Consumer Discretionary

Tesla’s Q1 Hit Hard by Soft China Demand, Marking a ‘Nightmare Quarter’ for Deliveries, Wedbush Says

/ / Consumer Discretionary /

Tesla’s (TSLA) Q1 has been a “nightmare quarter” as deliveries have suffered greatly due to persistently soft demand in China at the start of the year, Wedbush said in a report emailed Thursday. Supply challenges, including factory downtimes and the fire at its Berlin factory have hampered the company, the analysts said. “There is no denying this has been a quarter to forget for Musk and Tesla,” Wedbush said, adding that “further issues this quarter were compounded by the Model 3 Highland upgrade issues in the US /Fremont and flattish sales in Europe.” China’s challenging market, compounded by rising electric vehicle competition, remains a major concern for the company, with delivery estimates down 3% to 4% year-over-year this quarter. The current negative narrative surrounding Tesla is warranted, given sluggish growth and squeezed margins, especially in China. Wedbush said. “For Musk this is a fork in the road time to get

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Beacon Roofing Supply Hits New High After Home Depot Buys Rival

/ / Consumer Discretionary /

Shares of Beacon Roofing Supply rise to a new all-time high after home-improvement retailer Home Depot struck a deal to buy its privately held competitor, SRS Distribution. Beacon Roofing Supply distributes roofing materials and complementary products, such as siding and waterproofing in North America. The Home Depot deal could be a sign that big retailers are warming up to the niche roofing industry, which has in recent years consolidated under a number of brands buying local and regional distributors. Shares of Beacon rise 3% to $97.94.

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Estee Lauder Competitiveness, Distribution to Improve With Amazon Premium Beauty Deal, Oppenheimer Says

/ / Consumer Discretionary /

Estee Lauder’s (EL) bid to sell its Clinique brand through Amazon.com’s (AMZN) Premium Beauty store is a “logical” next step for the cosmetic company, Oppenheimer said Thursday. The deal, announced Wednesday, should enhance Estee Lauder’s distribution channels and boost its competitiveness. L’Oreal saw a 70% increase in demand for its products after they began selling on the Amazon platform, Oppenheimer analysts said. The company’s latest move appears favorable, but the elevated stock price and an uncertainty around its travel retail channel keep the risk/reward model unchanged. Estee Lauder “shares remain on our radar,” the investment firm said, issuing a perform rating with no price target. Estee Lauder shares were more than 6% higher in recent trading.

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Tesla Is Navigating Free FSD Trials, Gigafactory Challenges, and Governance Hurdles: Analyst

/ / Consumer Discretionary /

RBC Capital Markets analyst Tom Narayan maintained an Outperform rating on Tesla Inc (NASDAQ:TSLA) with a price target of $298. The fourth quarter of fiscal 2023 saw a demand-pull forward from the IRA expiry of particular Model 3s, and that likely negatively impacted the first quarter of 2024, as per the analyst. The analyst flagged the Red Sea disruption in January and the arson attack in February, hampering the Berlin gigafactory operations. Narayan expects the company’s decision to give one month of free trials of FSD in the U.S. will help drive higher volumes in the second quarter. Higher FSD attach rates are also central to his investment thesis on the stock. Narayan projects Tesla deliveries of 446,000 in the first quarter of 2024, down 10.7% vs. his prior estimate of 500k and 3.3% below consensus, based on registration data and app downloads. He expects Tesla to report deliveries during the first week of April.

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Estée Lauder Shares Climb 6.2% After Bank of America’s Upgrade on Turnaround Efforts

/ / Consumer Discretionary /

Shares of Estée Lauder on Thursday climbed after Bank of America upgraded its recommendation on the stock to buy from neutral as the beauty giant implements a profit-recovery plan. The owner of cosmetics brands such as Clinique, La Mer and Bobbi Brown should benefit from a reacceleration of sales and profit growth as Estee Lauder exits the fiscal year ending in June 30 with better visibility into end-market demand, Bank of America analysts say in a research note. The New York company lost focus on product upgrades and innovation in recent years. However, its current innovation push to respond faster to trends and repair brands portfolios should come with improvements across the prestige category. Bank of America expects to see innovation specifically aimed at reversing recent market-share softness in makeup from MAC and Tom Ford. Estée Lauder’s success is dependent on achieving more consistent growth across developed markets and emerging

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Disney Likely Has Several Sources of Potential Earnings Upside, UBS Says

/ / Consumer Discretionary /

Walt Disney’s (DIS) business model has multiple sources of potential upside that could drive earnings higher over the next several quarters, UBS Securities said in a note e-mailed Wednesday. The firm increased its per-share earnings outlooks for Disney by 3% to 6% from 2024 through 2026, with results likely driven by a better performance from the company’s parks business, with additional help from the direct-to-consumer and content segments, UBS analysts, including John Hodulik, said. UBS raised its price target on Disney stock to $140 from $120, with a buy rating.

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Estée Lauder Launches Clinique Amazon Store in Distribution Shift

/ / Consumer Discretionary /

Estée Lauder’s latest move amid its profit recovery plan is aimed at gaining consumers by taking control of the U.S. ecommerce giant, following similar steps from competitors such as L’Oréal, Coty and Shiseido. It directly partners with Amazon for the first time by launching a U.S. Amazon Premium Beauty store for Clinique. Other Estée Lauder brands will have their own Amazon stores over the coming months, CEO Fabrizio Freda says. Amazon, which started selling cosmetics in 2004, is leading growth across all retailers in beauty growth, with prestige outpacing mass growth, according to NIQ data from December. Shares rise 2% to $142.15.

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Walt Disney Likely Has Multiple Avenues of Potential Earnings Upside, UBS Says

/ / Consumer Discretionary /

Walt Disney’s (DIS) business model likely has several sources of potential earnings upside in the coming quarters, led by better results at its parks business, with additional help from the direct-to-consumers and content segments, according to UBS Securities. These sources are expected to drive the media and entertainment giant’s earnings estimates higher over the next several quarters, yielding a 25% three-year compound annual growth rate, UBS analysts John Hodulik, Batya Levi, and Christopher Schoell said in a note Wednesday. The brokerage expects the parks segment’s earnings before interest and taxes to grow by double-digit percentage annually in both the fiscal second quarter and full year amid strong US attendance. The company’s spending plan is likely to drive high-single-digit or better EBIT growth in the business for “several years,” the analysts said. “Despite the tougher comparisons, we expect the experiences segment to remain a high-growth and cash generative business for Disney,”

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