General Motors Will Keep Shoveling Cash Back To Shareholders

/ / Consumer Discretionary /

In the last couple of years, General Motors has been an aggressive buyer of its own stock thereby sending about $20 billion back to shareholders via share repurchases. The company will keep shoveling cash back to its shareholders next year, CFO Paul Jacobson says. Jacobson reiterates that GM plans to spend another $5 billion or so on buybacks early next year to get its share count under 1 billion. That’s just the next mile marker, not the end of the buyback cruise, he adds. GM’s stock trades on a low multiple, a reflection of investors’ belief that the company’s long-term earnings power is in the gas-powered vehicle business, and skepticism about the company’s prospects in EVs and autonomous robotaxis. So, under Jacobson, GM has responded by giving investors another thing they love: cash. GM up 4.2% in early trading.

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Lockheed Takes Hit From Delays in F-35 Lots 18-19 Contract

/ / Industrials /

Lockheed says costs tied to its F-35 Lots 18-19 aircraft contract began to exceed the advanced acquisition contract value in 3Q as funding lagged. The defense company remains in negotiations with the U.S. government over the deal, but says it was unable to recognize revenue and profit on about $400 million of costs incurred on the program during the quarter, plus about $300 million due to snags on the supply chain. Lockheed says it was prevented from invoicing and receiving about $450 million through the quarter and also had about $2 billion in potential termination liability exposure related to its Lots 18-19 deal. The company expects some of these issues to let up in the fourth quarter, but until a final agreement is reached, its results will continue to be negatively impacted, Lockheed says. Shares fall 5.2% to $582.60.

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Netflix Provided ‘Encouraging’ 2025 Guidance Amid ‘Strong’ Net Subscriber Additions, Wedbush Says

/ / Consumer Discretionary /

Netflix (NFLX) provided “encouraging” 2025 revenue guidance and reported “strong” net subscriber additions in the third quarter, Wedbush Securities said in a note Friday. “The primary driver of this surge will be a more robust content slate than we have seen in 2024,” Wedbush said in a Friday note following Netflix’s Q3 results released Thursday. The firm said the company’s gain of 5.1 million net paid subscribers in the quarter exceeded the consensus of 4 million. Wedbush said Netflix’s results for the quarter were “solid,” with revenue topping consensus, guidance and the firm’s estimate. Wedbush boosted its price target on Netflix to $800 from $775 and maintained its outperform rating. Netflix shares advanced more than 10% in recent Friday trading.

Netflix Provided ‘Encouraging’ 2025 Guidance Amid ‘Strong’ Net Subscriber Additions, Wedbush Says Read Post »

Netflix Expects Advertising Revenue to Double Next Year

/ / Consumer Discretionary /

Netflix’s ad-supported tier is growing at a healthy clip, leaving management to expect ad revenue to double in 2025 while still not a primary driver of overall growth, say analysts at UBS in a research note. The streaming giant saw a higher percentage of sign-ups opting for its ad tier in 3Q than in 2Q, say the analysts, and management expects to reach a critical scale across ad markets next year. Other takeaways the analysts note from Netflix executives include their suggestion that revenue growth in 2025 will be driven more by members than average revenue per member driven. “We believe the company could lean into monetization efforts with price/hour of consumption at the low end of peers and the content pipeline gaining steam,” say the analysts. Shares rise 11%, making it the best performer in the S&P 500 and Nasdaq 100.

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Morgan Stanley Benefited From ‘Solid’ Wealth Management Results in Q3, Oppenheimer Says

/ / Financials /

Morgan Stanley’s (MS) Q3 earnings-per-share beat was driven by “solid” wealth management results together with “sizable uplift” from beats across results in investment banking and trading, Oppenheimer said in a note Thursday. Oppenheimer also said total revenue exceeded expectations, driven by investment banking and trading. “Overall, we see Q3 as continued evidence of MS executing well, which we view as largely priced into the current valuation,” Oppenheimer said. Oppenheimer said that for 2025, it is boosting its EPS forecast for Morgan Stanley by about 2.4% mainly because of the flow-through effect of a higher base of trading expected in 2024 as well as wealth management assets under management and revenue. Oppenheimer has a perform rating on Morgan Stanley.

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Microsoft Poised for Growth Despite Short-Term Pressures, AI Challenges, Morgan Stanley Says

/ / Technology /

Microsoft (MSFT) faces negative investor sentiment due to concerns about gross margins, capital expenditures, artificial intelligence monetization, and its OpenAI relationship, Morgan Stanley said in an earnings preview on Thursday. But despite short-term supply constraints in AI infrastructure, Microsoft’s ability to deliver steady core Azure consumption puts it in a positive setup for outperformance in the upcoming quarters, the analysts said. “We expect to see modest upside in F1Q outperformance, but see the larger lever for stock outperformance being greater investor confidence in the F2H Azure acceleration,” Morgan Stanley said. The firm said investors have reduced their expectations for Microsoft 365 Copilot due to limited financial visibility and competitive pressures. However, it is showing positive signs of adoption and is viewed as a potential multi-year driver for average revenue per user expansion. Morgan Stanley expects the company’s capital expenditures to remain high as they are aligned with future growth in

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ASML Lacks Positive Catalyst for Rest of 2024

/ / Technology /

ASML Holding faces a few months without a positive share price catalyst as newsflow in the near term is unlikely to improve for the Dutch semiconductor-equipment maker, Stifel’s Juergen Wagner writes in a research note. ASML shed more than $60 billion in market value this week after the company warned the recovery for some areas of the industry could extend well into the next year.Wagner says near-term visibility is more limited at the moment, likely prompting a change in investor sentiment more toward shorter-term newsflow. ASML shares trade 0.6% lower at 630.00 euros.

