Ugly Results for Premarket Earnings

Alan Penny

28 January 2020

3 min read

Wall Street sign

  • Premarket earnings continue to cause a lot of angst
  • Some of the biggest companies in the US have disappointed
  • A look at Pfizer, 3M, and DelphiTech earnings

Heading into the Tuesday session, several companies in the United States reported premarket. As a general picture, it was very ugly. This could lead to further declines in the stock market, well beyond the headline hype and noise of the coronavirus.

day-to-day attitudes could very well continue to be very noisy

Because of this, it’s likely that the market will continue to see a lot of volatility and negativity. But, as the earnings season is in full effect, the day-to-day attitudes could very well continue to be very noisy in general.

The reports

DelphiTech earnings

Delphi Tech exploded to the upside in premarket trading on Tuesday, after BorgWarner said it is acquiring the company in an all-stock deal with a value of $3.3 billion.

BorgWarner makes technology for combustion, hybrid, and electric vehicles, so the acquisition of Delphi Tech makes sense. It stated that Delphi shareholders will receive 0.4534 shares of BorgWarner stock for each share of Delphi Tech owned. This will leave Delphi shareholders owning roughly 16% of the company.

As a result, Delphi Tech shares rose 61% before the bell rang, while BorgWarner shares lost 6.99% in premarket trading simultaneously. The deal is expected to help strengthen the power electronics division of BorgWarner.

Furthermore, the board of BorgWarner has approved $1 billion of stock buybacks going forward.

3M earnings

3M fell 1.5% in premarket trading on Tuesday, after the consumer and industrial products company reported fourth-quarter profits that missed expectations. However, revenue met the same expectations.

The company suggested it was going to cut 1500 jobs as part of their restructuring. It said it is implementing a restructuring plan to offer annualized savings of $110 million-$120 million with the jobs cuts, which makes up about 1.6% of the global workforce.

The restructuring led to a $134 million charge in the fourth quarter. Going forward, 3M says it expects an EPS of $9.30 to $9.75  for 2020.

3M produces numerous items, a couple of the most important ones being Scotch tape and Post-It notes. The company said its net income fell to $969 million, or $1.66 a share, from $1.35 billion or $2.27 a share from a year ago.

Pfizer Inc. earnings

Shares of Pfizer Inc. have been volatile in premarket trading on Tuesday, initially falling 1.94% before the opening bell rang.

The pharmaceutical company reported a fourth-quarter profit that missed expectations, while the revenue rose in line with forecasts. It also reported a net loss that narrowed down to $337 million, or $0.06 a share, from $394 million or $0.07 a share from a year ago.

Sales fell 9% while biopharmaceuticals rose 7%. For the year 2020, Pfizer expects adjusted EPS to be $2.82, perhaps all the way to the $2.92 level.

Powerhouse influencers

It should be noted that these are some of the large companies in the United States, and this will, of course, have an influence on the Dow Jones Industrial Average.

It looks as if the markets are set for losses during the trading session on Tuesday, perhaps continuing the pullback that started on Friday. The markets have been overheated lately, so this will be welcomed by longer-term investors.

Written By
Alan Penny

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