Stocks in the news
CVS Health's stock price fell to a new 52-week low as investors focused on the company's reduced earnings per share (EPS) outlook for fiscal year 2023. CVS's reduced EPS forecast was due to the financing of its recent acquisitions of Oak Street Health and Signify Health. The reduced outlook caused concern among investors, who were already wary of the high price tags associated with the acquisitions. However, CVS's Q1 results were not all negative, as the company beat analysts' expectations on revenue and kept its bottom line from slipping significantly. CVS also announced resegmentation and plans to expand its Medicare Advantage business. Although FY23 may be less upbeat than anticipated, CVS reiterated its earnings targets for 2024 and 2025, leading some analysts to believe that today's selling pressure is an overreaction.
In contrast, Starbucks reported better-than-expected results for Q2, with China performing much better than expected. However, investors were disappointed that the company did not raise its FY23 comp guidance, despite exceeding analysts' comp estimates for the quarter. Starbucks attributed its reluctance to increase guidance to its expectation that sales growth will slow in China in the second half of the year. The company's loyalty program has been a major driver for the robust growth in North America and the U.S.
Ford has reported a strong Q1 with increased revenue and reaffirmed its FY23 guidance with adjusted EBIT of $9-11 billion and adjusted FCF of about $6 billion. Ford's first quarter also featured its new reporting segments: Ford Model e (EV segment), Ford Blue (gas and hybrid vehicles), and Ford Pro (commercial vehicles). Ford Blue segment revenue increased 21% yr/yr to $25.1 billion with 10.4% EBIT margin, and it has a strong product lineup with upcoming exciting news about F-150 and the Explorer later this year. The Ford Pro segment's Q1 revs increased by 28% yr/yr, and it has strong order books in North America and Europe. Ford Model e is small with revs of just $700 million, down 27% yr/yr, impacted by F-150 Lightning needing to stop production to fix a battery problem. The company's Q1 report has been seen as a good report by Ford despite being overshadowed by GM's current performance.
Advanced Micro's Q1 report looked similar to rival Intel's Q1 report but the post-earnings reactions could not be more different. AMD's Q2 revenue forecast of $5.0-5.6 billion missed analyst expectations, which is a weak point, especially after the center of Intel's Q2 sales outlook was nicely ahead of consensus. Investors are reacting negatively due to this, and also because Data Center revs declined yr/yr in Q1. AMD's 22% sequential decline in Data Center was outshined by Intel's 14% decline, stoking worries that AMD is losing market share. Additionally, AMD's relatively pricey 21x FY24 earnings valuation is a premium compared to Intel at 17x. However, AMD still delivered adjusted EPS of $0.60 on revs of $5.35 billion, both topping consensus, and AMD's semi-custom SoCs witnessed solid demand due to sustained premium console sales from Microsoft and Sony.
DuPont beat top and bottom-line estimates for 1Q23, mainly due to strong performance in its water and safety solutions businesses. However, the company's exposure to the sluggish consumer electronics market led to a soft outlook for Q2 and FY23, causing a sharp drop in its shares. DuPont supplies components and materials to OEMs, and its Electronics and Industrial segment, which accounted for 45% of its revenue in FY22, experienced lower volumes and declining organic sales in Q1 due to weaker end market demand and channel inventory destocking. The company expects weakness and channel inventory destocking to persist in the near term for the electronics market. DD cut its EPS forecast to $3.55-$3.70 for FY23 and lowered the high end of its revenue outlook to $12.5 billion from $12.9 billion. On the positive side, DD expects strength to continue throughout the year for water, automotive, aerospace, and healthcare categories. DD is set to acquire Spectrum Plastics Group for $1.75 billion, which will add to its revenue derived from healthcare.