. “Once that sugar high has worn off, then you’ll start to see ordinary price sensitivity come back into consumer behavior.”

Write to Amara Omeokwe at amara.omeokwe@wsj.com

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Car Market Is Expected to Cool Amid Dearth of Vehicles on Lots

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The dwindling number of vehicles on dealership lots is threatening to cool the U.S. car market’s blistering sales pace.

Analysts are expecting new-car sales from June to fall off from recent months, when car shoppers turned out in near-record numbers, buoyed by excess household savings and pent-up demand from the pandemic. Most car makers are scheduled Thursday to report U.S. sales results for June.

Customers are still clamoring for a new ride, dealers say. But it has become harder for salespeople to match buyers to vehicles because of the lack of inventory caused by the computer-chip shortage that has hobbled car production since winter.

“We really don’t have enough cars to go around,” said Joe Shaker, owner of Shaker Automotive Group, which sells several brands in Connecticut and Massachusetts. He said his Ford store is carrying about 14% of its normal inventory.

New-vehicle sales in the first half of the year are expected to reach about 8.3 million units, according to an estimate from J.D. Power, a 32% increase over the same period a year earlier and up nearly 1% from the first half of 2019.

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Business

GameStop stock bounces around after earnings

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GameStop Corp. stock was unsettled in the extended session Tuesday as the videogame retailer at the center of the so-called meme-stock phenomenon said it had laid the groundwork for its “transformation” and reported lower-than-expected adjusted fourth-quarter earnings and sales.

GameStop
GME,
-6.55%
shares initially rose by more than 8% after the report, but pared gains later on, and was last down 3%. The retailer said it earned $80.5 million, or $1.19 a share, in the quarter, compared with earnings of 32 cents a share in year-ago quarter.

Adjusted for one-time items, GameStop earned $90.7 million, or $1.34 a share, compared with $1.27 a share a year ago.

Sales fell to $2.12 billion, compared with $2.19 billion in the fiscal 2019 fourth quarter, reflecting store closures related to the pandemic, the company said.

Analysts polled by FactSet expected the videogame retailer to report adjusted earnings of $1.35 a share on sales of $2.21 billion.

GameStop said same-store sales rose 6.5% in the quarter, with online sales rising 175% for the quarter and 191% for fiscal 2020. The analysts surveyed by FactSet had expected same-store sales to rise 4.7% in the quarter.

The company said it “strengthened” its balance sheet and ended the year with $635 million in cash, “laying the foundation for transformation.”

In a separate press release, GameStop said it had appointed Jenna Owens as chief operating officer, with a start date of Monday, March 29. Owens was a director and distribution manager Amazon.com Inc.
AMZN,
+0.86%.

The company also named Neda Pacifico, who was an executive at Chewy Inc.
CHWY,
-1.39%,
as senior vice president of e-commerce. Pacifico also starts on Monday.

Chewy co-founder Ryan Cohen and two of his allies joined GameStop’s board earlier this year, leading to hopes he’d direct an overhaul.

GameStop’s stock is often cited as one of the meme stocks that have skyrocketed in recent months thanks to frenzied boosts from Reddit comments and social-media posts.

See also: GameStop: what’s the fun in fundamentals, ask Reddit traders on the rocket-emoji launchpad

Shares of GameStop have gained more than 800% in the past three months, compared with gains around 7% for the S&P 500 index
SPX,
-0.76%.

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Business

IBM Explores Sale of IBM Watson Health

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International Business Machines Corp. is exploring a potential sale of its IBM Watson Health business, according to people familiar with the matter, as the technology giant’s new chief executive moves to streamline the company and become more competitive in cloud computing.

IBM is studying alternatives for the unit that could include a sale to a private-equity firm or industry player or a merger with a blank-check company, the people said. The unit, which employs artificial intelligence to help hospitals, insurers and drugmakers manage their data, has roughly $1 billion in annual revenue and isn’t currently profitable, the people said.

Its brands include Merge Healthcare, which analyzes mammograms and MRIs; Phytel, which assists with patient communications; and Truven Health Analytics, which analyzes complex healthcare data.

