Markets Defused is an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Buy the BT dip? … JP Morgan analysts see opportunity
- Microsoft downgraded intelligent cloud guidance
- Zoom's AI-led revenue and earnings beat
- Waitrose launched a £1bn store investment plan
- Target soared footfall rose and sales impressed
- Macy’s sales underwhelm as turnaround effort continues
- Walmart sold JD.com stake
- TK Maxx owner soared on stronger financial
Microsoft shares dip on downgrade to intelligent cloud guidance
Microsoft Corp (NASDAQ:MSFT) shares were slightly lower in Wednesday’s afterhours deals, after the company downgraded guidance for its Intelligent Cloud business.
The segment is now expected to generate revenues of $23.8 billion and $24.1 billion, a decrease from a prior estimate of $28.6 billion to $28.9 billion. It reflects slower growth in the cloud business.
Microsoft, meanwhile, said it anticipates that revenues from its AI services will see accelerated growth in the latter half of fiscal 2025. At the same time, Microsoft announced a structure of its business units – shuffling some of its AI-related cloud businesses.
Microsoft shares were down $1.59 or 0.37% to $422.55 in Wednesday’s afterhours dealing.
Zoom share jump in afterhours, AI demand saw revenue and earnings beat expectations
Shares in Zoom Video Communications Inc (NASDAQ:ZM) advanced in Wednesday’s afterhours trading after it reported a strong set of financial results for its second quarter.
Revenue totalled $1.16 billion for the quarter which was slightly above the market forecast of $1.15 billion. Earnings per share was reported at $1.39 per share, comfortably above Wall Street estimates of $1.21.
It comes as Zoom saw increased demand for its AI-powered products.
Zoom raised its full-year revenue forecast to a range of $4.63 billion to $4.64 billion, and, also upgraded its guidance for the third quarter – with the communications platform now expecting earnings per share between $1.29 and $1.31, on revenue of $1.16 billion to $1.165 billion.
In afterhours deals, Zoom shares were up $2.02 or 3.35%, to $62.25, adding to the 1.86% gain seen in Wednesday's regular trading session in New York.
Waitrose launched a £1bn store investment plan
Waitrose plans to invest £1 billion in opening 100 new convenience stores across the UK over the next five years.
The expansion of the grocer’s portfolio will include as many as four large supermarkets, plus the refurbishments of existing stores.
It plans to open its first new store, in London, by the end of 2024.
Buy the BT dip? … JP Morgan analysts see opportunity
BT Group PLC (LSE:BT.A) heightened competition in the UK broadband market ‘should not come as a surprise’, not according to London-based analysts at JP Morgan.
Sky’s team up with CityFibre, which on Tuesday spooked BT investors, looked like “a natural step” as the TV and communications operator sought to preserve its negotiating power and maintain strategic flexibility, JPM’s Akhil Dattani said in a note.
“We expect Sky to use it primarily to expand its fibre coverage rather than migrate away from BT,” the analyst commented.
He added: “Investors have long struggled with trying to model how the UK Fibre landscape will evolve, and what this means for BT’s future fibre returns (the core driver of its investment case).”
At JPM, the analyst team reckons erosion of market share is already priced. “Hence we believe any material sell-offs should always be seen as buying opportunities and we remain confident.”
JPM remains bullish on BT, with a price target of 290p which suggests around 110% upside to Wednesday’s closing price of 134.80p
Take-Two Interactive shares rose after unveiling of new Borderlands and Mafia games
Take-Two Interactive Software Inc (NASDAQ:TTWO) shares traded higher on Wednesday, up 2.96% to $159.40, with sentiments lifted by news of a bolstered game slate for 2025 – with a new Borderlands title and a new instalment of the Mafia game franchise.
Borderlands 4 and "Mafia: The Old Country were both unveiled at a live Gamescom 2024 event on Tuesday night.
The hotly anticipated titles evidently wowed gamers, as well as boosting the company’s Nasdaq-quoted stock.
Take-Two said the releases are part of their fiscal year 2026 plans, meaning that they’ll most likely out between April and December 2025.
“We had included its launch within Q4:27 in our model at 7.5 million units for launch quarter sell-in, on the assumption that the game was still years away,” Wedbush Securities analyst Nick McKay said in a note. “We have made the adjustment to Q2:26 at 5 million units on a late-quarter launch.”
Target soared as improved footfall saw sales ahead of expectations
Target Corp (NYSE:TGT) shares were up strongly on Wednesday, gaining 12.3% to $160.71, after its second-quarter beat Wall Street forecasts thanks to its first rise in footfall for some time.
Revenue for the quarter totalled $25.45 billion, beating the $25.19 billion estimate pencilled in by market analysts. Net income was reported at $1.19 billion, which on a per share basis was $2.57 – ahead of the $2.18 consensus estimate.
Target highlighted a 2% improvement comparable sales, driven by a 3% increase in store traffic which was its first increase in footfall in over a year
It upgraded its full-year earnings guidance, now forecasting adjusted earnings per share between $9.00 and $9.70, up from the previous range of $8.60 to $9.60.
Nonetheless, it stayed cautious for the rest of the year.
Macy’s shares slumped, sales underwhelm as turnaround effort continues
Macy's, Inc. (NYSE:M) shares fell nearly 13% on Wednesday, losing $2.25 to $15.51, after missing revenue expectations for its second quarter.
The department store retailer reported positive profitability metrics but revenue was shy of Wall Street estimates.
Net sales for the quarter came in at $4.94 billion, some way below the forecast of $5.12 billion.
At the same time, Macy’s downgraded its full-year net sales forecast to a range of $22.1 billion to $22.4 billion, down from $22.3 billion to $22.9 billion. Earnings (adjusted) per share was reported at 53 cents, actually better than the market consensus estimate of 30 cents.
The underwhelming results come after Macy’s snubbed $6.9 billion private-equity buyout offer, in July, when it was deemed not to be in the best interest of shareholders.
Walmart sold JD.com stake
Walmart Inc (NYSE:WMT, ETR:WMT), up 0.5% at $74.97, announced it had sold its entire stake in Chinese e-commerce firm JD.com.
The deal will bank around $3.6 billion of proceeds for the American retail giant. It saw Walmart sell 144.5 million JD.com shares at $24.95 each, a discount of 11% to the preceding day’s closing price.
Walmart had held the stake for eight years. Market pundits say the divestment comes as Walmart is exploring its own operations in China.
Whilst Walmart stock edged higher, JD.com’s price plummeted losing over 5% on Nasdaq to $26.71 – having been as low as $26.71.
TK Maxx owner soared on stronger-than-expected financials
TJX Companies Inc (NYSE:TJX) shares rose more than 6% on Wednesday thanks to expectation-beating financial results for its second quarter.
The retailer, which owns the TJ Maxx brand in the United States (or TK Maxx in the UK and Europe), reported $13.47 billion of revenue
Earnings per share (EPS) came in at $0.96, both above analysts' estimates. Comparable sales grew by 4%, with the company pointing to strong demand for its cut-price merchandise.
TJX raised its full-year guidance, as it expects earnings per share between $4.09 and $4.13, up from its prior forecast of $4.03 to $4.09. It also projects a 3% rise in comparable store sales for the fiscal year.