October 17, 2024 | Read Online

What You Need To Know For October 17th

Introducing Our New Earnings Season Blotter

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Let's get into it. You'll notice below we're ramping into a full earnings blotter that covers what went down during earnings season.

Earnings Corner 📜

Morgan Stanley (MS) reported earnings that beat estimates, with revenue of $15.38B up 16% y/y (vs. $14.41B expected) and EPS of $1.88 (vs. $1.58 expected). The bank outperformed across its wealth management, trading, and investment banking segments, with the last seeing revenue rise 56% since last year. The stock was up 6.5% at Wednesday's close

Charles Schwab (SCHW) reported earnings that beat estimates, with revenue of $4.85B up 5% y/y (vs. $4.78B expected) and EPS of $0.71 (vs. $0.69 expected). The outperformance was driven by a 9% increase in clients' daily average trades. The stock was up 6.3% at Wednesday's close

United Airlines (UAL) reported earnings that beat estimates, with revenue of $14.84B up 2.5% y/y (vs. $14.78B expected) and EPS of $3.33 (vs. $3.17 expected). Mgmt. announced a $1.5B share buyback, the first since the airline took government aid during the Covid pandemic, and projected Q4 EPS of $2.50-$3.00 (vs. $2.68 expected). The stock soared on the news and was up 12.4% at Wednesday's close, reaching its highest price since February 2020

Abbott Laboratories (ABT) reported earnings that beat estimates and raised its profit outlook, driving the stock up 1.5% at Wednesday's close

Goldman Sachs (GS) reported earnings that beat estimates, as easing rates buoyed investment banking, trading, and asset management fees, driving the stock up 1.4% at Wednesday's close

Johnson & Johnson (JNJ) reported earnings that beat estimates, even as net income was down 38% y/y due to over $3B in one-time legal and acquisition-related costs. The stock fell in premarket trading but was up 2.7% at Wednesday's close

Progressive (PGR) reported earnings that beat estimates, with mgmt. noting that losses from Hurricane Helene will total to a $0.75 EPS hit in Q4. The stock was up 1% at Wednesday's close

State Street (STT) reported earnings that beat estimates, driven by a 21% increase in revenue, causing the stock to hit an all-time and finish up 2.1% at Wednesday's close

ASML (ASML) reported earnings that beat estimates, with revenue of €7.47B (vs. €7.17B) and EPS of €5.28 (vs. €4.86). However, in an earnings statement that was accidentally released a day early, mgmt. cut its sales outlook and reported disappointing orders due to new export controls to China. The stock plunged and was down 21.7% at Wednesday's close. As Europe's largest company, ASML's weak Semiconductor guide spooked Tech bulls, but some are saying that this is far from a disaster for AI Chip Stocks

Citigroup (C) reported earnings that beat estimates, with revenue of $20.32B up 18% y/y (vs. $19.84B expected) and EPS of $1.51 (vs. $1.31 expected). The bank grew investment banking, wealth management, and equity markets revenue, but saw a decline in net interest income and fixed income revenue and increased its allowance for credit losses by $315M. The stock fell on the day and was down 4.9% at Wednesday's close

United Health Group (UNH) reported earnings that beat estimates, with revenue of $100.8B up 9% y/y (vs. $99.3B expected) and EPS of $7.15 (vs. $7.03 expected). However, the street was disappointed by a conservative FY 2025 EPS projection of $30 on the upper end (vs. $31.18 expected). The stock fell on the day and was down 5.6% at Wednesday's close

Bank of America (BAC) reported earnings that beat estimates, with fee-based revenue offsetting declines in net interest income and driving the stock up 2.1% at Wednesday's close

LVMH (LVMH) reported earnings that missed estimates due to declining demand in China and Japan, causing the stock to fall 7.6% at Wednesday's close. Regardless, the Company is going to continue to focus on the high end consumer and maintain pricing

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Today's Headlines 🍿

The U.S. is discussing capping the amount of chips NVIDIA and AMD can sell to some foreign countries other than China. The Biden Administration's potential move aims to prevent these powerful chips from being used for military purposes or to enhance the AI capabilities of other nations. The expanded restrictions could affect countries in the Middle East, although specific nations have not been named, and the decision is still under review by the National Security Council.
Nuclear has been rallying as AI giants are moving toward nuclear power to support LLM compute. Microsoft, Google, and Amazon have recently struck deals with nuclear power operators and developers, signaling a shift from their previous focus on wind and solar energy and reversing the 1990s through 2000s decline in nuclear power generation
The FTC has announced the "click-to-cancel" rule that will require companies to let you cancel any product as easily as you registered. FTC Chair Lina Khan emphasized that this rule aims to address the growing number of consumer complaints about situations where it's "extraordinarily easy to sign up for a subscription, but absurdly difficult to cancel"
The NY Comptroller's Office put out their annual Wall Street bonus data, arguing bonuses could rise over 7% in 2024. Here's the full report, which found that the average compensation in 2023 fell -5.2% to $471k. Here's a look at the bonus side of the equation below:

