This week for small caps: Blue Bird and Alico report amid shifting Fed expectations
The shortened trading week looks unlikely to deliver major corporate events, with investors instead turning their attention to the final wave of quarterly earnings, September retail sales data, and the latest consumer confidence figures. Nevertheless, below is a look at what will be important in the small-cap universe this week, November 24-28.
Earnings
Freedom Broker highlights two small-cap names to watch ahead of their results, to be released today.
Blue Bird Corporation (market cap: $1.7 billion): Wall Street maintains a consensus “buy” rating on the shares of the school bus manufacturer, with an average target price of $64.40 per share, implying almost 20% upside versus the November 21 close of $53.82 per share. The stock gained 6% that day after several analysts reiterated their positive outlook ahead of the earnings release.
Alico (market cap: $242.5 million): Wall Street generally has the stock rated a "buy," with an average target price of $39.50 per share, or roughly 25% above the last closing price of $31.73 per share. Freedom expects few surprises from the company’s results as Alico continues its transition from a citrus producer into a more sustainable business centered around long-term diversified land usage and real estate development. It is not citrus season, but the company has approved the sale of certain land assets, which could support liquidity, analysts said.
Macro events
The focus shifts to September retail sales and the producer price index, along with a Conference Board consumer confidence reading for November. All are due tomorrow, Tuesday, November 25. The next day, November 26, the Fed will publish its Beige Book. Freedom notes that the September data takes on added importance ahead of the Fed’s December meeting, especially after the unexpected rise in the unemployment rate to 4.44% in October.
Analysts said small-cap performance this week will generally hinge on shifting expectations for a December rate cut. Fed funds futures now imply a 58.6% probability that rates will be kept unchanged, versus 1.7% in late October. The probability of a 25-basis-point cut has fallen to 41.4% from 98.1%. “This repricing is weighing on risk appetite and is particularly negative for the small-cap segment,” Freedom wrote.
The U.S. trading week is shortened, with markets closed on Thursday, November 27, for Thanksgiving, and Friday’s session ending early at 13:00 New York time.
