These 10 Companies Upped Guidance Despite Global Economic Headwinds

Published on July 22, 2022 at 9:16 am by Affan Mir in Hedge Funds, News

In this article, we will discuss the 10 companies that just raised their guidance despite global economic headwinds. To skip the detailed analysis and outlook for 2022, you can go directly to These 5 Companies Upped Guidance Despite Global Economic Headwinds.

Since the pandemic-induced recession, the global financial outlook looked bleak due to lockdowns and supply chain disruptions. In 2021, the world was set out on the road to recovery, which was again hampered by record inflation and rate hikes in 2022.

2022 Outlook

The inflation rate rose to 9.1% at the end of June 2022. In the prior month, it had peaked at a 40-year high of 8.6%, while the forecasts were looking at an 8.8% inflation. The gasoline prices surged by 59.9% and in turn, energy costs made a 41.6% leap. Furthermore, food costs grew by 10.4%, which was the highest increase since February 1981. Finally, the core CPI surge in May was estimated to be around 5.7%, while the actual rise was around 5.9%.

In all this commotion, according to a report by Edward Jones, the economy is on the road to recovery in 2022. The report reveals that the US economy has salvaged more than 80% of the jobs lost between March and April 2020 and expects the unemployment rate to fall below 4%, and wage growth will keep its upward trend throughout 2022. In addition, the inflation rate will stay above 3%, compared to the 2% average and is likely to drop in the second half of 2022.

Earnings Scheduled For June 30, 2022

June 30 is a significant date in the financial market. It is considered the end of a financial year and most of the government’s budgeting and finalized projects are disclosed on this date. For most companies, June 30 was the end of their fiscal quarter, or in some cases the financial year. UnitedHealth Group Incorporated (NYSE:UNH), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Abbott Laboratories (NYSE:ABT) are some of the significant companies that recently posted their quarterly reports and raised their guidance for the rest of the year.

These 10 Companies Upped Guidance Despite Global Economic Headwinds

Source:Pixabay

Our Methodology

The companies on this list recently announced the reports for the quarter ending on June 30, 2022. Furthermore, all of these companies raised their guidance for the rest of the year or FY 2023.

The stocks have been listed in ascending order of their market capitalization as of July 21, 2022.

These Companies Upped Guidance Despite Global Economic Headwinds

10. Aehr Test Systems (NASDAQ:AEHR)

Market Cap as of July 21: $334.92 million

Aehr Test Systems (NASDAQ:AEHR) is a California-based semiconductor equipment and materials company. The company provides test systems for burning-in and testing logic, optical, and memory integrated circuits. The company announced its Q4 2022 results on July 19 and provided its FY 2023 guidance. The full year ended on May 31.

Aehr Test Systems (NASDAQ:AEHR)’s reported EPS was in-line with the estimates at $0.23. In the same quarter of the previous year, the non-GAAP net income was $930,000 or a diluted EPS of $0.04. Furthermore, the net sales of the company surged by 166% YoY to $20.3 million.

For FY 2022, Aehr Test Systems (NASDAQ:AEHR) reported a net sales growth of 206% to $50.8 million from $16.6 million in FY 2021. The company reported a non-GAAP net loss of $3.2 million in FY 2021 and recorded a non-GAAP net income of $11.7 million in FY 2022.

Aehr Test Systems (NASDAQ:AEHR) provided full-year guidance for FY2023. The revenues are expected to be at least $60 million to $70 million for FY 2023 ending on May 31, 2023. Due to the rising demand for silicon carbide in electric vehicles, the company expects the bookings to grow steadily in FY2023.

Aehr Test Systems (NASDAQ:AEHR) is one of the companies that announced its quarterly results and updated its guidance along with UnitedHealth Group Incorporated (NYSE:UNH), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Abbott Laboratories (NYSE:ABT).

9. Sonoco Products Company (NYSE:SON)

Market Cap as of July 21: $5.975 billion

Sonoco Products Company (NYSE:SON) is a South Carolina-based consumer packaging products company. It operates in North and South America, Europe, Australia, and Asia.

According to the Q2 2022 reports, Sonoco Products Company (NYSE:SON) reported a non-GAAP EPS of $1.76, outperforming the estimates by 11 cents. The revenue of $1.91 billion was in-line with the analyst consensus. Furthermore, the company also declared a quarterly dividend of $0.49, to be paid out on September 9 to the shareholders on record as of August 10.

Owing to its Q2 results, Sonoco Products Company (NYSE:SON) expects its base EPS to be between $1.35 and $1.45, compared to the estimated $1.15. Furthermore, the company raised its FY2022 base EPS guidance in the range of $6.20 to $6.30 from the previous outlook of $5.25 to $5.45. The FCF guidance remained unchanged at $365 million to $415 million.

