My top 8 things to watch Wednesday, Jan. 25
1. Microsoft (MSFT) shares sink nearly 3% early Wednesday, pressuring the broader market after the Dow Jones Industrial Average, the S&P 500 and the Nasdaq. Microsoft’s fiscal second-quarter earnings beat estimates. Revenue missed. Guidance short. CEO Satya Nadella excited about OpenAI’s ChatGPT. But CFO Amy Hood plays grim reaper halfway through the call. Maturing tech. MUST WAIT UNTIL AMY. Only thing that matters. Azure cloud sales up 38% year over year in constant currency. Lots of price target cuts by Wall Street analysts, but they largely keep their buy ratings. The Club has MSFT at our 2 rating, meaning we’d like to see more pullback before considering buying more.
2. 3M (MMM) was bad. I mean terrible on every line item for the quarter. Full-year sales decline of 2% to 6%, worse than estimates at the midpoint. You have to wonder what the heck management is going to do besides come up with a new kind of scotch tape. Multiple PT cuts on the Street. The industrial giant announces 2,500 manufacturing job cuts.
3. Boeing (BA) reports big fourth-quarter loss. Supply chain snarls outweigh surging travel demand as the world learns to live with Covid. Aircraft manufacturing suffered during the height of the pandemic. Revenue of $19.98 billion fell short of estimates. Reaffirms guidance on Max and Dreamliner. Positive annual free cash flow.
4. AT&T (T) fourth-quarter earnings beat but revenue misses. Not great but better than Verizon (VZ). Full-year guidance free cash flow of $16 billion or better versus $16.2 billion expected. FCF in 2022 was $14.1 billion. Increase in subscribers but annual profit outlook below expectations.
5. JPMorgan cuts Ford (F) price target to $15 per share from $16 and General Motors (GM) PT to $57 from $59; keeps overweight (buy) ratings on both. Analysts at JPMorgan also cut Tesla (TSLA) price target to $120 from $125; keep underweight (sell) rating. Tesla shares bounce 16% year to date but still down over 53% over the past 12 months. Elon Musk’s electric vehicle maker is set to report quarterly results after the closing bell Wednesday.
6. Baird keeps Danaher (DHR) at an overweight (buy) rating but cuts price target to $309 per share from $321. Analysts say the life sciences and medical diagnostics company now derisked from Covid. We saw Tuesday’s DHR stock drop after largely solid quarterly results was a buying opportunity.
7. Barclays raises price target on SLB (SLB) to $74 per share from $62. Already in the stock? That’s the question with all oil and gas companies. I say no. We had the nation’s strategic petroleum reserve (SPR) being emptied, and there’s no shortage of places that are being drilled. Instead of SLB, we own oilfield services giant Halliburton (HAL), which reported a strong quarter Tuesday.
8. Bank of America (BAC) gives employees who make up to $500,000 a year restricted stock. In a memo to staff, CEO Brian Moynihan said the bank is investing its people “at a time of change in the global economy.”
(Jim Cramer’s Charitable Trust is long MSFT, F, DHR, HAL. See here for a full list of the stocks.)
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