Summary: The consumer price index for September exceeds expectations, leading to increased bond yields and putting pressure on futures tied to major stock indices. Delta Air Lines lowers earnings guidance and cuts free cash flow estimates due to rising fuel prices. Walgreens reports quarterly revenue numbers, missing on earnings and cutting estimates following the departure of CEO Roz Brewer. Estee Lauder has its price target cut by Barclays. The United Auto Workers union expands the Ford strike to the company’s largest plant, impacting earnings per share. Truist upgrades Exxon Mobil and raises its price target following its acquisition of Pioneer Natural Resources. Goldman Sachs lowers Amazon’s price target, dismissing the FTC antitrust lawsuit. Barclays raises Johnson & Johnson’s price target, while Procter & Gamble’s target is cut by both Barclays and Bernstein. Domino’s Pizza reports declining same-store sales in the US but increasing international sales.
The consumer price index (CPI) for September has come in hotter than expected, causing bond yields to rise and putting pressure on futures tied to major stock indices such as the Dow, the S&P 500, and the Nasdaq. This is in line with the increase in producer prices observed on Wednesday. The Federal Reserve, in their minutes from the September meeting, announced that they will maintain “restrictive” interest rates until inflation eases.
Delta Air Lines has lowered its full-year earnings guidance and cut its free cash flow estimate. This was anticipated due to the rise in fuel prices. However, the company reported a beat on earnings and revenue, thanks to the increase in summer travel.
Walgreens has announced its quarterly revenue numbers, which were generated under the previous leadership of Roz Brewer, who left abruptly. The company missed on earnings and has therefore cut its estimates accordingly. Tim Wentworth, a health industry veteran, has been appointed as the new CEO and will officially take over on October 23.
Estee Lauder has had its price target cut at Barclays, from $162 to $137 per share. However, during the Club’s October Monthly Meeting, it was noted that patience is required and that CEO Fabrizio Freda is expected to turn things around.
In other news, the United Auto Workers union has expanded the strike at Ford to the company’s largest plant in Kentucky, which produces highly profitable SUVs and pickups. Bank of America estimates that this strike will result in a 5-cent per week drag on earnings per share.
Truist has upgraded Exxon Mobil from hold to buy and has raised its price target to $131 per share from $110. This upgrade is based on the anticipated longer-term benefits of Exxon’s acquisition of Pioneer Natural Resources. Following the announcement of this deal, it was revealed that the Club would be moving on from Pioneer Natural Resources as soon as its trading rules allow.
Goldman Sachs has lowered Amazon’s price target from $180 to $175 per share. However, it was emphasized that Amazon has made significant strides in cutting costs, and there is a belief that the FTC antitrust lawsuit against the company is baseless. During the Monthly Meeting, Jeff Marks, director of portfolio analysis for the Club, addressed this issue and answered nine other member questions.
Barclays has raised Johnson & Johnson’s price target from $158 to $162 per share. Johnson & Johnson recently acquired heart pump maker Abiomed for $16 billion, but there are concerns about how many procedures the company will perform due to the introduction of GLP-1s, new diabetes/weight-loss drugs.
Procter & Gamble, also a holding of the Club, has had its price target cut by Barclays to $154 per share from $166, and by Bernstein to $153 from $162. GLP-1 concerns have impacted the snack food sector, but Procter & Gamble has products in grooming, cleaning, and personal health that are less affected by this issue.
Domino’s Pizza has reported a decline of 0.6% in same-store sales in the third quarter in the US, while international sales have increased by 3.3% excluding currency effects. The company’s store growth is on track but slightly below expectations. While earnings for the quarter exceeded expectations, revenue fell short.
– [Consumer Price Index](https://www.investopedia.com/terms/c/consumerpriceindex.asp)
– [Delta Air Lines](https://www.delta.com/)
– [Estee Lauder](https://www.esteelauder.com/)
– [United Auto Workers](https://uaw.org/)
– [Exxon Mobil](https://corporate.exxonmobil.com/)
– [Goldman Sachs](https://www.goldmansachs.com/)
– [Johnson & Johnson](https://www.jnj.com/)
– [Procter & Gamble](https://us.pg.com/)
– [Domino’s Pizza](https://www.dominos.com/)