Stocks in the news
Johnson & Johnson (JNJ) is rallying higher on hopes that the pharmaceutical giant is moving closer to putting its long-standing talc litigation behind it. Last night, JNJ announced that the subsidiary it created to handle cancer victims' claims, LTL Management, re-filed for bankruptcy protection and has agreed to contribute up to $8.9 bln to resolve all current and future claims. That amount is much higher than the $2.0 bln figure that JNJ previously committed to, which many viewed as insufficient.
FedEx (FDX +1%) investors are signing off on the company's major announcements during its DRIVE Investor event today, sending shares toward August highs. The delivery giant discussed various topics related to its ongoing DRIVE program, which launched late last year and is focused on creating a more efficient and profitable business. FDX also increased its annual dividend by 10% to $5.04 per share, giving it a solid 2.2% yield.
Walmart has reaffirmed its EPS and net sales growth guidance for 1Q24 and FY24 at its 2023 investor and analyst conference. The company also reiterated its goal of achieving 4% sales growth and 4%+ operating income growth over the next 3-5 years. Walmart's affirmed outlook offers some relief that consumer spending hasn't softened further since the company reported Q4 results on February 21. However, Walmart's guidance was initially viewed as disappointing as its EPS forecast of $1.25-$1.30 for 1Q24 and $5.90-$6.05 for FY24 each fell short of expectations.
Conagra has increased its FY23 adjusted earnings guidance to $2.70-2.75 from $2.60-2.70 after delivering another round of top and bottom line upside in Q3 (Feb). The company grew its adjusted earnings by over 31% yr/yr to $0.76, topping estimates by double-digits, its second consecutive quarter boasting double-digit upside, a positive shift from CAG's typical low-single-digit beats. Meanwhile, revenue continued steadily expanding, jumping by 5.9% yr/yr to $3.09 bln, CAG's sixth-straight quarter of growth.
Cardlytics (CDLX), the operator of an advertising platform that utilizes data from the banking rewards programs it runs for its financial partners, has raised its Q1 guidance. The company now expects to generate revenue of $63.5-$66.5 mln, up from its original forecast of $54-$63 mln, and adjusted EBITDA of ($8.0)-($5.0) mln compared to its prior outlook of ($17.0)-($10.0) mln. The company's CEO Karim Temsamani credited better than expected growth in the U.S. business, in addition to the impact from product optimizations, for the improved outlook.
The company has been deeply affected by the steep pull-back in marketing spending due to the pandemic which is reflected in CDLX's poor financial results including twelve consecutive quarters of net losses. However, CDLX has successfully implemented $35 mln in expense reductions by the end of December and more cuts are anticipated. The company is also improving and upgrading its ad platform to support modern ad ranking models in order to drive higher monetization rates and provide more relevancy for its customers. CDLX believes it can drive an improvement in RPMs of 10-15% in 2H23. The bottom line is that CDLX's improved outlook clearly caught investors by surprise, providing some much-needed hope that its new management team can finally turn things around.