Daily News Round Up
Thursday, 15 May 2025
- Equity markets are pricing in a slowing, but not collapsing, global growth outlook amid persistent trade tensions. Multiple sources point to cautious optimism surrounding the US-China trade truce as insufficient to fully dispel uncertainty. ((WSJ), (Seeking Alpha)) JPMorgan lowered its recession probability following the tariff reduction, but general sentiment remains risk-averse. ((Fox Business), (Seeking Alpha))
- Sector performance is increasingly diverging, with defense, AI, and select biopharma showing resilience while others face tariff-related headwinds. European defense stocks rallied on the back of increased defense spending commitments. ((Market Watch)) Semiconductor companies involved in artificial intelligence are attracting significant investment, exemplified by the Nvidia deal in Saudi Arabia and CoreWeave’s IPO performance. ((Seeking Alpha), Investors Business Daily) Conversely, data centers and pharmaceuticals are facing increased cost pressure from potential tariffs. ((Seeking Alpha), (CNBC))
- Monetary policy is expected to remain accommodative, but inflation risks are building, potentially constraining future rate cuts. The Fed’s shift toward prioritizing full employment, even with potential inflationary pressure, continues to shape market expectations. (Reuters) Despite recent declines, analysts predict a resurgence in inflation, even with tariff reductions, potentially limiting the scope for further easing. ((Market Watch))
- Company-specific performance is mixed, highlighting the importance of fundamental analysis despite macro headwinds. Several earnings reports revealed significant divergence: Arcos Dorados dropped following a profit miss, while Dynatrace rose after beating expectations. ((FMP), (FMP)) Analyst downgrades (AbbVie) and upgrades (Super Micro Computer) also demonstrate the impact of individual company factors. ((FMP), (FMP))
- Emerging markets are perceived as relatively resilient against escalating trade tensions, but tactical adjustments are warranted. Analysis suggests emerging markets may be less exposed to trade wars than developed countries due to growing intra-EM trade. ((Seeking Alpha)) While medium-to-long-term outlooks remain constructive, near-term views have been downgraded, suggesting investors should adopt a cautious approach.
What happened yesterday?
Macro
Economic Growth: U.S. stock futures pointed to a lower open Thursday, and the dollar continued to fall while Treasury yields stabilized ahead of retail sales and producer price data. (WSJ)
Economic Growth: The EPB Four Economy Framework helps track the Business Cycle by focusing on sector sequences, with the Leading Economy offering early signals of future shifts. Leading indicators like real money supply, new home sales, building permits, and heavy truck sales reliably peak before broader economic downturns, providing actionable foresight. (Seeking Alpha)
Inflation: Don’t get used to the decline in the U.S. rate of inflation to a four-year low. Inflation will probably rise, at least temporarily, even after the Trump administration reduced high tariffs. (Market Watch)
Interest Rates: With mounting evidence that tight labor markets do not necessarily boost inflation and facing massive job losses in 2020, Federal Reserve Chair Jerome Powell oversaw a shift in U.S. central bank strategy that put more weight on the goal of full employment and pledged not to use a low jobless rate as a reason in itself to raise interest rates. (Reuters)
International relations: DAX dips 0.54% on tariff concerns and Fed policy uncertainty. Market awaits fresh cues from US PPI, retail sales, and ECB employment data. (FXEmpire)
International relations: Denmark’s economic growth, which was driven by what economists described as an “exceptional surge” in pharmaceutical exports, is expected to weaken this year. The looming threat of U.S. tariffs on the pharma industry won’t be much of a factor on that moderation, however, the International Monetary Fund said Tuesday. (CNBC)
International relations: While we retain a constructive medium- and long-term outlook for emerging markets debt, we have downgraded our near-term views for the asset class. We believe EM countries are better positioned to withstand a global trade war than developed countries, as the universe should be less directly exposed given the significant growth in intra-EM trade observed over the past years. (Seeking Alpha)
