My top 10 things to watch Friday, Dec. 9, 2022 1. Wholesale inflation: JUST PLAIN BAD. The government says November producer prices rose 0.3% overall versus the 0.2% expected increase. Ex-food and energy core rate double estimates: up 0.4%. US stock futures, up solidly before the numbers, turned lower after the release. Bond yields up. Consumer prices for November are out Tuesday morning when the Federal Reserve’s two-day December meeting begins. PPI keeps pressure on the Fed. Food inflation mitigated by Costco. 2. Costco (COST): Fiscal first-quarter 2023 total revenue of $54.44 billion and earnings-per-share of $3.07 — both missed estimates. Membership fee revenue was $1 billion. EPS includes a 15-cent charge to downsize fleet and a 12-cent drag due to the strong dollar. Food business really booming. Inflation: a little light at the end of the tunnel. Prices on corn, flour, sugar, butter all lower, even steak. Temporary discounts work: TVs sales up but smaller size screens. Looking ahead, we’re encouraged by the expected membership fee hike and special dividend. Costco hopes to open 24 net stores this fiscal year. Wall Street analysts cut their price targets, including at Citi, Stifel, Wells Fargo and Loop Capital. 3. The FTC sues to block Club holding Microsoft’s (MSFT) proposed $68.7 billion purchase of video game company Activision Blizzard (ATVI). In reaction to the government’s antitrust claims, Microsoft said, “We have been committed since Day One to addressing competitive concerns, including by offering earlier this week proposed concessions to the FTC.” The software and cloud giant looks forward to going to court. 4. Deutsche Bank upgrades Club holding Estee Lauder (EL) to buy from hold. Analysts cite as positives: Tom Ford, relaxed China Covid policies. Price target raised to $266 per share from $209. 5. Lululemon (LULU ) shares drop 7% in the premarket. Third-quarter beats on revenue and EPS. But somewhat light guidance on Q4. But how weak is the business really? Inventory at the end of Q3 was $1.7 billion, one-year dollar growth of 85%. Total same-store sales up 22% versus up 19% expected. The breakdown on a constant currency basis was a 17% increase in stores and a 34% increase in digital. Management is pleased with the start of the busy holiday shopping season. 6. Broadcom (AVGO) reports better-than-expected quarterly results, an upbeat forecast, and a dividend increase. Network revenue at the semiconductor solutions provider strong; hyper-scale strong; fully booked. 7. Citi raises 3M (MMM) price target to $126 per share from $117; seen still emerging fiscal tailwinds. Analysts at Citi increased PTs on a range of other industrials including Club holding Honeywell (HON). 8. Wells Fargo upgrades Netflix (NFLX) to overweight from equal weight (buy from hold), raising its price target to $400 per share from $300. 9. Baird raises price target on RH (RH), formerly known as Restoration Hardware, to $300 per share from $275; keeps neutral rating. Analysts note third-quarter beat and raised guidance. 10. Chewy (CHWY): Better than expected quarter and guidance raise. Non-discretionary consumables and health care strong. Automation paying off. Ended third quarter with 20.5 million customers. (Jim Cramer’s Charitable Trust is long COST, MSFT, EL and HON. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
My top 10 things to watch Friday, Dec. 9, 2022
1. Wholesale inflation: JUST PLAIN BAD. The government says November producer prices rose 0.3% overall versus the 0.2% expected increase. Ex-food and energy core rate double estimates: up 0.4%. US stock futures, up solidly before the numbers, turned lower after the release. Bond yields up. Consumer prices for November are out Tuesday morning when the Federal Reserve’s two-day December meeting begins. PPI keeps pressure on the Fed. Food inflation mitigated by Costco.
2.Costco (COST): Fiscal first-quarter 2023 total revenue of $54.44 billion and earnings-per-share of $3.07 — both missed estimates. Membership fee revenue was $1 billion. EPS includes a 15-cent charge to downsize fleet and a 12-cent drag due to the strong dollar. Food business really booming. Inflation: a little light at the end of the tunnel. Prices on corn, flour, sugar, butter all lower, even steak. Temporary discounts work: TVs sales up but smaller size screens. Looking ahead, we’re encouraged by the expected membership fee hike and special dividend. Costco hopes to open 24 net stores this fiscal year. Wall Street analysts cut their price targets, including at Citi, Stifel, Wells Fargo and Loop Capital.
