My top 10 things to watch Wednesday, July 17
- Wall Street is poised to open lower across the board Wednesday, a day after the S&P 500 and Dow Jones Industrial Average closed at record highs. Tech stocks, in particular, were under pressure again, part of the rotation away from high-fliers into value and small-cap stocks that we’ve seen since last week’s cooler consumer price index report. Are these tech troubles or opportunities?
- Chip stocks including Taiwan Semiconductor Manufacturing Company were under pressure, with comments from Donald Trump contributing to the weakness. The former president and current Republican presidential nominee told Bloomberg Businessweek that Taiwan should pay the U.S. for defense. At the Investing Club’s July Monthly Meeting at noon ET Wednesday, I will be discussing which companies would benefit from a second Trump presidency and which would be out of favor.
- When will the quarterly misses stop for J.B. Hunt? The logistics firm missed on both the top and the bottom lines. But West Coast ports look good. Does that point to a good retail holiday season? Barclays is among research firms to cut their price target on J.B. Hunt in response to the quarter.
- Oppenheimer downgraded Club holding Morgan Stanley to a hold-equivalent rating from outperform following its earnings report Tuesday morning. Analysts argue that Morgan Stanley’s investment banking business still has a long way to go before normalizing. I could not disagree more. A number of analysts raised their price targets on Morgan Stanley, as did we at the Club.
- Citigroup lowered its price target on Kraft Heinz to $38 a share from $42 but maintained its buy rating on the stock. Analysts believe the food maker’s earnings will come in below consensus when it reports July 31. To me, Kraft Heinz is the kind of company that needs to roll back prices to spur demand for its products.
- Barclays upped its price target on Tesla to $225 a share from $180, though that implies the stock could fall about $30 from where it closed Tuesday. Tesla has been on a tear in recent weeks. However, Barclays analysts, who kept their hold-equivalent rating on the stock, said the electric vehicle maker’s second-quarter earnings report will prompt investors to face Tesla’s “still-challenged” fundamentals. The love for this company without a concomitant increase in numbers is a little unnerving.
- Jefferies upgraded UnitedHealth Group to buy from hold. I think the health-insurance giant is back to its old winning ways after the severe hack at its Change Healthcare subsidiary earlier this year. The regulatory landscape for UnitedHealth also would get more favorable under another Trump administration.
- Of course, Johnson & Johnson‘s second-quarter earnings came in better than expected. Sales of its psoriasis drug Stelara were very strong. However, the company’s revised full-year earnings guidance range is distorting this one. That’s why the stock is slightly lower.
- Bank of America started coverage of Taser maker Axon Enterprise, arguing the company has a “commanding lead” to capture growing spending across the world on public safety. Analysts have a $380 price target, which implies about 19% upside from Tuesday’s close.
- Guggenheim upped its price target on Netflix to $735 a share from $700 and maintained its buy rating. The firm raised its estimates for subscriber growth and expects the streaming heavyweight to report strong quarterly numbers. There’s lots of info out there that this will be a much better-than-expected quarter.
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