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Daily News – 2May’24

  1. Asian Stocks Fall After Fed, Yen Resumes Declines: Markets Wrap

    (Bloomberg) — Asian equities slipped after Federal Reserve chair Jerome Powell downplayed the prospect of further interest-rate hikes. The yen resumed losses after a sudden jolt higher that hinted at official intervention. The Japanese currency fell as much as 1% against the dollar in early Thursday trading, after a sudden surge late Wednesday in New York.

  2. Fed Flags Lack of Inflation Progress But Signals Hikes Unlikely

    (Bloomberg) — The Federal Reserve signalled fresh concerns about inflation while indicating it was likely to keep borrowing costs elevated for longer rather than raising them again. Officials unanimously decided Wednesday to leave the target range for the benchmark federal funds rate at 5.25% to 5.5% — where it’s been since July — following a slew of data.

  3. Gold Pushes Higher as Fed’s Message and Yen Swings Spur Gains

    (Bloomberg) — Gold edged higher as the Federal Reserve struck a less hawkish tone than expected when holding interest rates steady, and Japanese authorities were suspected to have intervened to support the yen, hurting the dollar. Bullion rose toward $2,330 an ounce in early Asian trade after ending 1.5% higher in the prior session, the biggest one-day gain.

  4. Biden Now Calls Ally Japan ‘Xenophobic’ Along With China, Russia

    (Bloomberg) — US President Joe Biden included ally Japan along with rivals China and Russia in a list of countries he called “xenophobic” in a speech at a campaign fundraising event in Washington. Biden reiterated remarks he made last month linking China’s economic woes to its unwillingness to accept immigration.

  5. Powell Keeps Rate Cuts on Table But Leaves Timing Less Certain

    (Bloomberg) — Federal Reserve Chair Jerome Powell kept hopes alive for an interest-rate cut this year while acknowledging that a burst of inflation has reduced policymakers’ confidence that price pressures are ebbing. Powell, speaking to reporters Wednesday following the US central bank’s latest meeting in Washington.

  6. Yen Swings Stir Talk That Japan Is in the FX Market Once Again

    (Bloomberg) — A late yen surge in New York fuelled speculation Japanese authorities intervened for a second time this week, before the currency began to weaken again in Tokyo trading, paring much of the move. The yen advanced more than 3% and hit 153.04 per dollar as more than $4 billion of yen-related futures were exchanged in the final stretch of the US trading session.


  7. Billionaires Lutnick, Paulson to Host Fundraiser for Trump in NY

    (Bloomberg) — Billionaires Howard Lutnick, John Paulson and Woody Johnson are among the wealthy donors hosting a Manhattan fundraiser for Donald Trump later this month as the presumptive Republican nominee looks to build his 2024 war chest while a criminal trial limits his campaigning. Lutnick, the chief executive officer of Cantor Fitzgerald, is heading up the May 14.

  8. CVS Health shares tumbled 16.8% after the drugstore chain cut its adjusted profit and revenue forecast for the full year, citing persistent pressures in its Medicare insurance business.

    FIRST QUARTER RESULTS: Adjusted EPS $1.31 vs. $2.20 y/y, estimate $1.69. Comparable sales +5.3% vs. +11.6% y/y, estimate +3.95%. Net revenue $88.44 billion, +3.7% y/y, estimate $89.33 billion. Adjusted operating income $2.96 billion, -32% y/y, estimate $3.58 billion. YEAR FORECAST: Sees adjusted EPS at least $7, saw at least $8.30, estimate $8.29. Sees FY revenue at least $369 billion, saw at least $371.3 billion, estimate $371 billion. Sees FY adjusted operating income at least $14.75 billion, estimate $16.72 billion. Sees cash flow from operations at least $10.5 billion, saw at least $12.0 billion, estimate $12.09 billion. COMMENTARY: Guidance revision reflects the assumption that the majority of utilization pressure observed in the Health Care Benefits segment during 1Q will persist throughout 2024.

  9. Jerome Powell Offered Markets a Reprieve. It Vanished in a Blink

    (Bloomberg) — Traders on Wall Street cheered on Wednesday when Federal Reserve Chair Jerome Powell signalled, he didn’t see oncoming interest-rate hikes despite inflationary pressures. The celebration didn’t last long. For a brief period, US stocks popped to unleash the biggest post-policy meeting rally since December.

  10. DuPont de Nemours climbed 8% after the chemicals company reported first-quarter earnings that surpassed analyst expectations and raised full-year guidance. Wall Street sees an earnings recovery continuing over the course of the year.