International relations: The trade truce between the U.S. and China is a positive, but there is still uncertainty. Expect a long and potentially bumpy path through negotiations. (Seeking Alpha)
International relations: JPMorgan reduced its forecast for the chance of a recession this year after the United States and China temporarily lowered the higher tariffs they imposed. (Fox Business)
Market Sentiment: Risk-averse sentiment among US equity investors persisted for a fourth straight month, according to the monthly S&P Global Investment Manager Index US equity investor sentiment survey results released May 13. The survey has yielded negative index results since February, and registered its second-lowest reading in the survey’s history in March at negative 32%. (Seeking Alpha)
Policy: European defense stocks were rallying on Thursday, as Germany’s foreign minister said the country accepted the 5% of GDP defense-spending target for NATO countries. (Market Watch)
Policy: Greenlight Capital’s David Einhorn isn’t a fan of Trump’s trade policy. (Barrons)
Policy: Trump’s partial tariff pause could suggests a floor on how low equities can go before triggering a policy pivot. But investors should beware. (Market Watch)
Trade: President Donald Trump has suggested that India has offered to drop tariffs on U.S. goods to zero, something not immediately acknowledged by New Delhi. (Market Watch)
Trade: U.S. sees record imports from Mexico and Vietnam as Chinese goods face 145% tariffs, marking a significant shift in trade patterns since the pandemic. (Fox Business)
Industry
Aviation: The future is bright for space companies Intuitive Machines and Rocket Lab, according to Cantor Fitzgerald, and it’s not just about moon landings. (Market Watch)
Banking: Shares are up by a third this year, aided by the advance of the euro against the dollar. But with the ECB loosening and U.S. tariffs a major uncertainty, the way ahead could be more difficult. (Barrons)
Data Centers: The US data center sector faces a variety of trade protectionism issues as it looks to build out and deliver the promise of artificial intelligence. From a construction perspective, the impact of tariffs on data centers includes imported steel and aluminum products used in data center buildings and has been widened and increased to include a wider range of these products. (Seeking Alpha)
Energy: What does the future hold for nuclear and solar energy? Will nuclear struggle to become more relevant with potential capital costs of $26 trillion, or will next-gen reactors make nuclear more competitive than solar power? (Seeking Alpha)
Pharmaceuticals: MannKind Corporation (NASDAQ:MNKD) is a biopharmaceutical company specializing in inhaled therapeutics, particularly Afrezza, an inhalable insulin. Its Return on Invested Capital (ROIC) is 21.29%, with a Weighted Average Cost of Capital (WACC) of 11.91%, resulting in a ROIC to WACC ratio of 1.79. Comparatively, Geron Corporation has a negative ROIC of -26.79% and a WACC of 8.74%, yielding a ROIC to WACC ratio of -3.07. Celldex Therapeutics and Amarin Corporation have negative ROIC to WACC ratios of -2.04 and -2.70, respectively. ACADIA Pharmaceuticals has a ROIC of 24.13% and a WACC of 6.32%, with a ROIC to WACC ratio of 3.82. Exelixis demonstrates a ROIC of 18.19% and a WACC of 5.27%, achieving a ROIC to WACC ratio of 3.45. (FMP)
Semiconductors: Wall Street split the difference Wednesday, as AI rode a sovereign wave and small caps got swept out to sea. In Riyadh, President Trump, Nvidia’s Jensen Huang, and a caravan of Silicon Valley titans unveiled a mega-deal with Humain, the Saudi Public Investment Fund’s AI darling. (Seeking Alpha)
Corporate
AbbVie: Citi downgraded AbbVie (NYSE:ABBV) from Buy to Neutral, reducing its price target from $210 to $205. AbbVie’s shares fell more than 2% intra-day following the downgrade, which reflects caution about the company’s long-term outlook. Citi cited a thin late-stage pipeline and elevated risk from potential U.S. policy changes. AbbVie’s Skyrizi and Rinvoq drugs face no loss of exclusivity until after 2030. (FMP)
