Market Overview

The Week Ahead: Earnings from Chesapeake, Tesla and Herbalife

The third full week of February will be one of the last weeks of earnings season. At this point, most of the S&P 500's components have already reported.

Still, investors will get earnings reports from Allscripts Healthcare (NASDAQ: MDRX), Herbalife (NYSE: HLF), Tesla (NASDAQ: TSLA), MGM (NYSE: MGM), DTE Energy (NYSE: DTE), Chesapeake Energy (NYSE: CHK), Sourcefire (NASDAQ: FIRE), and The Carlyle Group (NYSE: CG).

Earnings reports

Multi-level marketer Herbalife will report earnings Tuesday. The company is expected to post an earnings per share figure of $1.03 on revenue of about $1.05 billion. However, at this point, the company's actual earnings performance might be irrelevant to its share price.

For the past several weeks, Herbalife shares have been affected more by comments from hedge fund managers than actual earnings fundamentals. Pershing Square's Bill Ackman has bet against Herbalife, alleging that the company is a pyramid scheme. Other fund managers, most recently Carl Icahn, have gone against Ackman, buying up Herbalife shares.

In response to Icahn's stake, Ackman told Benzinga that he welcomed Icahn's involvement, as it would shed further light on the situation at Herbalife.

Electric carmaker Tesla (NASDAQ: TSLA) will report earnings Wednesday. Like Herbalife, Tesla has been at the center of some news controversy. Specifically, the company's CEO Elon Musk made waves after he challenged the validity of a report in The New York Times.

A New York Times reporter, John Broder, claimed that the Model S he was test driving ran out of battery charge more quickly than the company had promised. With no charge left, the car broke down by the side of the road and had to be towed away.

Despite these issues, Dougherty & Co remains bullish on Tesla. Analyst Andrea James has a Buy rating and $45 price target on the stock, which closed at $37.04 Friday.

“We believe the stock has farther to go,” James told Benzinga. “The stock remains heavily shorted, mostly on concerns about long-term demand for Tesla's vehicles, skepticism over Tesla's ability to compete with the OEM establishment and concerns about margin targets and profitability. We believe there is plenty of room for investor sentiment to improve, misperceptions to correct and long-term investment interest to grow.”

Natural gas giant Chesapeake will report Thursday. After being a controversial stock in 2012, Chesapeake seems to have taken a step forward this year. Aubrey McClendon, the company's CEO and founder, will retire April 1. Although he built the company, McClendon was at the source of much of last year's controversy, burdening the company with debt levels many found to be excessive.

Analysts expect Chesapeake to post an earnings per share figure of $0.14 on revenue of $2.86 billion. But like Herbalife, investors may be concerned with things other than the actual report. Argus Research's Phil Weiss has a Hold rating on the stock with no price target.

“If I wanted to hold CHK stock, then I'd want to know what management's plans are to alleviate and unwind the financial complexity to clean up the balance sheet,” Weiss told Benzinga. “More insights about the CEO search, the status of efforts to sell assets and what, if any, changes we can expect to its planned spending in 2013.”

Economic releases

In the U.S., investors will get data on inflation. Wednesday will bring reports on the producer price index, while data on the consumer price index will be released Thursday. Higher than expected PPI and CPI might prompt the Federal Reserve to reconsider its loose monetary policy.

Internationally, both German PPI and CPI will be released Wednesday along with Eurozone consumer confidence. Germany's GDP will be released Friday, along with Canadian retail sales and the Canadian CPI.

Weekly calendar

Monday

  • U.S., Canadian markets closed
  • Mexican GDP year-over-year (Expected 3.57%)

Tuesday

  • Earnings from: Allscripts Healthcare, Herbalife
  • German ZEW Economic Sentiment (Expected 35), Wholesale Sales month-over-month (Expected -1%), Australian Wage Price Index (Expected 0.8%)

Wednesday

  • Earnings from: Walter Energy (NYSE: WLT), Tesla Motors, Soda (NASDAQ: SODA), MGM, DTE Energy
  • German CPI month-over-month (Expected -0.5%), French CPI month-over-month, U.K. Claimant Count Change (Expected -5K), U.S. Core PPI year-over-year (Expected 1.6%), U.S. Building Permits (Expected 915,000), U.S. Housing Starts (Expected 925,000)

Thursday

  • Earnings from: SM Energy (NYSE: SM), Swift Energy (NYSE: SFY), Nordstrom (NYSE: JWN), Sourcefire (NASDAQ: FIRE), Atlas Energy (NYSE: ATLS)
  • U.S. Core CPI year-over-year (Expected 1.8%), U.S. Existing Home Sales (Expected 4.9M), Philly Fed (Expected 1)

Friday

  • Earnings from: Crown Media (NASDAQ: CRWN), Atlas Resource Partners (NYSE: ARP)
  • German GDP, German Ifo Business Climate Index (Expected 105), Canadian Core CPI month-over-month

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