Closing Recap

Thursday, February 06, 2025

U.S. stocks were steady most of the afternoon, before popping to the highs in the final minutes for the S&P 500 and Nasdaq (while the Russell and Dow lagged) as markets await key earnings tonight (AMZN) and monthly jobs data tomorrow morning. Ahead of tomorrow’s Nonfarm monthly payroll report, Treasury yields remain near 2025 lows with the 10-yr holding at 4.43% after falling sharply the day prior. Stocks did slip a bit late afternoon, with some pointing to earlier comments from Treasury Secretary Bessent, others noted a move in currency markets, some cited positioning ahead of AMZN tonight and jobs tomorrow…either way, the move was quick, and stocks later rebounded in what was a generally low volume, tight trading range day. Oil prices fell to lowest levels since late December, while gold pulled back from record highs. Chicago Fed President Austan Goolsbee chimed in with comments ahead of tomorrow’s payroll report saying, “a full-employment economy with solid growth and falling inflation will let the U.S. Federal Reserve continue cutting interest rates, though uncertainty about the impact of tariffs and other policy changes argues for a slower approach”. Some news reports of potential cease fire talk between Russia and Ukraine (as per Daily Mail) led to a sell-off in names tied to Ukraine/Russia like Ags (MOS, CF), LNG names (LNG), Uranium selling off (CCJ) and defense stocks (NOC, GD) slipped as well. Hospital stocks (THC, HCA, UHS) were pressured by DOGE comments, retailers were mixed with TPR, RL rising on results while UA, and GOOS declined). Energy fell the most along with Healthcare while Financials led.

Treasury Secretary Scott Bessent in a Bloomberg interview today noted regarding the Department of Government Efficiency (DOGE) that “there’s a lot of misinformation. These are Treasury employees [working with DOGE]. There’s no tinkering with the system, they have read-only access, can make no changes.” Also in politics, White House Press Secretary Karoline Leavitt laid out President Trump’s tax plan that he is presenting to Congress. It includes: no tax on tips, no tax on senior’s Social Security, no tax on overtime pay, renewing Trump’s 2017 tax cuts, adjusting state and local tax (SALT) cap, eliminating special tax breaks for “billionaire sports team owners”, closing the carried interest loophole and tax cuts for “Made in America” products. Busy day on Wall Steet and Washington ahead of jobs data tomorrow!

• Weekly Jobless Claims climbed to 219,000 from 208,000 prior week (vs. est. 213,000); the 4-week moving average climbed to 216,750 from 212,750 prior week (previous 212,500); continued claims climbed to 1.886M (con. 1.874M) from 1.850M prior week (prev 1.858M).
• U.S. Challenger reported announced layoffs bounced 11k to 49.8k in January following the -18.9k drop to 38.8k in December. However, this is the lowest total cuts for January since the 19.1k in January 2022 which is the lowest on record for that month. On a 12-month basis, the pace contracted at a -39.5% rate.
• The average rate on a 30-year mortgage in the U.S. eased for the third week in a row, falling to 6.89% from 6.95% last week, mortgage buyer Freddie Mac said Thursday. A year ago, it averaged 6.64%.

• The Japanese yen touched an eight-week high versus the dollar, strengthened +0.85% as far as 151.30 per dollar this afternoon, the strongest level since December 12. The move comes after the BOJ’s Naoki Tamura said last night the central bank must raise rates to at least 1% or so in the latter half of fiscal 2025 with upward risks to prices rising. Meanwhile the British Pound slumped -0.58% vs the greenback after the Bank of England cut interest rates (as expected), but forecast higher inflation and weaker growth, with two officials calling for an even larger rate cut. Overall, the dollar index (DXY) was flattish at 107.65 late day (down 2% from 2-yr highs of 110.17 1/13).

