GameStop’s stock ended Monday’s session up 15.4%, registering its largest daily percentage increase since Dec.13, 2023.
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Shares in Puma, Adidas, and JD Sports fell as investors feared headwinds in the apparel sector
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It’s no secret that lots of analysts like tech behemoths like Amazon.com Inc., Microsoft Corp. and Nvidia Corp. amid the AI gold rush. But as of Friday, they liked one just a bit more, at least based on the percentage of ‘buy’ recommendations: Delta Air Lines Inc.
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Shares of Gap Inc. jumped after hours on Thursday after the clothing retailer reported fourth-quarter profit and sales that beat expectations, helped by yet another same-store sales gain at Old Navy and steady sales trends at its namesake stores.
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Vials move along a conveyor at the Novo Nordisk A/S production facilities in Hillerod, Denmark, on Monday, June 12, 2023. The success of Novo’s bestsellers Ozempic and Wegovy, drugs that help people lose significant amounts of weight, has created something of a gold rush in the pharma industry with about 40 companies developing products that will intensify competition.
Bloomberg | Bloomberg | Getty Images
Shares of Denmark’s Zealand Pharma rocketed higher, after the company posted strong results from a trial of a liver disease treatment that has been touted as a potential competitor in the booming weight loss drug market.
The Phase 2 trial of the survodutide drug showed 83% of adults saw positive results for a form of liver inflammation caused by excess fat cells known as “MASH,” the company said in an announcement Monday.
The drug has “demonstrated efficacy” in people with obesity and is currently undergoing five Phase 3 trials in a clinical program for people who are overweight or obese. It has received a fast-track designation from the U.S. Food and Drug Administration.
Analysts latched onto the drug’s possible efficacity in obesity research after the latest test results, which indicated the safety of the top dosage used in that trial.
Shares of Zealand Pharma provisionally closed 35% higher on Monday, amid enthusiasm for the company’s potential in the highly lucrative obesity market that propelled fellow Danish drugmaker Novo Nordisk to become Europe’s most valuable firm on its development of Ozempic and Wegovy.
Several other companies, including Eli Lilly, Roche and AstraZeneca, also seek to compete in the sector.
“Top-line results demonstrated an improvement in MASH, at all doses explored in the trial. Treatment with survodutide did not show unexpected safety or tolerability issues, including at the higher dose of 6.0 mg,” Michael Novod, head of bank Nordea’s health-care equity research team, said in a Monday note, hailing the latest Zealand Pharma results as an “unequivocal win for survodutide.”
“Importantly, the [Phase 2] MASH trial also tells us that the 6mg dose is safe, which is the top dose used in the ongoing [Phase 3] obesity trial too,” he added.
Analysts at Jefferies assessed that Zealand Pharma’s “position as a key player in next wave of obesity therapeutics is underappreciated,” noting the significance of the German co-inventor Boehringer Ingelheim’s announcement that the drug will advance as “quickly as possible” with treatment on liver diseases and related conditions.
Pharmaceutical firm Boehringer Ingelheim is funding and running clinical development of survodutide.
As Nestle, the world’s largest food company, prepares to publish its full-year results on Thursday, analysts will be seeking to work out the real impacts of the Nescafe coffee owner’s push to raise its prices while also keeping hold of hard hit customers.
Analysts polled by Nestle itself expect the company will report price hikes of 7.5% across 2023 — following hikes of 8.2% in 2022 — as the food seller pushes ahead with efforts to increase its margins, by offsetting inflationary pressures and passing on higher ingredient costs to customers.
Company watchers are anticipating these price rises will lead to a slight dip in the Kit Kat maker’s revenues, caused in part by price conscious customers switching over to cheaper alternatives to Nestle’s products.
Yet analysts are also expecting that Nestle’s price hikes will successfully drive an uptick in its operating profits.
Nestle’s
NESN,
Switzerland listed shares were little changed on Wednesday after falling 9% over the previous 12 months.
A selection of 21 analysts polled by Nestle itself, are now expecting the company will report a 22.7% surge in its operating profits, to 15.13 billion Swiss francs ($17.36 billion), caused by an uptick in its margins from rates of 45.2% in 2022 to 45.9% in 2023.
The increase in Nestle’s operating profits is expected to be achieved in the face of a 1% drop in the company’s revenues, to 93.68 billion francs, caused by downtrading as customers switch to cheaper products and negative foreign exchange impacts, consensus forecasts show.
In the long term, Nestle is aiming to push its margins back up to rates 50%, after they were suppressed following a surge in the price of ingredients including cocoa caused by the outbreak of the Ukraine war and the economic impacts of COVID-19.
Nestle’s price hiking strategy, however, carries the risk of driving away the cereal seller’s customers amid a spate of widespread downtrading that has hit major companies worldwide as hard hit consumers switch to cheaper private-label products.
Notably, Nestle previously reported a 0.4% drop in its sales, year-on-year, to 68.8 billion francs, in the nine months ending in October 2023, as customers bought cheaper products.
