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Based on what we saw last year, tonight's numbers will give Wall Street its cue for the next few months. That's right: Apple is coming and a lot is riding on this. Everything else will be a sideshow until the market gets a chance to digest what the giant has to say.

 

First, of course, we need to catch up from yesterday. The numbers are good enough. The response is on the brittle side. Shopify (SHOP: $313, down 2% this week) actually beat the all-important revenue target with $391 million, giving us 48% growth when we weren't expecting anything better than 42% there. That's the real reason we love this company. However, a surprise operating loss when Wall Street wanted a profit sent the stock down . . . and a warning that the cash burn would continue until the end of the year kept it there. (Of course, they have $2 billion in cash and not much debt, but do you think Wall Street really notices?)

 

As far as we're concerned, if you were in Shopify because you liked the profitability at this stage, this is the gut check you needed. The company is still so early in its growth cycle that the price-per-earnings math is practically obscene. We're here for the top-line trend instead, and on that front we're happy with what we're getting. (Revenue guidance remains strong.)

 

And it's not like the business is deteriorating. Gross margins are still well above 55%. If not for management's decision (a good one, in our view) to build a network of warehouses for commercial partners, Shopify would be as profitable as we all projected. We're also amused that the only people on Wall Street who spoke up about this company yesterday moved their targets UP . . . in one case all the way up to $400. The bulls will be vindicated here. Even our $450 Target is within sight.

 

Likewise, Exact Sciences (EXAS: $91, up 1% this week but then down 8% overnight) and, to a smaller extent, Paycom (PAYC: $209, flat and then down 2% overnight), hit their numbers but dropped because management neglected to do more than confirm existing guidance. If investors wanted better than perfection, their lack of nerve is a buying opportunity for the rest of us.

 

Paycom did everything right with $175 million in revenue ($4 million above our target) turning into $0.70 per share in profit ($0.03 above our target) and 4Q19 guidance is actually a little above what we wanted. We've seen this before. The company hits its marks and gets punished for not telling us to look forward to even better things ahead. Then over the quarter the stock recovers.

 

Exact Sciences is a similar story. We wanted $216 million on the all-important top line and got $218 million. We were ready to accept a 41 cent per-share loss and the company only lost 31 cents. All good things. But revenue guidance for the current quarter was only in line with our target and the stock is down. Sales are still ramping up 60% a year. What more can we ask?

 

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Earnings Preview: Annaly Capital Management (NLY: $8.94, up 2% this week)

Earnings Date: Wednesday, 5:00 PM ET

Expectations: 3Q19
Revenue: $1.0 billion
Net Profit: $374 million
EPS: $0.25

Year Ago Quarter Results
Revenue: $800 million

Net Profit: $390 million
EPS: $0.30

Implied Revenue Growth: 20%
Implied EPS Decline: 17%

Target: $10
Sell Price: $8
Date Added: October 25, 2019
BMR Performance: 2%

 

Key Things To Watch For in the Quarter

 

We're here because with the yield curve healing, Annaly can once again borrow cheap and buy longer-term mortgages that pay enough interest to cover the financing costs as well as the quarterly dividend. The Fed is spending $60 billion a month to keep those short-term rates down and then today's rate cut will help that process even more. As a result, this company has probably seen the worst. We're looking for better days ahead.

 

That said, it will be good when management is confident enough in the operating environment to restore the dividend to $0.30 per share. We aren't getting that this time around. All we're looking for is for the company to make enough money to make its current $0.25 obligation, which is enough to translate into an 11.2% yield right now. And naturally, any good things management can share about their outlook will be great for rebuilding Wall Street's confidence in this company.

 

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Earnings Preview: MetLife (MET: $47, up 1%)

Earnings Date: Wednesday, 5:00 PM ET

Expectations: 3Q19
Revenue: $16.4 billion
Net Profit: $1.3 billion
EPS: $1.40

Year Ago Quarter Results
Revenue: $16.4 billion

Net Profit: $1.3 billion
EPS: $1.38

Implied Revenue Growth: flat
Implied EPS Growth: 1%

Target: $56
Sell Price: $39
Date Added: October 30, 2018
BMR Performance: 20%

 

Key Things To Watch For in the Quarter

 

This is a holding quarter for MetLife, which is coping with tough year-over-year comparisons for its massive investment portfolio (lower interest rates are a drag) as well as tactical shifts in its global insurance operations. Next quarter should get the growth wheels turning again, so guidance is critical.

 

Otherwise, the company is holding up a lot better than the market as a whole. Even a little bottom-line growth is rare and precious this quarter. MetLife should give us at least a few cents per share of progress, even if it's the product of buybacks instead of organic expansion. Management has retired 65 million shares over the past year so every dollar earned now stretches 6% farther than it did in 3Q18. That's enough to keep the headline numbers moving in the right direction.

