Consumer Discretionary

General Motors’ Core Business Strength Underpins Electric, Autonomous Vehicles Development, BofA Says

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General Motors’ (GM) “well-managed” core business continues to underpin its future-proofing strategy of accelerating investments in electric and autonomous vehicles, BofA Securities said in a note Tuesday. “GM’s liquidity levels should be sufficient to manage through volatility in the macro environment, while also proactively investing for the future and returning value to shareholders,” the brokerage said. Following General Motors’ solid Q1 results, the brokerage said the company did not disappoint investors, who were looking for an upside to 2024 guidance. General Motors raised its full-year adjusted EPS outlook to between $9 and $10, from the previous range of $8.50 to $9.50, after reporting forecast-beating Q1 earnings. BofA reiterated its buy rating on the stock and a price target of $75.

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Starbucks’ U.S., China Pressures Drive Estimates Lower

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Starbucks remains well positioned despite current pressures, UBS analysts say in a research note. The coffee chain has a strong customer brand affinity and attractive growth profile. The U.S. challenges largely reflect a combination of Middle East conflict-related protests and consumer spending pressures, while China macro conditions and competition represent overhangs, the analysts say. These pressures are expected to weigh on Starbucks’ results. UBS lowers its 2Q North America same store sales to flat from an increase of 3%, and its international estimates to a decline of 2% from prior flat expectations. It also cuts its 2Q and FY EPS forecasts to 78 cents and $3.94, previously, noting that sales headwinds likely persisted in the 2Q.

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Spotify Demonstrates Robust Financial Health With Impressive Q1 Revenue, Margin Improvements: Analyst

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Goldman Sachs analyst Eric Sheridan had a Neutral rating on Spotify Technology SA (NYSE:SPOT) with a price target of $277. Spotify reported fiscal first-quarter 2024 revenue growth of 20% year-on-year to $3.95 billion, beating the consensus of $3.85 billion. EPS of $1.05 beat the consensus of $0.70. The stock price jumped Tuesday after the print. The analyst expects Spotify to have a positive market reaction to its first-quarter 2024 earnings report (including its forward second-quarter 2024 commentary) as the company reported roughly in-line subscriber and revenue performance across its businesses with some headwinds to forward revenue and subscriber momentum in the forward forecast. In addition (and likely the more significant component of the stock reaction to this earnings report), he would focus on the positive operating momentum in both gross margins and operating margins on a mix of improved music and podcast trends with some headwind from audiobook costs operating margins benefiting from lower personnel

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General Motors’ Potential In EV Transformation Weighed By Analysts After Q1 Beat- Was This a ‘Prove Me’ Quarter For CEO Mary Barra?

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General Motors Company (NYSE:GM) shares are trading higher on Tuesday after raising its outlook for FY24, following a first-quarter beat. General Motors projects adjusted earnings per share of $9.00 – $10.00, higher than the prior view of $8.50 – $9.50. According to Wedbush analyst Daniel Ives, the company is focusing heavily on profitability, with expenses continuing to be a big priority. This was a major “prove me” quarter for General Motors, which shows the long-awaited turnaround for the company’s CEO, Mary Barra. Importantly, honing in on the EV transformation, the company expects to be EV variable margin positive in the second half of the year, with at least a 60-point EBIT margin improvement this year and mid-single digit EBIT EV margin in 2025, including the benefits from the clean energy tax credits. Ives reiterated an Outperform rating on the stock with a price forecast of $45. BofA Securities analyst John Murphy said in a new investor note

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Starbucks Faces Near-Term Pressures, But Long-Term Outlook Remains Positive, UBS Says

/ / Consumer Discretionary /

Starbucks’ (SBUX) 2024 outlook will likely be affected by near-term pressures, but it remains well-positioned in the long term due to “strong customer brand affinity and an attractive growth profile,” UBS said in a note emailed Tuesday. Challenges in the US stem from protests related to Middle East conflict and pressure on consumer spending, while China’s macro conditions and competition are adding to concerns, according to the note. The firm said results from its survey on brand image, customer traffic, and sales trends and growth found Starbucks still has a strong brand reputation and opportunities to improve sales in the future. UBS said it expects Starbucks to reduce its fiscal 2024 same-store sales and revenue growth. Earnings will also decrease as cost-saving measures will not be able to maintain the current earnings target, the firm added. UBS reduced the price target for Starbucks to $95 from $105, while keeping the

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Tesla Q1 Non-GAAP Earnings, Revenue Decline

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Tesla (TSLA) reported Q1 non-GAAP earnings late Tuesday of $0.45 per diluted share, down from $0.85 a year earlier. Analysts surveyed by Capital IQ expected $0.50. Revenue for the quarter was $21.3 billion, down from $23.33 billion a year earlier. Analysts surveyed by Capital IQ expected $22.26 billion. Shares were up 5.3% in after-hours tradng.

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CFRA Maintains Buy Opinion On Shares Of Tesla Inc.

