Markets Defused is an easy-to-understand and straightforward recap of the week’s most engaging business and stock market news.
- Can Nvidia keep meeting the market’s high expectations?
- UK energy bills will rise again in October
- Peloton skyrocketed on first revenue growth for years
- JD Sports boosted as American sales drove growth
- Buy the BT dip? … JP Morgan analysts see opportunity
- TK Maxx owner soared on stronger-than-expected financials
- Target soared as improved footfall saw sales ahead of expectations
- Eli Lilly shares boosted by diabetes data
- Tesla’s EU import tariffs won’t be as bad as first feared
- Sports stream underdog FuboTV gave media giants a bloody nose
- AMD’s new $5bn acquisition promised accelerated AI scale-up
Can Nvidia keep meeting the market’s high expectations?
NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) speculators were this week positioning ahead of Wednesday's second-quarter earnings report.
AI-related demand for high-powered processors, the kinds that Nvidia specialises in, has been the factor in the chip-maker's emergence as ‘the world’s biggest’ company, with a market capitalisation above $3 trillion.
Throughout its rise - 170% this past year alone – investors have come to expect big numbers as these quarterly earnings reports come along.
It remains to be seen whether the AI bandwagon can keep motoring ahead at the pace that investors have become accustomed to.
Analysts on Wall Street remain optimistic, or at least they do in the preview reports they publish, with many expecting Nvidia to exceed earnings forecasts due to the sustained demand for its AI processors.
UK energy bills will rise again in October
British households are facing a winter of higher energy bills after UK regulator Ofgem confirmed on Friday that the ‘price cap’ would rise by 10% from October. It means that the average UK annual dual-fuel energy bill will increase to £1,717, up from £1,568.
This hike is primarily driven by rising wholesale gas prices due to geopolitical tensions and extreme weather events, Ofgem said.
The regulator reviews the energy price cap every three months and sets a maximum limit on what suppliers can charge per unit.
This winter’s cap is lower than last year's peak, but it is still substantially above the levels seen before the energy crisis that followed the war in Ukraine.
Peloton skyrocketed on first revenue growth for years
Peloton Interactive Inc (NASDAQ:PTON) shares skyrocketed on Thursday, rising $1.25 or 37.55% to $4.61, after a modest increase in revenue proved to be much better than Wall Street had feared.
Revenue for the quarter was up just 0.2% to $644 million for its fourth quarter, beating forecasts of $631 million.
Significantly, it was the first time Peloton has seen a quarter of revenue growth since 2022.
At the same time, Peloton improved profitability with adjusted earnings (EBITDA) reaching $70 million – compared to a $34.7 million loss for the same quarter last year.
Despite the market’s giddiness, Peloton remain quite cautious with guidance predicting lower revenue in the next quarter with its forecast pitched between $560 million and $580 million.
JD Sports boosted as American sales drove growth
JD Sports Fashion PLC (LSE:JD.) shares closed Thursday more than 10% higher, to 141.85p, thanks to a strong trading performance in its second quarter.
It was driven mainly by strong sales in its North American division.
Group like-for-like sales were up 2.4%, while organic sales rose by 8.3% for the period – in North America like-for-like sales were up 5.7% and organic sales was up 13.7%.
In the UK, JD’s like-for-like sales were down by 0.8% albeit this was better than the 6.4% decline in the preceding quarter.
Despite a volatile retail environment, JD Sports has maintained full-year profit guidance which sees pre-tax profits between £955 million and £1.035 billion.
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
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.
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.
Eli Lilly shares boosted by diabetes data
Eli Lilly and Co (NYSE:LLY) shares gained nearly 3% on Tuesday with the latest research data finding that its in-demand weight loss medication tirzepatide, marketed under the Mounjaro and Zepbound brand names, had shown a significant reduction in the risk of developing type 2 diabetes.
The risk of type 2 diabetes was reduced by 94% in a late-stage clinical trial, the pharmaceutical firm reported.
It was also noted that during a 17-week off-treatment follow-up, patients began regaining weight and showed some increase in the progression to diabetes.
Tesla’s EU import tariffs won’t be as bad as first feared
Tesla Inc (NASDAQ:TSLA) is now expected to face a significantly lower than feared import tariff in the European Union, after it moves its China-built electric vehicles.
Elon Musk’s EV firm will pay a 9% tariff on the imports, rather than the 20.8% rate previously expected.
Tesla has factories in China that would be subject to these European tariffs.
The European Commission meanwhile confirmed it revised tariffs will impact Chinese automakers – such as BYD, Geely, and SAIC - more heavily, with those tariffs set at 17%, 19.3%, and 36.3% respectively.
A final decision, to set tariffs for five years, is expected to be published at the end of October.
Sports-streaming underdog FuboTV gave media giants a bloody nose
FuboTV (NYSE:FUBO) stock surged close to 20% in Monday’s deals after a court ruling temporarily blocked the launch of Venu Sports – a new sports streaming joint venture owned Disney, Fox Corp (NASDAQ:FOXA) and Warner Bros Discovery.
NYSE-quoted FuboTV, which has a market value of around $600 million, was an early-mover in sports streaming in North America – which has been carrying tier-one sports including NFL, NBA, NHL, MLB and the English Premier League since 2015, selling subscriptions through partnerships with various cable broadcasters.
FuboTV earlier this year filed an antitrust lawsuit against Venu, the proposed new sports streaming ‘giant’, claiming that the joint venture would monopolise the sports streaming market, reducing competition and driving up prices for consumers.
With an early, but not yet decisive, score FuboTV’s claim was supported by Judge Margaret Garnett of the Southern District of New York, who has temporarily ruled to halt the launch of Venu pending further legal proceedings or a final decision by the court.
Investors in FuboTV cheered this early ruling, sending the stock higher.
AMD’s new $5bn acquisition promised accelerated AI scale-up
Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) shares traded higher on Monday, moving up to $152.72, after announcing the acquisition of server maker ZT Systems for $4.9 billion. It is described as part of AMD’s strategy to expand its portfolio of artificial intelligence (AI) chips and hardware, to compete more effectively with Nvidia.
The deal will be funded through a mix of cash and stock (75% cash and 25% stock).
ZT Systems, a privately held company based in New Jersey, has approximately 2,500 employees and AMD is expected to retain about 1,000 of the engineers to bolster its expertise in AI system design and deployment.
Post completion, meanwhile, AMD is expected to sell ZT’s server manufacturing business.