Mid-Morning Look

Wednesday, February 26, 2025

U.S. stocks rebounding early after the S&P 500 and Nasdaq Composite had fallen the last 4-trading days, with big gains early in Technology, Consumer Discretionary, Communications (laggards during the losing streak), while Energy remains weak along with profit taking in defensive sectors Consumer Staples and Healthcare. Tech is getting a bounce led by semiconductors (SOX +1.75%) ahead of NVDA earnings tonight after the market close, while software (IGV) bounces after falling the last 5-days. The US dollar and Treasury yields rebound while Bitcoin erases gains overnight and gold prices are steady, holding above $2,900 an ounce. Housing data this morning was weaker, ahead of GDP data tomorrow and the PCE inflation data on Friday (Fed’s preferred inflation gauge). European markets were higher again as the region remains strong while Asia trading was mixed. The S&P 500 (SPX) bounces back near the 6,000 level, trying to recover after growing fears of slowing US growth dented optimism.

• In Restaurants: BLMN Q4 adj EPS $0.38 above est. $0.37 but down from $0.75 y/y as revs fall -19% y/y to $972.0M, missing the $1.08B estimate; Q4 US company-owned comp sales -1.1% vs. est. -1.24%; JACK reported a better-than-anticipated FQ1, headlined by EPS of $1.92 (-2% y/y) coming in ahead of consensus of $1.69 as above-consensus restaurant-level margins at both the Jack in the Box and Del Taco brands were key drivers of the bottom-line beat, but near-term uncertainty following surprise departure of CEO; DNUT downgraded to Underweight at Morgan Stanley company guided 2025 well below expectations; CAVA reported 4Q comps of 21.2% (vs. Street 17.9%) driven by 15.6% traffic and 5.6% average check.
• In Autos: GM said it will increase its quarterly dividend by 25% and undertake a new $6 bln share buyback program; LCID initiated FY25 vehicle production guidance of 20,000, after delivered 10,241 vehicles and produced 9,029 vehicles. LCID was downgraded to Underperform at bank America as thinks departure of CEO Peter Rawlinson more consequential than understood by market and expects product development to stall & consumer demand could be dampened; in auto retail, AAP posted Q4 but 2025 comp sales view weighs on shares.

• FCX +4%; along with gains in SCCO after President Donald Trump ordered a probe into potential new tariffs on copper imports to rebuild U.S. production of a metal critical to electric vehicles, military hardware, the power grid and many consumer goods.
• FSLR +12%; reported mixed Q4 results as its gross margin results and guidance were below expectations, but shares rise on better than feared guidance as analysts note 2025 revenue guidance of $5.55B at the midpoint a positive given weak 2025 revenue guidance was a key concern going into the results.
• INTU +12%; FQ2 revenue solidly above estimates (4%) across all key segments (Credit Karma, Small Biz Segment) and op. margin and EPS were significantly better than expected while online Ecosystem ex Mailchimp growth reaccelerated to 25% Y/Y after 8 quarters.
• LUNR +9%; as the co is for the launch of its second moon lander, as six-legged lander, named Athena is encapsulated atop a SpaceX Falcon 9 rocket at NASA’s Kennedy Space Center in Florida ahead of its launch scheduled for 7:17 pm.
• PRCH +21%; shares soared after results, prompting an upgrade to Buy at Loop Capital noting the company fell short on total revenue, but it exceeded expectations in terms of profitability, and looking ahead to 2025, the management believes they can maintain an 80% gross margin while improving the EBITDA margin.
• SMCI +25%; after the company met a deadline from Nasdaq to submit delayed regulatory filings in order to avoid delisting. After the close on Tuesday, Super Micro filed updated quarterly reports for its fiscal year ended June 30, 2024, as well as quarters ended Sept. 30, 2024, and Dec. 31, 2024.
• WDAY +10%; Q4 results beat as cRPO growth of 15.2% came ahead of expectations of 14.3%, and the Company issued better FQ1 cRPO growth guidance of 14.5-15.5% vs the Street’s 13.9%; also, FY26 subscription revenue growth of ~14% is reiterated, and OM outlook is ticking higher to 28% (vs. 27.5% previously).
• ZI +18%; shares jumped after Q4 results delivered upside expectations, and Piper upgraded to Neutral though noted that operational challenges remain elevated despite better-than-feared results and Q4 revenue declined y/y for the third consecutive quarter along with a tepid Q1 outlook.

• APP -15%; after both Fuzzy Panda Research, and Culper Research take short position in the company.
• BLMN -17%; Q4 adj EPS $0.38 above est. $0.37 but down from $0.75 y/y as revs fall -19% y/y to $972.0M, missing the $1.08B estimate; Q4 US company-owned comp sales -1.1% vs. est. -1.24%.
• CART -7%; reported Q424 results whereby GTV came in at the high end of guidance, while EBITDA was $12M above the high-end of guidance (in line with the Q324 EBITDA beat). While Q125 GTV guidance came in marginally above consensus, Q125 EBITDA guidance was ~5% below consensus.
• FLYW -29%; as the company reported Q4 revenue that missed estimates ($117.55M vs. $118.85M) on EPS miss and guided FY25 FXN revenue less ancillary services growth excluding the $330M acquisition of Sertifi to 10-14%, well below Street estimates of ~22%, prompting Wall Street downgrades.
• GO -31%; shares slipped after guiding FY25 EPS $0.70-$0.75 below consensus $0.87 while 4Q performance was soft, with worse-than-feared profitability overshadowing better-than-expected traffic-driven comps
• LMND -5%; as Q4 results were better with EPS loss (-$0.42) vs. est. loss (-$0.60); Q4 revs rose 29% y/y to $148.8M vs. est. $144.9M but shares fall on weaker guidance as sees Q1 revs $143M-$145M vs. est. $151.4M and 2025 revs $655M-$657M