Consumer Discretionary

Airbnb Keeps Leading Position Amid Strong Travel Demand, Wedbush Says in Upgrade

/ / Consumer Discretionary /

Airbnb’s (ABNB) stock price declined recently, but it’s a good time to buy because travel demand is strong and the company continues to hold a leading competitive position in the alternative accommodation segment, Wedbush said in a note Tuesday. “We think investors should take advantage of this period of relative weakness and see potential upside to near-term estimates following disappointing [Q2] guidance that we view as conservative given positive travel data points thus far in [Q2],” Wedbush said, adding that the company’s long-term growth potential remains strong, with promising opportunities as it expands beyond its core business, Wedbush added. Near-term travel demand looks strong, boosted by events like the Paris Olympics from July 26 to Aug. 11, and Euro Cup from June 14 to July 14, according to the note. Positive engagement data and rising alternative accommodation demand suggest potential for Airbnb to exceed Q2 expectations, it added. Wedbush is […]

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Costco Stock Will Only Look Hotter as Elections Near

/ / Consumer Discretionary /

Costco Wholesale shares are looking very attractive to investors as retail spending remains tight, and that sentiment is probably going to intensify as spending becomes even more volatile heading into election season, UBS analysts say in a research note. “As this takes place, Costco’s share gains will look even more compelling and the stock will sustain its premium valuation,” the analysts say. The market currently has little appetite for market share losers, and Costco is positioned to keep scooping up market share as macroeconomic strains have more consumers seeking out warehouse memberships to maximize their spending power, the analysts say.

Costco Stock Will Only Look Hotter as Elections Near Read Post »

Costco Wholesale’s Fiscal Q3 Results to Highlight Strong Business Model, UBS Says

/ / Consumer Discretionary /

Costco Wholesale’s (COST) upcoming fiscal Q3 financial results are expected to emphasize the strength of its warehouse club business model, UBS Securities said in a note. The firm noted that Costco has consistently increased foot traffic by mid-single digits regardless of the macroeconomic backdrop. “With such strong and consistent growth in footsteps, [Costco] offers exactly what the market is looking for right now, given that retail investors have very little appetite to be exposed to market share losers and are increasingly favoring market share winners,” UBS said in its note Monday. UBS said new member growth, increasing traffic and new store openings likely helped the company grow its net sales by 8%, while earnings per share are estimated at $3.75, above the $3.71 consensus, for fiscal Q3, the firm added. Costco is scheduled to release fiscal Q3 results Thursday. “We believe [Costco] can continue to appeal to a cash strapped

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McDonald’s Struggles With Lowest Sales Growth Since 2020, Sluggish Trends to Continue in Q2, BofA Says

/ / Consumer Discretionary /

McDonald’s (MCD) saw its lowest quarterly same-store sales growth in Q1 since H1 of 2020 and real-time spending data indicate the slow trend will continue in Q2, BofA Securities said in a note Tuesday. The company has been facing declining customer traffic since Q3 2023 and is now lagging peers like Burger King and Wendy’s (WEN), highlighting issues with difficult comparisons and missed execution, BofA said. McDonald’s $5 combo deal aims to address the lack of a national value menu, but overall prices also need to moderate as the company’s cumulative price increase of 20% since 2022 surpasses both Burger King and Wendy’s, the analysts said. BofA said it sees the $5 combo as an urgent move and a temporary measure before introducing a more permanent value offer. The firm lowered the price objective on McDonald’s stock to $288 from $302 and reiterated its neutral rating.

McDonald’s Struggles With Lowest Sales Growth Since 2020, Sluggish Trends to Continue in Q2, BofA Says Read Post »

Nike Now Tracking Toward Fiscal Fourth-Quarter Revenue Growth, RBC Says

/ / Consumer Discretionary /

Nike (NKE) is now positioned for slight fiscal fourth-quarter revenue growth while its fiscal 2025 guidance may imply a back-half acceleration in sales, RBC Capital Markets said Friday. The brokerage is guiding for sales of $13.01 billion, implying growth of 1% on a reported basis and 2% at constant currencies. That’s up from RBC’s prior sales estimate of $12.53 billion, which implied a decline from the $12.83 billion Nike reported the year earlier. The average analyst estimate in a Capital IQ survey is for $12.91 billion. Direct-to-consumer sales are expected to rise 1% in constant currency terms to $5.67 billion while wholesale revenue is seen climbing 3% to $7.21 billion, according to the report. Wholesale should benefit from a “significant easing” of year-over-year comparisons, according to RBC analyst Piral Dadhani. For fiscal 2024, RBC is forecasting revenue of $51.76 billion, up from its prior view of $51.28 billion and above

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Nike’s Underperformance Linked to Earnings Downgrades, Future Strategy Crucial, RBC Says

/ / Consumer Discretionary /

Nike’s (NKE) stock has underperformed peers due to earnings downgrades and lower valuations, and relies on a return to positive revenue growth, which is not expected until early 2025, RBC Capital Markets said in an earnings preview Friday. The firm said Nike’s current valuation is more attractive and will remain stable until management reveals the company’s future product plans and strategies. Further details of product range transition, including timing, new products and category strategy, will be important, according to RBC. RBC said it expects revenue to grow 1% to $13 billion and diluted earnings per share of $0.72 for fiscal Q4, the results of which are scheduled for release in late June. For fiscal year 2024, RBC said it now expects a 1% revenue growth because of foreign exchange translation. For fiscal year 2025 organic revenue guidance, RBC said it lowered its estimate to 2% growth from 4%. “Nike’s de-rating

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CFRA Reiterates Buy Opinion On Shares Of Netflix, Inc.

