Stock Market Update for Thursday February 29th

Global Markets

• Japan’s Nikkei: The Nikkei index closed lower as investors opted to sell stocks to secure profits, while concurrently reallocating funds to foreign markets. Adding to the market sentiment, data revealed a downturn in Japanese factory output, marking its lowest level in four years.
• Chinese Markets: The significant rise of nearly 2 percent in Chinese markets was primarily attributed to the strength and positive performance of the semiconductor sector. Semiconductors, also known as chips or integrated circuits, are a critical component in various electronic devices, including computers, smartphones, and automotive systems.
• The UK: FTSE 100 index closed slightly higher on Thursday, driven by a positive set of earnings reports from companies such as Haleon and Howden. These upbeat earnings releases provided a boost to investor sentiment and contributed to the FTSE 100’s potential for monthly gains.
• European Markets: In the broader context the sentiment was mixed, with some indices posting gains while others faced challenges. The European Central Bank (ECB) made an announcement indicating that rate cuts were not expected until June.  German stocks experienced a surge following preliminary readings suggesting a drop in inflation across several economically significant states in the country.
• United States Market: U.S. stock indexes predominantly trended upwards, fueled by data indicating a stabilization in inflation rates. This positive development buoyed investor confidence.
• Canada’s Market: Canada’s primary stock index observed an uptick as investors absorbed updates on domestic earnings.

Canadian Earnings

• Canadian Imperial Bank of Commerce (CIBC): CIBC surpassed estimates for first-quarter profit, buoyed by robust performance in its domestic personal and business banking segment, which offset the impact of higher provisions set aside for potential bad debts.
• Toronto-Dominion Bank (TD): TD Bank Group reported a decline in first-quarter profit attributed to increased provisions to cover deteriorating loans.
• Canadian Natural Resources: Canadian Natural Resources surpassed profit estimates for the fourth quarter, driven by record production in oil and gas.

US Earnings

1. AMC Entertainment Holdings Inc: The theater chain reported a larger-than-expected quarterly loss attributed to higher distribution costs for concert movies featuring popular artists such as Taylor Swift and Beyonce. Additionally, the lack of major releases from Hollywood studios following twin strikes further impacted revenue. Total operating costs and expenses increased by over 3% to $1.25 billion in the fourth quarter, resulting in a loss of 83 cents per share, surpassing the average analyst estimate of 70 cents. CEO Adam Aron acknowledged the challenges posed by the strikes and anticipated temporary earnings challenges for AMC in 2024.
2. Anheuser-Busch InBev SA: Despite beating sales estimates and raising its annual dividend by 9%, Anheuser-Busch InBev’s shares slipped due to investor concerns over the absence of a new share buyback, poor U.S. sales performance, and the impact of hyperinflation in Argentina. While the company reported a 6.2% rise in fourth-quarter sales, slightly ahead of analyst expectations, its U.S. volumes fell by 15.3%. Anheuser-Busch InBev aims to grow core profits in line with its medium-term outlook of 4-8% in 2024, indicating a cautious approach amidst challenges.
3. Birkenstock Holding Plc: The German sandal maker exceeded market expectations for first-quarter revenue, benefiting from strong demand for its footwear, particularly in the United States. The company’s quarterly revenue rose to 302.9 million euros, surpassing market expectations. However, shares experienced a decline in premarket trading following a slight decrease in the quarterly gross profit margin. Birkenstock’s ability to attract a sizable customer base seeking casual and informal fashion post-pandemic indicates positive market sentiment.
4. C3.ai Inc: The software firm reported better-than-expected quarterly results, narrowing its full-year revenue forecast range, which remained ahead of Wall Street estimates. The appointment of a new chief financial officer, effective March 1, and optimistic revenue projections for 2024 propelled the company’s shares upwards. C3.ai anticipates revenue between $306 million and $310 million for 2024, exceeding analysts’ estimates. Despite a smaller net loss per share than expected, the company demonstrated strong performance and strategic planning.
5. CRH Plc: The largest building materials producer in the United States and Europe forecasted core profit growth of 6% to 10% in 2024 after surpassing its 2023 guidance with a 15% growth in adjusted EBITDA. With a significant portion of its profits generated in the United States, CRH Plc expects full-year adjusted EBITDA between $6.55 billion and $6.85 billion in 2024. The company’s strong performance in 2023 and optimistic outlook for 2024 reflect confidence in its growth trajectory and strategic initiatives.
6. Haleon Plc: The Sensodyne toothpaste-maker announced plans to buy back $633 million of its shares amidst firm demand for its products and progress in reducing debt. Haleon expects organic revenue growth between 4% and 6% this year, with analysts forecasting a slightly higher organic revenue increase. The company’s positive outlook for organic revenue growth in the first quarter of the year indicates continued momentum and strategic planning to enhance shareholder value.
7. HP Inc: HP Inc missed Wall Street estimates for first-quarter revenue, marking a seventh consecutive quarter of decline driven by sluggish demand in the personal computers (PC) market. Despite revenue falling approximately 4.4% to $13.19 billion, the company’s adjusted earnings per share aligned with target estimates. HP Inc forecasts second-quarter adjusted profit per share in line with estimates, suggesting stability amidst market challenges and ongoing shifts in consumer demand.
8. Monster Beverage Corp: The company fell short of Wall Street expectations for fourth-quarter revenue, attributed to budget-conscious consumers’ hesitation in purchasing higher-priced beverages and energy drinks. Despite an increase in gross profit percentage, net revenue rose 14.4% to $1.73 billion, falling below analysts’ estimates. Monster Beverage Corp’s performance underscores the impact of consumer behavior on sales and highlights the need for strategic marketing and pricing strategies in a competitive market.
9. Paramount Global: Paramount Global missed Wall Street estimates for quarterly revenue but surprised investors with a profit, driven by gains in streaming services amidst a weak advertising market. Paramount+ added 4.1 million subscribers during the quarter, indicating growth in its streaming segment. Despite declines in revenue from TV media and advertising, the company’s profitability and subscriber growth demonstrate resilience and adaptation to evolving consumer preferences.
10. Salesforce Inc: Salesforce Inc expanded its stock buyback program and announced a new dividend, but its annual revenue forecast below estimates led to a decline in shares. While the company reported revenue and profit beats for the fourth quarter, its 2025 revenue forecast fell short of analysts’ estimates. Salesforce Inc anticipates adjusted profit per share for the full year in line with estimates, suggesting a cautious outlook amidst competitive pressures and evolving market dynamics.
11. Snowflake Inc: Snowflake Inc forecasted first-quarter product revenue below Wall Street estimates due to expectations of reduced customer spending in an uncertain economy. The company appointed a new chief executive officer and reported total revenue exceeding analysts’ estimates for the reported quarter. However, its adjusted profit per share also surpassed estimates. Despite positive financial performance, Snowflake Inc’s conservative revenue forecast for the current quarter led to a decline in shares, reflecting investor concerns over future growth prospects.

