3 Blue-Chip Stocks Drowning in Earnings Despair


  • Best to avoid or sell these blue chips if you still carry them.
  • JetBlue Airways (JBLU): The discount airline posted a net loss of $104 million. 
  • Levi Strauss (LEVI): The company is cutting 10% of its workforce after its Q4 print disappointed Wall Street.
  • Pfizer (PFE): Declining sales of the pharma company’s Covid-19 vaccine are just part of the problem. 
Blue-Chip Stocks - 3 Blue-Chip Stocks Drowning in Earnings Despair

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While overall earnings for the final quarter of 2023 have been positive, not every company is celebrating.

A number of well-known concerns missed the mark with their latest prints, plummeting their share prices. For many companies, disappointing results for the fourth quarter of last year continue a steady decline in their business. As some formerly strong Blue-Chip companies deliver subpar results, we’re learning about declining sales and a loss of market share. Additionally plaguing them are failed new products, aborted takeovers, weakening demand, and corporate restructurings designed to make it all better.

It’s a dramatic time on Wall Street when the wheat is separated from the chaff. The key for investors is to parse through the numbers and separate winners from losers. Let’s explore three blue-chip stocks drowning in earnings despair.

JetBlue Airways (JBLU)

jetblue (JBLU) airplane on a runway
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JetBlue Airways (NASDAQ:JBLU) saw its stock drop nearly 5% immediately after the carrier’s Q4 2023 report. A net loss of $104 million and issuing a weak outlook for the year ahead didn’t sit well.

The airline announced an EPS loss of 19 cents compared to a profit of Wall Street’s expected 28 cents. Revenue totaled $2.33 billion versus $2.29 billion that was expected among analysts who track the company’s progress. Sales fell 3.7% from a year ago.

The net loss of $104 million compared to a year earlier profit of $24 million. As bad as the Q4 print was, the forward guidance was worse. JBLU expects revenue to decline nearly 9% in the current first quarter of 2024. That’s more than the 5.5% decline Wall Street had estimated. JetBlue Airways said its capacity in the current quarter is likely to be down 6% from a year ago. The bad results and guidance come after a federal judge barred its planned $3.8 billion acquisition of rival Spirit Airlines (NYSE:SAVE).

All the negative news has dragged JBLU stock lower. Over the last 12 months, the company’s share price has declined 31%, bringing its five-year decrease to 67%. New CEO Joanna Geraghty just took over the top job at the airline and has been given a mandate to improve profitability.

Levi Strauss (LEVI)

Red Levi Strauss (LEVI) logo
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Levi Strauss (NYSE:LEVI) is a legacy retailer that continues to struggle. The company known for its denim and blue jeans led off its Q4 2023 earnings print by announcing that it plans to cut 10% of its global workforce amid a broad restructuring of its business. The workforce reduction grabbed some headlines. But it couldn’t take away from the fact that Levi Strauss posted poor financial results and issued a soft outlook for the year ahead.

The company reported Q4 2023 EPS of 44 cents compared to 43 cents that had been expected on Wall Street. Revenue in the quarter amounted to $1.64 billion versus the forecast of $1.66 billion. Levi Strauss said that it expects revenue to rise 1% for all of this year, lower than the 4.7% that Wall Street had forecast. As for the job cuts, they’ll take place in the first half of this year and could impact as many as 2,000 staff. LEVI stock is down 1% in the last 12 months and down 18% over the past five years.

Pfizer (PFE)

blue Pfizer logo on the windows of a corporate building PFR stock
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Pharmaceutical giant Pfizer (NYSE:PFE) is another company that continues to struggle. It needs to get its sales back on track after a steep drop-off in global purchases of its Covid-19 vaccine and related medications.

The company did manage to report a surprise profit for Q4 2023 as sales of its Covid-19 medications performed better than expected at the outset of cold and flu season. However, Pfizer’s Q4 revenue missed its target, and the pharma concern offered tepid forward guidance.

The drug maker reported Q4 EPS of 10 cents compared to a loss of 22 cents that had been expected. Revenue totaled $14.25 billion, which was below the $14.42 billion that was forecast on Wall Street. Overall sales were down 41% from a year earlier. While Pfizer’s Covid-19 vaccine sales performed better than expected at $5.36 billion, they were down 53% from a year ago. Looking ahead, Pfizer reiterated its full-year 2024 guidance that calls for revenue of $58.50 billion and earnings of $2.05 per share.

In addition to declining sales of its Covid-19 medications, Pfizer has also struggled to develop a weight loss drug. Management said on its earnings call that they hope the $34 billion acquisition of cancer drug maker Seagen, which closed during Q4 of last year, will help restore investor confidence. PFE stock is down 37% in the last 12 months, including a 7% decline so far in 2024.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

Article printed from InvestorPlace Media, https://investorplace.com/2024/02/3-blue-chip-stocks-drowning-in-earnings-despair/.

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