Arcos Dorados (ARCO): Arcos Dorados (ARCO) shares fell over 13% intra-day following first-quarter earnings of $0.07 per share, missing the consensus estimate of $0.15. Revenue reached $1.1 billion, exceeding expectations of $1.05 billion. Comparable sales increased by 11.1% year-over-year. Adjusted EBITDA decreased by 16.2% to $91.3 million, with the EBITDA margin declining from 10.1% to 8.5%. Digital sales rose 6.3%, accounting for nearly 60% of total systemwide sales. The loyalty program reached 18.8 million registered members across five key markets by the end of the quarter. (FMP)
Biodesix, Inc.: Canaccord Genuity maintained a “Buy” rating for Biodesix, Inc. (NASDAQ:BDSX) on May 14, 2025. Biodesix reported a Q1 2025 loss of $0.08 per share, an improvement from a $0.14 per share loss in Q1 2024. Q1 2025 revenue was $17.96 million, a 21% increase from $14.82 million in Q1 2024, driven by lung diagnostic testing and services, which saw an 18% increase, marking the 16th consecutive quarter of over 15% lung diagnostics revenue growth. The stock price is currently $0.22, reflecting a 38.74% decrease, with a 52-week high of $2.04 and a low of $0.195, and a market capitalization of approximately $32.2 million, with a trading volume of 4,148,055 shares. (FMP)
Boralex Inc.: Boralex Inc. (BRLXF) reported earnings on May 14, 2025, with an EPS of $0.20, below the estimated $0.29. Revenue for the period was approximately $185.5 million, missing the estimated $242.7 million. The company’s P/E ratio is 91.39, earnings yield is 1.09%, price-to-sales ratio is 3.60, enterprise value to sales ratio is 7.95, debt-to-equity ratio is 2.69, and current ratio is 0.96. The earnings call was led by Patrick Decostre (President and CEO) and Bruno Guilmette (CFO) and attended by analysts from National Bank and CIBC. (FMP)
Caledonia Mining Corporation PLC: Caledonia Mining Corporation PLC (AMEX:CMCL) has received a new price target of $21 from Maxim Group on May 14, 2025, representing a potential increase of 49.31% from the then-trading price of $14.07. The current stock price is $13.80, reflecting a decrease of approximately 3.33% or $0.48. A feasibility study for the Bilboes project is anticipated to reduce upfront capital costs and enhance returns, potentially reshaping the company’s future outlook. Caledonia’s market capitalization is approximately $266.17 million, with a trading volume of 40,925 shares. Strong first-quarter performance suggests a potential rerating in the second half of the year. (FMP)
Copa Holdings (NYSE:CPA): Copa Holdings (NYSE:CPA), a Panama-based airline operating as Copa Airlines, maintained a “Buy” rating on May 14, 2025, with a stock price of $103.14. TD Cowen raised its price target from $140 to $144. Currently, CPA is priced at $102.60, a 0.68% increase of $0.70, fluctuating between $102 and $103.37 during the trading day. Over the past year, the stock has ranged from a high of $114 to a low of $80.01. Its market capitalization is approximately $4.22 billion, and today’s NYSE trading volume is 100,238 shares. (FMP)
CoreWeave: At Wednesday’s close, CoreWeave surged 69% from its IPO pricing at $40 a share. (Investors Business Daily)
CyberArk Software: Cantor Fitzgerald raised its price target on CyberArk Software (CYBR) to $420 from $400, maintaining an Overweight rating after the company’s Q1 earnings release. CyberArk exceeded expectations for revenue, annual recurring revenue (ARR), and free cash flow. The company increased its full-year guidance for operating income and earnings per share. Despite the positive results, the stock experienced a slight dip following the earnings report, partly due to CyberArk’s decision not to raise its full-year ARR and adjusted free cash flow guidance. (FMP)
Dynatrace (NYSE:DT): Dynatrace (NYSE:DT) shares increased over 5% intra-day after reporting fourth-quarter results exceeding expectations. Adjusted earnings were $0.33 per share, $0.03 above estimates, while revenue reached $445 million, surpassing the $435 million consensus. Subscription revenue grew 18% year-over-year to $423.6 million. Annual recurring revenue (ARR) reached $1.73 billion, a 15% increase from the prior year; on a constant currency basis, subscription revenue and ARR grew 20% and 17%, respectively. Dynatrace projects Q1 2026 revenue between $465 million and $470 million and EPS of $0.37 to $0.38. Full-year 2026 revenue is expected to be between $1.95 billion and $1.965 billion, with EPS of $1.56 to $1.59. (FMP)