Analysts said any dip in revenues could be made worse by negative foreign exchange impacts, caused by a surge in the value of the Swiss franc, as well as a slowdown in the U.S. food market which generates 35% of Nestle’s revenues. Foreign exchange rate shifts previously had a 7.4% negative impact on Nestle’s sales in the first three quarters of 2023.
For analysts at Barclays, the focus will now be on what Nestle says about its key metric, real internal growth (RIG). The metric, which measures the volume of products sold, will give an indication as to whether Nestle is continuing to actually sell more products in the face of higher prices.
Berenberg analysts, led by Timo Lüllau-Mortensen, suggested that Nestle may be somewhat protected against downtrading, in comparison to its rivals, due to its current product mix and its positioning in the premium market.
“Nestlé is not immune to downtrading or inflationary pressures, but its categories – such as infant formula, baby food, pet food, health supplements and coffee (together about 60% sales) – all provide relatively low risk from private label, while infant formula and pet food exhibit relatively high brand loyalty,” Berenberg’s analysts said.
Analysts will also be looking closely at figures surrounding Nestle’s pet food segment, to see whether online rumors surrounding its Purina pet food brands have impacted the segment’s sales.
In a statement, Nestle previously responded to rumors relating to alleged safety concerns surrounding its Purina pet food brands, as the company described the online rumors – that were shared on the TikTok social media platform – as “false” and spread by those working for rival companies.
Shares of Chipotle Mexican Grill Inc. rose after hours on Tuesday after the Mexican fast-casual chain reported fourth-quarter results that topped Wall Street’s estimates, as consumer demand and higher prices on the menu outweighed higher ingredient costs.
The company reported fourth-quarter net income of $282.1 million, or $10.21 a share, compared with $223.7 million, or $8.02 a share, during the same quarter in 2022. Chipotle reported adjusted earnings of $10.36 a share.
Revenue rose 15.4%, to $2.52 billion. Same-store sales increased 8.4%.
Analysts polled by FactSet expected Chipotle
CMG,
to report adjusted earnings per share of $9.71, on revenue of $2.49 billion, with a 7.1% same-store-sales gain.
The sales results for the quarter were helped by a 7.4% increase in consumer transactions at restaurants. Digital sales accounted for more than a third of total food and drink sales. Costs for beef, produce and queso rose. Costs for paper fell.
Executives said they expected full-year same-store sales growth in the “mid-single-digit range.” FactSet forecast a 5.3% increase.
Shares rose 2.9% after hours.
“We opened 121 new restaurants during the fourth quarter with 110 locations, including a Chipotlane,” executives said in Chipotle’s earnings release. “These formats continue to perform well and are helping enhance guest access and convenience, as well as increase new-restaurant sales, margins, and returns.”
Chipotle’s results follow a dimmer outlook from McDonald’s Corp.
MCD,
which said Monday it expected “macro challenges” to continue this year as it contends with a low-income consumer hit harder by inflation and the impact abroad from a widening conflict in the Middle East. Starbucks Corp.
SBUX,
also said the conflict — including related calls for boycotts in the U.S. — and a more wary consumer in China had weighed on its most recent quarterly results.
A report last month from Placer.ai said that Chipotle last year attracted more customers from wealthier areas less likely to feel the impacts from higher prices. And the chain last month announced plans to hire 19,000 people to handle what it calls “burrito season,” which runs from March to May and is Chipotle’s busiest time of the year.
Ahead of the financials from Chipotle, some analysts were focused on the potential impact of harsher weather in January. Others focused on higher beef costs, higher worker wages and the potential for a corresponding increase in menu prices, and the prospect of new menu-item promotions, following last year’s limited-time return of carne asada, which remains popular.
BTIG analyst Peter Saleh, in a research note last month, said that in the longer term, the development of Chipotle’s drive-through Chipotlanes — geared toward handling digital orders and driving higher margins — was “underappreciated” by investors. And he said international growth could be a bigger story for the chain in the second half of this decade.
“Continental Europe has been a difficult market for restaurants other than the large quick-service brands, but we see a lot of opportunity in Canada, the U.K. and a few other markets given cultural influence and restaurant landscapes,” he said.
Bristol Myers Squibb Co.
BMY,
on Friday reported fourth-quarter results that beat analysts’ expectations, helped by portfolio stalwarts like the blood thinner Eliquis as well as strong growth among newer drugs.
The drugmaker reported fourth-quarter net income of $1.762 billion, or 87 cents per share, down from $2.022 billion, or 95 cents per share, in the year-earlier period. Adjusted earnings per share came to $1.70, down 7% from a year earlier but ahead of the FactSet consensus of $1.55. Revenue totaled $11.477 billion in the quarter, up 1% from a year earlier and topping the FactSet consensus of $11.192 billion.
For the full year 2024, Bristol Myers Squibb said it expects sales growth in the low single-digits and adjusted earnings per share of $7.10 to $7.40, ahead of analysts’ estimates.
Among Bristol Myers’ top-selling products, growth in sales of blood thinner Eliquis and cancer drug Opdivo helped offset declining sales of multiple myeloma treatment Revlimid, which is facing generic competition.
