Month: May 2024

Investing.com — Another one of our AI-picked winners is soaring after smashing top and bottom-line estimates for its Q1 earnings report this morning. After more than doubling EPS expectations and posting solid revenue, Tenet Healthcare (NYSE:THC) has gained 11% in premarket trading and looks set to keep on rising in the weeks ahead.

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Goldman Sachs (NYSE:GS): +4% after reporting. BankUnited (NYSE:BKU): +6% after reporting.Zions Bancorporation (NASDAQ:ZION): +4.5% after reporting.Tesla (NASDAQ:TSLA): +12% after reporting.Microsoft (NASDAQ:MSFT): +4.6% after reporting.Biogen Inc (NASDAQ:BIIB): 4.56% after reporting. ON Semiconductor Corporation (NASDAQ:ON): +4% after reporting.PayPal Holdings (NASDAQ:PYPL): +8% after reporting.

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Source: ProPicks

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By Chibuike Oguh

NEW YORK (Reuters) – U.S. stocks ended lower on Tuesday as markets weighed economic data showing rising labor costs and deteriorating consumer confidence on the day of a key Federal Reserve policy meeting to decide the direction of interest rates.

Data showed on Tuesday that U.S. labor costs rose by a more-than-expected 1.2% last quarter, indicating an uptick in wage pressures. A survey also found that U.S. consumer confidence worsened in April, dropping to its lowest level in more than 1-1/2 years.

The reports came a day before the Federal Reserve Open Market Committee (FOMC) ends its two-day meeting, with investors widely expecting the central bank to leave interest rates unchanged.

Most Magnificent Seven stocks finished lower, including Tesla (NASDAQ:TSLA), Alphabet (NASDAQ:GOOGL), Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN).

“We’re still in an environment where the knee-jerk reaction is to extrapolate any warmer data into firmer inflation and more hawkish reaction from the Fed,” said Garrett Melson, portfolio strategist at Natixis Investment Managers in Boston.

“But nothing has changed: growth is still strong, labor markets are holding up, and ultimately we’re taking a little bit of breather in the disinflation process,” Melson added.

Money markets are pricing in just about 31 basis points (bps) of rate cuts this year, down from about 150 bps estimated at the start of 2024, according to LSEG data.

According to preliminary data, the S&P 500 lost 79.92 points, or 1.56%, to end at 5,036.25 points, while the Nasdaq Composite lost 325.26 points, or 2.00%, to 15,664.13. The Dow Jones Industrial Average fell 574.08 points, or 1.47%, to 37,823.57.

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Shares of GE HealthCare (NASDAQ:GEHC) shrank after its first-quarter revenue missed analyst estimates, 3M gained after posting a better-than-expected quarterly profit.

Drugmaker Eli Lilly (NYSE:LLY) jumped after it raised its full-year profit forecast. PayPal (NASDAQ:PYPL) rose after raising its full-year adjusted profit forecast.

Of the 265 companies in the S&P 500 that have reported earnings to date for the first quarter, 79.2% have beat analyst estimates, compared with the long-term average of 67%, according to LSEG I/B/E/S data.

(This story has been refiled to reflect that the Federal Reserve policy meeting is on Tuesday, in paragraph 1)

Eli Lilly & Co. (NYSE:LLY) saw its shares jump over 7% at the open on Tuesday after the pharmaceutical giant reported better-than-expected earnings and gross margin for the fiscal Q1 2024.

Specifically, Eli Lilly posted earnings per share (EPS) of $2.58, beating the analyst expectations of $2.48. However, the company’s revenue for the quarter was $8.77 billion, falling short of the consensus estimate of $8.94 billion.

Importantly, the company’s gross margin improved significantly, reaching 80.9% compared to 76.6% in the same period last year and surpassing the consensus projection of 79.9%.

Looking forward, Eli Lilly expects its full-year 2024 EPS outlook to be between $13.50 and $14.00, well above the estimated $12.50.

The company also hiked its revenue forecast for the year to between $42.4 billion and $43.6 billion, compared to a consensus of $41.44 billion.

This upward revision, an increase of roughly $2 billion from the previous forecast, is primarily attributed to the strong performance of its drugs Mounjaro and Zepbound, as well as expanded production capabilities for the rest of the year.

