Daily Update - April 6, 2023
Selected highlights of the day:
By: Matthew Otto
FedEx announces of increases dividend and formation change
FedEx has increased its annual dividend payout to shareholders by 44 cents to $5.04, a move that shows confidence in its future. The company also announced changes to its corporate structure, consolidating all its operating companies, including FedEx Express, FedEx Ground, and FedEx Services, into one unit. This move is expected to drive efficiencies and eliminate the need for multiple stops by different drivers on the same day. The less-than-truckload business will remain separate and serve industrial customers.
- Morgan Stanley analyst Ravi Shanker maintains an Equal-Weight rating but raises the price target to $180.
- Credit Suisse analyst Ariel Rosa reiterates FDX with an Outperform rating and maintains a $273 price target.
- Stephens & Co. analyst Jack Atkins reiterates an Overweight ratingand maintains a $290 price target.
- Goldman Sachs analyst Jordan Alliger maintains a Buy rating and raises the price target to $258.
- Citigroup analyst Christian Wetherbee maintains a Buy rating and raises the price target to $285.
- Raymond James analyst Patrick Tyler Brown upgrades FDX from Market Perform to Outperform and announces a $285 price target.
Costco sees lower revenue, Wall Street remains unmoved
Costco Wholesale saw a decline in same-store sales in March as consumers made smaller purchases, with the average size of transactions down 5.8% from February, indicating that consumers may be pulling back due to economic uncertainty. Same-store sales decreased 1.1% in March, compared to February’s 3.5% rise, while net sales only increased by 0.5% from a year earlier to $21.7 billion. Costco’s sales were also affected by lower gasoline prices, and the worst-performing categories included home furnishings, toys, seasonal products, jewelry, and ancillary sales, despite strong performance in food and sundries, tires, health and beauty, and apparel.
For the thirty-one weeks ended April 2, 2023, the company reported net sales of $137.77 billion, which is a 6.0% increase from the same period last year.
- Telsey Advisory Group analyst Joseph Feldman: reiterates an Outperform rating on Costco Wholesale and maintains a $540 price target.
- Oppenheimer analyst Rupesh Parikh: reiterates an Outperform rating on Costco Wholesale and maintains a $550 price target.
- Wells Fargo analyst Edward Kelly: reiterates an Equal Weight rating on Costco Wholesale and maintains a $475 price target.
Walmart announces of restructuring
Walmart’s CFO, John David Rainey, stated that the company will slow down hiring and increase automation as it builds out automation technology due to inflation impacting the business. Rainey also stated that Walmart expects two-thirds of its stores to be serviced by automation within three years and reduce costs taken to process a package by 20%. Automation will also help prevent inventory build-up and get Walmart closer to inventory optimization. Walmart is investing in alternative revenue streams like advertising, fulfillment services, and membership programs to improve profitability. The company is sticking to its April quarter, full-year, and three- to five-year forecast of generating 4% sales growth and over 4% operating income growth.
- UBS analyst Michael Lasser maintains a Buy rating and raises the price target from $168 to $170.
- Wells Fargo analyst George Kelly also keeps an Overweight rating and raises the price target from $155 to $170.
- Oppenheimer analyst Rupesh Parikh stays with an Outperform rating and raises the price target from $160 to $165.
- Telsey Advisory Group analyst Joseph Feldman reiterates an Outperform rating and maintains a $160 price target.
- Keybanc analyst Bradley Thomas maintains an Overweight rating and raises the price target from $165 to $170.
- BofA Securities analyst Robert Ohmes reiterated a Buy rating and a $165 price target,
- Citi analyst Paul Lejuez reiterated a Buy rating and a $169 price target.
Lumentum Holdings has announced selected unaudited preliminary financial results for its fiscal third quarter ended April 1, 2023. The company expects revenue to be in the range of $380 to $384 million, below its previous guidance of $430 to $460 million, primarily due to a network equipment manufacturer representing more than 10% of its fiscal second-quarter revenue.
The company has also announced an increase in its share repurchase program authorization to an aggregate amount of $1.2 billion, funded through its existing cash balance, and extended its duration through May 2025.
Wall Street Reaction
- Raymond James analyst Simon Leopold maintains an Outperform rating and lowered the price target to $73.
- Morgan Stanley analyst Meta Marshall stays with an Equal-Weight rating and lowered the price target to $60.
- UBS analyst David Vogt maintains a Neutral rating and lowered the price target to $50.
- Craig-Hallum analyst Richard Shannon downgraded LITE from Buy to Hold and announced a $50 price target.
- Barclays analyst Tom O’Malley leaves an Overweight rating and lowered his price target to $55.
- Needham analyst Alex Henderson maintains a Buy rating and lowered the price target to $59.
- Rosenblatt analyst Mike Genovese downgraded LITE from Buy to Neutral.
InflaRx receives a green light from the FDA
InflaRx has received Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA) for its drug Gohibic (vilobelimab) for the treatment of critically ill COVID-19 patients. Vilobelimab is the first authorized drug to control complement factor C5a, a protein that plays a harmful role in the body’s immune response. The EUA was granted based on Phase III clinical trial results showing a significant relative reduction in 28-day all-cause mortality of 23.9% compared to placebo in critically ill invasively mechanically ventilated COVID-19 patients. InflaRx plans to apply for full approval to treat critically ill COVID-19 patients and is continuing to develop vilobelimab in other indications, including pyoderma gangrenosum.
- Raymond James analyst Steven Seedhouse maintains a Strong Buy and raises the price target from $8 to $25.
- Guggenheim analyst Yatin Suneja upgrades his rating from Neutral to Buy and announces an $8 price target.
- HC Wainwright analyst Edward White reiterates a Buy and raises the price target from $6 to $10.
- LifeSci Capital analyst Sam Slutsky upgrades from Market Perform to Outperform.
- Credit Suisse analyst Tiago Fauth reiterated an Underperform rating on InflaRx despite the aproval.