Daily US Equity Opening News: CSCO & WMT reports solid earnings; BRK buys CB stake; DE cuts profit forecast; 13F updates

TODAY'S AGENDA:

• Our interactive Daily Calendar is available here; a pdf version can be downloaded here.


• 
  BROKER MOVES: INTC upgraded at Wolfe following 38% decline, with CRUS downgraded at Benchmark on valuation. To see the full Broker Moves list, please click here.


• 
  SPEAKERS: Fed's Barr (voter) will appear at a Senate hearing on financial oversight; Fed's Harker (2026 voter, but retires in 2025; Neutral) will speak on the economic impact of higher education and healthcare institutions (in April, Harker said inflation was still too high); Fed's Mester (2024 voter, retires in June, Neutral) will speak on the economic outlook (earlier in the week, she said it was appropriate to hold rates steady as it awaits evidence that price pressures are easing further, adding that it was too early to conclude that inflation has stalled out or it was going to reverse); Fed's Bostic (2024 voter, Hawk) will also speak on the economic outlook (last week, Bostic said the Fed was on track for a single cut this year, though the timing was uncertain).

US EQUITY NEWS

CONSUMER STAPLES

• 
  Walmart (WMT) Q1 2024 (USD): Adj. EPS 0.60 (exp. 0.52), Revenue 161.51bln (exp. 159.52bln). KEY METRICS: Total US comp. sales ex gas +3.9% (exp. +3.42%); Walmart-only US stores comp. sales ex-gas +3.8% (exp. +3.45%); Sam's Club US comp. sales ex-gas +4.4% (exp. +3.33%); Walmart-only US comp. transactions +3.8% (exp. +3.17%). GUIDANCE: Q2 adj. EPS 0.62-0.65 (exp. 0.64); FY adj. EPS at high end or slightly above original guidance, consolidated net sales at high-end or slightly above original guidance.

COMMUNICATIONS

• 
  Netflix (NFLX) - To launch an in house advertising technology platform by the end of 2025, and said it had reached 40mln global MAUS on its ad-supported plan. Netflix will also expand its buying capabilities to include The Trade Desk (TTD), Google's (GOOG) Display & Video 360, and Magnite (MGNI), who will join Microsoft (MSFT) as the main programmatic partners for advertisers.


• 
  Paramount Global (PARA), Amazon (AMZN) - Paramount has held talks with Amazon about expanding the ties between their media businesses, adding that the talks may not amount to anything, but are said to include bundled sales of channels. One source said the discussions also involved advertising.


• 
  Trump Media & Technology (DJT) DJT filed a non-timely 10-Q with US SEC, said due to timing of appointment of SMC, unable without unreasonable effort and expense to complete review of financials.


• 
  Meta (META) - EU's Breton announces a formal Digital Services Act investigation into Meta (META), as they are not convinced the firm has done enough to comply with DSA obligations. Announces an in-depth investigation into: Potential addictive & “rabbit hole” effects of the platforms; Effectiveness of age verification tools; Level of privacy & safety afforded to minors in the functioning of recommender systems


• 
  Baidu (BIDU) Q1 2024 (CNY): EPS 19.91 (exp. 21.00), Revenue 31.5bln (exp. 31.5bln). CEO said the Ernie API handled 200mln queries in April (50mln in Dec.).

TECH

• 
  Cisco Systems (CSCO) Q3 2024 (USD): Adj. EPS 0.88 (exp. 0.82), Revenue 12.70bln (exp. 12.53bln). Total subscription revenue 6.9bln (around 54% of total revenue), Total ARR 29.2bln (incl. 4.2bln from Splunk), +22% Y/Y; Product ARR 15.5bln, +44% Y/Y. COMMENTARY: Exec said customers were consuming the equipment shipped over the last few quarters in line with its expectations, and it was seeing a stabilisation of demand as a result. It added that the addition of Splunk will be a catalyst for further growth ahead. Expect revenue growth to be in the low- to mid- single digit range next year. GUIDANCE: Q4 adj. EPS 0.84-0.86 (exp. 0.84), Revenue 13.4bln-13.6bln (exp. 13.54bln). FY adj. EPS 3.69-3.71 (exp. 3.64, prev. 3.68-3.74), Revenue 53.6-53.8bln (exp. 53.63bln, prev. 51.5-52.5bln).