    FIRST QUARTER RESULTS: Adjusted EPS 79c, estimate 65c. Net sales $2.93 billion, estimate $2.83 billion. Oper Ebitda $682 million, estimate $612.3 million. Price/mix -1%. Volume -5%. SECOND QUARTER FORECAST: Sees adjusted EPS about 84c, estimate 78c. Sees net sales about $3.03 billion, estimate $3.03 billion. Sees oper Ebitda about $710 million, estimate $684.3 million. YEAR FORECAST: Sees adjusted EPS $3.45 to $3.75, saw $3.25 to $3.65. Sees net sales $12.10 billion to $12.40 billion, saw $11.90 billion to $12.30 billion. Sees oper Ebitda $2.90 billion to $3.05 billion, saw $2.80 billion to $3.00 billion.

  11. Amazon.com shares rose 2.3% Wednesday, after the e-commerce and cloud computing company reported first-quarter results that beat expectations. Analysts noted strength in the company’s cloud-computing business, which overshadowed a tepid revenue forecast.

    FIRST QUARTER RESULTS: Net sales $143.31 billion, +13% y/y, estimate $142.59 billion. Online stores net sales $54.67 billion, +7% y/y, estimate $54.77 billion. Third-Party Seller Services net sales $34.60 billion, +16% y/y, estimate $34.63 billion. AWS net sales $25.04 billion, +17% y/y, estimate $24.11 billion.


  12. Johnson & Johnson’s shares jumped 4.6% after the pharmaceutical giant announced an $11 billion settlement that would resolve pending talc-based powder lawsuits. Analysts see the settlement plan lifting an overhang on the stock with Leerink Partners saying the amount is less than feared.

    RBC Capital Markets, Shagun Singh (outperform, PT $175): Says encouraged by the proposed plan to resolve 99.75% of all Talc cases, “which removes one aspect of overhang on the stock”. Wells Fargo, Larry Biegelsen (equal weight, PT $163): Says the revised talc settlement plan may have a better chance of success. “Our expert believes this approach may succeed given JNJ likely has the votes & filing in new jurisdiction”.

  13. Advanced Micro Devices shares fell 8.9% Wednesday, after the chipmaker issued a disappointing forecast for artificial intelligence processors as it attempts to make inroads into the lucrative market dominated by Nvidia.

    FIRST QUARTER RESULTS: Adjusted EPS 62c vs. 60c y/y, estimate 61c. Revenue $5.47 billion, +2.2% y/y, estimate $5.45 billion. Adjusted gross margin 52% vs. 50% y/y, estimate 52%. Adjusted operating income $1.13 billion, +3.2% y/y, estimate $1.11 billion. Adjusted operating margin 21% vs. 21% y/y, estimate 20.8%. SECOND QUARTER FORECAST: Sees revenue $5.4 billion to $6 billion, estimate $5.72 billion. Sees adjusted gross margin about 53%, estimate 53%. Morgan Stanley analyst Joseph Moore (overweight, lowers PT to $176 from $177): AMD’s 1Q and 2Q outlook were in line. “All eyes remain on the AI business; we heard what we expected to hear, but there are still questions”.

  14. Pfizer shares rose 6.1% after the drugmaker boosted its adjusted earnings per share forecast for the full year as first-quarter drug sales topped expectations.

    FIRST QUARTER RESULTS: Revenue $14.9 billion, estimate $13.91 billion. Comirnaty revenue $354 million, -88% y/y, estimate $591.6 million. Paxlovid rev. $2.04 billion, -50% y/y. Eliquis revenue $2.04 billion, +8.9% y/y, estimate $1.95 billion. Vyndaqel family revenue $1.14 billion, estimate $912 million. YEAR FORECAST: Sees adjusted EPS $2.15 to $2.35, saw $2.05 to $2.25. Still sees revenue $58.5 billion to $61.5 billion. Barclays, Carter Gould (equal weight, PT $28): Notes that the 1Q revenue beat was driven by Paxlovid. Sees the results as only a modest incremental positive as “Covid numbers for the FY are still reachable, but won’t be fully de-risked until well into the fall, while the recent launches remain a mixed bag and legacy products still raise more questions than answers”.

  15. Starbucks shares fell 15.9% as a drop in the coffee chain’s second-quarter comparable sales bucked consensus estimates for a 1.5% increase.

    Sales fell for the first time since 2020 as half-off deals and new lavender lattes weren’t enough to entice increasingly budget-conscious consumers. Chief Financial Officer Rachel Ruggeri blamed the results on colder-than-usual January weather that affected store visits, a more cautious global consumer and the conflict in the Middle East. SECOND QUARTER RESULTS: Comparable sales -4%, estimate +1.46%. Adjusted EPS 68c, estimate 80c. Net revenue $8.56 billion, estimate $9.13 billion. Operating income $1.10 billion, -17% y/y, estimate $1.35 billion. Adjusted operating margin 12.8%, estimate 14.5%.


