Next week on the stock market

LVMH’s growth has come off the boil in recent quarters, as tough economic conditions have even seen some luxury shoppers controlling their budgets a bit more. Organic revenue growth’s still in positive territory though, up 2% to €41.7bn in the first half. Sales in the important Asia region made up almost a third of that total, of which Chinese consumers account for a significant chunk.

With the Chinese central bank having unleashed a wave of stimulus measures in late September, there’s been a fresh jolt of optimism around the outlook for LVMH. Although that has dissipated a little, the expansionary moves made by Chinese leaders are aimed at stimulating lending to help boost the overall economy. However, what could be a real game changer is if this is accompanied by fiscal stimulus to put more money in consumers’ pockets. It’s hoped that this will convince them to save less and spend more.

While it’s too early to tell if the Chinese stimulus package will help lead to a sustained economic recovery we’re keen to see if it’s enough to shift full-year sales guidance higher when LVMH’s third-quarter update is released next week.

ASML’s revenues so far this year have been lagging levels seen in 2023. The company’s banking on a step change in sales of micro-chip manufacturing systems in the last two quarters of the year to keep 2024 revenue flat overall. The consensus of analyst forecasts for next Wednesday’s third quarter results is for year-on-year revenue growth of 7% to €7.1bn. That’s slightly ahead of the mid-point of company guidance which itself disappointed the market when issued in July.

Analysts are looking for a bumper end to the year to take up the slack, earmarking quarter-on-quarter growth of over 24% to €8.8bn in the final quarter, so we’ll be carefully monitoring Q4 guidance. We think ASML’s technology leadership leaves it well placed to benefit from long-term megatrends such as artificial intelligence, but some of its key customers are facing their own challenges so we’ll also be looking for any pointers on next year’s outlook where growth is currently expected to accelerate further.

Netflix comes into next week’s third-quarter results on a high. Recent performance has been strong, with subscriber growth smashing expectations back in July. Several key initiatives are working in tandem: the successful rollout of paid sharing, increased traction in non-English speaking markets, and the cheaper ad-supported subscription tier.

The key going forward is to keep the subscriber flywheel going. Scale matters in the streaming space, and the larger Netflix gets, the more leverage it has over peers and content creators. Subscriber growth on a yearly basis is expected to slow from 8.7mn to around 5mn in the coming quarter. But that’s largely due to a tough comparable quarter last year, given that it was the first time paid sharing was introduced. We think there’s scope for another positive surprise here, though nothing is guaranteed.