• 
  The Trade Desk (TTD) - Morgan Stanley said Trade Desk's partnership with Netflix (NFLX) shows its increasing importance in the ecosystem. Said that a 10% share of Netflix' advertising-based video-on-demand platform would drive 2% upside to Trade Desk's FY26 expected revenue.


• 
  Microsoft (MSFT) - Amid escalating US-China tensions over technology access, urged China-based AI staff to relocate, particularly engineers, to countries like the US, Ireland, Australia, and New Zealand, WSJ reports citing sources. This move aligns with increased data centre demand, but it faces challenges like power supply, the WSJ added.


• 
  TSMC (TSM) - Reassured that there was no damage to its Arizona factory following an incident involving a waste disposal truck explosion. Reports of an explosion prompted firefighter response, with a driver hospitalised.


• 
  Palo Alto Networks (PANW), IBM (IBM) - Palo Alto Networks and IBM partner up to deliver AI-driven security solutions, addressing complex cybersecurity challenges in today's digital landscape. PANW will acquire IBM's QRadar SaaS assets, enhancing Cortex XSIAM's threat protection capabilities.


• 
  Ingram Micro (not listed) - The IT products and services distributor, backed by Platinum Equity, is moving ahead with plans for an IPO that could raise more than USD 1bln, valuing it at as much as USD 10bln, Bloomberg reports.


• 
  Chips - China has asked its top automakers to source up to 25% of their semiconductors locally by next year in line with efforts to build a self-reliant supply chain due to escalating US trade tensions, according to Nikkei, adding around 10% of automotive chips are supplied locally now. The goal is to eventually use only locally made chips for automobiles.

FINANCIALS

• 
  Chubb Limited (CB) - Berkshire Hathaway (BRK.B) reported a stake in the Co. (around 26mln shares worth around USD 6.7bln, equating to around 6.4% of its market capitalisation).


• 
  Robinhood (HOOD) - April assets under custody USD 123.3bln (-5% vs March), it had 24mln Funded Customers at the end of April (+90k vs March) thousand from March. Net deposits USD 4.9bln in April (+45% annualised growth rate relative to March AUC); the last twelve months, net deposits USD 27.4bln (+35% relative to April 2023 AUC). April trading volumes were higher for options and lower for equities and crypto relative to March.


• 
  B. Riley Financial (RILY) - Reported lower EPS and revenue Y/Y. Q1 EPS -1.71 (vs 0.51 Y/Y), Revenue USD 343mln (vs 432mln Y/Y). Its Securities, Wealth Management, and Financial Consulting business reported a record Q1. 2023 results benefited from USD 52mln of unrealized gains on investments in addition to increased interest income. In contrast, Q1 reflected USD 30mln of unrealised non-cash investment losses, and incremental costs related to filing its 10-K, internal review and subsequent independent investigation undertaken by our Board's Audit Committee. Ex these items, operating income was flat Y/Y.


• 
  Aflac (AFL) - Is acquiring 40% of direct lender Tree Line Capital Partners, which focusses on lending to SMEs, WSJ reported citing sources. AFL is paying around USD 100mln for the stake.


• 
  AIG (AIG) - To sell 20% ownership stake of Corebridge (CRBG) to Nippon Life for USD 3.8bln.

CONSUMER DISCRETIONARY

• 
  Amazon (AMZN) - Arizona AG filed lawsuits against Amazon, alleging unfair practices violating state laws, including misleading Prime cancellation procedures and biased Buy Box algorithms. AG asserts Amazon's actions inflate prices and harm smaller retailers.


• 
  Nike (NKE) - Chairman Mark Parker sold 168,378 shares at USD 93.14/shr on May 24th for a total USD 15.68mln.


• 
  YUM! Brands (YUM) - Declared a quarterly dividend of USD 0.67/shr, and authorised USD 2bln share buyback, to take place between July 1st 2024 and December 31st 2026.