Eliquis, one of 10 drugs selected for the first round of Medicare price negotiations under the Inflation Reduction Act, generated $2.87 billion in sales in the fourth quarter, up 7% from a year earlier and slightly ahead of analysts’ expectations.
Revlimid sales fell 36% from a year earlier, to $1.45 billion in the fourth quarter.
Bristol Myers’ new product portfolio accounted for $1.072 billion in sales in the quarter, up 66% from a year earlier. Melanoma treatment Opdualog and anemia drug Reblozyl helped fuel that growth, but sales of the CAR-T cell therapy Abecma fell 20%, to $100 million.
The company’s partner on Abecma, 2seventy bio Inc.
TSVT,
said earlier this week that it is pivoting to focus exclusively on the development and commercialization of the cell therapy and is selling its research-and-development pipeline to Regeneron Pharmaceuticals Inc.
REGN,
With analysts watching for a reset after a rough 12 months, as the shares have dropped more than 30%, Bristol Myers has been on a shopping spree lately. In December, the company struck deals to buy radiopharmaceuticals company RayzeBio Inc.
RYZB,
as well as Karuna Therapeutics Inc.
KRTX,
which has a key experimental schizophrenia treatment, KarXT. A regulatory decision on KarXT is expected in September.
Last month, the company closed its acquisition of cancer drugmaker Mirati Therapeutics Inc.
Bristol Myers Squibb shares are down 5.2% year to date, while the S&P 500
SPX
has gained 2.9%.
The rage for artificial intelligence (AI) stocks is showing no signs of cooling off. That’s why Microsoft (MSFT -2.69%) management made sure to mention AI tech prominently in both the press release and during the conference call detailing its fiscal second quarter of 2024 earnings.
Those results, divulged just after market hours on Tuesday, beat analyst estimates and featured some impressive numbers. And while AI certainly played a part in that, it was actually another set of offerings from the tech giant that really gave its quarter some muscle.
No cloudy skies with the cloud
Microsoft’s second frame of the fiscal year saw the company book slightly over $62 billion in revenue, which was a sturdy 18% improvement over the same quarter of fiscal 2023 and topped the company’s guidance of $60 billion to $61 billion. Not to be outdone, non-GAAP (adjusted) net income advanced by 26% year over year to hit nearly $22 billion ($2.93 per share).
Analyst expectations for the quarter were relatively modest. On average, they were expecting the tech giant to earn slightly over $61 billion on the top line, and post a per-share, adjusted net income figure of $2.78.
Microsoft posted estimate-beating quarters throughout calendar 2023, but the rise in its shares was due more to its association with top AI app developer OpenAI. Microsoft is a major investor in — and partner of — the company, which is the entity behind the popular ChatGPT app. Microsoft has assertively incorporated OpenAI functionalities into more than a few of its offerings, including the Office software suite.
In the earnings release, the only quote Microsoft attributed to its CEO Satya Nadella was about, yes, AI. The company’s leader briefly enthused about the technology, saying that by applying it at scale, it’s helping to gain new clients and improve productivity throughout its operations.
What didn’t get as much attention, and probably should have, was Microsoft’s cloud computing products and services. The company is the No. 2 provider of such offerings — behind Amazon‘s mighty Amazon Web Services (AWS) — and is doing well in drawing fresh revenue from this source.
During the quarter, the company’s Intelligent Cloud business segment saw its revenue balloon by 20% year over year to nearly $26 billion. Inside that grouping, the still-hot Azure and other cloud services saw their collective take rise at a 30% clip, outpacing the analyst expectations of under 28%.
The AI and cloud combination is already potent
Even if AI — still a relatively young technology — wasn’t a mighty driver of Microsoft’s growth for the quarter, it still made a difference. The company said it now has about 53,000 clients for Azure AI, its anchor cloud-based AI platform. Nadella said that one-third of that figure comprises customers new to Azure within the past year.
This portends very well for Microsoft’s future. However, judging by the market’s rather tepid reaction to the quarterly results — the stock was trading slightly down after hours as of this writing — investors haven’t yet fully considered this potential. So even though the company’s shares zoomed higher in 2023, in this year and beyond, they can certainly hit even loftier heights.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool has a disclosure policy.
Micron Technology Inc.’s stock climbed nearly 5% in after-hours trading Wednesday after the company posted quarterly results that topped analysts’ revenue and earnings estimates.
The maker of computer memory and data storage reported a fiscal first-quarter net loss of $1.23 billion, or $1.12 a share, compared with a net loss of $1.43 billion, or $1.31 a share, in the same quarter a year ago. Adjusted earnings were a loss of 95 cents a share.
Revenue improved to $4.73 billion from $4 billion in the year-ago quarter.
Analysts surveyed by FactSet had expected on average a net loss of $1.01 a share on revenue of $4.58 billion.
“Micron’s strong execution and pricing drove better-than-anticipated first-quarter financial results,” Micron Chief Executive Sanjay Mehrotra said in a statement announcing the results.
Micron provided second-quarter sales guidance of roughly $5.3 billion, while FactSet analysts are forecasting $4.97 billion.
Shares of Micron
MU,
have soared 57% this year, while the broader S&P 500 index
SPX
has increased 22%.
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