Estee Lauder Investors Spooked As F2Q Guide Bleak

/ / Consumer Discretionary /

Estee Lauder pulls guidance for its current fiscal year, but what insight it did provide for the current quarter spooked investors badly. The cosmetics company projects a F2Q sales drop between 8% and 6%, and adjusted EPS well below what analysts were expecting. The main culprit is the ongoing problems in China and the Asia retail market. While outgoing CEO Fabrizio Freda expects stimulus measures there to eventually stabilize the high-end beauty market, it’s going to take some time. Estee Lauder does buy some breathing room for new leadership, with a halved dividend to free up some resources. Estee Lauder plunges 23% premarket to $66.55.

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AMD Stock Pressure Suggests Raised Guidance Was Largely Anticipated

/ / Technology /

Advanced Micro Devices’ guidance was generally in-line but many were expecting more upside for the business, particularly in its data center segment, says Susquehanna Financial Group’s Christopher Rolland in a research note. The chip maker reported a sharp rise in quarterly sales on demand for its AI chips and other products for data centers. CEO Lisa Su raised her projection for AMD’s sales of AI chips this year to $5 billion from a $4.5 billion forecast in July. “While the company did raise 2024 MI300 revenue guidance to >$5B, we believe the negative stock reaction suggests the $500M raise was largely anticipated by investors,” says Rolland. AMD sinks 10% to $149.71.

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Alphabet’s 3Q Bolsters Optimism Around Google’s Long-Term Prospects

/ / Technology /

Alphabet’s latest results give analysts at Wedbush confidence that the parent company of Google is set to manage a period of transition. Alphabet’s 3Q results were powered by strong performance in its cloud-computing division, while Google’s search engine and YouTube video platform both reported slowing revenue growth for a second straight quarter. The analysts note Google’s integration of Gemini into its core services is starting to result in tangible results across consumer and enterprise products. “We continue to believe the structural risks to Google’s search dominance are overblown, and we are optimistic on the longer-term prospects of the search business as Google manages through this period of transition,” say the analysts, who raise their price target to $210 from $205. Shares rise 6.6% to $180.92 in early trading.

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McDonald’s U.S. Orders Slowed While Spending Rose in 3Q

/ / Consumer Discretionary /

McDonald’s logged a small gain in U.S. comparable sales during 3Q as it pulled in slightly fewer orders year-over-year but guests spent more on average with each order. The fast-food chain says effective value marketing of its core menu and growth in digital sales and delivery contributed to the 0.3% U.S. comparable sales increase. But analysts had been targeting a 0.7% gain, according to FactSet, thinking that the chain would outperform its U.S. competitors in a tight spending environment for eating out. McDonald’s slides 2.3% to $290.01 premarket.

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McDonald’s Overseas Sales Fell More Than Expected in 3Q

/ / Consumer Discretionary /

McDonald’s recorded fewer comparable sales for 3Q due to shortfalls in its international markets that were worse than Wall Street had anticipated. Comps in the fast-food chain’s international operated markets were down 2.1%, led by poor sales in France and the U.K. The company’s international developmental licensed markets saw comps drop 3.5% due to the war in the Middle East and weakening sales in China, which more than offset growth in Latin America. Analysts had been expecting comps in both market groups to slip just 1.2%, according to FactSet. Investors had been bracing for some weakness overseas after Domino’s Pizza recently missed 3Q international sales projections.

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McDonald’s Fights for Struggling Consumers

/ / Consumer Discretionary /

McDonald’s says that families and lower-income customers continue to feel pinched across many global markets, making for a challenging environment for fast-food. McDonald’s is pushing its international franchisees to offer more value options, and expects to stay conservative with any price increases. “Consumers are certainly remaining resistant to pricing,” McDonald’s CFO Ian Borden says during an earnings call.

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Boeing Secures Order For 10 787s From LATAM Airlines

/ / Industrials /

Boeing Company (NYSE:BA) disclosed an order for 10 new 787 Dreamliners from LATAM Airlines Group, with options for five additional aircraft. With this latest order, LATAM plans to expand its 787 fleet to 52 by 2030, enhancing capacity on high-demand routes and supporting new routes, such as its nonstop service to Sydney, Australia. Notably, Boeing’s 2024 Commercial Market Outlook projects that Latin American air travel will more than double in the next 20 years, with annual growth of 5%. Nearly 2,300 new airplane deliveries are expected, expanding the regional fleet to over 3,000 aircraft by 2043. Ramiro Alfonsín, Chief Financial Officer of the LATAM Airlines Group said, “The Boeing 787 is a much more efficient aircraft, allowing us to continue growing sustainably while reducing our carbon footprint as we drive the growth of our operations. This order will enable us to receive at least two aircraft of this model each year

