1. Target (TGT) beats on first-quarter revenue and earnings-per-share (EPS). Inventories are down 16%. Really bullish save shrinkage (organized retail theft), which is expected to reduce profitability by more than $500 million compared with last year. Same-store sales in Q1 flat versus up 0.2%. Q2 guidance below expectations. Target basis outlook on “softening sales trends in the first quarter.”
2. Target’s reported quarter was far better than Home Depot‘s (HD). Tons of price target cuts on HD, though Wall Street analysts at various firms either keep their buy or neutral ratings. I don’t think anyone should have been surprised by the home improvement retailer’s results, and here’s why. By the way, Lowe’s (LOW) reports its quarter next week
3. TJX Companies (TJX) reported a mixed quarter. Beating on EPS but missing on revenue. Inventories per-store on a reported basis fell 5%. Same-store sales at Marmaxx unit (T.J. Maxx and Marshalls) increase below expectations. HomeGoods unit decline more than expected. Q2 guidance lower than estimates but full-year outlook above.
4. The Dow, the S&P 500 and the Nasdaq are set to open higher. But the simmering debt ceiling talks remain in focus. The 2011 debt-ceiling debate has been a useful, if not foreboding, analogue for Wall Street. We looked at how Club stocks performed during the 2011 standoff and how they did for the rest of the year once clear of the crisis.
5. In Tuesday’s sprawling interview with CNBC anchor David Faber, Tesla CEO Elon Musk said he doesn’t care if his inflammatory tweets scare away potential EV buyers or Twitter advertisers. “I’ll say what I want, and if the consequence of that is losing money, so be it.” Musk also said Tesla has the ability to weather rocky economic times. He believes the Fed was “slow to raise interest rates, and they’re gonna be slow to lower them.”
6. Bernstein analyst Toni Sacconaghi follows Tuesday evening’s Tesla 2023 annual shareholder meeting in Austin, with a challenge of Musk and the future of FSD (full self driving). Really? Sacconaghi sees the next 12 months as tough for Tesla. Wedbush, meanwhile, thinks Musk will be CEO of Tesla for at least another five years. Also cites as encouraging Musk’s response to an investor’s question about trying a “little bit of advertising.”
7. Bank of America increases its price target on Salesforce (CRM) to $250 per share from $235. The analysts there spoke to Salesforce partners ahead of quarterly results, set for release on May 31. They see stable demand; Slack mixed; and the rest better. In quarterly disclosures from big money managers, an update emerged about the activist onslaught at Salesforce. The so-called Wall Street whales also traded six other Club stocks in the first quarter.
8. Barclay’s upgrades Wynn Resorts (WYNN) to overweight from equal weight (buy from hold). Raises price target to $135 per share from $120. The analysts see recovery in Asia gambling hub Macao “well ahead of shares.” That’s welcome news. We have a number of other Club holdings with lots of China exposure: Starbucks (SBUX) and Estee Lauder (EL).
9. Bernstein is concerned about Devon Energy and lowers price target to $64 per share from $71. But the analysts keep outperform (buy) rating. We sold and exited Devon much higher and consolidated our oil and natural gas production exposure around Coterra Energy (CTRA) and Pioneer Natural Resources (PXD). The Club also owns oilfield services giant Halliburton (HAL).
10. Citi cuts its price target on Expedia (EXPE) to $105 per share from $125. Keeps neutral rating. The analysts cite a big first-quarter miss on adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $185 million; sees this continuing.
(See here for a full list of the stocks in Jim Cramer’s Charitable Trust.)
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