8. Rexford Industrial Realty, Inc. (NYSE:REXR)

Market Cap as of July 21: $8.632 billion

Rexford Industrial Realty, Inc. (NYSE:REXR) is an industrial REIT operating in Southern California. The company operates 252 properties with close to 28 million rentable square feet.

Rexford Industrial Realty, Inc. (NYSE:REXR) topped its Q2 2022 FFO estimates by $0.01 after reporting an FFO per share of $0.49. The company barely missed the revenue estimates by approximately $95,000 after generating $149.12 million. However, the revenues were up by $104 million, compared to the same quarter in 2021.

Rexford Industrial Realty, Inc. (NYSE:REXR) raised its core FFO per diluted share guidance to $1.87-$1.90 from the previous range of $1.84-1.88. The previous same property portfolio net operating income growth was expected to be 4.0% to 5.0%, which was raised to 5.75% to 6.25%.

Here is what Baron Funds had to say about Rexford Industrial Realty, Inc. (NYSE:REXR) in its Q4 2021 investor letter:

“Rexford Industrial Realty, Inc. contributed positively to performance during the fourth quarter. Rexford is a high-growth REIT that owns a portfolio of industrial warehouse properties concentrated in Southern California. Outperformance was driven by continued robust business fundamentals that led to better-than-expected third quarter financial results and raised full-year guidance. Rexford is also seeing accelerating acquisition activity, which is accretive to the company’s profitability.”

7. Knight-Swift Transportation Holdings Inc. (NYSE:KNX)

Market Cap as of July 21: $8.667 billion

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is America’s fifth-largest trucking company. Moreover, the company sells non asset-based brokerage services.

According to the second-quarter 2022 reports, Knight-Swift Transportation Holdings Inc. (NYSE:KNX) surpassed its EPS estimates of $1.35 after recording an EPS of $1.41. The revenues also exceeded the estimates of $1.85 billion by $109.49 million. The revenues surged by 49% compared to the previous quarter, while the net income of $340 million represented a 66% growth on a QoQ basis. Knight-Swift Transportation Holdings Inc. (NYSE:KNX) exited the second quarter with $529 million of free cash flow and a reduction of $86 million in debt.

Looking forward, Knight-Swift Transportation Holdings Inc. (NYSE:KNX) revised its EPS guidance for FY 2022 to $5.30-$5.45 compared to the previous estimates of $5.20 to $5.40. The current full-year EPS consensus stands at $5.33.

6. Biogen Inc. (NASDAQ:BIIB)

Market Cap as of July 21: $31.28 billion

Biogen Inc. (NASDAQ:BIIB) is an American biotechnology company, specializing in therapies and treatments for patients with neurological and neurodegenerative diseases. After the company posted its Q2 results, RBC Capital analyst Brian Abrahams on July 20 maintained an Outperform rating on Biogen Inc. (NASDAQ:BIIB)’s shares and lowered the price target to $259 from $264.

Biogen Inc. (NASDAQ:BIIB) posted solid Q2 results on July 20, beating the analyst estimates of $4.07 by a significant margin of $1.18. The company also outperformed its revenue estimates after reporting $2.59 compared to the estimated $2.48.

Biogen Inc. (NASDAQ:BIIB) raised its revenues and EPS guidance for FY 2022 after announcing its Q2 results. Priorly, the revenues for the year were expected to be $9.7 billion to $10 billion but were revised to $9.9 to $10.1 billion. The adjusted earnings per share are now expected to be between $15.25 and $16.75, up from $14.25 to $16.00. The adjusted SG&A and R&D expenses estimates remained unchanged at $2.3 billion-$2.4 billion and $2.2 billion-$2.3 billion, respectively.

UnitedHealth Group Incorporated (NYSE:UNH), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Abbott Laboratories (NYSE:ABT), along with Biogen Inc. (NASDAQ:BIIB) reported their quarterly results on June 30, 2022.

Here is what Longleaf Partners Fund said about Biogen Inc. (NASDAQ:BIIB) in its Q4 investor letter:

“Biogen (83%, 2.43%; 5%, 0.10%), a biotechnology company specializing in therapies for the treatment of neurological diseases, was a strong contributor before we exited the position in the first half. We began acquiring shares in January 2021, paying between 9- 11x FCF and a discount to our appraisal, even if the company’s promising drug pipeline turned out to be worth 0. After Biogen’s Alzheimer’s drug Aduhelm was approved in June, we quickly sold out after the stock’s price appreciated over 70% and briefly exceeded our appraisal of the value. We re-initiated a position in Biogen in December at a price below our original cost basis from January. The stock became very cheap once again after Aduhelm’s early sales disappointed due to its high initial cost before management correctly cut the price. We think Biogen’s core Multiple sclerosis (MS) and Biosimilars businesses are strong enough to create sustainable double-digit EPS growth, even if Aduhelm and the entire Alzheimer’s program is worth zero. We also expect a board led by large shareholders to continue the company’s accretive repurchase, while considering other beneficial corporate actions.”

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