Equities week ahead: Salesforce, Lululemon, Berkeley Group

Salesforce Q3 earnings

Salesforce reports earnings on December 3rd. Expectations are for EPS of $2.45 on revenue of $9.35 billion, which comes as the share price trades 28% higher this year.

After a poor start to the year, Salesforce appears to be back on track. However, it's still a challenging environment as businesses take longer to commit to big deals amid an uncertain outlook. Yet despite tough macro conditions, there is some optimism, with AI now a significant part of the growth story.

In September, Salesforce revealed more details about its suite of autonomous AI agents. According to Salesforce, the Agentforce platform represents the third wave of the AI revolution. This agent software will be under the spotlight in Salesforce's Q3 results. CEO Marc Benioff reportedly said that this could start a hybrid future where humans and AI agents would work side by side.

Q2 figures helped the share price recover from disappointing numbers in May, which had sparked a steep sell-off. Revenue, which came in at $9.3 billion, was ahead of the $9.2 billion forecast, while EPS came in at $2.56, ahead of the $2.35 forecast. Guidance for the coming quarter will also be watched closely.

How to trade CRM earnings?

The Salesforce share price has trended higher since May, accelerating gains to 348. After rising to an all-time high of 348 for a second time, the share price has fallen lower in what could be a double-top reversal pattern.

Sellers would need to break below 316 to create a lower-low, confirming the reversal and exposing the 50 SMA at 300.00.

Buyers would need to rise above 348 to create a higher high and extend the bullish trend.

Lululemon Q3 earnings preview

Athleisure brand Lululemon will release Q3 earnings on Thursday, December 5th. Expectations are for EPS of $2.72 on $2.36 billion in revenue.

The results come as the share price trades down 38% year to date, and after disappointing Q2 results, which sent the share price falling. In Q2, revenue grew 7% to $2.37 billion, below the $3.41 billion forecast. However, EPS beat estimates at $3.15, which is up from $2.68 the previous year.

However, Lululemon slashed its full-year guidance. The company now expects revenue for the full year of $10.38 billion to $10.48 billion, down from a previously expected $10.7 billion to $10.8 billion. Earnings guidance was also lowered.

One reason for its disappointing Q2 numbers was criticism of the breeze-through leggings pulled from stores. New styles are now being fast-tracked.

In the wake of Black Friday, attention will be very much on retailers and consumer demand. Other retailers that released earnings earlier in the season have highlighted the challenging retail environment and outlook.

How to trade LULU earnings?

The LULU share price is recovering from a 2024 low of 226. The price has been grinding higher, rising above the 50 and 100 SMA, but is failing to rise above the 200 SMA, which is proving a tough nut to crack.

Buyers need to rise above the 200 SMA at 322 and above 334, the November high, to extend gains toward 370, the late April high.

Failure to retake the 200 SMA could see the price head towards 300, last week’s low, and the 50 SMA.

Berkeley Group results

Berkeley group is expected to have seen a solid start to the year. The government's new proposed changes to the planning system should help ease some of the struggles that housebuilders such as Berkeley Group have, helping the group deliver new homes the country needs.

However, the budget wasn't a win-win for Berkeley Group or other housebuilders, as the rise in employer National Insurance Contributions will hit company profits. Berkeley Group could unveil the extent of this hit this week. There are also concerns that the budget will have an inflationary effect over the longer term. The Bank of England has reined in rate cut expectations across the coming year, which could mean that affordability pressures remain.

It will be interesting to see if Berkeley tweaks its full-year outlook as a result. The house builder had been penciling in underline pre-tax profits of £525 million.

That said, property platform Zoopla has predicted that house prices will rise by 2.5% in 2025 and transactions will increase by 5%, which would be good news for the sector.

How to trade BKG earnings?

The price has been trending lower since mid-August, dropping from 5365 to 4150, which is currently its lowest level since November 2023.

The price has formed a series of lower highs and lower lows. The 50 SMA has crossed below the 200 SMA in a bearish signal and the RSI is below 50.

Sellers will look to extend the bearish trend towards the 4000 round number and 3750, the late 2023 low.

Any move higher will need to rise above 4380, last week’s high, and 4440, the June low, to start building a base higher.