• 
  Tesla (TSLA) - Swedish Appeals Court rejects Tesla's appeal against decision to dismiss the Cos case against Sweden's transport agency.


• 
  JD.Com (JD) Q1 2024 (USD): Adj. EPS 0.78 (exp. 0.64), Revenue 36.00bln (exp. 35.66bln). Said price competitivness is increasingly resonating with users, growth of user base within lower-tier cities increased in Q1.


• 
  Under Armour (UAA) Q4 2024 (USD): Adj. EPS 0.11 (exp. 0.08), Revenue 1.33bln (exp. 1.33bln); Inventory 958.5mln (exp. 1.01bln), -19% Y/Y. REVENUE BREAKDOWN: North America 771.9mln (exp. 777.9mln), -10% Y/Y; APAC 226.7mln (exp. 238.2mln), +0.8% Y/Y; EMEA 284.1mln (exp. 271.7mln), +9.5% Y/Y; Latin America 50.2mln (exp. 46.9mln), +20% Y/Y. OTHER: Announced 500mln share repurchase programme. Announced restructuring plan, to incur 70-90mln of charges. COMMENTARY: "Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term". GUIDANCE: FY25 adj. EPS 0.18-0.21 (exp. 0.52), Revenue to be down at a low double digit percentage rate.

INDUSTRIALS

• 
  Deere & Co (DE) Q2 2024 (USD): EPS 8.53 (exp. 7.86), Revenue 15.24bln (exp. 13.28bln). GUIDANCE: FY Net ~7bln (prev. 7.5-7.75bln); profit forecast cut on a demand slowdown. COMMENTARY: Quarterly results underscore sound execution in the face of challenging market conditions. Global agricultural and turf demand further softens while the construction industry remains stable.


• 
  Werner Enterprises (WERN) - Announced a new share buyback authorisation for up to 5mln shares; withdrew its previous stock repurchase authorisation, which had approximately 1.6mln shares remaining available for repurchase.


• 
  ZTO Express (ZTO) Q1 2024 (USD): EPS 0.38 (exp. 0.33), Revenue 1.38bln (exp. 1.27bln), Parcel Volume +13.9% to 7.2bln. COMMENTARY: Exec said Q1 parcel volume of the express delivery industry +25.2% Y/Y. The boom of live video streaming and social network retailing has helped stimulating consumption and fuelled the increase in express delivery volume, but also contributed to an increase in the proportion of low-priced parcels. Price competition intensified further. Said a greater portion of industry parcel volume became less profitable or loss making; kept loss-making parcels out of its network. GUIDANCE: Reiterated FY24 parcel volume outlook between 34.73-35.64bln (+15-18% Y/Y).

ENERGY

• 
  US Silica Holdings (SLCA) - Its Industrial and Specialty Products segment to increase prices for most non-contracted silica, aplite, diatomaceous earth, clay, perlite, and cellulose products. Price increases will range up to 20% depending on the product and grade, and are effective for shipments beginning July 1st.


• 
  TransCanada (TRP) - TC Energy strongly opposes the Delaware Chancery Court's decision regarding liability in a class action lawsuit linked to its 2016 acquisition of Columbia Pipeline Group, and is planning to appeal the ruling. Court allocated damages of USD 398.4mln, with TC Energy responsible for half.


• 
  Tullow Oil (TUWOY) - Working interest production guidance remains 62-68 KBOEPD, with FY outcome expected to be towards lower end of range.


• 
  Chevron (CVX) - Preparing to launch the sale process for its remaining North Sea oil/gas assets, via Reuters citing a statement; process includes a 19.4% stake in the Giant Clair Field/Pipelines.


• 
  Crescent Energy (CRGY), SilverBow Resources (SBOW) - Crescent Energy is to acquire SilverBow Resources for USD 2.1bln, creating a leading growth through acquisition Co. with a Premier Eagle Ford position.

HEALTHCARE

• 
  Pfizer (PFE) - Agrees to settle over 10,000 US lawsuits regarding cancer risks linked to Zantac for up to USD 250mln, the FT reports. The deal aims to mitigate Pfizer's potential liabilities.