Imperial Brands PLC: Imperial Brands PLC (PNK:IMBBY) reported earnings per share of $1.64 on May 14, 2025, exceeding the estimated $1.60. Revenue reached $19.36 billion, significantly exceeding expectations. For the six months ending March 31, revenue declined 3.1% to £14.6 billion, while sales of tobacco and next-generation products increased 3.2% to £3.66 billion, driven by a 5.9% rise in tobacco pricing. Adjusted operating profit rose 1.6% to £1.65 billion. Shares fell 7% following the announcement. Key valuation metrics include a price-to-sales ratio of approximately 0.70, an enterprise value to sales ratio of about 0.95, an enterprise value to operating cash flow ratio of around 9.32, a debt-to-equity ratio of approximately 1.67, and a current ratio of about 0.72. (FMP)
JD.com Inc: Mizuho Securities’ Wei Fang set a price target of $48 for JD.com Inc (NASDAQ:JD) on May 14, 2025, predicting a 33.15% potential upside from its current price of $35.72 (down 4.11% or $1.53 from $37.25). JD.com’s first quarter of 2025 revenue reached 301 billion yuan ($47 billion), a 16% year-over-year increase. Non-GAAP net income increased by 43% to 12.8 billion yuan ($1.8 billion), with earnings per ADS at 8.41 yuan ($1.16). The operating margin improved to 3.5% from 3%, and income from operations rose to 10.5 billion yuan ($1.5 billion). JD’s market capitalization is approximately $48.9 billion, with its stock having traded between $24.13 and $47.82 over the past year. (FMP)
KP Tissue Inc: KP Tissue Inc. (TSX:KPT), trading as KPTSF on the PNK exchange, reported Q1 2025 earnings on May 14, 2025, with an earnings per share (EPS) of $0.09, exceeding the forecasted $0.06. Revenue was approximately $379.5 million, falling short of the anticipated $515.5 million. The company’s price-to-earnings (P/E) ratio is 34.75, its enterprise value to operating cash flow ratio is 24.24, its current ratio is 1, and its earnings yield is 2.88%. (FMP)
Kroger Co: On May 9, 2025, Greg Landsman engaged in a transaction involving between $250,001 and $500,000 worth of The Kroger Co. (NYSE:KR) shares. Kroger’s current stock price is $66.80, a decrease of 1.02% or $0.69, with a daily trading range of $66.12 to $67.61. Over the past year, the stock has ranged from a high of $73.63 to a low of $49.04. Kroger’s market capitalization is approximately $44.15 billion, and the daily trading volume is 2,093,156 shares. The Zacks Retail – Supermarkets industry is experiencing strong growth. (FMP)
Lattice Semiconductor Corporation: Lattice Semiconductor Corporation (NASDAQ:LSCC) has a Return on Invested Capital (ROIC) of 7.17%, lower than its Weighted Average Cost of Capital (WACC) of 11.64%. Among competitors, Monolithic Power Systems has the highest capital efficiency with a ROIC of 50.69% and a WACC of 9.69%. Altair Engineering’s ROIC is 0.75% against a WACC of 10.57%, resulting in a ratio of 0.07. Semtech Corporation’s ROIC is 3.89% with a WACC of 13.27%, yielding a ratio of 0.29. Microchip Technology has a ROIC of -0.03% and a WACC of 9.58%, while Silicon Laboratories has a ROIC of -16.27% and a WACC of 10.52%. (FMP)
Life360: Aura and Life360 (NASDAQ:LIF, ASX:LIF) have entered a strategic partnership, with Life360 investing $25 million in Aura. Life360 serves approximately 79.6 million monthly active users across over 170 countries. Aura will have exclusive rights to sell Life360 through its Employee Benefits channel and will implement a multi-year marketing program targeting Life360 customers. Life360’s stock (LIF) is currently trading at $58.79, down 1.39% ($0.83), with a daily trading range of $57.45 – $59.99. The stock’s 52-week range is $26 – $62.64, and its market capitalization is approximately $4.49 billion, with a trading volume of 805,361 shares. On May 12, 2025, Susan L. Stick sold 500 shares at $46.89 each, retaining 111,309 shares. (FMP)
LightPath Technologies, Inc.: The consensus price target for NASDAQ:LPTH has increased from $3.83 a year ago to $5.50 in the last month and last quarter. LightPath Technologies recently acquired G5 Infrared and is experiencing growth in defense contracts, including a potential contract with Lockheed Martin. The company began delivering infrared lens assemblies to a European defense customer in October 2024, expecting $1 million to $2 million in revenue during 2025 from this agreement. Analyst Jaeson Schmidt from Lake Street Capital Markets set a price target of $3 for LPTH. (FMP)
