A sell-off late in the week helped sour the previously positive mood on Wall Street. On Thursday two officials at the US Federal Reserve spoke in favour of a 50 basis point rate increase in March.
This wasn't the message the markets either expected or wanted to hear. It would represent an increase on the 25 basis point hike seen earlier this year when the hope was the Fed was approaching the end of the rate hiking cycle.
Pharmaceutical packaging and delivery system manufacturer West Pharmaceutical Services (WST:NYSE) was lifted by better-than-expected earnings. Back-up power firm Generac (GNRC:NYSE) was lifted after reporting a record year.
Pharma firm Organon (OGN:NYSE), a spin-off from Merck (MRK:NYSE) which focuses on women's health therapies, fell sharply as both fourth quarter and full year numbers fell short of what was expected. A disappointing earnings update from Devon Energy (DVN:NYSE), linked to production outages and higher costs, put the oil and gas firm on the back foot. Investors also reacting to disappointing news on dividends and share buybacks.
COCA-COLA
Higher selling prices helped beverage giant Coca-Cola (KO:NYSE) beat street revenue estimates for the fourth quarter while adjusted earnings per share came in bang in line with expectations at $0.45.
Net revenues increased 7% year on year to $10.13 billion as the company pushed through 12% price increases but it had a dampening effect as overall unit case volumes slipped 1%.
Unit case volumes were weakest in the Europe, Middle East and Africa region which experienced a 5% drop as consumer demand softened due to inflation squeezing incomes.
CEO James Quincey said prices increases will likely moderate throughout the year as inflation falls back. Looking forward the company is forecasting organic revenue growth of 7% to 8% and better than expected earnings per share growth of 4% to 5%.
Quincey added, ‘We are keeping consumers at the centre of our innovation and marketing investments while also leveraging our expertise in revenue growth management and execution.’
AIRBNB
The travel recovery has been tripped up a few times since lockdown restrictions were lifted more than a year ago now, so a first profitable year for Airbnb (ABNB:NASDAQ) was something to celebrate.
The homes and rooms-rental platform reported fourth-quarter results that beat estimates on both the top and bottom lines and issued altogether more confident guidance than expected as demand for travel continues to deny cost-of-living pressures.
The beats were driven by strength in bookings for nights and experiences, which rose 20% year-on-year in Q4, supporting a 20% jump in gross booking value to $13.5 billion. Cross-border trips jumped 49%.
In a letter to shareholders, CEO Brian Chesky hailed the removal of travel restrictions in China as ‘an encouraging sign of continued recovery for the region,’ and investors lapped it up. Airbnb stock has surged more than 15% since the update on 14 Feb.
CISCO SYSTEMS
Network, cloud and cyber-security firm Cisco Systems (CSCO:NASDAQ) posted better-than-expected second-quarter results on Thursday and saw its shares gain 5%, bucking the trend in technology stocks.
Cisco's product and service revenue beat forecasts, as did its gross margin which was an impressive 63.9%, as it worked through its large backlog of orders built up during the pandemic.
The firm said lead times for some components for its hardware products fell, allowing it to ship more kit to customers.
The firm lifted its third-quarter guidance - it now sees adjusted earnings per share of 96c to 98c against a consensus of 89c and revenue growth of 11% to 13% against a market forecast of 6% - and its full year guidance.
‘We continue to have very low order cancellation rates’, said finance director Scott Herren on the conference call, while chief executive Chuck Robbins said 2023 was ‘shaping up to be a great year’.