It isn’t clear how much the business might fetch in a sale, and there may not be one.

IBM, with a market value of $108 billion, has been left behind as cloud-computing rivals Microsoft Corp. and Amazon.com Inc. soar to valuations more than 10 times greater. The Armonk, N.Y., company has said it’s focused on boosting its hybrid-cloud operations while exiting some unrelated businesses.

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Business

Tesla is in decline, SUVs are king, and more insights from the world’s largest electric-vehicle market

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Europe overtook China in 2020 to become the world’s largest market for electric vehicles, amid a pedal-to-the-metal push to increase EV adoption from governments and supercharged demand from consumers.

The registrations of new electric vehicles topped 1.33 million in the key European markets last year, compared with 1.25 million in China, according to a report based on public data by automotive analyst Matthias Schmidt.

The 18 markets include the European Union states — minus 13 countries in Central and Eastern Europe — as well as the U.K., Norway, Iceland, and Switzerland.

And growth will only continue, according to Schmidt, who publishes the European Electric Car Report. He projects that electric vehicles’ share of the European car market will rise from 12.4% in 2020 to 15.5% in 2021 — that is 1.91 million vehicles out of a total of 12.3 million, and an increase of 572,000 from 2020.

Key trends have emerged as Europe races to become the most important region for EVs, highlighted in the report that Schmidt shared with MarketWatch.

Among them are that the Renault Zoe is now the most popular electric vehicle in Europe, overtaking Tesla’s Model 3, which took the top spot in 2019. In fact, Tesla’s success in Europe has declined across the board over the last year, with the U.S. company delivering 97,791 cars across the continent in 2020, down from 109,467 in 2019.

Here’s what you should know:

SUVs are leading the growth

When you think of environmentally-friendly vehicles, sport-utility vehicles and crossovers probably don’t spring to mind. But this class is by far the most popular type of battery-electric vehicle in Europe, representing 27% of all registrations in 2020 and 29% in December alone.

Hyundai
005380,
+0.42%
and Kia
000270,
-1.22%
led the pack, making up 39% of battery-electric SUV and crossover volumes in 2020.

SUVs and crossovers are even more popular with hybrid buyers — accounting for 53% of plug-in hybrid electric-vehicle volumes last year.

Luxury buyers prefer hybrids

When it comes to hybrids, better is best. Premium brands made up 58% of all plug-in hybrid electric-vehicles in 2020.

Many of those cars were supplied by the German automotive giants: Volkswagen Group
VOW,
-0.40%,
which owns Audi and Porsche, Mercedes-Benz owner Daimler
DAI,
+0.46%,
and BMW
BMW,
-0.19%.

There is a coming wave from China

As Chinese car makers increase efforts to meet market demand at home and abroad, they are looking at Europe.

The volume of electric vehicles in Europe that were made by Chinese companies grew 1290% from 2019 to 2020, to 23,800 units. Much of that momentum came only recently — half of those cars arrived in the final three months of the year.

As Europeans scrambled to buy electric vehicles, the flow of cars from China also included Teslas. In December, 20% of all Tesla
TSLA,
+5.83%
models registered in Austria were manufactured in China.

Also read: Audi is betting on the luxury market in a new electric-vehicle venture with China’s oldest car maker

Government action is speeding up EV adoption

European car makers are being pushed to manufacture more electric vehicles by the threat of hundreds of millions of euros in fines from the European Union over binding emissions targets. 

Phased in through 2020, and continuing into 2021, the fleetwide average emission target for new cars must be 95 grams carbon dioxide per kilometer, which is around 4.1 liters of gasoline per 100 kilometers.

In the wake of the post-Brexit trading agreement, the U.K. government said that the country’s car makers face emissions targets “at least as ambitious” as in the EU.

EV adoption is being pushed on both sides of the market, with governments stimulating demand by providing generous incentives for buyers to trade in their gas guzzlers.

In Germany, buyers can save up to €9,000 ($10,940) on purchases of new electric vehicles. France offered incentives of up to €7,000 in 2020, but will trim that down to €6,000 in 2021. 