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Boeing Q3 Earnings: Revenue And Profit Decline, Cultural Challenges, CEO Ortberg Vows Transformation

/ / Industrials /

Boeing Co (NYSE:BA) reported a 1% year-over-year revenue decline to $17.854 billion in the third quarter of 2024, missing the consensus of $17.931 billion. Adjusted loss per share expanded to $10.44 from $3.62 in the same quarter of 2023, missing the consensus of $10.34. The company stated that the results reflect the impact of the International Association of Machinists and Aerospace Workers (IAM) work stoppage and previously announced charges on commercial and defense programs. Boeing recorded an adjusted operating loss of $5.989 billion for the quarter, compared to $1.09 billion a year ago. The core operating loss margin was (33.6%) Vs. (6%) a year ago. Commercial Airplanes revenue fell 5% YoY to $7.443 billion, impacted by $3 billion in charges and higher expenses. Deliveries declined by 10%; 116 airplanes were delivered, and the backlog included over 5,400 airplanes valued at $428 billion. Defense, Space & Security revenue rose 1% year over

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General Motors Will Keep Shoveling Cash Back To Shareholders

/ / Consumer Discretionary /

In the last couple of years, General Motors has been an aggressive buyer of its own stock thereby sending about $20 billion back to shareholders via share repurchases. The company will keep shoveling cash back to its shareholders next year, CFO Paul Jacobson says. Jacobson reiterates that GM plans to spend another $5 billion or so on buybacks early next year to get its share count under 1 billion. That’s just the next mile marker, not the end of the buyback cruise, he adds. GM’s stock trades on a low multiple, a reflection of investors’ belief that the company’s long-term earnings power is in the gas-powered vehicle business, and skepticism about the company’s prospects in EVs and autonomous robotaxis. So, under Jacobson, GM has responded by giving investors another thing they love: cash. GM up 4.2% in early trading.

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Lockheed Takes Hit From Delays in F-35 Lots 18-19 Contract

/ / Industrials /

Lockheed says costs tied to its F-35 Lots 18-19 aircraft contract began to exceed the advanced acquisition contract value in 3Q as funding lagged. The defense company remains in negotiations with the U.S. government over the deal, but says it was unable to recognize revenue and profit on about $400 million of costs incurred on the program during the quarter, plus about $300 million due to snags on the supply chain. Lockheed says it was prevented from invoicing and receiving about $450 million through the quarter and also had about $2 billion in potential termination liability exposure related to its Lots 18-19 deal. The company expects some of these issues to let up in the fourth quarter, but until a final agreement is reached, its results will continue to be negatively impacted, Lockheed says. Shares fall 5.2% to $582.60.

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Netflix Provided ‘Encouraging’ 2025 Guidance Amid ‘Strong’ Net Subscriber Additions, Wedbush Says

/ / Consumer Discretionary /

Netflix (NFLX) provided “encouraging” 2025 revenue guidance and reported “strong” net subscriber additions in the third quarter, Wedbush Securities said in a note Friday. “The primary driver of this surge will be a more robust content slate than we have seen in 2024,” Wedbush said in a Friday note following Netflix’s Q3 results released Thursday. The firm said the company’s gain of 5.1 million net paid subscribers in the quarter exceeded the consensus of 4 million. Wedbush said Netflix’s results for the quarter were “solid,” with revenue topping consensus, guidance and the firm’s estimate. Wedbush boosted its price target on Netflix to $800 from $775 and maintained its outperform rating. Netflix shares advanced more than 10% in recent Friday trading.

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Netflix Expects Advertising Revenue to Double Next Year

/ / Consumer Discretionary /

Netflix’s ad-supported tier is growing at a healthy clip, leaving management to expect ad revenue to double in 2025 while still not a primary driver of overall growth, say analysts at UBS in a research note. The streaming giant saw a higher percentage of sign-ups opting for its ad tier in 3Q than in 2Q, say the analysts, and management expects to reach a critical scale across ad markets next year. Other takeaways the analysts note from Netflix executives include their suggestion that revenue growth in 2025 will be driven more by members than average revenue per member driven. “We believe the company could lean into monetization efforts with price/hour of consumption at the low end of peers and the content pipeline gaining steam,” say the analysts. Shares rise 11%, making it the best performer in the S&P 500 and Nasdaq 100.

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