In an up and down week US indices were a touch off their record levels although the end of the week took on a more positive hue thanks to comments from Federal Reserve chair Jerome Powell.
Powell suggested rate cuts were not too far away. Shares in IT outfit Hewlett Packard Enterprises (HPE:NYSE) surged on strong demand for the company's artificial intelligence focused servers.
Excitement around AI continued to drive Nvidia (NVDA:NASDAQ) higher while on the over side of the coin, fellow Magnificent Seven constituent Tesla's (TSLA:NASDAQ) miserable start to 2024 continues.
The electric vehicle maker was hit by an arson attack on a facility in Germany. Another of the seven; Apple (AAPL:NASDAQ) also saw its shares come under pressure on a big fine from the European Commission and reports of a big drop in iPhone sales in China.
The maker of Jack Daniels, Brown-Forman (BF.B:NYSE), also fell as it reported a 2% drop in third quarter revenue and downgraded full-year sales guidance.
CROWDSTRIKE
Shares in Austin, Texas-based cybersecurity firm Crowdstrike (CRWD:NASDAQ) jumped more than 20% on Wednesday, their biggest daily gain in four years, to a new intraday high of $360 after the company posted forecast-beating earnings and a positive 2024/25 outlook.
For the fourth quarter to the end of January, the firm reported a 33% increase in revenue to $845 million and non-GAAP earnings per share of $0.95 against the $0.83 consensus.
Earnings guidance for the first quarter to the end of April and the full year to next January also pleased the market.
‘CrowdStrike delivered an exceptionally strong and record fourth quarter’, said chief executive George Kurtz. ‘CrowdStrike is cybersecurity’s consolidator of choice, innovator of choice, and platform of choice to stop breaches.’
Analyst Hamza Fodderwala at Morgan Stanley observed ‘there is no spending fatigue here’, referring to comments by the chief executive of Palo Alto Networks (PANW:NASDAQ), who last month blamed spending fatigue among customers for the firm’s lower revenue outlook sending its shares tumbling almost 30% in a single day.
TARGET
Better-than-expected fourth quarter earnings (5 March) from Target (TGT:NYSE) helped sustain the US budget retail chain’s recent rally, with the shares rising 12.3% to a 52-week high of $171.5.
Quarterly earnings per share of $2.98 came in almost 60% higher year-on-year and comfortably ahead of the $1.90 to $2.60 forecast range. Meanwhile, a 4.4% fall in comparable sales proved better than the 4.6% drop analysts had feared as sales and traffic trends improved sequentially for the second quarter in a row.
Also stoking investor excitement were the Minneapolis-based retailer’s ambitious US store openings plan and the impending launch of its ‘Target Circle 360’ membership programme, which should enhance Target’s competitive strengths.
CEO Brian Cornell commented: ‘Our team’s efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations.’ He added: ‘Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience.’
Target’s shares have made strong progress since mid-November when third quarter results breezed past forecasts with improved profitability aided by easing supply chain costs as well as efforts to control inventories.
KROGER
Shares in Kroger (KR:NYSE) struck new two-year highs this week after the grocery giant topped Wall Street’s fourth quarter earnings estimates and forecasted better than expected sales and profit for 2024.
Fourth quarter EPS (earnings per share) came in at $1.34 compared with analysts’ estimates of $1.13 on revenue which grew 6.4% to $37.06 billion, slightly shy of consensus expectations of $37.11 billion.
The company said consumers are cooking more at home instead of eating out as grocery prices soften at a faster rate than restaurant prices.
CEO Rodney McMullen said: ‘We are lowering prices and offering even more ways to save with personalized promotions and rewards.
Higher demand for groceries prompted the company to forecast 2024 adjusted profit of between $4.30 and $4.50 per share which is ahead of analysts’ estimates of $4.24 per share.
Kroger said it is committed to defending its all stock $24.6 billion merger with smaller rival Albertsons despite the US Federal Trade Commission blocking the deal on grounds it will hurt consumers and reduce competition.