• BWA mixed Q4 results as EPS beat/revs light ($1.01/$3.44B vs. $0.96/$3.47B) and forecast full-year 2025 revenue and profit below Wall Street estimates citing lower automobile production and a strong U.S. dollar; sees FY25 adjusted EPS $4.05-$4.40, consensus $4.48 and lighter revs $13.4B-$14B vs. $14.49B est.
• CVNA was added to Tactical Outperform List, PT raised from $250 to $285 at Evercore ISI ahead of its Q4 earnings release on 2/19 and into the 3/6 IRC tour saying sees upside to the $280-$290 range for CVNA.
• KMX upgraded from In Line to Outperform at Evercore/ISI and raised tgt to $110 as sees improving comp and share trends persisting amidst a favorable industry backdrop, an improving EVR ISI Used Car Dealer Survey, and a widening Used vs New car transaction price-gap which it views as favorable for stronger comps at KMX.
• ORLY reported Q4 EPS $9.50 vs. est. $9.75; Q4 sales rose 6.9% y/y to $4.1B vs. est. $4.04B; Q4 comparable sales +4.4% vs. +3.4% y/y, and above est. +2.63%; Guides EPS $42.60-$43.10 vs. est. $45.04 and sees FY revs $17.4B-$17.7B, vs. est. $17.59B; sees year capex $1.2B-$1.3B.

• PTON reported Q2 revenue that rose well above expectations and raised its profitability outlook; said Q2 revs rose 26.9% y/y to $743.6M topping consensus of $652.7M; raises year adj EBITDA $300M-$350M from $240M-$290M, and guides connected fitness subscribers 2.75M-2.79M, from 2.68M-2.75M vs. est. 2.76M.
• RL shares jump; Q3 sales $2.14B tops ests $2.01B and EPS $4.82 above $4.49 consensus; boosts annual revenue forecast to increase between 6% and 7%, vs. prior forecast of a 3% to 4% rise.
• TPR shares jump; raised FY revs to above $6.85B, topping prior view above $6.75B after Q2 sales beat and says forecast includes expectation for additional 10% tariff on China imports into the U.S. from February 4, which is expected to have an immaterial impact on fiscal 2025 results.
• UA raises FY adj operating income view to $185M-$195M, from prior $140M-$160M (est. $178.9M) and boosted its FY adj EPS view to $0.28-$0.30, from prior $0.24-$0.27, vs. est. $0.29.
• Kirkland’s secures $25m investment from BYON, enhancing liquidity and strategic partnership; shareholders approved the deal with 97% support, giving beyond 40% stake in the company.

• In Tobacco: PM surpassed market expectations for Q1 profit and revenue, helped by robust demand for its heated tobacco product and Zyn nicotine pouches and its flagship heated tobacco device IQOS, expected to launch in the U.S. in Q2, has been a driving force behind its effort to make more money.
• In Food: Kellanova (K) reported a top and bottom line beat for Q4 but said it does not provide forward looking guidance; HSY forecast annual profit below consensus estimates ($6-$6.18 vs. $7.34) as record cocoa prices weigh on margins, but Q4 sales rose nearly 9% to $2.89B topping ests of $2.84B on better adj EPS profit; HSY noted lower supply for a fourth consecutive season in West Africa following dry weather is also said to impact prices; BBB Foods (TBBB) 21M share Secondary priced at $28.25 (upsized deal from 17.5M shares).
• In Lodging: HLT reported Q4 profit beat on in-line revs of $2.78B and Q4 RevPAR +3.5% but guided Q1 and FY profit lower citing weak leisure demand travel; sees Q1 adj EPS $1.57-$1.63, below consensus $1.65 and expects 2025 adj EPS $7.71-$7.82 per share, below average estimate of $8.02 per share.

