Qualcomm Earnings Could Be Overshadowed by These 2 Worries

/ / Technology /

Qualcomm has seen a recovery in its smartphone chip business, and it’s looking to keep up that momentum when it reports its fiscal fourth-quarter results on Wednesday after the close. The company also has two diversification efforts that can drive results in the future. But there are clouds hanging over the proceedings. Analysts are projecting 14% revenue growth on the year to $9.9 billion. Adjusted earnings per share is seen at $2.56, up 27%. Over the past 10 quarters, Qualcomm has beaten sales and EPS estimates eight times. The consensus estimate for first-quarter guidance is $10.6 billion in sales, and EPS of $2.86. Qualcomm’s core market is smartphone chips, which comprise 65% of total revenue in the past year. Analysts see smartphone sales at $6.1 billion, up 12% on the year, similar to last quarter. The last three quarters have shown recovery in this cyclical segment, and Wall Street expects […]

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Apple to Face First-Ever EU Fine Regarding Antitrust Rules, Sources Say, Bloomberg Reports

/ / Technology /

Apple is set to be fined by the European Union’s antitrust regulators, making the iPhone maker the first company to be fined under the union’s new digital antitrust rules for Big Tech, Bloomberg reported, citing people familiar with the case. Watchdogs are preparing the penalty after Apple failed to allow app developers to steer users to cheaper deals and offers outside of the App Store, the report said. The European Commission could wage the fine before current EU competition commissioner Margrethe Vestager is set to leave office later this month, but there is a chance it could be pushed back to later this year, Bloomberg reported.

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Apple IPhone-Related Factors to Drive Near-Term Stock Performance, Morgan Stanley Says

/ / Technology /

Apple (AAPL) iPhone-related factors will be the main drivers of near-term estimate revisions and stock performance, Morgan Stanley said in a note Friday. One such factor is the Apple Intelligence phase 1 rollout consumer response, which Morgan Stanley believes is “too early” to evaluate now. Other factors are the timing of when iOS18.2 will be launched in December and the timing of the rollout of the iPhone SE4, Morgan Stanley said. On Apple’s fiscal Q4 results, the investment bank said they were “admittedly mixed,” with revenue lighter than Morgan Stanley’s above-consensus estimate but “still seasonally better than the last two September quarters.” Morgan Stanley maintained Apple’s overweight rating and $273 price target. Apple shares were down 1.8% in recent Friday trading.

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Estee Lauder’s Dividend Cut Implies Persistent Stress in Medium Term, BofA Says

/ / Consumer Discretionary /

Estee Lauder’s (EL) quarterly dividend cut signals “stress continues to be persistent” on earnings and cash flow in the medium term, BofA Securities said Friday in a report. The 5% decline in fiscal Q1 organic sales, led by weaker-than-expected figures in China and Asia travel retail, compared with the firm’s estimate for a 4% decline. The firm slashed its earnings per share forecast to $1.50 for fiscal 2025 from $2.80 and cut the fiscal 2026 projection to $2.95 from $$4.55. The fiscal 2027 outlook fell to $3.50 from $5.20. The dividend cut “implies a return to $3.50 of EPS over time assuming a 40% payout ratio,” the report said. BofA lowered its price target for the stock to $75 from $100 and reiterated its neutral rating. “With China still decelerating and uncertain and a new CEO starting in January, it seems premature to ‘buy the dip’ at this point,” BofA

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Amazon Near All-Time High With AWS Growth, Retail Rebound

/ / Consumer Discretionary /

Amazon.com stock approaches an all-time high after the company reported Amazon Web Services growth reaccelerating and a rebound in retail spending following some deceleration last quarter, Davidson analysts Gil Luria and Alex Platt say in a research note. The company’s commentary around AWS suggests that AI features are gaining considerable traction with customers, the analysts say. Management also suggests that AWS core services growth is healthy from new workloads and cloud migration initiatives, they say. Efforts to improve profitability on both the retail side and AWS are boosting the company’s operating margins, the analysts say. Shares rise 7.3% to $200, $1.20 from their all-time high.

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Amazon Web Services Takes Lead Among AI Hyperscalers

/ / Consumer Discretionary /

Amazon Web Services is now the top dog among cloud providers for AI, Davidson analysts Gil Luria and Alex Platt say in a research note. Amazon.com has taken several steps to get products and features in line with those of its hyperscaler peers in AI, especially Microsoft Azure, they say. The Amazon cloud division now has a broad set of product offerings for generative AI-specific workloads, and sees strong adoption of AI features like Amazon Q or Bedrock, the analysts say. In 3Q, AWS took in almost twice as many total dollars quarter-to-quarter as Azure, with growth accelerating to 19%, they say.