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CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: We lower our 12-month target by $10 to $210, based on a 2025 P/E of 54.5x, justified by long-term growth expectations. We cut our adjusted EPS views by $0.20 to $2.55 for 2024 and by $0.15 to $3.85 for 2025. TSLA posted Q1 adjusted EPS of $0.45 vs. $0.85 (-47%), shy of the $0.50 consensus. Revenue fell 9% to $21.30B ($960M below consensus) and gross margin contracted 200 bps to 17.4% (90 bps above consensus). TSLA said Cybertruck production lifted to over 1K units/week in April and its earnings slides featured a preview of technologies in development, including a ride-hailing app, humanoid robot, AI computing, and full self-driving. TSLA also said it would accelerate the launch of new vehicle models ahead of its previously-communicated start of production.

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Tesla Accelerates Rollout of More-Affordable EVs as Profit Drops Sharply — WSJ

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By Rebecca Elliott Tesla Chief Executive Elon Musk sought to assuage Wall Street’s concerns about the company’s strategic direction by underscoring the automaker’s commitment to making less-expensive electric cars. On the company’s Tuesday earnings call, Musk said Tesla was accelerating the launch of new models, including vehicles that sell at more-affordable prices. His comments cap a dismal start to the year for the world’s most-valuable automaker, which saw its first-quarter profit plunge to its lowest level since 2021. Tesla’s operating margin narrowed significantly, dropping to 5.5% in the first three months, from 11.4% a year earlier. Musk also emphasized the importance of Tesla’s achieving its longstanding — and thus far elusive — goal of developing an autonomous car. He shared new details about the company’s plans for a dedicated robotaxi model and ride-hailing network, saying Tesla would operate its own fleet and allow customers to deploy their vehicles for the

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Spotify Likely to Deliver In-Line Q1 Results, Profitability Will Be ‘Key Focus,’ Macquarie Says

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Spotify (SPOT) is seen delivering in-line Q1 results on Tuesday, while profitability will be a “key focus” for investors after the recent job cuts and as podcasts are near an inflection point to profitability, Macquarie Equity Research said in a note emailed Friday. Macquarie expects the company to report Q1 revenue of 3.6 billion euros ($3.82 billion) “driven by a 10% price hike in the US (28% of premium sub base) and improving ad market trends that should support growth in ad supported revenues.” “Podcast margins were near breakeven in 4Q23, and [management] commentary signaled that margins are likely to positively inflect and drive profitability through 2024,” said Macquarie analysts Tim Nollen and Ross Compton. “Podcasting has an inherent fixed cost base that implies operating leverage across the content slate. This is in contrast to music where each and every stream warrants a variable cost to the label,” they said.

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Tesla Slashes Marketing Team Amid Broad Layoffs

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Tesla (TSLA) has cut its newly established marketing team as part of broader company layoffs, Bloomberg reported Monday, citing people familiar with the matter. The “growth content” team in the US, led by senior manager Alex Ingram and comprising about 40 employees, was dissolved as part of job cuts, the people told Bloomberg. The company has a smaller marketing team in Europe, the report said, citing one person. There were also significant job reductions in Tesla’s design studio and Hawthorne, California staff, according to the report.

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Amazon.com Could Post Q1 Beat, But Face Challenges in Q2, BofA Securities Says

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Amazon.com’s (AMZN) retail margins, advertising revenue, and Amazon Web Services growth are likely to drive a Q1 beat, but the company is likely to face headwinds in Q2, BofA Securities said in a Monday note. “We expect a 1Q beat, and while 2Q set up has some unusual q/q hurdles, we expect positive 1Q metrics and call commentary to be constructive,” said the investment firm. BofA Securities noted that positives for Q1 include Prime Video ads, improving AWS demand and AI traction, and greater-than-expected retail margin expansion, among others. But while BAC aggregated credit and debit card and Bloomberg Second Measure data pointed to eCommerce upside in Q1, this could slow in Q2 because of certain holiday sales in the first quarter, the investment firm added. BofA Securities lowered its Q2 estimate for the company, saying recent sale events could have pulled forward some some demand for the period. The

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Nike Needs a Win, and It’s Betting on Caitlin Clark to Deliver One

/ / Consumer Discretionary /

By Weston Blasi Some Nike athletes’ careers are ‘winding down,’ one expert said, and the company is looking to make a big splash with Clark’s meteoric rise. Caitlin Clark is reportedly adding to the $76,535 starting salary she’ll make in the WNBA in a big way: with an eight-figure endorsement deal with Nike Inc. Clark’s endorsement deal with Nike (NKE) will have a total value that’s “above $20 million,” Shams Charania of The Athletic (NYT) reported, and would come after an iconic run for Clark through the women’s March Madness that saw her star rise to a point where the women’s tournament final had more viewers than the men’s final for the first time. As part of the Nike deal, Clark would be getting a signature shoe, something almost unheard of for a basketball player who has yet to play in a professional game. In the basketball space, Nike has

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