• In Industrials: HON announced its expected split into three divisions automation, aerospace and advanced materials following activist investor pressure, while Q4 results beat but guidance mixed. SYM shares tumble after Q1 results and Q2 guidance disappointed along with flat backlog and slowing pace of system deployments; sees Q2 revenue $510M-$530M vs. est. $533.3M. E&C sector gets a bounce (PWR, PRIM, MTZ) after a late day pullback Wednesday after Bloomberg reported the US Army Corps of Engineers on Thursday lifted its pause on permitting renewable energy projects, a spokesman said
• In Aerospace & Defense: HII shares fell on the lower Q4 EPS and revs noting profit more than halved to $3.15 per share and came in below analysts’ estimates of $3.49 per share, and revs missed as well hurt by lower performance at its Newport News shipbuilding facility. Defense stocks (NOC, GD, RTX) were weak after Daily Mail reported this morning US President Donald Trump will try to force Ukrainian President Volodymyr Zelensky to agree to a ceasefire with Russia by Easter under a peace plan, according to a report
• In Chemicals: APD posted slight Q1 beat helped by higher sales in Asia and Americas, but forecasts Q2 profit to $2.75-$2.85 vs. est. $3.05, below expectations due to soft demand; CTVA reported in-line Q4 while 2025 EBITDA range narrowed to low end, dd earnings growth still on track; LIN forecasts lower volumes in the industrial sector due to cyclical impacts by industrial activity and demand, particularly in metals and chemicals. Follows awful guidance the day prior from FMC in sector that weighed on shares.
• In Metals & Mining: CRML shares fell after saying it would sell ~4.5M ordinary shares and warrants at $5 to buy shares at an amount equivalent to $7 in a PIPE (private investment in public equity);

• Financial Services: EFX shares fell top and bottom line beat but said 2025 guidance reflects an expectation of an about 12% decline in 2025 US hard mortgage credit inquiries, compared to down 10% in 2024 and said employer Services revenue declined 9% in the quarter and was also impacted by the U.S. hiring market (shares of TRU dipped in reaction). WEX shares tumbled, downgraded at Bank America to Neutral noting the mid-point of ‘25 EPS guidance is 11% below consensus and WEX also lowered long term growth targets to 5-10% for organic revenue (8-12% prior) and 10-15% for adj EPS (15-20% adj. net income earlier).
• In Insurance: ALL margins helped drive a solid 4Q EPS beat, with auto PIF approximately in line with consensus while its ad spends accelerated to 4.7% of premiums (+90bps q/q and above BMO 4.0% estimate). LNC shares jumped after Q4 adj earnings topped consensus and MET shares slipped after its results; VOYA downgraded to Equal Weight from Overweight at Barclays citing weaker expected earnings power in the company’s new guidance, risk to 2026 consensus estimates in the event that all the unfavorable 2025 items don’t fully go away, and limited valuation upside to its price target.

• BMY shares fall; forecast 2025 adj EPS $6.55-$6.85, below est. $6.92 and forecasts 2025 revs of around $45.5B missing the $47.4B estimate saying they expect generic competition for some of its older drugs; is also expanding its cost-cutting program by additional $2B by end of 2027, bringing total cost cuts under the program to $3.5B.
• KURA announced the pivotal Phase 2 KOMET-001 trial in r/r NPM1-m AML met its primary endpoint (CR/CRh) though analysts note absolutely no numbers were provided in the press release or the conference call. BTIG downgraded to Hold from Buy due to a lack of clarity and competitive differentiation around the safety and efficacy of ziftomenib in the KOMET-001 readout.
• LLY said its Type-2 Diabetes drug Mounjaro and weight-loss/diabetes medicine Zepbound drove a 45% increase in Q4 revenue to $13.53B, topping the $13,43B consensus; said it expects to generate an adjusted 2025 profit of $22.50-$24 a share in 2025 as midpoint above consensus estimate of $22.76 a share for 2025.
• VKTX shares fall; reported quarterly earnings, in which it also said its late-stage trial for the subcutaneous or under-the-skin version of experimental obesity drug VK2735 will start in Q2. Investors were hoping for some meaningful developments, but the updates were mostly incremental, which sent shares lower. The two 52-week Phase 3 trials are expected to support regulatory submission in the U.S.
• The WSJ reported midday that the White House is working on an executive order to fire thousands of U.S. Department of Health and Human Services workers, according to people familiar with the matter. Under the order, the Food and Drug Administration, Centers for Disease Control and Prevention and other health agencies would have to cut a certain percentage of employees.

