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💸 Beating the Earnings Beat
Plus, a familiar name resurfaces in unexpected aisles—will it spark new life?
Happy Wednesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.
🟩 | US stocks rose Wednesday as markets rebounded from the prior session's sell-off. The Dow Jones rose 0.8, while the S&P 500 gained 0.5% and the Nasdaq climbed 0.3%.
📈 | One Notable Gainer: United Airlines stock jumped 12.4% after beating Q3 earnings and revenue, announcing a strong Q4 outlook, and launching a $1.5 billion share buyback, its first since before the pandemic.
📉 | One Notable Decliner: Novavax shares dropped 19.4% after the FDA placed a clinical hold on its Covid-influenza combo shot and stand-alone flu vaccine applications.
💸 | Tomorrow's Trade: Beating the Earnings Beat. Scroll down for more.
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S&P 500 Heatmap. Credit: Finviz
All Stock Heatmap. Credit: Finviz
Global ADR snapshot. Credit: Finviz
MARKET MOVERS
MS (+6.5%) Investment banking surge at Morgan Stanley solidifies Wall Street revival (YF)
ASML (-6.4%) ASML extends losses after large 2025 sales outlook cut (Investing.com)
PLD (+4.6%) Prologis Q3 Earnings: Taking a Look at Key Metrics Versus Estimates (Zacks)
ASPN (+13.3%) Aspen Aerogels maintains Outperform rating from Oppenheimer (Investing.com)
USB (+4.7%) U.S. Bancorp Lending Income Beat Estimates in Third Quarter (Bloomberg)
OVERHEARD ON THE STREET
QZ: Netflix is expected to announce a price hike and increased advertising focus, with third-quarter earnings likely showing a drop in subscriber growth to 3.5 million, down from 8.8 million last year.
CNBC: General Motors is investing $625 million in a joint venture with Lithium Americas Corp. to develop the Thacker Pass lithium mining operation in Nevada, crucial for EV battery production.
QZ: Anthropic CEO Dario Amodei claims that generative AI could transform the world by curing depression, ending poverty, and eradicating disease, but achieving this requires significant investment and collective effort.
CNBC: Amazon Web Services will invest over $500 million with Dominion Energy to develop a small modular nuclear reactor in Virginia, enhancing clean energy for its expanding AI services and aiming for net-zero emissions.
Reuters: Stellantis recalls 54,000 hybrid SUVs globally, including 21,069 in the U.S., due to a brake pedal defect that may cause it to disengage while applied; repairs will reinforce the pedal.
TOMORROW’S TRADE IDEA, TODAY
Beating the Earnings Beat
Analysts Say Act Now
Earnings are typically heavily traded because they can clue investors in as to where a company is headed, for better or worse. But with this unsung energy stock, one analyst recommends another approach: get in before the report, and reap the benefits after.
TD Cowen analyst Gabe Daoud urges investors to consider adding SM Energy (SM) to their portfolio prior to the company’s earnings call, slated for November 1.
Daoud also upped his rating on the stock to Buy, with a price target of $60 per share. Despite commodity prices trending down, this gives the energy stock around 34% in implied upside from Monday’s close.
Growth Projections
With uncertainty rising in the Middle East, Daoud acknowledged that investors should be cautious when it comes to crude oil right now.
However, he believes SM is prepared to navigate these uncharted basins. Daoud believes that SM is well-positioned to be more capital-efficient in 2025, and projects another earnings beat for the company, after soaring past second-quarter estimates. He points to acquisitions in Texas and Utah as catalysts for sustained growth.
The analyst also hinted at the possibility of dividend increases or share buybacks in the future, which could create more upside.
What Wall Street Says
The stock is up nearly 10% YTD and more than 7% over the past month. Its average analyst price target sits at $54.81, leaving Daoud more bullish than his fellow bankers.
Of the 10 analysts covering the stock, 6 give it a Buy rating, but none have listed it as a Sell. Its EPS projections for 2025 sit at $6.49, an 18% increase from current levels.
If Daoud is correct, the stock already has a lot going for it, and another earnings beat could potentially provide a short-term spike in the stock price.
Are you bullish or bearish on SM Energy (SM) over the next 12 months? |
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ON OUR RADAR
USA Today: Coca-Cola recalled over 13,000 cases of Minute Maid Zero Sugar Lemonade mislabeled as zero-sugar, containing regular lemonade, distributed in Indiana, Kentucky, and Ohio.
CNN: Bed Bath & Beyond is returning to brick-and-mortar stores by partnering with the Container Store, where its branded products will be sold as part of a $40 million investment to support the struggling retailer.
Axios: Spotify is paying audiobook publishers hundreds of millions annually, doubling available titles for premium users, and boosting U.S. audiobook market growth from 14% to 28% since its 2022 launch.
CNN: Aldi offers a $47 Thanksgiving meal for 10, undercutting Walmart by $2 per person, appealing to budget-conscious shoppers amid rising grocery prices.
BI: The growing market for refurbished iPhones, driven by affordability and sustainability, is challenging Apple as sales of new models slow, with companies like Back Market gaining significant traction.
FRIDAY’S POLL RESULTS
🟩🟩🟩🟩🟩🟩 🐂 Bullish
🟨⬜️⬜️⬜️⬜️⬜️ 🐻 Bearish
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