My top 10 things to watch Thursday, Nov. 16
1. Cisco Systems (CSCO) delivers a true guide down. While fiscal Q1 results were solid — beats on top and bottom lines — the networking hardware maker said it has too much inventory at the customer level. It sounds like a problem that will take two quarters to fix. Piper Sandler, Bank of America, Barclays and Deutsche Bank all cut their price targets. Shares of CSCO fell 11% during the premarket.
2. Club holding Palo Alto Networks (PANW) had a strong quarter, including 20% revenue growth. But confusion over billings vs. remaining performance obligation (RPO) and total contract value (TCV) has investors dumping the cybersecurity firm. That’s not the right thing to do. We are saying the pullback in PANW shares — down 6% since Wednesday’s report after the bell — represents a buying opportunity.
3. Target (TGT) stores are still under lock and key but it may no longer be hurting sales. The retailer partnered with the U.S. Department of Homeland Security in October after news it was shutting stores in nine major cities due to rising crime. Is it safer now? Is Target taking share from Walgreens Boots Alliance (WBA)? BofA raised price target to $160 from $135 and keeps buy rating on shares. Wells Fargo upgraded Target to buy from hold and raised price target by $28 to $148.
4. Newest takeaway from Target: Starbucks (SBUX) is moving 100,000 cups per week at its stores. The coffee giant delivered an upside surprise with its fiscal fourth quarter earlier this month, showing strong comparable-store sales growth and excellent margin expansion. We have a 1 ratings on shares.
5. Some Walmart (WMT) color: Management said in the last two weeks of October it seemed like the consumer was pumping the breaks, but November is going well. Cold weather that pushed across the country likely helped with apparel and getting people in holiday mood. Still, the big box retailer was down nearly 5% in the premarket after providing full-year EPS guidance that was lighter than analysts’ expectations.
6. During our November Monthly Meeting on Wednesday, I shared some of the lessons I’ve learned this year and looked ahead to 2024. We also ran through all 35 stocks in the portfolio, including new name Eaton (ETN). Here’s a rapid-fire update.
7. Alibaba (BABA) reported Q2 adjusted EPS of $2.14 vs. consensus $2.11, no spin-off of cloud intelligence, better EBITDA. It also announced its first annual dividend distribution for fiscal 2023 with aggregate amount of about $2.5 billion.
8. TJX Companies (TJX) gets price target bumps, not cuts, after the company’s fourth-quarter earnings guidance came in softer than expected. So typical. We upgraded TJX to a 1 rating on Wednesday after shares fell 3%. Management may just be acting conservatively.
9. Advanced Auto Parts (AAP) has a rocky road ahead. BofA downgraded shares to underperform from neutral after “disappointing” Q3 earnings report. “A lot of wood to chop before the stock looks attractive.” Shares fell more than 4% on the downgrade.
10. Mizuho upgraded Intel (INTC) to buy from hold, citing “significant” new server product launches, improving improving PC business, data center unlocking value.
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