Closing Recap

Thursday, February 20, 2025

Stocks were lower from start to finish on Thursday, erasing weekly gains for major averages as financials tumbled (JPM, GS), consumer discretionary declined behind a pullback in Wal-Mart (WMT) shares on weaker guidance and industrials declined amid weakness in power/E&C stocks as investors head into option expiration tomorrow cautiously. Market leaders were few, with Energy the best sector as oil prices rose along with defensive sectors such as REITs and Healthcare. Stocks did bounce this afternoon, paring losses after the S&P (SPX) was below 6,100 most of the morning. Gold prices made another record high, Bitcoin jumped over 2% to $98,500 and the dollar slipped. The Japanese yen rallied against the dollar and the Nikkei 225 Index fell 1.2%. A former official of the Bank of Japan said it could raise rates in May, if the domestic political situation worsens or President Trump’s tariffs cause a shock. Still plenty of macro headlines worth watching as Ukraine/US/Russia headlines flood news wires in recent days, along with tariff headlines and broad cost cutting measures in Washington DC as the White House looks to reign in overspending. Wall Street darling Palantir Technologies (PLTR) which provides governments with services such as software that visualizes army positions, added to Wednesday losses after the Pentagon said it was looking at potential budget cuts for the fiscal year 2026. Regarding economic data, the Philly Fed Index came in better, but new orders halved from the prior month and the inflationary prices paid component advanced. All eyes on next week PCE reading and NVDA earnings.

• Feb. Philadelphia Fed factory index 18.1 above the consensus est. 14.3 as new orders index at 21.9 vs 42.9, the employment index at 5.3 vs 11.9 while the inflationary prices-paid index higher at 40.5 vs 31.9 prior as Fed future index at 27.8 vs 46.3 and Philadelphia Fed prices-received at 32.9 vs 29.7.
• January U.S. Architecture Billings Index (ABI) declined to 45.6 from December’s revised reading of 44.6. Despite the slight uptick, January’s reading Marks the second weakest reported score since May lows at 42.4. This also Marks the 18th consecutive month below the 50-contraction threshold.

• WTI crude oil rose $0.32 or 0.44% to settle at $72.57 per barrel and Brent crude rose $0.44 or 0.58% to settle at $76.48 per barrel. In weekly oil inventory data, U.S. crude oil stockpiles rose while gasoline and distillate inventories fell last week according to the EIA weekly data, as seasonal maintenance at refineries led to lower processing. Crude inventories rose by 4.6M barrels in the latest week vs. expectations for a 3.1M-barrel build. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.5M barrels last week to 23.3 million barrels. U.S. natural gas futures snapped a seven-session winning streak as near-term forecasts point to milder weather to follow this week’s Arctic blast. Nymex front month settles down 3% at $4.152/mmBtu (wide range today with overnight high of $4.476 and the day’s low of $4.034.)

• CVNA reported strong 4Q results with retail unit growth accelerating to more than 50% y/y from 34% q/q, and above consensus growth of 43%. Revenue, total gross profit per unit, and adj. EBITDA also came in higher than expected. Looking ahead to 1Q25, guided a sequential increase in retail units sold and adj. EBITDA, Shares slipped as the $913M ATM offering weighed on shares while retail & wholesale GPU also came in modestly below Street.
• GRAB shares fell after results and guidance as forecast 2025 annual revenue between $3.33B-$3.4B, vs. ests of $3.40B; Mizuho noted management provided a conservative guide due to heavier-than-usual Q1 seasonality, product launch plans and FX uncertainty.
• LKQ reported Q4 adj EPS $0.80 topping the $0.74 estimate saying they have been ramping up its cost-cutting by selling underperforming assets, including its operations in Poland and Bosnia, and cutting jobs.