Regulation could hurt some bottom lines in the short-term

Volkswagen Group confirmed last week that it had not met the EU’s emissions targets for 2020, meaning that the company is on the hook for more than €100 million in fines.

Others could face the same fate, though rivals Daimler, BMW, Renault
RNO,
-0.58%,
and Peugeot (now part of Stellantis
STLA,
+1.05%
) all say they met their targets.

“Despite very ambitious efforts in electrification, it has not been possible to meet the set fleet target in full. But Volkswagen is clearly well on its way,” said Rebecca Harms, a member of the independent Volkswagen Sustainability Council.

“The key to success will be to give a greater role to smaller, efficient and affordable models in the electrification rollout.”

It is unclear how easy that will be in 2021. The COVID-19 pandemic contributed to the fewest passenger-car registrations in Europe since 1985 and, according to Schmidt, this allowed a number of car makers to meet emissions targets.

Also read: Car makers put the pedal to the metal on electric vehicles in 2020, with sales surging in one key region where Tesla lost market share

Tesla is losing dominance

Tesla comfortably topped the European EV charts in 2019. It delivered more than 109,000 vehicles that year, making up 31% of the region’s battery electric-vehicle market. 

But the tide turned in 2020, with Tesla dropping behind both the brands of Volkswagen Group, which had 24% market share, and the Renault–Nissan–Mitsubishi Alliance, with 19% market share. Last year, Tesla delivered nearly 98,000 vehicles and made up just 13% of the European market.

According to Schmidt, it was the introduction of emissions targets, and the specter of massive fines, that has accelerated European car makers’ battle against Tesla for dominance.

See also: Electric-car sales jump to record 54% market share in Norway in 2020 but Tesla loses top spot

“With 2021 getting even tougher — thanks to the phase-in year ending — Tesla will come under even more intense competition,” Schmidt said. “Come 2025 when the targets increase again, Tesla will certainly be playing against fully-fit opponents and will potentially struggle.”

However, Schmidt does note in his market outlook for 2021 that the opening of Tesla’s factory in Germany, expected to start production in the second half, is likely to double regional volumes next year.



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World

Biden Freezes U.S. Arms Sales to Saudi Arabia, U.A.E.

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The Biden administration has imposed a temporary freeze on U.S. arms sales to Saudi Arabia and the United Arab Emirates as it reviews billions of dollars in weapons transactions approved by former President

Donald Trump,

according to U.S. officials.

The review, the officials said, includes the sale of precision-guided munitions to Riyadh as well as top-line F-35 fighters to Abu Dhabi, a deal that Washington approved as part of the Abraham Accords, in which the Emirates established diplomatic relations with Israel.

U.S. officials said it isn’t unusual for a new administration to review arms sales approved by a predecessor, and that despite the pause, many of the transactions are likely to ultimately go forward.

But in line with campaign pledges made by President

Biden,

Washington is seeking to ensure that American weapons aren’t used to further the Saudi-led military campaign in Yemen, where its conflict with the Iranian-aligned Houthis has resulted in thousands of civilian deaths and widespread hunger.

Mr. Biden “has made clear that we will end our support for the military campaign led by Saudi Arabia in Yemen, and I think we will work on that in very short order,” Secretary of State

Antony Blinken

said at his confirmation hearing last week. Washington will continue to help defend the Saudis against Houthi attacks, Mr. Blinken said.

Officials at the Saudi and Emirati embassies in Washington didn’t immediately comment on the developments.

Congress and the U.S. defense industry were informed of the review in recent days, one U.S. official said. It is unclear how long the review will last.

Officials couldn’t offer a precise dollar figure for the weapons sales under review. But the review, they said, includes a $23 billion deal between Washington and the Emirates for the F-35 jet fighters, Reaper drones and various munitions that was finalized on Mr. Trump’s last full day in office, according to a statement on the website of the UAE’s Washington embassy.

It also includes billions in contracts with Riyadh, including a deal for $290 million in precision-guided munitions that the U.S. government approved in late December.

