Mid-Morning Look

Tuesday, February 04, 2025

U.S. stocks are pushing higher, taking the last 48 hours’ worth of tariff news in stride this morning; boosted by earnings and economic data as well. S&P futures traded in a wide range overnight but straight up since the market open as investors take a more “wait and see” approach as to the impact of futures tariffs. Stock markets had tumbled early Monday after President Trump looked set to put 25% tariffs on Mexican and Canadian goods, only to pare losses when both countries received a 30-day delay on tariffs by promising to beef up border security with 10,000 troops each on both borders. However, an additional 10% U.S. tariff on Chinese exports took effect at this morning which was followed by a retaliatory action by Beijing which announced it was investigating Google and imposing tariffs on imports of U.S. oil, coal, gas, cars and farm equipment from Feb. 10 and looked into possible sanctions for PVH and ILMN in medical devices. Meanwhile, Trump has vowed to soon subject Europe to tariffs even as he gave Canada and Mexico a last-minute reprieve. In stock news, the shares of PLTR, SPOT, hit all-time highs after earnings along with gains on FOXA, RACE and CMI. On the flip side, consumer staples EL, CLX, PEP are lower on results/guidance; PYPL tumbles on margins and MRK plunges on guidance in big Pharma. Stocks got an additional boost around 10:00 AM after monthly JOLTs job openings data came in below last month and estimates.

• Dec factory orders ex-defense -0.9% vs Nov -0.4%, Durables orders unrevised at -2.2%, nondurables orders +0.3% vs Nov +0.4%, total manufacturing inventories +0.4% vs Nov +0.4%, nondefense cap orders ex-aircraft revised to +0.4% from +0.5%; Dec shipments revised to +0.5% from +0.6%.

• In Aerospace & Defense: PLTR shares surged after Q4 rev growth of 36% y/y which handily topped consensus of ~28% y/y driven by acceleration in US Commercial and US Government; the co guided to strong 36% revenue growth for Q1, and initial 2025 revenue guidance of 31% Y/Y was also well above. HUBB Q4 adj EPS $4.10 beats the $4.02 estimate but revs $1.33B misses the $1.41B estimate; sees FY25 adjusted EPS $17.35-$17.85 (vs. consensus $17.70) and said anticipates total sales growth and organic sales growth of 4-5%. TDG Q1 results mixed as EPS $7.83 topped the $7.75 per share est. but revs $2.01B just below the $2.03B estimate; raises FY25 adjusted EPS view to $35.51-$37.43 from $35.36-$37.28 (est. $37.44) while backs FY25 revenue view $8.75B-$8.95B vs. consensus $8.9B. WWD mixed Q1 results; Q1 adj EPS $1.35, vs est. $1.18, adj EBIT $107Mm vs est. $98.7Mm on sales $773Mm vs est. $775Mm; says on track to deliver FY guidance, narrowed FY adj EPS guidance.
• In Semiconductors: IFNNY Infineon shares rose in Europe after results and guidance; upgraded its full-year revenue outlook and reported quarterly results and guidance above expectations; guided for flat-to-slightly up Automotive revenue in FY25; Power & Sensor segment is also expected to be up significantly in FY25. NXPI reported In-Line Dec Q revenue of $3.11B (-4.3% q/q), with non-GAAP (NG) EPS at $3.18 (-$0.05/ -$0.02 vs Stifel’s/ Street estimates), with slight Auto outperformance offset by Comms Infrastructure coming in below expectations; 1Q revenue is expected to be down 9% q/q, lower than consensus. RMBS Q4 results + forward guide as set record high total revenue, product revenue, profitability and record cash generation; another record was 8 new semiconductor products launched in 2024. SMCI shares rose after the company said that it will give a business update on Feb. 11 following the market close.

• FOXA +5%; Q2 adj EPS $0.96 tops the $0.64 consensus on better revs of $5.08B (est. $4.85B) as Q2 Cable network programming revenue ($2.17B), TV revenue ($2.96B) and Advertising revs ($2.42B) all above consensus.
• MPC +4%; lifting refiners after reports Q4 adj EPS $0.77 vs. est. $0.02 on revs $33.47B vs. est. $31.94B; Q4 Midstream segment posted adj. core profit of $1.71B vs $1.57B y/y but refining and marketing margin fell.
• PLTR +27%; after Q4 rev growth of 36% y/y which handily topped consensus of ~28% y/y driven by acceleration in US Commercial and US Government; the co guided to strong 36% revenue growth for Q1, and initial 2025 revenue guidance of 31% Y/Y was also well above.
• RACE +8%; Q4 adj EPS €2.14 tops est. €1.86 on better revs €1.74B vs. est. €1.65B, but guidance was below ests as sees 2025 Adj EBITDA at least €2.68B (vs. est. €2.8B) and sees 2025 Adj diluted EPS €8.60 (vs. est. €8.94).
• SMCI +5%; after the company said that it will give a business update on Feb. 11 following the market close.
• SPOT +10%; shares jumped as Q4 revs rose 16% y/y to 4.24B euros vs. est. 4.19B and posted Q4 premium subscribers’ growth of 11% to 263M vs. ests of 260M; said expects Q1 operating income of 548M euros above analysts’ est. of 450.6M euros; guides Q1 monthly active users (MAUs) of 678M, in line with estimates.

• EL -17%; as Q4 EPS and revs top views (EPS $0.62/$4B vs. est. $0.32/$3.98B) but guidance disappoints as sees Q3 organic net sales growth -10% to -8% and EPS $0.24-$0.34 vs. et. $0.63 and total sales growth down -10%
• MRK -10%; after saying it will temporarily pause shipments of Gardasil vaccine to China, starting February through at least mid-year; the Dow component reported better Q4 results ($1.72/$15.6B vs. $1.67/$15.51B) but forecast 2025 sales $64.1B-$65.6B below ests $67.31B and EPS $8.88-$9.03 vs. est. $9.02.
• PVH -1%; down along with ILMN after China said it was starting an anti-monopoly investigation into Alphabet Inc’s Google and put both PVH and biotechnology company ILMN on a list for potential sanctions in a retaliation to the 10% tariffs the US is placing on China tonight.
• PYPL -9%; reported Q4 adj EPS $1.19 above the $1.12 consensus estimate on better revs $8.37B (est. $8.26B) and provided better Q1 EPS view ($1.15-$1.17 vs est. $1.13) and FY EPS $4.95-$5.10 vs est. $4.90, but shares fell as Q4 adj operating margins contracted by 34 basis points to 18% and posted lower-than-expected Q4 total payment volume $437.8B vs estimate $438.64B; also announced $15B buyback.
• SYNA -10%; announced Michael Hurlston is stepping down as president and CEO and as a member of the board of directors, effective immediately, as Mr. Hurlston will assume the role of CEO at Lumentum Holdings Inc.