• In Online Retail: BABA reported Q3 revenue of 280.15B yuan ($38.58B) compared with the 279.34B yuan expected by Wall Street; said strong year-end shopping sales and the success of its strategy to attract cost-conscious consumers helped results.
• In Specialty Retail, toy retailer HAS top and bottom-line results topped expectations but said they expect total annual revenue to be up slightly compared with analysts’ estimates for a 4% rise; also unveiled a new strategic plan targeting $1B in cost savings, and an avg of mid-single digit revenue growth and 50-100 bps of annual operating profit margin improvement.
• In Apparel/Footwear Retail: BIRK Q1 revs of 361.7M euros topped ests 356.2M euros on better adj EPS while maintained its annual margin forecast even after reporting a 70-bps hit to its gross margins in Q1, as its wholesale segment revenue jumped 30% to 182M euros, while direct sales to customers rose 11% to 178.5M euros.
• In Consumer Products: HLF shares surged on new CEO announcement, while Q4 results top views (EPS $0.36/$1.21B sales vs. est. $0.22/$1.19B) as Mizuho noted Q4 marked third consecutive quarter of yr/yr growth in new distributors (solid +22%) & 12-mo. y/y re-qualification of distributor leader’s ex China also increased. CELH ests tweaked lower at Bank America to reflect higher gross-to-net sales promo spend; PG shares slipped after saying shipments to the US have been lower in Q1 so far.
• In Restaurants: SHAK shares rose after guiding 2025 adj. EBITDA $205M-$215M (up from prior $200-$215M view) and vs. est. $209.1M, forecasts 2025 comp sales about +3% on same rev outlook and confidence to achieve 22% restaurant margin; CAKE Q4 results were strong, beating on the top and bottom line. WING hit 52-week lows, adding to yesterday -13.4% decline post earnings.

• Hotels & Online Travel: BKNG is expected to report earnings after the close tonight; while TRIP shares declined after its results this morning as revs topped consensus, but costs rose 14% year-over-year to $411 million, matching the top line and leaving operating income flat; in lodging space, HST and CHH reported results.
• In Casinos & Gaming: CHDN reported a better-than-expected top line of $624.2m (vs Street $619m), with strength across the board – particularly within L&HR and Gaming and adjusted EBITDA was $236.6m vs Street $234.8m, on slightly higher margins and 27.8% flow-through vs $47.3% PY.

• In Solar: after surging on Wednesday following better-than-feared results, shares of SEDG were downgraded to underperform from market perform at BMO Capital Markets following an “overdone” rally. Meanwhile Morgan Stanley upgraded SEDG to Equal Weight saying Q125 guidance was better than expected, likely due in part to safe harboring benefits following a Q4 miss.
• In Utilities: SO reported Q4 EPS of $0.5 missing ests $0.51 citing higher operating costs and interest expenses; in research, CMS was upgraded to Overweight from Equal Weight at Barclays as the firm reshuffled its preferences in Michigan utilities following the Q4 earnings, now seeing CMS as the preferred way to invest in the state’s "premium" regulatory environment. DTE was downgraded to Equal Weight from Overweight at Barclays in conjunction with call saying DTE eventually needs to deal with the renewable natural gas tax credit roll-off, which will require an acceleration of rate base growth, capex ramp, and additional equity.

• In Consumer Finance: AFRM said to continue as exclusive provider of Shop Pay (SHOP) Installments in US, will become exclusive provider in Canada; NRDS forecast 1Q revenue that beat the average analyst estimate after delivered better than expected revenue growth for Q4; TOST delivered beats across gross payment volume, recurring gross profit, and adjusted EBITDA, supported by better GPV per location, annual recurring revenue conversion, and FinTech pricing
• In Insurance: ALL said the January catastrophe loss was $1.08B and catastrophe losses of $849M after-tax; said Allstate catastrophe losses incl $1.07B related to CA wildfires.

