Live5 updates

• Mon, May 13, 2024 at 12:40 PM GMT+2

  Here’s an interesting fun fact on Netflix (NFLX) you probably didn’t realize.

  The stock has rallied 12% since May 1, and is now trading at the levels seen before the company’s disappointing earnings day in late April.

  In a new note this morning, JP Morgan analyst Doug Anmuth credits the rebound to “1) increased comfort with both the 2024 reported revenue outlook and NFLX’s decision to no longer report subscribers beginning in 2025; 2) recognition that NFLX is not subject to heavy AI-driven capex intensity like Meta, Alphabet, and Amazon; and 3) excitement into the Upfront presentation on May 16.”

  The annual Upfront is when TV networks and streaming services pitch their programming and ad products to advertisers and agencies.

  Anmuth thinks Netflix will have bullish things to say at the event that could be a catalyst to the stock.

  “At the Upfront we expect an update to the 23 million plus ad tier monthly active user (MAU) disclosure, with our conversations suggesting investors are looking for 35-40 million plus ad tier MAUs, including the benefit of the T-Mobile bundle. Outside of ad tier metrics, we expect updates on the upcoming content slate and NFLX’s sports strategy, with articles suggesting NFLX could host two NFL games on Christmas later this year. NFLX would bring the NFL large global distribution while the games could serve as a boost to NFLX’s ad tier and enable the company to actively promote upcoming content. Finally, we look for progress around improving the ad product, tech, and sales, with some investors expecting a 3P demand side platform announcement,” Anmuth says.

• 

  Mon, May 13, 2024 at 12:30 PM GMT+2

  Bullish trading call on Walmart into earnings from EvercoreISI

  Walmart’s (WMT) stock has been lagging the S&P 500 the past month as sticky inflation data calls into question the spending power of US consumers.

  There has been some chatter on the Street of extra conservative guidance from Walmart when it reports earnings this Thursday morning.

  But EvercoreISI’s retail analyst Greg Melich is putting those worries to the side, adding Walmart to his tactical buy list into the results.

  Says Melich this morning:

  “We believe the company is executing at a high level while pursuing initiatives such as digital advertising, Walmart Plus, and automation. Even a modest improvement in digital profitability (before considering incremental advertising/alternative profit opportunity) provides a considerable margin capture opportunity. Our sense is that the company will speak to a fairly steady low to middle income consumer, in addition to higher income share capture, with positive traffic and share gain reasons for the commentary to skew constructive through the year. Normally Walmart does not raise full year EPS and comparable sales guidance in 1Q, but we do see them taking a positive tone with respect to underlying momentum in the business. This may prove especially pronounced in international operations – which continue to see positive double-digit percentage comparable sales, with positive industry commentary on Walmart’s continued share capture likely under appreciated by investors.”

• 

  Mon, May 13, 2024 at 12:20 PM GMT+2

  An interesting dynamic in markets begins to form.

  After several years of explosive EPS growth for the Mag 7 names, the space is headed for a slowdown this year and next (left chart from RBC strategist Lori Calvasina). By the same token, after several years of limp growth for the 493 other S&P 500 components EPS growth is seen accelerating this year and next.

  The question on the horizon is this: do the other 493 S&P 500 companies represent better value than the Mag 7 as their profit growth is likely to accelerate again in 2025?

  

• 

  Mon, May 13, 2024 at 12:10 PM GMT+2

  Date save: May 20, JP Morgan investor day

  With its stock up a cool 8.7% in the past month on the back of expectations for higher for longer interest rates, JP Morgan’s (JPM) May 20 investor day is coming into focus.

  Jefferies analyst Ken Usdin is out this morning sticking with a buy rating into the investor day, but hiking his price target to $227 from $215. He expects a “focus on market share gains, investment spending and efficiency” on the part of JPM execs.

  “While the net interest income guidance seems conservative with higher-for-longer rates, we see JPM continuing to slow-play guide updates,” adds Usdin.

• 

  Mon, May 13, 2024 at 12:00 PM GMT+2

  Goldman not banking on major inflation slowdown

  Sticky inflation is likely to stay sticky in 2024.

  Ahead of this week’s key CPI Index report, Goldman is calling out the potential for disinflation in some important categories as the year treks along. Even still, Goldman’s macro team forecasts inflation to stay above the Fed’s preferred 2% target.

  Here’s Goldman’s top economist Jan Hatzius:

  “We see further disinflation in the pipeline in 2024 from rebalancing in the auto, housing rental, and labor markets, though we expect offsets from continued catch-up inflation in healthcare, car insurance, and housing. We forecast year-over-year core CPI inflation of 3.5% and core PCE inflation of 2.7% in December 2024.”