Mid-Morning Look

Thursday, February 06, 2025

U.S. stocks are holding modestly higher as Wall Street digests another busy morning of quarterly earnings and mixed economic data that continues to show a solid labor market into tomorrows monthly jobs report. The Dow, the S&P 500, and the Nasdaq all put together back-to-back gains ahead of tonight’s quarterly earnings report from retail giant Amazon (AMZN). In policy news, the Bank of England cut interest rates by 25bps to 4.5% as expected, but two officials called for a bigger rate cut against a backdrop of weaker growth. The Bank of England upwardly revised its inflation outlook, due to near-term increases in energy prices, but downgraded its growth forecast for this year. Early sector leaders include Consumer Staples and Financials, though none really stick out ultra strong, while Energy and Utilities are the biggest laggards. In stock news, HON announced it would break into three separate companies, luxury retailers rally behind RL and TPR earnings; saw mixed earnings in pharma as LLY rises/BMY falls; chip stocks opened higher before sliding as weakness in ARM, QCOM, SWKS weigh on the group after results; in autos Ford (F) declines on outlook. Treasury prices are down slightly, the dollar and Bitcoin edge higher and gold pulls back after ending at all-time highs Wednesday.  

• Weekly Jobless Claims climbed to 219,000 from 208,000 prior week (vs. est. 213,000); the 4-week moving average climbed to 216,750 from 212,750 prior week (previous 212,500); continued claims climbed to 1.886M (con. 1.874M) from 1.850M prior week (prev 1.858M).
• U.S. Challenger reported announced layoffs bounced 11k to 49.8k in January following the -18.9k drop to 38.8k in December. However, this is the lowest total cuts for January since the 19.1k in January 2022 which is the lowest on record for that month. On a 12-month basis, the pace contracted at a -39.5% rate.

• In Pharma: AZN reported core earnings of $2.09 per share on $14.89B in fourth-quarter sales, both topping expectations, as earnings rocketed 44% on a strict, as-reported basis, while sales climbed 24%; also guided FY to sales growth in the high single-digit percentage range and sees core earnings growth at a low double-digit percentage. BMY shares fall; forecast 2025 adj EPS $6.55-$6.85, below est. $6.92 and forecasts 2025 revs of around $45.5B missing the $47.4B estimate saying they expect generic competition for some of its older drugs; is also expanding its cost-cutting program by additional $2B by end of 2027, bringing total cost cuts under the program to $3.5B. LLY said its Type-2 Diabetes drug Mounjaro and weight-loss/diabetes medicine Zepbound drove a 45% increase in Q4 revenue to $13.53B, topping the $13,43B consensus; said it expects to generate an adjusted 2025 profit of $22.50-$24 a share in 2025 as midpoint above consensus estimate of $22.76 a share for 2025.
• In Chemicals: APD posted slight Q1 beat helped by higher sales in Asia and Americas, but forecasts Q2 profit to $2.75-$2.85 vs. est. $3.05, below expectations due to soft demand; CTVA reported in-line Q4 while 2025 EBITDA range narrowed to low end, dd earnings growth still on track; LIN forecasts lower volumes in the industrial sector due to cyclical impacts by industrial activity and demand, particularly in metals and chemicals. Follows awful guidance the day prior from FMC in sector that weighed on shares.
• In Food: Kellanova (K) reported a top and bottom line beat for Q4 but said it does not provide forward looking guidance; HSY forecast annual profit below consensus estimates ($6-$6.18 vs. $7.34) as record cocoa prices weigh on margins, but Q4 sales rose nearly 9% to $2.89B topping ests of $2.84B on better adj EPS profit; HSY noted lower supply for a fourth consecutive season in West Africa following dry weather is also said to impact prices; BBB Foods (TBBB) 21M share Secondary priced at $28.25 (upsized deal from 17.5M shares).

• AMSC +36%; after Q3 results posted significant upside to top- and bottom-line expectations while Oppenheimer noted the company provided very manageable guidance.
• APPS +48%; surged on better Q3 results; Q3 adj EPS $0.13 vs est. ($0.01), adj EBITDA $22Mm vs est. $17.54Mm on revs $134.6Mm vs est. $123.68M; guides FY revs $485-490Mm vs est. $477.04M.
• COHR +14%; as reports record sales driven by strong AI related Data Center sales, and both Telecom and Datacom sales grew, but industrial markets remain soft; guides Q3 revs $1.39-1.48B vs est. $1.403B.
• PM +9%; surpassed market expectations for Q1 profit and revenue, helped by robust demand for its heated tobacco product and Zyn nicotine pouches.
• PTON +15%; reported Q2 revenue above expectations and raised its profitability outlook; said Q2 revs rose 26.9% y/y to $743.6M topping consensus of $652.7M; raises year adj EBITDA $300M-$350M from $240M-$290M
• RL +15%; Q3 sales $2.14B tops ests $2.01B and EPS $4.82 above $4.49 consensus; boosts annual revenue forecast to increase between 6% and 7%, vs. prior forecast of a 3% to 4% rise.
• TPR +15%; raised FY revs to above $6.85B, topping prior view above $6.75B after Q2 sales beat and says forecast includes expectation for additional 10% tariff on China imports into the U.S. from February 4, which is expected to have an immaterial impact on fiscal 2025 results.
• YUM +7%; Q4 EPS and Q4 sales above estimates, as Taco Bell’s value offerings attracted U.S. consumers and reported worldwide same-store sales rose 1% in the quarter vs estimates for a 0.42% rise.

• CLS -7%; after CEO, CFO, President and several executives reveal share sales in SEC filing overnight.
• HII -14%; shares fall on lower Q4 EPS and revs noting profit more than halved to $3.15 per share and came in below analysts’ estimates of $3.49 per share, and revs missed as well hurt by lower performance at its Newport News shipbuilding facility.
• HOLX -7%; was downgraded to Market Perform at Leerink after results saying though delivered Q1 in line to the preannouncement, they lowered their FY25 guide by 100M or 1.55% org growth ex-COVID vs 4.05% prior guide.
• KURA -13%; announced the pivotal Phase 2 KOMET-001 trial in r/r NPM1-m AML met its primary endpoint (CR/CRh) though analysts note absolutely no numbers were provided in the press release or the conference call.
• PI -12%; slides on weaker guidance as guides Q1 revs $70-73Mm vs est. $93.26Mm, adj EBITDA $1.1-2.6Mm vs est. $15.17Mm and adj EPS $0.06-0.11 vs est. $0.43 following generally in-line Q4 results.
• RBLX -17%; as Q4 bookings of $1.36B missed the $1.37B estimate; Q4 Daily active users fell slightly to 85.3 million in Q4, from 88.9 million in Q3 (and est. 88.3M); guides 2025 bookings to $5.20B-$5.3B as the midpoint of which is below estimates of $5.27B.
• SWKS -25%; posted results and guidance that were largely in line with expectations, but shares tumbled after management disclosed it losing significant share in the next-generation iPhone 17. SWKS indicated it will be dual sourced on the iPhone 17 likely on the DRX socket, which will be partially offset by content increases on SKUs with AAPL’s internal modem, with blended content expected to be down 20-25% as compared to the iPhone 16.
• SYM -13%; shares tumble after Q1 results and Q2 guidance disappointed along with flat backlog and slowing pace of system deployments; sees Q2 revenue $510M-$530M vs. est. $533.3M.
• VKTX -3%; reported quarterly earnings, in which it also said its late-stage trial for the subcutaneous or under-the-skin version of experimental obesity drug VK2735 will start in Q2. Investors were hoping for some meaningful developments, but the updates were mostly incremental, which sent shares lower