• 
  Roche (RHHBY) - Reports positive Phase I results for its dual GLP-1/GIP receptor agonist CT-388 in people with obesity.


• 
  Bristol Myers Squibb (BMY) - FDA gave accelerated approval for Breyanzi, a CAR T-cell therapy, in treating relapsed or refractory follicular lymphoma. It's endorsed by the National Comprehensive Cancer Network as a third-line therapy.


• 
  AstraZeneca (AZN) - Supernova trial met Covid-19 prevention endpoint.


• 
  QuidelOrtho (QDEL) - Launched a second US distribution centre in Pedricktown, New Jersey.


• 
  Apogee Therapeutics (APGE) - Began Phase 2 trials of APG777, a novel IL-13 targeting antibody for moderate-to-severe atopic dermatitis. Positive Phase 1 results suggest potential for improved treatment with less frequent dosing.


• 
  Eli Lilly (LLY) - Announces Efsitora met the primary endpoint in both QWINT-2 and QWINT-4 with once-a-week dosing regimen for people living with type 2 diabetes. Equally safe and effective among adults naïve to insulin therapy currently using and not using GLP-1 receptor agonists.


• 
  Biogen (BIIB), Ionis (IONS) - Cos. announce topline phase 1/2 study results of investigational drug in amyotrophic lateral sclerosis; development of BIIB105, will be discontinued based on data from phase 1/2 alspire study.

UTILITIES

• 
  AES (AES) - To sell its 47.3% equity interest in AES Brasil to Auren Energia for approximately USD 640mln. Including this sale, as well as others closed in 2023 and 2024, AES will have achieved more than half of its USD 3.5bln asset sale proceeds target through 2027.

13-F FILINGS

Appaloosa Management:

• 
  New buys: Adobe (ADBE), JD.com (JD), Boeing (BA).


• 
  Increased: Alibaba (BABA), Oracle (ORCL), PDD (PDD), Baidu (BIDU), UPS (UPS


• 
  Reduced: Uber (UBER), Meta Platforms (META), Intel (INTC), Macy's (M), Microsoft (MSFT).


• 
  Exited: HCA Healthcare (HCA), FMC Corp (FMC), Whirlpool (WHR), Mohawk Industries (MHK), General Motors (GM).


• 
  Top holdings: Alibaba (BABA), Amazon (AMZN), Microsoft (MSFT), Meta Platforms (META), and Nvidia (NVDA).

Berkshire Hathaway:

• 
  New buys: Chubb (CB).


• 
  Increased: Occidental (OXY).


• 
  Reduced : Apple (AAPL), Paramount (PARA), Sirius XM (SIRI), Louisiana-Pacific (LPX), Chevron (CVX).


• 
  Exited: HP Inc (HPQ).


• 
  Top holdings: Apple (AAPL), Bank of America (BAC), American Express (AXP), Coca-Cola (KO), Chevron (CVX).

Elliott Management:

• 
  New buys: Transocean (RIG), HDFC Bank (HDB), iShares Bitcoin Trust (IBIT), Nvidia (NVDA).


• 
  Increased: Suncor Energy (SU), Match Group (MTCH), BioMarin (BMRN), Etsy (ETSY), Liberty Broadband (LBRDK).


• 
  Reduced: Peabody Energy (BTU), Marathon Petroleum (MPC), Howmet (HWM), Seadrill (SDRL).


• 
  Exited: iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), Fidelity National (FNF), Valaris (VAL), Reservoir Media (RSVR).


• 
  Top holdings: Suncor Energy (SU), Triple Flag (TFPM), Marathon (MPC), Pinterest (PINS), NRG Energy (NRG).

Icahn Capital:

• 
  New buys: CVR Partners (UAN), JetBlue (JBLU).


• 
  Increased: International Flavors (IFF).


• 
  Exited: FirstEnergy (FE), Newell Brands (NWL).


• 
  Top holdings: Icahn Enterprises (IEP), CVR Energy (CVI), Southwest Gas (SWX), Bausch Health (BHC), International Flavors (IFF).

