Energy, health care earnings to dominate week

SAN FRANCISCO (MarketWatch)—Earnings from the energy and health care sectors will dominate investor attention as respective heavyweights report following a week where upside earnings surprises lifted the broader market out of a slump.

The broader market comes off a big week with the Dow Jones Industrial Average












DJIA, +0.76%










 finishing up 2.6%, the S&P 500 index












SPX, +0.71%










 having its best gain of 2014 with a 4.1% advance, and the Nasdaq Composite Index












COMP, +0.69%










 closing up 5.3%.

Dow components reporting this week

Company/Ticker	Report date	Estimated EPS / revenue	Market cap
Merck & Co. MRK, +1.73%	Oct. 27	88 cents / $10.64 billion	$163.36 billion
Pfizer Inc. PFE, +1.78%	Oct. 28	55 cents / $12.27 billion	$181.35 billion
DuPont DD, +0.60%	Oct. 28	53 cents / $7.95 billion	$62.78 billion
Visa Inc. V, -0.37%	Oct. 29	$2.10 / $3.19 billion	$133.53 billion
Exxon Mobil Corp. XOM, +0.40%	Oct. 31	$1.72 / $103.46 billion	$401.35 billion
Chevron Corp. CVX, -0.24%	Oct. 31	$2.54 / $52.97 billion	$220.64 billion

Out of the six Dow components reporting, two are the biggest names in the energy sector and two represent heavyweights in heathcare. The week also sees more than 150 companies on S&P 500 reporting.

The two sectors represent polar opposites of the broader market this year: Healthcare is the best performer on the S&P 500 while energy has fallen to a loss on the year following a plunge in oil prices.

Energy kept pace with health care until oil prices dropped.

Energy earnings expectations slip on slumping oil prices

Energy earnings are expected to take a big third-quarter hit. At the beginning of the third quarter, August crude oil futures were trading at about $105 a barrel on the New York Mercantile Exchange. By the end of September, the most actively traded futures contract settled just above $91 a barrel, a 13% decline over the quarter.

Exxon Mobil is expected to report quarterly earnings of $1.72 a share, down from the $1.91 a share consensus expected at the start of the third quarter, according to FactSet data.

Similarly, Chevron is estimated to report third-quarter earnings of $2.54 a share, down from the $2.79 a share consensus that started that quarter. ConocoPhillips earnings are expected at $1.19 a share, down from a forecast $1.48 a share at the beginning of the quarter. Earnings for the sector are expected to decline 1% from a year ago.

The outlook for the sector isn't looking much better. Since the end of September, analysts have slashed energy earnings estimates for the fourth quarter, according to John Butters, senior earnings analyst at FactSet.

"As a result of these cuts to estimates, the Energy sector has recorded the largest decrease in expected earnings growth (to -4.7% from 7.0%) of all 10 sectors during this time," Butters said in a recent note.

Health care looks healthiest on the revenue side

Health care earnings are much better positioned this season. The sector is expected to see earnings growth of 12.4% in the third quarter and the best revenue growth of any other sector at 10.2%. In addition to Pfizer and Merck, it's a big week for biotechs Gilead Sciences, Amgen, and AbbVie, along with drug distributor McKesson and pharmacy-benefits manager Express Scripts.

As far as earnings growth for the sector, Gilead is expected to do the heavy lifting. Excluding the biotech's contribution, earnings growth for the health-care sector is estimated at 5.7%, according to FactSet's Butters.

Social media to have its say

The social media side of tech will have some big shoes to fill following earnings beats from Microsoft, Yahoo, and Apple this past week. Earnings reports from Twitter and Facebook will start off and the week.

Notable earnings reports this week

Report Date	Company/Ticker (FactSet consensus EPS / revenue)
Oct. 27	Amgen Inc. AMGN, +0.01%  ($2.11 / $4.96 billion) Twitter Inc. TWTR, +0.56%  (1 cent / $351.1 million) Seagate Technology PLC STX, +3.26%  ($1.24 / $3.62 billion)
Oct. 28	Facebook Inc. FB, +0.79%  (40 cents / $3.12 billion) Gilead Sciences Inc. GILD, +3.29%  ($1.92 / $5.98 billion) McKesson Corp. MCK, +1.05%  ($2.73 / $42.98 billion)
Oct. 29	Express Scripts Holding Co. ESRX, +0.81%  ($1.29 / $24.9 billion) Anadarko Petroleum Corp. APC, -1.29%  ($1.27 / $4.25 billion) Phillips 66 PSX, +0.49%  ($1.69 / $47.8 billion)
Oct. 30	Starbucks Corp. SBUX, +1.30%  (74 cents / $4.24 billion) MasterCard Inc. MA, -0.12%  (78 cents / $2.45 billion) ConocoPhillips COP, +0.10%  ($1.19 / $13.63 billion)
Oct. 31	AbbVie Inc. ABBV, +1.29%  (77 cents / $4.82 billion) NextEra Energy Inc. NEE, +0.57%  ($1.55 / $4.52 billion) Dominion Resources Inc. D, +0.88%  (96 cents / $3.33 billion)