Stocks look to open lower Friday as bond yields push higher. The S&P 500 is on track to end its four-week winning streak. Crypto slammed Friday morning, with bitcoin down more than 8% and ether down more than 9%.
- Despite Friday's losses, stocks have soared since mid-June. Was that the bear market bottom? The S&P 500 still has a way to go eclipse its January record high.
- During the recent rally, we were mostly sellers. But we don't feel the urgency to sell more, as we explained in a commentary Thursday evening.
Bed Bath & Beyond (BBBY) shares tank more than 40% after activist investor Ryan Cohen completes his planned sale of his stake in the troubled retailer and all his call options. The meme stock has been volatile lately after the WallStreetBets crowd spiked it higher this summer. At one point, it reached a 2022 high of $30 per share. The stock is set to open under $11. Telsey Advisory Group, a retail-focused firm, sees a potential drop to $3 after the sale by Cohen, who co-founded Chewy and has a big stake in GameStop (GME), where he also is chairman.
General Motors (GM) reinstates its dividend, which was suspended to conserve cash in the early days of the Covid pandemic. The automaker also announced a boost to its buyback program to $5 billion. It had $3.3 billion left in the previous plan. Club holding Ford Motor (F) reinstated its dividend in October 2021. Citi reiterates GM as a top pick.
Oppenheimer reiterates outperform (out) rating on Salesforce (CRM), raises price target from $205 to $240, calling the Club holding a long-term market share gainer. However, the firm does call out near-term enterprise spending pressure due to macro uncertainty. Over at BMO, analysts reiterate outperform rating, despite trimming estimates, due to what they view as an attractive risk/reward at current levels.
Bank of America upgrades BJ's Wholesale Club (BJ) to buy, saying the "value proposition supports warehouse club model." This bodes well for Club name Costco (COST), something we spoke to in more detail yesterday.
Keybanc reiterates overweight (buy) rating on Club holding Apple (AAPL), raises price target from $177 to $185, citing healthy iPhone demand in July after weaker April, May, and June. Analysts noted that demand appears more resilient for higher-end models while demand for budget models is "muted," a dynamic that speaks to the notion that lower-income consumers are feeling inflation the most and forced to cut back on discretionary spending.
Club holding Meta Platforms (META) price target cut to $225 at Morgan Stanley, down from $280. The analysts cited lower engagement and growth of Reels, which monetizes at a lower rate, resulting in a revenue headwind. Despite this, they reiterate overweight rating, as execution risk is "more than reflected in the price at current levels." They also note the stock trades at a discount to peers on a growth-adjusted basis, significant free cash flow potential remains, Reels has potential to scale faster than expected, AI dominance should support engagement and revenue growth going forward and potentially deepen competitive moat. Bottom line, owning META recently has been painful but patience is required as current levels offer an attractive risk/reward given profitability and cash generating ability.
Wells Fargo names Club Bullpen stock Palo Alto Networks (PANW) as a top pick ahead of earnings, which are set for release after the closing bell this coming Monday.
In another sign of the tough environment for the personal computer business, Wells Fargo downgrades HP Inc. (HPQ) to underweight from equal weight (sell from hold), cuts price target to $30 per share from $35. HP Inc. is set to report quarterly results after the closing bell on Monday.
Bank of America upgrades Foot Locker (FL) to neutral from underperform (hold from sell), raises its price target to $43 per share from $28. BofA analysts call new CEO Mary Dillon a "thesis-changing move." Dillon was formerly CEO of Ulta Beauty (ULTA).
Home Depot (HD), two days after strong earnings, announced late Thursday a second quarter cash dividend for the 142nd consecutive quarter. The company is also starting a new $15 billion buyback program. Bank of American see Home Depot and rival Lowe's, which had mixed earnings this week, as "attractive."
Wayfair (W) shares sink 7% in Friday's premarket on a stock already down more than 60% year to date. The home goods online marketplace is cutting 870 jobs, which will cost between $30 million and $40 million mostly in severance and benefits. That's about 5% of its workforce.
(Jim Cramer's Charitable Trust is long F, META, COST, CRM, AAPL and PANW. See here for a full list of the stocks.)
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