Blue Owl Capital is expanding their park Ave office footprint by 42%. Adding 4 more floors, Blue Owl will become the Seagram Building's anchor tenant. The iconic New York City landmark, which now boasts nearly 100 percent occupancy offers amenities like the Seagram Playground with sports courts and a wellness center
Jane Street interns, typically math wizards out of M.I.T. are cashing in. The trading firm's quantitative researcher internship, running from May to August, offers a base salary equivalent to $250k annually, while a trading desk engineering intern is offered a slightly lower base of $175k annually. These internship salaries significantly outpace those offered by other financial institutions, with JPMorgan and Barclays offering median base monthly salaries of ~$8k
Phillips 66 plans to cease operations at its Los Angeles-area refinery in 2025. Phillips 66 is 8.13% of California's refining capacity. This announcement comes mere days after Gov. Gavin Newsom announced new regulations around gas storage that makes operating in the state more expensive
Pfizer Inc. is facing pressure from activist investor Starboard Value LP, which has reportedly acquired a $1 billion stake in the pharmaceutical giant. CEO Albert Bourla is scheduled to meet with Starboard representatives on Wednesday to discuss potential changes, following reports that the investment firm had allied with two former Pfizer executives. This development comes as Pfizer's shares have declined by more than 50% from their pandemic peak, reflecting the company's challenges in maintaining growth after the surge in Covid-19 vaccine sales
Hurricane Milton, which made landfall in Florida as a Category 3 storm, has resulted in an estimated $36B in private insured losses. The storm's unusual wind pattern affected a vast area, impacting the entire Florida peninsula and parts of Georgia, and distinguishing it from previous hurricanes like Helene. This significant loss estimate positions Milton among the costliest hurricanes in history, with other firms also projecting similar or higher figures
Walgreens is set to shutter 14% of their store footprint due to weak sales. The retail drugstore chain will close 1,200 stores over the next few years, starting with 500 stores in 2025. Walgreens has stated that roughly 25% of their 8,700 locations are unprofitable. While the Company has been criticized by consumers by locking many ordinary day products behind glass cases, shares rose on Tuesday by 15% following the removal of this drag on earnings
Boeing is looking to raise up to $25B to shore up liquidity. The company filed a plan with regulators to sell a combination of bonds and shares, hoping to avoid getting its debt cut to junk. Boeing executives announced that it has set up a new credit agreement for $10B to cover short-term costs
Ingram Micro, a Platinum Equity portco, is targeting a $428mm IPO, valuing the company at up to $5.4B. The technology products distributor's planned IPO would mark a return to the public market after nearly a decade of private ownership and reflects a resurgence in stock market listings backed by private equity firms
Bausch and Lomb has PE interest, with TPG and Blackstone pursuing a potential $14B buyout. The eyecare company is reportedly working with Goldman Sachs on a deal to separate from its heavily indebted parent company, Bausch Health Cos., with formal bids expected by the end of the month
Harry Stebbings of 20VC, a popular venture of cast, has raised a $400mm fund focused on Seed and Series A financing. This is Harry's 3rd fund and he is focused on revitalizing venture capital in Europe. Stebbings echoed Trump in a way by saying he wants to "Make Europe Great Again"
Tom Brady is officially a minority owner of the Las Vegas Raiders. In a deal unanimously approved by NFL team owners during their annual fall meeting, seven-time Super Bowl champion now holds a 5% stake in the team. Brady's new role as a team owner comes with certain restrictions, including limitations on his broadcasting activities with Fox, to mitigate potential conflicts of interest.
Warren Buffett is hiking his stake in SiriusXM to 32% following the satellite radio company's combination within John Malone's Liberty Media empire. Buffett's defying the street — JPMorgan reinitiated coverage with an underweight rating last week — as the bank has soured on SiriusXM as it has grappled with growing subscriber losses and challenging demographic shifts
The Container Store received $40 million in Preferred Equity from Beyond, the entity formally known as Bed, Bath, and Beyond. This is meant to help the struggling retailer right the ship and drive sales toward TCS' higher-margin custom services business
U.S. EV sales are actually increasing. The electric vehicle (EV) market share in the U.S. rose to 8.9%, an increase from last year's 7.8%. Although the growth rate of EV market share has slowed, it is approaching the significant 10% milestone that many view as crucial for broader EV adoption in the country. However, manufacturers and dealers are shouldering some of the EV adoption cost, expanding incentives and dropping prices to move inventory