“The (State) Department is temporarily pausing the implementation of some pending U.S. defense transfers and sales under Foreign Military Sales and Direct Commercial Sales to allow incoming leadership an opportunity to review,” a department spokesman said.

Calling it “a routine administrative action,” the spokesman said the review “demonstrates the administration’s commitment to transparency and good governance, as well as ensuring U.S. arms sales meet our strategic objectives of building stronger, interoperable, and more capable security partners.”

Write to Warren P. Strobel at Warren.Strobel@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Apple, Tesla and Facebook ready to report record sales in busiest week of earnings

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U.S. companies have barely managed to eke out positive earnings growth so far in this quarterly results season, but the big test arrives in the week ahead.

Nearly a quarter of the S&P 500
SPX,
-0.30%
is set to report results, with those companies representing 39% of the index by market value, according to calculations based on FactSet data. Given that the S&P 500 is weighted by market capitalization, this roster of companies will have an outsize impact on the profit trajectory for the index.

Earnings are expected to decline for the fourth consecutive quarter once all results are in for the latest period, but those companies that have reported thus far have been beating expectations in aggregate.

The FactSet consensus now models a 5% earnings decline for the index, compared with the 6.3% drop projected a week ago. If profit growth for the S&P 500 ultimately ends up positive, it would mark an end to the current earnings recession, which takes place when corporate profits drop for two or more consecutive quarters.

Apple Inc.
AAPL,
+1.61%
and Facebook Inc.
FB,
+0.60%
are among the highlights of next week’s slate, along with Tesla Inc.
TSLA,
+0.20%,
which will deliver results for the first time since it became a member of the S&P 500. All three high-profile companies are scheduled to report Wednesday afternoon and expected to have produced record revenue in the holiday quarter.

The holiday quarter is always crucial for Apple, which releases new iPhones in the fall. With a slightly later launch than usual this year due to the pandemic pushing sales into the period, Apple is widely expected to post its largest quarterly revenue total ever and its first ever total above $100 billion. The technology giant likely also continued to see benefits from remote-work and remote-schooling trends, which have driven strong iPad and Mac sales throughout the COVID-19 crisis.

Full preview: Get ready for Apple’s first $100 billion quarter in history

Facebook is also expected to post what should easily be a record quarter given strong digital advertising trends during the holiday period. Still, the company will face questions about user engagement and a decision to ban Donald Trump from the platform indefinitely over his role in inciting the violent riot at the U.S. Capitol. Bernstein analyst Mark Shmulik points to “continued usage fatigue” across social media as well as a “conversation skewed towards unmonetizable political events.”

Full preview: Facebook earnings still flourishing amid pandemic, economic slowdown and antitrust scrutiny

Tesla already disclosed delivery numbers for the full year that came in ahead of analyst expectations, and all eyes will be on the company’s outlook for 2021. RBC Capital Markets analyst Joseph Spak anticipates a delivery forecast of 825,000 to 875,000 million units for the full year, even though Chief Executive Elon Musk said on Tesla’s last earnings call that an analyst was “not far off” for expecting 840,000 to a million deliveries during 2021.

Full preview: Can Tesla’s sales growth match stock’s rise?

Here’s what else to watch for in the week ahead, which brings reports from 117 members of the S&P 500 and 13 Dow Jones Industrial Average
DJIA,
-0.57%
components.

Up in the air

Boeing Co.’s
BA,
-0.76%
journey remains turbulent even as the company’s 737-MAX jets were recertified after being grounded for almost two years. Though the company began deliveries of these aircraft, “the pace of delivering all 450 parked 737-MAX will be dictated by airline customers ability to absorb aircraft as well as air traffic demand,” according to Benchmark Company analyst Josh Sullivan.

Boeing’s Wednesday morning report will offer perspective on the company’s recovery expectations amid the pandemic, though Sullivan sees volatility ahead stemming from a recent equity offering and the impact of the COVID-19 crisis on airlines.

The fourth-quarter reports from U.S. airlines have been bleak so far, and American Airlines Group Inc.
AAL,
-0.06%
and Southwest Airlines Co.
LUV,
-0.80%
offer more on Thursday morning.