Lone Pine Capital :

• 
  New buys: Intuit (INTU), Blackstone (BX), Philip Morris (PM), GE (GE).


• 
  Increased: Block (SQ), Meta Platforms (META), Bath & Body Works (BBWI), Dick's Sporting Goods (DKS), ASML (ASML).


• 
  Reduced: Mastercard (MA), Workday (WDAY), EPAM Systems (EPAM), Live Nation (LYV), TSMC (TSM).


• 
  Exited: Alphabet (GOOGL), TransDigm (TDG), BILL Holdings (BILL), Tempur Sealy (TPX), Floor & Decor (FND).


• 
  Top holdings: Meta Platforms (META), Amazon (AMZN), TSMC (TSM), Microsoft (MSFT), and Salesforce (CRM).

Paulson & Co.:

• 
  New buys: Altice USA (ATUS), Carrols Restaurant (TAST).


• 
  Increased: Madrigal Pharma (MDGL), International Tower Hill Mines (THM), Novagold Resources (NG).


• 
  Reduced: Anglogold (AU)


• 
  Exited: SSR Mining (SSRM).


• 
  Top holdings: Madrigal (MGDL), Bausch Health (BHC), Brightsphere (BSIG), Perpetua Resources (PPTA), and Novagold (NG).

Pershing Square:

• 
  Reduced: Chipotle (CMG).


• 
  Exited: Lowe's (LOW).


• 
  Top holdings: Chipotle (CMG), Hilton Worldwide (HLT), Restaurant Brands (QSR), Alphabet (GOOG), Howard Hughes (HHH).

Soros Fund Management:

• 
  New buys: Cerevel Therapeutics (CERE), Okta (OKTA), WestRock (WRK), PG&E (PCG), Sunrun (RUN).


• 
  Increased: Alphabet (GOOGL), Aramark (ARMK), D.R. Horton (DHI), American Equity (AEL), SPDR S&P Regional Banking ETF (KRE).


• 
  Reduced: Novo Nordisk (NVO), Sempra (SRE), CRH (CRH), Amazon (AMZN), AerCap (AER).


• 
  Exited: iShares Russell 2000 ETF (IWM), SPDR S&P 500 ETF Trust (SPY), SPDR Euro Stoxx 50 ETF (FEZ), Las Vegas Sands (LVS), Birkenstock (BIRK).


• 
  Top holdings: Alphabet (GOOGL), AerCap (AER), American Equity (AEL), Novo Nordisk (NVO), Cerevel (CERE).

Starboard Value:

• 
  New buys: Alight (ALIT).


• 
  Increased: News Corp. (NWSA), Rogers (ROG), Algonquin (AQN), Mercury Systems (MRCY).


• 
  Reduced: Humana (HUM), Aecom (ACM), Wix.com (WIX), Fortrea (FTRE), Salesforce (CRM).


• 
  Exited: Vertiv (VRTV).


• 
  Top holdings: GoDaddy (GDDY), Gen Digital (GEN), Algonquin (AQN), Alight (ALIT), and Salesforce (CRM).

Third Point:

• 
  New buys: Alphabet (GOOGL), Advance Auto (AAP), Marvell Technology (MRVL), Goldman Sachs (GS).


• 
  Increased: Amazon (AMZN), Meta Platforms (META), Intercontinental Exchange (ICE), Apollo Global (APO), Corpay (CPAY).


• 
  Reduced: International Flavors (IFF), Uber (UBER), Microsoft (MSFT), Bath & Body Works (BBWI), Vistra Corp (VST).


• 
  Exited: US Steel (X), DuPont de Nemours (DD), McKesson (MCK), BioMarin (BMRN).


• 
  Top holdings: PG&E (PCG), Amazon (AMZN), Microsoft (MSFT), Bath & Body Works (BBWI), Meta Platforms (META).

Trian Fund Management :

• 
  Reduced: Ferguson (FERG), Allstate (ALL).


• 
  Top holdings: Disney (DIS), Janus Henderson (JHG), Wendy's (WEN), General Electric (GE), Invesco (IVZ).

16 May 2024 - 13:45- EquitiesData- Source: Newsquawk