• In Medical Equipment/Supplies: BLCO shares fell after making a statement on sale process that, "after engagement with potential buyers, that process is complete, and will not result in a transaction at this time." GMED agreed to acquire NVRO for $5.85 per share. HAE cuts its sales growth forecast for fiscal 2025 to 3%-5% from 5%-8% after posting Q3 revs $349M missing the $353M estimate.
• In Medtech: HOLX was downgraded to Market Perform at Leerink after results saying though delivered Q1 in line to the preannouncement, they lowered their FY25 guide by 100M or 1.55% org growth ex-COVID vs 4.05% prior guide (both at midpoint) as they continue to experience a number of challenges in their Breast Health business.
• In Distributors: MCK reported mixed FQ3 results that missed the revenue consensus slightly but beat on adjusted EPS by $0.03; narrowed FY25 adjusted EPS guidance to the high end of the pervious range and laid out a bullish view of F2026 where 12% to 14% of EPS growth, despite slower growth in Medical.
• In Medical Research: IQV shares rose as top and bottom line Q4 results topped consensus.
• In Ortho: ZBH Q4 profit and sales narrowly top consensus while guides FY25 adjusted EPS $8.15-$8.35 which is below the consensus $8.55 and sees FY25 revenue up 1%-3.5%.
• In Managed care: MOH shares slide as reported higher-than-expected costs tied to its government-backed Medicaid plans in Q4 (medical cost ratio was 90.2%, higher than ests 88.43%) while also reported Q4 EPS miss ($5.05 vs. $5.72 est.) and guides 2025 EPS at least $24.5 vs. est. of $25.71 per share. In Research, CI was downgraded to Market Perform at Bernstein citing underperformance in the company’s employer stop loss business, coupled with pharmacy benefit manager policy uncertainty. CNC was downgraded to Hold from Buy at Argus saying growth prospects in the company’s Medicare Advantage business are unclear.

• APPS shares surged on better Q3 results; Q3 adj EPS $0.13 vs est. ($0.01), adj EBITDA $22Mm vs est. $17.54Mm on revs $134.6Mm vs est. $123.68M; guides FY revs $485-490Mm vs est. $477.04M.
• CLS shares fall after CEO, CFO, President and several executives reveal share sales in SEC filing overnight.
• PI slides on weaker guidance as guides Q1 revs $70-73Mm vs est. $93.26Mm, adj EBITDA $1.1-2.6Mm vs est. $15.17Mm and adj EPS $0.06-0.11 vs est. $0.43 following generally in-line Q4 results.
• RBLX shares tumble; Q4 bookings of $1.36B missed the $1.37B estimate; Q4 Daily active users fell slightly to 85.3 million in Q4, from 88.9 million in Q3 (and est. 88.3M); guides 2025 bookings to $5.20B-$5.3B as the midpoint of which is below estimates of $5.27B.
• In Optical (LITE, AVGO, COHR), Trendforce said DeepSeek’s low-cost AI model to spur demand for optical communication, with optical transceiver shipments projected to grow by 56.5% in 2025.

• ARM reported a good DecQ at $983M (vs. est. $948M) and guided MarQ in line to $1.225B (est. $1.23B) but shares slipped amid disappointing investors’ expectations of upside guide from recent AI headlines
• COHR shares jump as reports record sales driven by strong AI related Data Center sales, and both Telecom and Datacom sales grew, but industrial markets remain soft; guides Q3 revs $1.39-1.48B vs est. $1.403B.
• QCOM posted better-than-expected results and guidance, as the company continued to see upside across Handsets, Automotive, and IoT. However, QTL guidance of flat YOY in FY25, which underwhelmed investors.
• FORM was downgraded to Neutral from Buy (tgt to $34 from $64) at B Riley as Q4 results modestly missed estimates and its Q1 outlook much more so despite ongoing DRAM high bandwidth memory strength citing unusually weak PCs and smartphones as probe card demand culprits