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M&A Transactions💭

Zdorovaya Planeta, producer of fitness desserts, was acquired for $433.0M by Supplement Group (PINX: GTEH).

Vital Thin Film Materials, producer of sputter targets and evaporation materials, has reached a definitive agreement to be acquired for $1.35B by Optics Technology Holdings.

The Portfolio of Fiber and Fixed Network Assets of TPG Telecom entered into a definitive agreement to be acquired for $3.57B by Vocus Group.

TotalEnergies EP, operator of extraction of oil and natural gas services, was acquired for $259.4M by Hibiscus Petroleum (KLS: 5199).

SellerCloud, developer of an e-commerce software platform, was acquired for $110.0M by Descartes Systems Group (TSE: DSG).

PlanNet21 Communications, provider of technology infrastructure services, has entered into a definitive agreement to be acquired for $193.96M by Conscia.

Longboard Pharmaceuticals (NAS: LBPH), a clinical-stage biopharmaceutical company, has reached a definitive agreement to be acquired for $2.5B by H. Lundbeck (CSE: HLUN A). Centerview Partners and Evercore Group advised on the sale.

Gynesonics, manufacturer of incision-free medical devices, was acquired for $350.0M by Hologic (NAS: HOLX).

Great American NewCo, provider of diversified platform, has entered into a definitive agreement to be acquired for $386.0M by Oaktree Capital Management. Moelis & Company advised on the sale.

WorkForce Software, developer of a cloud-based workforce management software, was acquired for $1.2B by Automatic Data Processing (NAS: ADP).

Weener Plastics Group, manufacturer of plastic packaging products, was acquired for $928.8M by Silgan Holdings (NYS: SLGN). J.P. Morgan, Wells Fargo, and William Blair & Company advised on the sale.

Mogas Industries, manufacturer of service ball valves, was acquired for $305.0M by Flowserve (NYS: FLS). Robert W. Baird & Co advised on the sale.

Kellstrom Aerospace, distributor of engines, aircraft, and spare parts, has reached a definitive agreement to be acquired for $200.0M by VSE (NAS: VSEC). Perella Weinberg Partners advised on the sale.

De Le Rue Authentication, manufacturer of holographic films, has reached a definitive agreement to be acquired for $332.51M by Crane NXT (NYS: CXT).

Tock, developer of a restaurant oriented platform, was acquired for $400.0M by American Express (NYS: AXP).

Motz Co., operator of a non-media advertising event planning company, was acquired for $4.08B by M83 Studio (KRX: 476080).

KORE Software, developer of business intelligence platform, has entered into a definitive agreement to be acquired for $650.0M by Two Circles. William Blair & Company advised on the sale.

Private Placement Transactions💭

Path Robotics, manufacturer of welding robots, raised $100.0M of Series D venture funding ed by Drive Capital and Matter Ventures.

Praxis, operator of a residential society building firm, raised $525.0M of venture funding led by Arch, Global Emerging Markets, and Manifold Capital Partners.

Observe, developer of an enterprise SaaS platform, raised $145.0M of Series B venture funding led by Sutter Hill Ventures.

Koloma, developer of clean energy technology, raised $298.12M of Series B venture funding led by Khosla Ventures and Breakthrough Ventures at a pre-money valuation of $600.0M.

Elektrofi, developer of a drug delivery platform, raised $112.25M of Series C venture funding led by Undisclosed Investors.

X Energy, leading developer of advanced SMR and fuel technology, raised $500.0M of Series C1 venture funding led by The Climate Pledge, Ken Griffin, and NGP Group.

Ocean-sky Silkroad Satellite, operator of satellite communication designed to improve communication efficiency, raised $141.75M of venture funding led by Hefei Industry Investment Group.

Lightmatter, developer of a light-powered chip designed to speed up AI computations, raised $400.0M of Series D venture funding led by T. Rowe Price Group at a pre-money valuation of $4.0B.

Noteworthy Chart 🧭

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