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Amazon Funding Capex Increases With Stronger Margins

/ / Consumer Discretionary /

Amazon is funding considerable increases in its capital expenditures with an even larger step-up in operating profit gleaned from tight cost controls, UBS analysts say in a research note. The company is controlling its headcount to keep operating expense growth low and expand margins, they say. The company’s capex jumped 80% to about $23 billion in 3Q as Amazon Web Services invests aggressively in AI infrastructure to meet high demand, Davidson analysts say in a research note. But Amazon’s cloud unit has a lot of price efficiencies in its chips that are less expensive to implement, they say.

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Exxon Changing Refining Approach to Optimize Operations

/ / Energy /

Exxon’s refining margins were down in 3Q, but CEO Darren Woods says on a call with analysts that the oil giant is fundamentally changing its approach to its refining process in order to optimize its operations. The company’s cost-savings push, which has resulted in $11.3 billion in cost cuts since 2019, is helping to achieve this goal, he says: “A great example in the refining business has been centralization of the maintenance approach that we’re doing, not just in turnarounds but in our routine day-to-day maintenance.” This move has added value and lowered costs through consolidation and effective execution, Woods says. The company’s 3Q profit falls on lower energy prices and narrowing margins.

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Exxon Mobil (XOM) Q3 2024 Earnings Call Transcript Summary

/ / Energy /

The following is a summary of the Exxon Mobil Corporation (XOM) Q3 2024 Earnings Call Transcript: Financial Performance: ExxonMobil announced Q3 earnings of $8.6 billion, marking one of the best third quarters in the past decade. Year-to-date earnings in 2024 for the Energy Products business have doubled compared to the same period in 2019. The company achieved structural cost savings of $5 billion across the Product Solutions business since 2019. Business Progress: Continued portfolio optimization through divesting less advantaged sites, leading to a reduction in total refinery count to an expected 15 by year-end. Implemented significant improvements in product yield and efficiency, exemplified by the Rotterdam Advanced Hydrocracker and Beaumont expansion. Advanced long laterals drilling in the Pioneer acquisition, with plans for the first ever 20,000-foot laterals. Opportunities: Inaugurated an agreement with Mitsubishi for low carbon ammonia and equity participation, enhancing the development of a new energy value chain in

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McDonald’s Can Recover From Short-Term Struggles, Analysts Say

/ / Consumer Discretionary /

The E. coli outbreak that sickened dozens and international pressures will create near-term headwinds for McDonald’s, UBS analysts say in a research note. However, they predict trends will strengthen in the new year, thanks to new menu items, continued promotions and increased marketing. Same-store sales in 3Q and initial October trends show that the restaurant chain’s momentum was improving, prior to the recent food-safety incident. And while macroeconomic challenges persist overseas, the company is either gaining share or notching improvements in trends across all major markets. Analysts raise their price target to $345 and maintain their buy rating.

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Apple Intelligence Hasn’t Yet Provided Expected Boost

/ / Technology /

Apple’s newly released set of artificial-intelligence features hasn’t provided the boost some had expected for the iPhone maker, Quilter Cheviot’s Ben Barringer says in a note. The iPhone 16 disappointed users as AI capabilities aren’t proving to be overly beneficial yet as Apple Intelligence was only released on Oct. 28, Barringer notes. “Without an obvious catalyst to bring high single digit growth back, investors may be better placed in some of the other Magnificent Seven companies instead,” Barringer says. Apple shares are down 1.6% premarket at $222.29.

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Estée Lauder’s Visibility on Path to Recovery Is Reduced

/ / Consumer Discretionary /

Estée Lauder’s latest results, coupled with its guidance withdrawal, further reduces its visibility on its path to recovery, Morgan Stanley analysts say in a research note. The cosmetics company’s incoming CEO Stéphane de La Faverie will likely need to add aggressive cost-cutting measures and reinvestments behind the company’s portfolio once he takes over the top job, the analysts add. “Bottom line, Estée Lauder is acknowledging incremental weakness in Asia travel retail in guidance, which drives weak second-quarter guidance and withdrawn full-year guidance.” Shares drop 19% to $71.01.

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