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Alcoa Beats Q3 EPS Expectations, Rides Alumina Price Surge Despite Production Hiccups

/ / Basic Materials /

Alcoa Corporation (NYSE:AA) shares are trading higher on premarket Thursday. On Wednesday, the company reported third quarter sales of $2.904 billion, missing the consensus of $2.967 billion. Alumina production dropped 4% sequentially to 2.44 million metric tons, mainly due to the full curtailment of the Kwinana refinery in June 2024. Meanwhile, aluminum production rose 3% sequentially to 559,000 metric tons, driven by progress on the Alumar smelter restart. In the Alumina segment, third-party shipments dropped 9% sequentially, mainly due to reduced trading activity. In the Aluminum segment, total shipments fell 6% on a sequential basis, owing to lower trading and shipment timing. Adjusted EBITDA, excluding special items, rose to $455 million from $325 million in the second quarter thanks to higher alumina prices and lower raw material costs. Adjusted EPS of $0.57 exceeded the consensus of $0.28. The company ended the third quarter of 2024 with a cash balance of

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UnitedHealth Seeing Steep Medical Cost Headwinds, RBC Says

/ / Health Care /

UnitedHealth Group (UNH) is seeing a steeper-than-expected medical cost trend amid elevated Medicare coding intensity and temporary Medicaid acuity headwinds, RBC Capital Markets said in a note Wednesday. RBC said it is raising its 2025 Medical Care Ratio estimate by 70 basis points to 84.7% and lowering its adjusted earnings per share estimate to $29.75 from $30.84 previously. “Our estimate reflects elevated Medicare coding intensity, which has persisted beyond resumption prior authorization, as well as Medicaid acuity headwinds, which should be transitory,” RBC analysts said in the note. UnitedHealth’s management cited three headwinds, including an about 20% rise in Medicare coding intensity, elevated Medicaid acuity from timing mismatches, and increased specialty drug prescribing, RBC said, adding that these specialty headwinds should not affect the medical cost ratio beyond Q4 as the company has priced for Inflation Reduction Act drug provisions in its 2025 bids. RBC reiterated its outperform rating on

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Alcoa Corporation (AA) Q3 2024 Earnings Call Transcript Summary

/ / Basic Materials /

The following is a summary of the Alcoa Corporation (AA) Q3 2024 Earnings Call Transcript: Financial Performance: Alcoa Corporation reported a flat revenue of $2.9 billion in Q3 2024. Net income improved significantly to $90 million from $20 million in the prior quarter, with an earnings per share increase from $0.11 to $0.38. Adjusted EBITDA increased by $130 million to $455 million, driven primarily by higher average realized third-party prices for alumina and improved cost management in both raw materials and production. The Alumina segment saw a substantial increase in adjusted EBITDA, contributing $181 million, due to elevated alumina prices. The Aluminum segment, however, faced a decrease by $53 million, largely due to higher raw material costs and a drop in metal prices. Business Progress: Alcoa achieved its fourth consecutive quarterly production record at the Mosjoen smelter in Norway, while improving operations at the Alumar smelter in Brazil, now at

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ASML Cut to Next-Year Guidance Makes 2026 Outlook Key for Shares

/ / Technology /

ASML Holding’s cut to its expectations for next year on weak order intake means the company’s trajectory from 2025 into 2026 and beyond is now key for its shares, Citi analysts say in a research note. The Dutch company, which supplies semiconductor-manufacturing machinery to chip makers, expects between 30 billion and 35 billion euros in sales next year, below a previous forecast of up to 40 billion euros. The company had reiterated as recently as September that the low end of its 2025 sales guidance was conservative despite negative newsflow over the summer, including cuts to spending plans by key customer Intel, Citi says. “Estimates had been declining for 2025, including our own, but consensus at 36 billion euros is now high,” the analysts say.

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UnitedHealth Cites Multiple Factors Weighing On Earnings

/ / Health Care /

UnitedHealth Group’s 2025 earnings guidance came in below analyst forecasts, weighing on its shares as the healthcare heavyweight deals with a variety of factors that are hurting profitability. The company says recent Medicaid redeterminations have left it with fewer, but sicker, members, while funding from Medicare has declined despite elevated hospital spending, Mizuho analyst Ann Hynes says in a research note. There has also been an increase in the utilization of expensive specialty drugs, the analyst says. UnitedHealth says it expects to continue facing these cost pressures as certain care patterns persist at higher levels than previously expected, the analyst says. Shares fall 7% to $562.48.

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