Stock News

• Boeing: The U.S. Federal Aviation Administration (FAA) mandated Boeing to develop a comprehensive plan to address systemic quality-control issues within 90 days, following safety concerns raised after a recent mid-air emergency.
• Neuralink: The U.S. Food and Drug Administration (FDA) identified deficiencies in record-keeping and quality controls during inspections at Elon Musk’s Neuralink, a brain implant company.
• Ford: The U.S. safety regulator initiated a recall query into approximately 44,219 Ford E-series vehicles over concerns regarding power brakes and steering assist.
• OpenAI: The U.S. Securities and Exchange Commission (SEC) launched an investigation into OpenAI’s CEO Sam Altman’s internal communications to ascertain if investors were misled.
• Healthcare Providers: Healthcare providers in the U.S. encountered payment issues following a week-long ransomware outage at a tech unit of UnitedHealth Group, leading to cash flow challenges for some smaller providers.

Top Analyst Ratings:

1. EQB Inc: National Bank of Canada downgraded EQB Inc’s rating to “sector perform” from “outperform” due to the company’s first-quarter earnings miss. This miss was primarily caused by higher loan losses and expenses. The downgrade suggests that National Bank of Canada believes EQB Inc may face challenges or headwinds in the near term, leading to a more cautious outlook on the stock.
2. Fiera Capital Corp: CIBC raised the target price for Fiera Capital Corp to C$8.25 from C$7, citing better-than-expected performance fees and solid performance from joint ventures that drove the company’s fourth-quarter earnings beat. This upward revision in the target price indicates CIBC’s increased confidence in Fiera Capital Corp’s future prospects and potential for stock price appreciation.
3. First Quantum Minerals Ltd: Barclays raised the target price for First Quantum Minerals Ltd to C$13 from C$11. Barclays highlighted the company’s comprehensive refinancing, which provides a pathway to complete the S3 expansion and buy more time for discussions toward a potential resolution in Panama. This suggests Barclays believes in the company’s ability to execute its growth plans and resolve potential challenges effectively.
4. National Bank of Canada: Jefferies raised the target price for National Bank of Canada to C$113 from C$109, citing the company’s return to strong profitability across all operating segments in the first quarter. This upward revision suggests Jefferies has a positive outlook on National Bank of Canada’s performance and expects continued growth and profitability.
5. Winpak Ltd: CIBC downgraded Winpak Ltd’s rating to “neutral” from “outperformer” due to weak fourth-quarter results and tepid guidance for 2024. This downgrade indicates CIBC’s reduced confidence in Winpak Ltd’s near-term performance and potential challenges the company may face.
6. Nutanix Inc: JPMorgan raised the target price for Nutanix Inc to $70 from $65 following the company’s positive second-quarter results, with free cash flow outperforming materially. This upward revision suggests JPMorgan has increased confidence in Nutanix Inc’s ability to generate cash flow and deliver strong financial performance.
7. Okta Inc: Piper Sandler raised the target price for Okta Inc to $110 from $85, based on the company’s solid fourth-quarter results and minimal immediate impacts on the business from the October 2023 cyber breach. This indicates Piper Sandler’s positive outlook on Okta Inc’s resilience and growth potential despite the cybersecurity incident.
8. Salesforce Inc: D.A. Davidson raised the target price for Salesforce Inc to $300 from $230, citing the company’s fourth-quarter revenue beat driven by growing demand for its AI and data offerings. This upward revision reflects D.A. Davidson’s bullish outlook on Salesforce Inc’s growth prospects and market position.
9. Snowflake Inc: RBC lowered the target price for Snowflake Inc to $246 from $255, reflecting lower revenue estimates for the current quarter. This suggests RBC’s concerns about Snowflake Inc’s near-term revenue outlook and potential challenges the company may face.
10. TJX Companies Inc: Jefferies raised the target price for TJX Companies Inc to $120 from $110, citing strong fourth-quarter results driven entirely by traffic and showing strength across banners and geographies. This indicates Jefferies’ positive view on TJX Companies Inc’s performance and growth potential in the retail sector.