 

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Earnings Preview: Universal Display (OLED: $175, flat)

 

Earnings Date: Wednesday, 5:00 PM ET

Expectations: 3Q19
Revenue: $86 million
Net Profit: $25 million
EPS: $0.58

Year Ago Quarter Results
Revenue: $78 million

Net Profit: $23 million
EPS: $0.48

Implied Revenue Growth: 10%
Implied EPS Growth: 20%

Target: $250
Sell Price: $195
Date Added: May 8, 2018
BMR Performance: 83%

 

Key Things To Watch For in the Quarter

 

It's been a fantastic couple of quarters as Universal Display claws its way back to record profit fundamentals. Now we're looking for a pivot from recovery to real expansion, but this is probably not the moment when that happens. All we want to see is a little progress . . . not much at all, compared to the recent past, but 10% on the bottom line is a whole lot better than what investors are looking at from the S&P 500.

 

Our expectations don't need to be high because the recent past has been so good. Universal Display has given BMR subscribers 83% in roughly 17 months. Very few stocks can compete with that. Naturally, we'd be delighted to see the rally continue at this pace. All it takes is a shred of good news of a new supply deal. Apple might have nice things to say about Universal Display phone screens. Any of Asia's television manufacturers could pipe in. A company this size doesn't need much boosting to move fast.

 

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Earnings Preview: Facebook (FB: $189, up 1%)

 

Earnings Date: Wednesday, 5:00 PM ET

Expectations: 3Q19
Revenue: $17.4 billion
Net Profit: $5.5 billion
EPS: $1.92

Year Ago Quarter Results
Revenue: $13.7 billion

Net Profit: $5.1 billion
EPS: $1.76

Implied Revenue Growth: 27%
Implied EPS Growth: 9%

Target: $220
Sell Price: $177
Date Added: May 21, 2019
BMR Performance: 2%

 

Key Things To Watch For in the Quarter

 

Now we're moving into the big leagues. Facebook is a long way from the days when self-imposed regulation of customer-supplied advertising messages took a big bite out of its margins. Growth is back, strong enough to justify this company's inclusion in the top tier of Technology giants.

 

As long as the headline numbers are where they need to be, investors will turn their attention to the audience metrics. We need to see Facebook growing, both in terms of raw account numbers and user engagement. Any color on how well management is monetizing additional properties like Instagram is a bonus.

 

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Earnings Preview: Apple (AAPL: $243, down 1%)

 

Earnings Date: Wednesday, 5:00 PM ET

Expectations: 3Q19
Revenue: $63.0 billion
Net Profit: $12.8 billion
EPS: $2.84

Year Ago Quarter Results
Revenue: $62.9 billion

Net Profit: $14.1 billion
EPS: $2.91

Implied Revenue Growth: up a bit
Implied EPS Decline: 9%

Target: $238
Sell Price: We would not sell Apple.
Date Added: February 4, 2016
BMR Performance: 160%

 

Key Things To Watch For in the Quarter

 

From our perspective, the numbers are largely preordained. CEO Tim Cook will do what it takes to engineer a slight upside surprise. If he can't do it, we're in for another miserable fall reminiscent of last year.

 

The real excitement will be on the revenue side. Apple needs to show the world that this year's iPhone launch is better than the last one. Everything else is secondary. Service growth will be nice, but it's still only a small piece of the overall puzzle here. Speakers, the Apple Watch and other relatively new product categories are likewise part of the sizzle, but they're a long way from being anything like the main event.

 

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Earnings Preview: Office Properties Income Trust (OPI: $32, flat)

 

Earnings Date: Thursday, 8:00 AM ET

Expectations: 3Q19
Revenue: $165 million
Net Loss: $6 million
EPS: -($0.19)
Funds From Operations: $1.40

Year Ago Quarter Results
Revenue: $106 million

Net Profit: $0.00
EPS: $0.00
Funds From Operations: $2.12

Implied Revenue Growth: 55%
Implied EPS Decline: flip from breakeven to loss
Implied FFO Decline: 34%

Target: $36
Sell Price: $22
Date Added: April 21, 2016
BMR Performance: -27%

 

Key Things To Watch For in the Quarter

 

Year-over-year comparisons are still extremely choppy in the wake of this company's creation in the merger of two once-independent REITs. As a result, our expectations are on the loose side. We won't get upset if a few of the comparisons are off, especially when it comes to earnings per share, where Real Estate accountants are notoriously "creative" even in the simplest seasons. With so many variables feeding into Office Properties, just about anything will happen.

 

The one metric we won't compromise on is Funds From Operations. The minimum that will make us happy is $0.55 per share, enough to cover the current dividend. However, if the combined company is throwing off as much cash as we hope, shareholders may get a piece of that additional income. We'd love that. Management cut the old payout as part of the merger, so any gesture toward restoring what we gave up will be welcomed.

 

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Earnings Preview: The Carlyle Group (CG: $28, up 1%)

 

Earnings Date: Thursday, 8:00 AM ET

Expectations: 3Q19
Revenue: $518 million
Net Profit: $140 million
EPS: $0.40

Year Ago Quarter Results
Revenue: $613 million

Net Profit: $86 million
EPS: $0.25

Implied Revenue Decline: 15%
Implied EPS Growth: 60%

Target: $28
Sell Price: $20
Date Added: March 6, 2017
BMR Performance: 85%

 

Key Things To Watch For in the Quarter

 

The last name BMR subscribers need to watch in the coming 24 hours, Carlyle may prompt more cheering than most. We've counseled patience for months as management navigates a sluggish period for Private Equity. Now, at last, the comparisons finally turn back in our favor. Growth is back on the menu. That's all we wanted.