Meta Ads Should Lift Earnings, Citi Says. The Stock Could Jump 15%. — Barrons.com

/ / Technology /

Citi is more bullish than the rest of Wall Street about Meta Platforms. It all comes down to ads. Analyst Ronald Josey is upping his estimates for Meta’s third-quarter earnings based on new internal Citi data for Reels, the company’s short-video service. The company is expected to report results on Oct. 23. Josey predicts Meta will deliver $5.48 per share in earnings on $40.7 billion in sales. Both numbers indicate year over year growth will be a percentage point higher than his earlier estimates. The consensus is $5.19 per share in earnings on $40.1 billion in sales, FactSet data show. The new data show that the number of ad loads — the percentage of ads encountered while watching Reels — has reached 22.2% to date in the third quarter, up 70 basis points from the previous quarter. More than 75% of Meta’s advertisers use Reels, Josey said. “Given our view […]

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Qualcomm Acquiring Intel Seen As ‘Logically Unlikely’

/ / Technology /

Qualcomm has approached Intel about an acquisition, according to a report from The Wall Street Journal on Friday, but the sale looks “logically unlikely” to Benchmark analyst Cody Acree. He says in a research note that Qualcomm has no experience in operating leading-edge chip manufacturing facilities, so any acquisition would be instantly paired with a disposition of Intel’s entire manufacturing operation, which many have called for Intel to do on its own. An Intel offer would probably have to offer at least a 40% to 50% premium to its current trading price to be taken seriously, and given Qualcomm’s market cap and cash balance, any transaction would have to include heavy debt and stock components, the analyst says.

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Intel Stock Advances After Report of Apollo Offer

/ / Technology /

Shares of Intel advanced following a Bloomberg report that Apollo Global Management has offered to make a multibillion-dollar investment in the company. The stock was up 2.7% at $22.45 in premarket trading. When the market closed Friday, shares had fallen more than 56% since the start of the year but gained 3% during the trading day after The Wall Street Journal reported that Qualcomm had approached Intel about a takeover. Citing unnamed sources, Bloomberg reported on Sunday that Apollo had indicated interest in investing as much as $5 billion in Intel. Intel executives are weighing Apollo’s proposal, though the size of the potential investment could change and discussions could fall apart, according to the report.

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Apple Off to Strong Start With First Weekend of iPhone 16 Sales, Wedbush Says

/ / Technology /

Apple (AAPL) saw a “strong demand start” for iPhone 16 over the weekend, reinforcing Wedbush Securities’ view that the technology giant will be able to break its historical mark for iPhone units in a year and reach a market capitalization of $4 trillion in 2025. The brokerage estimates iPhone 16 sales to be up high single digits and potentially double digits beginning with the December quarter, it said in a Sunday client note. Wedbush believes Apple’s highly anticipated artificial intelligence features for the new iPhone will be released in phases over the coming months. “This is the beginning of an AI driven iPhone supercycle that should enable Apple to break its historical mark for iPhone units in a year and translate into a $4 trillion market cap for Cupertino in 2025,” Wedbush analysts led by Daniel Ives wrote in the note. Based on the brokerage’s recent Asian supply chain checks,

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ASML Expected to Raise 2030 Targets Over AI Demand

/ / Technology /

ASML Holding is in a position to upgrade its financial targets for the end of the decade when the Dutch semiconductor-equipment maker holds an investor day on Nov. 14, Citi analysts write in a note to clients after hosting ASML CEO Christophe Fouquet at Citi’s Global TMT Conference. “Fouquet explained clearly that the primary driver of their long-term model is the addressable market, where there is clear upside for artificial intelligence relative to the model provided in 2022,” the analysts say. ASML is currently forecasting sales of approximately 44 billion to 60 billion euros in 2030, with a gross margin of roughly 56% to 60%.

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ASML’s Investor Day to Shift Market Focus to Longer Term

/ / Technology /

The market focus on ASML Holding will likely shift away from the short term to 2026 and 2027 when the Dutch semiconductor-equipment maker hosts an investor day on Nov. 14, UBS analysts write in a note to clients. The analysts say ASML’s earnings on Oct. 16 should provide a near-term boost for the stock as they expect to see solid orders from Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, but the market will likely focus more on the investor day the following month. ASML shares trade 3.6% higher at 696.60 euros.

