My top 10 things to watch Tuesday, Feb. 21
1. Market interest rates are headed higher. The 10-year Treasury yield is almost at 4% … still way too low versus the 2-year yield at around 4.6%. The Dow, the S&P 500 and the Nasdaq are set to take a hit at the open. Two Dow stocks, Home Depot (HD) and Walmart (WMT), under pressure after quarterly results.
2. Another big Fed week ahead: minutes from central bankers’ latest meeting out Wednesday and then their favorite inflation gauge, the core PCE index, released Friday. Club earnings this week include Palo Alto Networks (PANW), TJX Companies (TJX), Nvidia (NVDA), Pioneer Natural Resources (PXD) and Coterra Energy (CTRA) as well as Bausch Health (BHC).
3. Home Depot on Tuesday morning disappoints with both quarterly earnings of $3.30 and its forecast. Costs way up; $1 billion in additional compensation. Transactions down 6%. Ticket amounts up 5.8%. Wish it were the other way. Revenue of $35.83 billion also missed. Sees comp sales for year flat, but gives 10% dividend boost.
4. Walmart’s holiday-quarter beats on earnings per share of $1.71 and revenue of $164.05 billion. But the retail giant’s first-quarter EPS guidance of $1.25 comes up short and so does full-year at $5.90. However, Walmart did say December was the largest sales month in company history.
5. Deere (DE) price target raised to $398 per share from $364 at Bernstein, which keeps market perform (hold) rating. Analysts calculate that 90% of Deere’s guidance raise came from price. Not what we want there. But lots of other PT hikes, including Morgan Stanely to $537 from $522; maintains overweight (buy) rating. We like and own Caterpillar (CAT).
6. Nvidia gets a price-target hike to $246 per share from $175 at Morgan Stanley; keeps equal weight (hold) rating. Analysts expect in-line quarter when the chipmaker reports after the closing bell Wednesday.
7. Molson Coors (TAP): quarterly EPS beat but slight revenue missing. Coors and Miller Lite beat Bud Light in Q4. Above premium sales up 23%. In beer, we like and own Constellation Brands (STZ), the company behind the Mexican juggernauts Corona, Modelo and Pacifico.
8. Mizuho cuts price target on Upstart (UPST) to $14 per share from $16. One of my least favorite stocks. So-called artificial intelligence-vetted lending with bad loans. 40% short position. Often thought of in the same sentence as Affirm (AFRM).
9. UBS downgrades Doximity (DOCS), cloud platform for doctors to manage patient visits, to sell from hold now? 10% workforce reduction after 9% job cuts in September. Not compelling cash flow. Unusual to see shares react negatively to layoffs. Still an expensive stock valued at 50x earnings.
10. Mizuho likes the Twilio (TWLO) pivot and takes price target up to $90 per share from $75.
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