Mid-Morning Look

Friday, May 09, 2025

U.S. stocks open the trading day higher, but have been paring gains, pulling back off the highs as the S&P 500 (SPX) failed to hold 5,700 late yesterday and the Nasdaq pulls back below 18,000 as investors cautious ahead of a huge trade talk this weekend with China. Stocks jumped Thursday, sparked by the announcement of a US/UK trade deal, though the momentum faded toward the end of the session. Now, investors turn attention to Switzerland, where Treasury Secretary Scott Bessent is holding trade talks with Chinese officials. President Donald Trump wrote on Truth Social this morning that a 80% tariff on China “seems right,” but said he’s leaving the decision up to Treasury Secretary Scott Bessent, as he urged Beijing to do more to open their markets to US goods. Trump’s administration is weighing a dramatic tariff reduction to ease tensions with China and temper the economic pain. Seeing a little easing in the US dollar (DXY lows -0.44%) and Treasury yields (10-yr 4.35% lows) after jumping yesterday. Major averages are currently flattish for the week as Dow Jones Industrials looks for a 3^rd straight week of gains and the Russell 2000 its 5^th straight.  The S&P 500 has surged 14% since Trump announced a reprieve in some levies on April 9, although it remains 3.7% lower for the year. In stock news this morning, several big winners and losers after earnings overnight. Among the biggest winners in the S&P PODD, MCHP on earnings and biggest losers in the S&P EXPE, AKAM, TKO.

• In Paper & Packaging: PKG was downgraded from Overweight to Equal Weight and IP cut to Underweight from EW at Wells Fargo (cut tgt to $180 from $205) and reduced estimates citing worsening fundamentals in domestic and global containerboard markets, a more balanced risk/reward profile, Greater conviction that IP will not be able to hit its 2025 guide, and valuation bot both.
• In Restaurants & Bars: SG shares slipped early after guided FY25 revenue $740M-$760M, below consensus est. $763.7M and guided same-store sales about flat for FY25; DNUT was downgraded to Hold from Buy at Truist after results saying they are “shocked” by the speed at which the story fell apart; TXRH reported disappointing Q1 earnings but same-store sales were slightly better than expected as trends accelerated in April and May, leading to Q2 same-store sales growth tracking better than estimates.

• LYFT +17%; shares rose after swinging to a Q1 profit and posted higher, boosted by more people using the ride-sharing app; Q1 profit was $2.6M vs. loss of -$31.5M y/y as revs rose 14% y/y to $1.45B and total rides grew 16% y/y while the number of active riders climbed 11%.
• MCHP +11%; shares rise on results; CEO said believes the industry’s down cycle is over, resulting in the company providing a sales outlook for the current quarter that was above expectations guiding Q1 revs $1.02B-$1.07B, above consensus of $980M after Q4 revs $970M topped the $960M estimate.
• NET +8%; after delivered a strong F1Q25 print, with revenue, operating income, and CFFO/FCF above guidance; posted largest deal in company history (5-year $130M TCV) and the longest SASE deal in company history (7-year $12.7M TCV) and record number of $1M+ and $5M+ deals.
• PHX +21%; announced it has entered into a definitive agreement with the WhiteHawk Income Corporation to be acquired in an all-cash offering for $4.35 per share in deal valued at $187M.
• PINS +11%; after Q1 total revenues above Street and guidance with Q2 outlook above prior expectations driven by continued strong user growth (total MAUs +17mm QoQ) & growing contribution from international monetization; Q1 Adj. EBITDA solidly above expectations.
• PODD +15%; Q1 results were ahead, with Revenue of $569M (vs. $543M, +4.7% vs. cons), with both US and International Omnipod revs ahead of street; raised its guidance, now expecting Omnipod growth of 20% to 23% (vs. 17% to 21% prior) and slightly raising Gross margins by 50 bps.
• TASK +14%; to be taken private by co-founders and Blackstone; holders receive $16.50 per share in cash.
• TMDX +21%; shares jumped after Q1 EPS $0.70 topped est. $0.24; Q1 revs $143.5M vs. est. $123.39M; raising its full year 2025 revenue guidance to be in the range of $565M-$585M, which represents 30% growth at the midpoint compared to the company’s prior year revenue.
• TTD +25%; as posted revs 7% better, Adjusted EBITDA 41% better with an in-line 2Q guide based on trends QTD; Revenue growth of 25% was 840 basis points ahead of Q1 guidance and a rebound from the Q4 miss; success with Kokai adoption (now at ~2/3 of clients) appears to be driving stronger ROAS.

• EXPE -7%; shares fell after Q1 revenue of $2.98B, missing the $3.01B estimate as the company noted demand trends continue to cool; booked nights increased 6.4%, to 107.7M, compared with analyst projections for about 108.5M and cuts FY25 gross bookings growth view to 2%-4% from 4%-6%.
• GMED -21%; as Q1 results fell short of expectations, delivering revenue of ~$598.1M (-1.4% Y/Y, 0.8% xFx) and adj. EPS of $0.68 relative to Street ests. of $625.9M and $0.74 and trimmed its FY25 adj. EPS guidance by $0.10 to $3.00 to $3.30 (from $3.10 to $3.40) as Nevro closes earlier than anticipated.
• HUBS -8%; shares fell as reported strong Q1 results with revenue and billings exceeding investor expectations; 1Q Revs +18% y/y cc and 1Q Billings +18% y/y cc; announces $500mn buyback; guides 2Q Revs +16% y/y cc; sees FY revs guide reit on cc basis at +16% y/y cc and OMs reit at ~18%.
• IOVA 44%; downgraded to Market Perform at Citizen’s and removed its price target given revised guidance, current cash burn, and uncertainties surrounding the Amtagvi launch. Iovance reported Q1 EPS, missing Street’s est. ($81.6MM), and lowered FY2025 guidance to $250-$300MM (from $450-$475MM).
• ONTO -28%; Q1 results were largely in line, with advanced nodes revenue surprisingly strong, nearly doubling q/q, but guided for Q2 revenue/earnings to decline, which missed consensus estimate; reported a disappointing quarter with the official announcement of 2.5D share loss to KLAC
• SG -14%; after guided FY25 revenue $740M-$760M, below consensus est. $763.7M and guided same-store sales about flat for FY25.
• WOLF -27%; downgraded at both Citigroup and JP Morgan after the company forecast 2026 revs $850M, below consensus of $958.7M after reporting Q3 revs of $185.4M, in-line with consensus; reported a net loss per share of 72 cents for the third quarter, compared with estimates of a loss of 82 cents a share.