• BMRN reported results above ests as Cantor noted growth looks very good this year at +9-12% y/y ($3.1B – $3.2B vs. est. at $3.095B), and the earnings power is becoming a lot more noticeable: +20-25% growth y/y ($4.20-4.40 vs. est. $4.15). Operating margins also continue to expand: 2025 guidance is for 32-33% op margins (vs. 32%).
• LLY shares volatile after STAT news reported in ongoing trials of Eli Lilly’s next-generation obesity drug, several trial participants are running into an issue they never expected: They are losing too much weight. One participant lost 22% of her weight in nine months — substantially faster than the rate seen with approved GLP-1 drugs like Wegovy or Zepbound https://tinyurl.com/bddjcx2d  

• In Animal Health Services: TRUP shares slip as Q4 earnings and revs miss while margins were better, while gross new adds in its Trupanion Care and Other Subscription Products segments fell 10.1% to around 57,000 for the quarter ended December 31; FRPT forecasts FY sales $1.18B-$1.21B vs. ests $1.21B after posting Q4 sales $262.7M vs. estimates of $264.1M on an EPS miss ($0.36 vs. $0.39); did guide FY adj EBITDA forecast of above $210M vs. ests. $204.4M.
• In Medical Equipment & Supplies: BLCO reported Q4 revenues that were slightly better than estimates (+2%) while the adj. EBITDA were broadly in-line with estimates. 2025 revenue and adj. EBITDA guidance bracketed estimates.

• In Chemicals: CE was downgraded to Sector Perform from Outperform at RBC Capital noting overexposure to auto end markets (especially Europe ICE) has resulted in NT earnings headwinds from lower builds/bloated inventories throughout the chain. In ag chemicals, two earnings results, as Piper noted both CF and NTR reported Q424 results which were generally in line with consensus and consistent with the ag market conditions during the period. The good news for investors is that both companies have given positive guidance for 2025 regarding the nutrient S/D situation going forward and the global grain market balance.
• In Metals: RS reported realized 4Q24 LIFO adjusted operating EPS of $2.22, well below the Street’s $2.74, and RS’s guidance range of $2.65-$2.85 as RS incurred 4Q24 LIFO expense of $5.6M vs. our estimate (and management guidance) of a benefit of $50M. gold miners (GOLD, AEM, NEM, GFI, AU) outperformed as gold prices made new all-time highs rising above $2,700 an ounce earlier.
• In the E&C/Power sector: PWR Q4 adj EPS $2.94 vs. est. $2.63 while revs rose 13% y/y to $6.55B vs. est. $6.61B; and Q4 adj Ebitda rose 34% y/y to $737.8M, sending shares lower; shares of MTZ, PRIM and other E&C names were lower in sympathy

• AMPL shares jumped on strong results as DA Davidson upgraded to Buy saying the co exited 2024 with strong enterprise momentum and positive indicators that current sales re-acceleration is durable in 2025 and beyond.
• APP shares tumbled after a negative report from BearCave which noted shares are up 750% over the last year to around 35x revenue — is fueled by low-quality revenue growth from ads that are deceptive, predatory, and at times unreadable or unclickable. https://tinyurl.com/4sxhypvv
• CWAN reported strong Q4 results, marked by 25% ARR growth and net retention reaching 116% and provided a 1Q and year revenue forecast that topped estimates (Piper upgraded to Overweight).
• KVYO reported a solid Q4, highlighted by its largest revenue upside since its first IPO quarter as Q4 sales metrics were all positive, including the most net new customer additions (+10k), but Needham said weakness likely a negative reaction to the company’s new pricing model not driving any upside to FY25 revenue guidance.
• SNOW was upgraded to buy from Neutral at BTIG saying after two-plus years of dealing with cloud optimization headwinds, recent fieldwork is pointing towards an improving demand backdrop in CY2025.
• Unity Software (U) shares tumbled initially as guides Q1 significantly below street on top line and EBTIDA despite solid Q4; sees Q1 revenue $405M-$415M, below est. $436.6M and guides Q1 adj EBITDA $60M-$65M below consensus $89.8M – shares rebounded quickly to end much higher.
• In IT Services & Consulting: EPAM Q4 EPS and revs topped consensus while forecasting Q1 revenue above Wall Street expectations ($1.28B-$1.29B vs. est. $1.27B) but EPS below ests, pushing shares lower; forecast year revenue growth rate to be in the range of 10% to 14% for 2025, compared to analysts’ expectations of 11.4%.