“Lilly’s first quarter performance reflects solid year-over-year revenue growth with strong sales of Mounjaro and Zepbound,” said David A. Ricks, Lilly’s chair and CEO.

“Our progress in addressing some of the world’s most significant health care challenges has resulted in increased demand for our medicines.”

Following the earnings release, analysts at Citi said Eli Lilly’s “strong Q1 and a $2bn revenue plus 200bps margin raise for FY24, on tirzepatide revenue/mix dynamics, will likely keep the shares bouyant.” The bank maintained a Buy rating and $895 price target on the stock.

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Meanwhile, analysts at Goldman Sachs said the company reported “somewhat of a mixed quarter, with 1Q24 revenues of $8.8bn coming in below GS/Consensus (Visible Alpha) estimates of $9.2bn/$8.9bn, though on the bottom-line, EPS of $2.58 was ahead of GS/Consensus estimates of $2.40/$2.39, respectively.”

Analysts at BMO Capital told investors that the higher guidance overshadows the “high-quality miss on [the] top line.”

The revenue “miss (-2% vs. consensus) reflects a lack of capacity, rather than a problem with Lilly product demand. 1Q24 earnings continued to demonstrate the need for continued capacity expansion with Trulicity and Mounjaro notably missing (-14% and -12% respectively),” they wrote.

As anticipation builds ahead of AMD’s (NASDAQ:AMD) earnings report, investors are bracing for potential market volatility following a warning from Mizuho analysts. With the semiconductor giant set to unveil its financial performance after the closing bell on April 30th, all eyes are on AMD’s stock as Mizuho cautions against a management decision that has provided some nervousness ahead of the release.

AMD earnings preview

In a note to clients Monday, Susquehanna lowered its price target for AMD to $185 from $200 per share, maintaining a Positive rating on the company.

Analysts at the firm said they “expect generally in-line to slightly weaker guidance” from AMD, “driven by weakness in AMD’s core business, perhaps offset by potential MI300 upside.”

“We note cooling investor sentiment for MI300 after competitive GTC announcements from NVIDIA (NASDAQ:NVDA). However, we believe further upward revisions to MI300 guidance are likely, and necessary, for shares to move higher,” added the firm.

At Morgan Stanley, the AMD price target was cut to $177 from $193, with the bank maintaining an Overweight rating on the stock. Morgan Stanley lowered its price target for AMD, amid longer-term concerns.

“AMD is one of the biggest ‘battleground’ stocks this earnings period, amid mixed conditions in the core business and longer-term questions in AI around NVIDIA’s coming Blackwell chip,” said the bank. “Our view is constructive longer term, but we don’t see this quarter as a catalyst given those factors.”

Elsewhere, Erste Group downgraded shares of AMD to Hold from Buy in a note last week, highlighting the company’s valuation as a factor influencing its more neutral view on the stock, while

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Mizuho issues a stark warning on AMD stock

Mizuho analysts released a note covering AMD ahead of its earnings release today, issuing a word of warning to investors.

“I know for a fact that after some sell side checks suggesting MSFT was cutting their Mi300 GPU orders as well as chatter about lack of HBM DRAM from Samsung (KS:005930) to run with AMD’s GPU chips, a great deal of investors began shorting AMD and betting against the rev estimates for 2024 (the $4.5-5B for Mi300),” said the analysts.

They add: “It is not like AMD is now a super consensus short, but it is shorted and many investors I speak with will not touch it ahead of the print on fears not raising the current Mi300 rev target of $3.5B for ’24 would lead to a implosion in stock.”

Furthermore, the analysts say that focusing solely on one quarter or update for Mi300 compared to the bigger picture “feels like what is wrong with this market.” However, it is acknowledged that with expectations for GPU growth at AMD high and their valuation elevated, investors need to feel confident in a path towards $10 billion next year in Mi300 revenue.

Overall, the Mizuho analysts think this debate or competition will be decided on tonight’s print and guidance, stating that patience is required and “that it will be handsomely rewarded for AMD investors.”

“But the fast money/trader community seems to have taken charge and created a set-up for AMD whereby they have to at least raise the $3.5B rev [revenue] bogey to $4B if not $4.5B to convince folks they are executing well, not seeing any customer cancellations or push-outs and can track to $8-10B in revs next year,” said the analysts. “And this is why I am extra nervous into the print.”

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