Can you hear me now?

Verizon Communications Inc.
VZ,
+0.35%
leads off a busy week of telecommunications earnings Tuesday morning, followed by AT&T Inc.
T,
+0.35%
Wednesday morning and Comcast Corp.
CMCSA,
-0.92%
Thursday morning.

For the wireless carriers, a key issue will be the impact of iPhone 12 promotions on recent results. Investors will also be looking for information about a recent wireless auction offering spectrum that will be crucial for 5G network deployments. Though the bids haven’t been made public yet, the auction drove record spending and AT&T and Verizon are both expected to have paid up handsomely to assert their standing. The question for investors is what impact these bids will have on the companies’ financial positioning.

Full preview: AT&T earnings to kick off a defining year for telecom giant

AT&T and Comcast have more media exposure than Verizon, and those two companies have been trying to contend with the new realities brought on by the pandemic. Both companies have made moves to emphasize streaming more with their film slates given theater closures, and the financial implications of these moves will be worth watching.

Paying up

The evolving situation with the pandemic is reflected perhaps no more clearly than in the results of Visa Inc.
V,
-1.52%,
Mastercard Inc.
MA,
-1.63%,
and American Express Co.
AXP,
-1.01%,
which have a pulse on the global consumer spending landscape. The companies should provide insight on a travel recovery toward the end of the year, as well as the impact of recent lockdowns.

Susquehanna analyst James Friedman wrote recently that his Mastercard revenue projection of $3.97 billion is slightly below the consensus view, though he also asked: “does anyone really care about Q4 2020?” Friedman is upbeat about mobile-payments and online-shopping dynamics that suggest “positive trends ahead” for Mastercard, which reports Thursday morning. Visa follows that afternoon, while American Express kicks of the week with its Tuesday morning report.

The chip saga continues

Advanced Micro Devices Inc.
AMD,
+1.38%
is poised to keep benefiting from Intel Corp.’s
INTC,
-9.29%
stumbles, which analysts expect to last for some time even as Intel prepares for a new, technology-oriented chief executive to take the helm.

“We have low confidence that Intel will be able to close that transistor gap quickly, and therefore expect it to continue to lose share for the foreseeable future,” Jefferies analyst Mark Lipacis wrote after Intel’s latest earnings report. AMD will show how that dynamic has played out on its side of the equation when it posts numbers Tuesday afternoon.

Full preview: If Intel gets its act together, can AMD maintain swollen valuation?

Other chip makers reporting in the week ahead include Texas Instruments Inc.
TXN,
-1.31%
on Tuesday afternoon; Xilinx Inc.
XLNX,
+1.26%,
which is in line to be acquired by AMD, on Wednesday afternoon report, when it will be joined by chip-equipment maker Lam Research Corp.
LRCX,
-0.06%
; and Western Digital Corp.
WDC,
-5.23%
on Thursday afternoon.

Busy week for the Dow

Among the 13 members of the Dow Jones Industrial Average
DJIA,
-0.57%
set to report this week are 3M Co
MMM,
-0.96%.
, Johnson & Johnson
JNJ,
+1.13%,
American Express, Verizon, and Microsoft Corp.
MSFT,
+0.44%,
all of which report Tuesday.

“Near term, we see the company’s COVID-19 vaccine readout as a key upcoming catalyst and believe efficacy in the 80%+ range would suggest a clear role for the product in the market,” J.P. Morgan analyst Chris Schott wrote of Johnson & Johnson.

Cowen & Co. analyst J. Derrick Wood sees tough comparisons for Microsoft especially in its Azure and server businesses, though he expects a more favorable situation going forward.

Full preview: SolarWinds hack may actually be a good thing for Microsoft

Wednesday brings results from Boeing and Apple, while Thursday features McDonald’s Corp.
MCD,
-0.07%,
Dow Inc.
DOW,
-0.10%,
and Visa. Honeywell International Inc.
HON,
-1.45%,
Chevron Corp.
CVX,
-0.30%,
and Caterpillar Inc.
CAT,
-0.13%
round out the week Friday morning.

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