/ / Consumer Discretionary /

We lift our target to $725 from $640 on a forward TEV/EBITDA of 26.3x our 2025 EBITDA estimate at $28.14/share, a premium to the peer average at 23.0x and below NFLX’s three-year average at 31.6x. We keep our EPS views at $18.55 (consensus $18.31) in 2024 and $21.95 ($22.02) in 2025; our respective revenue estimates are $38.6B and $43.2B. Back in mid-April, NFLX surprised investors by disclosing it will remove subscriber data starting in Q1 2025, as it says the business is broader with other revenue streams. We still believe investors and advertisers want to know the subscriber base, net adds, and average revenue per user or subscriber (ARPU) by total/regions. In Q1 2024, NFLX added 9.33M net subscribers, ending with 269.6M total subscribers. Monthly ARPU varied by region with UCAN at $17.30 ($16.18 a year ago), EMEA at $10.92 ($10.89), LATAM at $8.29 ($8.60), and APAC ex-China at $7.35

CFRA Reiterates Buy Opinion On Shares Of Netflix, Inc. Read Post »

CFRA Maintains Hold Opinion On Shares Of Ross Stores, Inc.

/ / Consumer Discretionary /

We maintain our 12-month price target of $138, based on 23.0x our FY 25 (Jan.) EPS estimate and slightly lower than the company’s 5-year average forward P/E multiple of 23.9x. We maintain our FY 25 and FY 26 EPS estimates of $6.00 and $6.40, respectively. ROST posts normalized Q1 EPS of $1.46 vs. $1.09, $0.11 above consensus estimates on revenues of $4.86B vs. $4.50B and $32M above estimates. Comparable store sales increased 3% Y/Y while total revenues increased 8%. Management said that Accessories and Children were the best-selling categories while California and the Pacific Northwest were the strongest regions. The company also stated that dd’s Discounts outperformed Ross as customers responded well to better value. Inventory was up 10% Y/Y with average store inventory up 4% and in line with sales growth. ROST guided for comp store sales up 2% to 3% and EPS of $5.98 at the high point.

CFRA Maintains Hold Opinion On Shares Of Ross Stores, Inc. Read Post »

Ross Stores Stock Pops on Strong Earnings. Lower Costs Helped. — Barrons.com

/ / Consumer Discretionary /

Shares of Ross Stores were trading sharply higher Friday after the discount retailer easily beat quarterly estimates and lifted guidance. Late Thursday, Ross posted earnings per share of $1.46 for its fiscal first quarter, beating Wall Street’s call for $1.35, according to FactSet. Sales of $4.86 billion topped the consensus call for $4.83 billion. Same-store sales ticked 3% higher. Ross stock was up 6.8% to $140.80 in premarket trading Friday, while futures tracking the S&P 500 edged 0.3% higher. “Though we had hoped to do better, first quarter sales were in line with guidance despite macroeconomic headwinds that continued to pressure our customers’ discretionary spending,” CEO Barbara Rentler said in the earnings release. “Earnings results for the period were better-than-expected primarily due to lower expenses relative to our plan.” For its fiscal second quarter, the company expects same-store sales to rise 2% to 3% and is calling for earnings per

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Target to See Lower Comparable Q2 Sales, BofA Says

/ / Consumer Discretionary /

Target (TGT) is expected to have lower comparable sales in Q2, but are still expected to rise, BofA Securities said in a note Thursday. Target is expected to have lower Q2 comparable sales, making the brokerage lower its Q2 sales projection to a 1% increase compared to previous estimate of 3% increase. This is due to “continued softness in discretionary categories (most notably home & hardlines), and softening trends in frequency categories.” However, that means Target is expected to deliver sales results within its guidance of flat to 2% increase. The company recently announced a new pricing strategy with rewards programs and owned products focused on entry-level price points that will help in increase traffic and market share. BofA’s forecast for fiscal year 2025 EPS is unchanged at $9.45 given Q1 performance that surpassed its estimates.. BofA reiterated a price objective of $190 for Target with buy rating.

Target to See Lower Comparable Q2 Sales, BofA Says Read Post »

Analysts Highlight Target’s Market Share Struggles And Increased Competition: Details

/ / Consumer Discretionary /

Yesterday, Target Corp (NYSE:TGT) reported its first-quarter FY24 earnings and the following are the comments on the same by different analysts. BMO Capital – Reiterates Market Perform, lowers price target from $170.00 to $155.00 Analyst Kelly Bania said that while Target’s first-quarter results were in line with her expectations, investor expectations for continued GM% upside were clearly reigned in. With signs of share losses widening in food & consumables, continued weakness in digital growth and signs of increasing same-day competition from Amazon.com Inc (NASDAQ:AMZN) and Walmart Inc (NYSE:WMT), the analyst lowered the price target to $155. The analyst believes 6% EBIT margins remain the target, but the pace of achieving the target could take longer than expected. RBC Capital Markets – Reiterated Outperform, lowers price target from $191.00 to $181.00 Analyst Steven Shemesh opined that with the majority of the easy gross margin wins in the rearview, the focus will shift back to demand trends /market

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