Stocks rebounded from significant losses last week. Both the Dow Jones Industrial Average (^DJI 0.69%) and the S&P 500 (^GSPC 1.20%) finished modestly higher after initially falling on news that hostilities had begun between Russia and Ukraine.
The week ahead is sure to bring more developments on the geopolitical front, but earnings news will drive movements in individual stocks. With that in mind, let's look at why Zoom (ZM 3.49%), Ambarella (AMBA 0.49%), and Target (TGT -0.36%) are among the most anticipated earnings reports to watch.
Image source: Getty Images.
1. Zoom's outlook
Investor sentiment is negative heading into Zoom's Monday earnings announcement. While the video communications specialist is still expanding, its prospects aren't as attractive as they were a year ago when most gatherings were occurring online.
Zoom is expected to boost sales by about 20% in the fourth quarter on top of the prior year's 369% spike. Revenue should cross $1 billion compared to less than $200 million in the same period in 2019.
The big question is how well Zoom can capitalize on its bigger customer base at a time when its services are in less demand. CEO Eric Yuan and his team believe that path to growth runs through innovation like the new event presentation and whiteboarding functionality. "We are well on our way to becoming an indispensable platform," Yuan told investors back in late November.
Wall Street is skeptical that Zoom can keep growing quickly after crossing $4 billion in sales. Most investors forecast just a 16% increase this year, compared to the over 50% spike in 2021. Zoom's stock will swing depending on how closely management's official outlook matches that prediction.
2. Ambarella's supply chain
Ambarella's growth potential has improved dramatically with the company's pivot toward the computer vision tech that supports attractive niches like autonomous driving, security cameras, and artificial intelligence. Demand in those industries should help lift sales by a blistering 45% in Monday's report.
The gains might be overshadowed by mounting supply chain pressures, which management mentioned in November. Its customers likely had trouble securing enough components like semiconductor chips, perhaps pushing many orders into future quarters.
That delay isn't a risk to Ambarella's long-term outlook, though. Its video processing technology is finding a footing in autonomous driving, along with other key growth niches like radar perception. Overall, look for management to issue a bullish outlook as they aim for roughly $500 million of annual sales in the next year, even if inventory troubles could push more of that growth toward the second half of 2022.
3. Target's holiday growth
The pressure is on for Target to issue a great earnings report on Tuesday. Rival Walmart (WMT -1.75%) said in mid-February that it gained market share over the holiday season, in part thanks to its ability to secure enough merchandise, and keep prices low, while inflation spiked. Target's announcement this week will show whether it stumbled in these areas.
Heading into the report, most investors are looking for solid sales and earnings growth to close out a record fiscal 2021. The main question is whether the factors that helped Target win during the pandemic, like soaring demand for premium products and fast delivery methods, will persist as COVID-19 fades.
The chain gained about $10 billion in new market share and saw its profitability spike to nearly 10% of sales. It's not clear yet what portion of these gains will remain in 2022 and beyond.
