This week, we’ll get a look into the quarterly earnings of Johnson & Johnson (NYSE: JNJ).
Investors will also see insight into the crude oil inventory in the U.S.
Here’s more of what to look for in the week ahead on Wall Street:
On the IPO Front
There are a few initial public offerings on the calendar for this week.
One to look at is KnowBe4, which plans to price its IPO on Wednesday. It plans to trade on the Nasdaq under the ticker symbol KNBE.
What it is: The company is based in Clearwater, Florida and develops “software as a service” systems to prevent socially engineered attacks against a company platform.
It includes employee training to help educate staff on potential threats.
In its S-1 filing with the Securities and Exchange Commission, it had revenue of $174 million in 2020 — an increase from $120 million reported in 2019
Despite the revenue increase, KnowBe4 has reported net losses in each of the last three years.
However, those losses have narrowed considerably as the company has cut total operating expenses from $225 million in 2019 to $149 million in 2020.
KnowBe4 has raised at least $158 million from investors like Elephant Partners, KKR, Goldman Sachs, Tiger Global and Vista Equity Partners.
The company boasts around 37,000 customers globally and around 20% operating and free cash flow.
The offering: The company offers 11.8 million shares at a price range of between $16 and $18 per share.
It hopes to raise around $201 million with its IPO, which will be used to expand its working capital.
Part of the proceeds could be used for future acquisition.
According to Renaissance Capital, at the midpoint of $17 per share, KnowBe4 could see a market value of around $3.1 billion.
Morgan Stanley, Goldman Sachs, Bank of America Securities, KKR, Citi and UBS Investment Bank are all bookrunners on the deal.
The skinny: As long as there are hackers, there will always be a need for companies to invest in cybersecurity.
KnowBe4 actually uses a former hacker to help train employees on how to avoid outside hacking.
A concern is that the company has reported net losses over the last three years.
That can be mitigated a bit because those losses have shrunk as revenue continues to increase and expenses have been trimmed.
However, this is a very competitive market to be in with many experienced players in the game.
Deeper Dive: Johnson & Johnson Earnings
More large companies are set to release their quarterly earnings this week as the quarterly earnings season gets in full swing.
One of the bigger companies … and one in the news a lot lately … is Johnson & Johnson.
The $421 billion market cap pharmaceutical company made headlines last week when the Centers for Disease Control and Prevention paused the use of the company’s COVID-19 vaccine due to blood clotting issues.
The company will report its first-quarter 2021 earnings on Tuesday.
JNJ EPS Beats Expectations in 2020
In 2020, Johnson & Johnson’s earnings consistently beat market expectations.
In the first quarter and third quarter of the year, the company’s earnings beat analysts by $0.20 or more.
This time around, analysts project the company to report earnings of around $2.33 per share — the highest in a year.
JNJ Also Beats Expectations in Revenue
It’s the same story for the company’s total revenue.
In each of the last four quarters, JNJ has beaten Wall Street expectations.
And by a pretty good margin.
Analysts project the company will report revenue of $21.9 billion for the first quarter of 2021 — the highest quarterly revenue total in a year.
The skinny: The pause of the use of its vaccine won’t be indicated in this quarterly report.
That said, I would expect another revenue and EPS beat for Johnson & Johnson.
The biggest question will come in the next quarter, where expectations are for earnings of $2.30 per share on revenue of $22.3 billion.
Investor interest in JNJ hasn’t waned too much as the stock is fallen, but only about 2% off its 52-week high.
Money & Markets Week Ahead: Data Dump
On Wednesday, the U.S. Energy Information Administration will release its weekly U.S. crude oil inventory report.
This tracks the changes in commercial crude oil inventories held by U.S. firms.
Inventories have a direct correlation to the price of petroleum products, like gasoline.
An increase in inventories indicates weaker demand, while a decrease shows stronger demand.
U.S. Crude Oil Inventories Decline in Last 3 Weeks
As you can see in the chart above, crude oil inventories fell by nearly 6 million barrels last week.
That followed a 3.5 million barrel decrease the following week — all indicating an increase in demand.
Consensus estimates are for another 5.9 million barrel decrease in crude oil inventories for the week of April 21.
Earnings Reports
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out this week:
Monday
Coca-Cola Co. (NYSE: KO)
International Business Machines Corp. (NYSE: IBM)
Prologis Inc. (NYSE: PLD)
Tuesday
Johnson & Johnson (NYSE: JNJ)
Netflix Inc. (Nasdaq: NFLX)
Lockheed Martin Corp. (NYSE:LMT)
Wednesday
Verizon Communications Inc. (NYSE: VZ)
Crown Castle International Corp. (NYSE: CCI)
Kinder Morgan Inc. (NYSE: KMI)
Halliburton Co. (NYSE: HAL)
Thursday
Intel Corp. (Nasdaq: INTC)
AT&T Inc. (NYSE: T)
Union Pacific Corp. (NYSE: UNP)
Snap Inc. (NYSE: SNAP)
Friday
American Express Co. (NYSE: AXP)
Royal Caribbean Cruises Ltd. (NYSE: RCL)
That’s all for this week.
Until next time…
Safe trading,
Matt Clark
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.