  16. Estee Lauder shares fell 13.2% after the beauty company cut its year sales forecasts, while its adjusted EPS guidance for the fourth quarter fell well short of consensus estimates. EL cites “ongoing macroeconomic headwinds, including continued softness in overall prestige beauty in mainland China, and geopolitical volatility in some areas around the world.”

    THIRD QUARTER RESULTS: Adjusted EPS 97c vs. 47c y/y, estimate 48c. Adjusted net sales $3.94 billion, +4.9% y/y, estimate $3.91 billion. Gross margin 71.9%. Organic sales +6%, estimate +5.6%. FOURTH QUARTER FORECAST: Sees adjusted EPS 18c to 28c, or 19c to 29c in constant currency; estimate 77c. Sees net sales +5% to +9%. Sees organic net sales +6% to +10%. YEAR FORECAST: Sees adjusted EPS $2.14 to $2.24, saw $2.08 to $2.23, estimate $2.25. Sees EPS $1.96 to $2.09, saw $2.04 to $2.20. Sees net sales -2% to -3%, saw -1% to +1%. Sees organic net sales -1% to -2%, saw -1% to +1%. COMMENTARY: For fiscal 2024 outlook, amid ongoing macroeconomic headwinds, including continued softness in overall prestige beauty in mainland China, and geopolitical volatility in some areas around the world, EL is reducing its organic net sales outlook range and both increasing and tightening its adjusted diluted net earnings per common share range, partially offset by an expected unfavourable impact from foreign currency translation.

  17. Super Micro Computer shares fell 14% after estimate-topping forecasts for adjusted EPS and net sales in the fourth quarter weren’t enough to impress investors.

    THIRD QUARTER RESULTS: Adjusted EPS $6.65 vs. $1.63 y/y, estimate $5.58. Net sales $3.85 billion vs. $1.28 billion y/y, estimate $3.86 billion. Adjusted gross margin 15.6% vs. 17.7% y/y, estimate 15.3%. FOURTH QUARTER FORECAST: Sees adjusted EPS $7.62 to $8.42, estimate $6.97. Sees net sales $5.1 billion to $5.5 billion, estimate $4.73 billion. COMMENTARY: “Strong demand for AI rack scale PnP solutions, along with our team’s ability to develop innovative DLC designs, enabled us to expand our market leadership in AI infrastructure. As new solutions ramp, including fully production ready DLC, we expect to continue gaining market share. As such, we are raising our fiscal year 2024 revenue outlook from $14.3 to $14.7 billion to a new range of $14.7 to $15.1 billion.”

  18. Pinterest shares soared 21% Wednesday, after the social media company’s better-than-expected results and outlook prompted analysts to raise their price targets on the stock. Brokers said that advertising demand, growing popularity with Gen-Z and the use of AI should keep the momentum going and support revenue growth.

    FIRST QUARTER RESULTS: Adjusted EPS 20c vs. 8.0c y/y, estimate 14c. Revenue $740.0 million, estimate $700.3 million. Monthly active users 518 million, estimate 503.75 million. Average rev. per user $1.46, estimate $1.39. Adjusted Ebitda $112.9 million, estimate $74.8 million. Adjusted Ebitda margin 15%, estimate 10.9%. SECOND QUARTER FORECAST: Sees revenue $835 million to $850 million, estimate $828.2 million. Sees adjusted operating expenses $490 million to $505 million.


  19. Kraft Heinz shares fell 6% after the packaged-food company reported a steeper-than-expected decline in organic volume for the first quarter. Management also projected that second-quarter organic net sales will be similar to first-quarter results in prepared comments, which analysts view as disappointing.

    FIRST QUARTER RESULTS: Adjusted EPS 69c, estimate 69c. Net sales $6.41 billion, estimate $6.43 billion. Organic revenue -0.5%, estimate -0.77%. Organic volume -3.2%, estimate -3.01%. SECOND QUARTER FORECAST: Organic revenue similar to -0.5% in 1Q, assuming the impact associated with the shutdown of one of its plants for unplanned maintenance comes in toward the lower end of its estimated range of a roughly 50 to 100 basis point organic net sales growth hit in 2Q. Estimate +0.8%.

  20. Long-predicted consumer pullback finally hits restaurants like Starbucks, KFC and McDonald’s
    Starbucks, Pizza Hut and KFC are among the chains that reported same-store sales declines this quarter.

    McDonald’s said it’s adopting a “street-fighting mentality” to creating value to win over customers. Outliers like Wingstop and Chipotle Mexican Grill show that customers will still order their favorite foods, even if they’re more expensive than they were a year ago.

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