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Walmart and Costco Bought Up Stock at Bargain Prices — Barrons.com

/ / Consumer Discretionary /

Ed Lin Companies can show confidence in their prospects in many ways, but $1 billion of stock repurchases certainly trumps a “cautiously optimistic” outlook. Among retailers, that’s a breathtaking amount of buyback activity. That’s how much Walmart laid out to buy back shares in the fiscal second quarter ended July 26. What’s even more impressive is that the retailer didn’t significantly curb buying as the share price rose. Walmart paid $363 million in May for 5.8 million shares, an average price of $62.19 each, according to a form the company filed with the Securities and Exchange Commission. Then it paid $292 million in June for 4.4 million shares, an average price of $67.12 each, and paid $339 million in July for 4.9 million shares, an average price per share of $69.66. At the end of July, Walmart had $14.5 billion allocated for share repurchases. Walmart stock has only climbed since

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Nike’s leader is stepping down

/ / Consumer Discretionary /

John Donahoe will retire as chief executive next month, capping a tumultuous tenure that caused the sneaker giant to lose ground to competitors. Donahoe will also step down from the board of directors. Company veteran Elliott Hill will succeed Donahoe as president and CEO starting Oct. 14. Hill served as consumer president until Donahoe took over in early 2020 and shuffled Nike’s leadership ranks. During the pandemic, Donahoe sought to focus on selling directly to consumers and Nike cut ties with longtime retail partners. The strategy backfired as the e-commerce boom faded. Nike shares rose 6.8% Friday.

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Apple Is the World’s Most Valuable Stock. It’s Still Underestimated. — Barrons.com

/ / Technology /

By Alex Eule Fed Day was the highlight of the week, but Apple deserves an honorable mention. Friday was Apple’s annual holiday, with new iPhone 16 models arriving in stores. It’s a joyous moment for Apple fans. For investors, it’s more complicated. The skilled folks on the Dow Jones Market Data team have tracked Apple’s stock around every iPhone release. By now, there’s an ample sample size across 17 years. The stock has declined an average of 0.1% on the day new iPhones are announced. On launch day — a week or two later — shares slip another 0.1%. Over the following week, Apple slightly underperforms the market. Day traders are free to short the iPhone launch, but everyone else should go long — way long. Six months out from iPhone releases, Apple stock has returned an average of 11.7%, eight percentage points better than the S&P 500 index. All

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Adobe Stock Is an Unappreciated AI Play. It’s Time to Buy. — Barron’s

/ / Technology /

Shares fell after earnings despite signs that the company is monetizing its artificial-intelligence offerings. By Jacob Sonenshine Adobe’s earnings report painted a pretty picture of its ability to turn artificial intelligence into paying customers. But the reaction to its disappointing guidance was anything but pretty. That has created a buying opportunity in its stock. There was a lot to like about Adobe’s third-quarter results, with both earnings and sales easily topping estimates. The market, though, focused on management’s somewhat disappointing outlook, which included a forecast for “net new annual recurring revenue” — representing the sales Adobe expects to bring in from new customers or from increasing monthly subscription payments — to come in at $550 million in the fourth quarter, up 9% quarter over quarter. The fourth quarter usually sees double-digit growth, and the stock tumbled 13% after the report. It has since settled around $510. The market reaction was

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Micron Earnings Expected to Deliver Bad News. Why Citi Says Buy the Stock.

/ / Technology /

By Angela Palumbo Micron Technology reports earnings next week and while many analysts are pessimistic about what guidance the chip maker will provide, a Citi analyst still said buy the stock. Citi analyst Christopher Danely wrote in a research note Friday that he spent time chatting with investors this week about their expectations for Micron’s earnings, which will be released after the stock market closes on Sept. 25. His takeaway: a lot of pessimism. “We estimate roughly 80% of investors are bearish on Micron with every hedge fund we spoke with being negative but a few mutual funds being positive,” Danely wrote. While shares of Micron have risen 4.7% this year, they have recently taken a tumble. As of Thursday’s close, the stock has dropped 42% from its all-time closing high of $153.45 hit on June 18. There’s a few reasons for the shift in sentiment. For one, broader semiconductor

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FedEx Cuts Full-Year Outlook After Posting Lower Profit, Revenue in 1Q

/ / Industrials /

FedEx cut its outlook after posting lower profit and revenue in its fiscal first quarter, dragged down by a shift in the mix of it business that saw reduced demand for priority services, increased demand for deferred services and constrained yield growth. The Memphis, Tenn., package-shipping company on Thursday posted a profit of $790 million, or $3.21 a share, for its three months ended Aug. 31, compared with $1.08 billion, or $4.23 a share, in last year’s quarter. Adjusted per-share earnings were $3.60, missing the $4.75 that analysts polled by FactSet forecast. Revenue fell 0.5% to $21.6 billion. Analysts were looking for $21.87 billion, according to FactSet. Chief Executive Raj Subramaniam said the company remains focused on transforming its network, improving efficiencies and lowering costs, adding that he remains confident in the value-creation opportunities the company has ahead. For its fiscal 2025, FedEx now expects per-share earnings between $17.90 and

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