MicroStrategy (MSTR): BTIG raised its price target for MicroStrategy (MSTR) to $620 from $570, maintaining a Buy rating. MicroStrategy’s Bitcoin holdings are currently valued at approximately $60 billion and have appreciated by about 12% year-to-date. The firm believes MicroStrategy’s fixed-income instruments hold strategic potential and that the market undervalues the risk/reward profile of its debt, potentially leading to additional equity upside. (FMP)
Orezone Gold Corporation: Orezone Gold Corporation (PNK:ORZCF) reported Q1 2025 earnings on May 14, 2025, with an EPS of $0.02, missing the estimated $0.04. Revenue was $82.7 million, below the anticipated $113.2 million. Gold production totaled 28,688 ounces, sold at an average price of $2,851 per ounce, generating $82.7 million in revenue from 28,943 ounces. The all-in sustaining cost (AISC) was $1,415 per ounce. Adjusted EBITDA was $44.2 million, with adjusted earnings attributable to shareholders of $18.7 million, resulting in adjusted EPS of $0.04. Liquidity stood at $130.9 million, comprising $102 million in cash and $28.9 million in undrawn senior debt. The hard rock expansion is 45% complete and expected to begin production in Q4 2025. Key financial ratios include a P/E ratio of 5.42, a price-to-sales ratio of 1.37, and a debt-to-equity ratio of 0.31. (FMP)
PennantPark Floating Rate Capital Ltd.: Michael Diana from Maxim Group adjusted PFLT’s price target to $11.50 on May 14, 2025, down from $12.50, representing a potential 12.63% upside from its $10.21 trading price at the time. The stock has declined nearly 8% year-to-date and currently trades between $9.98 and $10.19, closing at $10.15, a 0.15% increase of $0.015. In the first quarter of 2025, net investment income fell short of maintaining the base dividend, raising concerns about sustainability. PFLT’s market capitalization is approximately $1.01 billion, with a trading volume of 595,359 shares today. Over the past year, the stock has seen a high of $12.02 and a low of $8.82. (FMP)
PTC Therapeutics, Inc. / Ultragenyx Pharmaceutical Inc. / Amicus Therapeutics, Inc. / Blueprint Medicines Corporation: PTC Therapeutics (NASDAQ:PTCT) has a Return on Invested Capital (ROIC) of 31.66%, a Weighted Average Cost of Capital (WACC) of 10.03%, and a ROIC to WACC ratio of 3.16. Ultragenyx Pharmaceutical Inc. has a ROIC of -50.05%, a WACC of 7.62%, and a ROIC to WACC ratio of -6.57. Amicus Therapeutics, Inc. boasts a ROIC of 55.32%, a WACC of 7.91%, and a ROIC to WACC ratio of 6.99 – the highest among peers. Blueprint Medicines Corporation has a ROIC of -17.59%, a WACC of 8.51%, and a ROIC to WACC ratio of -2.07. (FMP)
SFL Corporation Ltd.: SFL Corporation Ltd. (NYSE:SFL) reported an earnings per share (EPS) of $0.03 on May 14, 2025, surpassing the estimated EPS of -$0.003. Quarterly revenue was $186.7 million, exceeding the estimated $186.1 million. The company declared its 85th consecutive quarterly dividend of $0.27 per share. Key financial metrics include a price-to-earnings (P/E) ratio of 8.81, a price-to-sales ratio of 1.39, an enterprise value to sales ratio of 4.41, a debt-to-equity ratio of 2.52, a current ratio of 0.38 and an earnings yield of 11.35%. (FMP)
Super Micro Computer, Inc.: Raymond James upgraded Super Micro Computer, Inc. (SMCI) to “Outperform” on May 14, 2025, with a price target of $41 (from a stock price of $38.89). SMCI’s stock has increased by 16.02%, or $5.37, reaching $38.89, after fluctuating between $34.18 and $39.09 during the day. Over the past year, the stock has ranged from $17.25 to $101.40. The company’s market capitalization is approximately $23.21 billion, with a trading volume of 90.5 million shares. AI revenue now accounts for 70% of SMCI’s total revenue. (FMP)
VerifyMe, Inc.: VerifyMe, Inc. (NASDAQ: VRME) had its price target adjusted to $1.50 on May 14, 2025, by Jack Vander Aarde from Maxim Group, down from $2, representing an 83.37% potential upside from a trading price of $0.818. Q1 2025 revenue was $4.5 million, a decrease from $5.8 million in Q1 2024, with a gross profit of $1.5 million (33% of revenue), compared to $2.3 million (39%) in Q1 2024. The net loss remained steady at $0.6 million for both periods. As of today, VRME’s stock is priced at $0.6918, with a 2.59% decrease, fluctuating between $0.651 and $0.7074. The stock’s 52-week range is $5 to $0.5469, and the current market capitalization is $8.55 million, with a trading volume of 121,586 shares. VerifyMe maintains a cash reserve of $5.7 million. (FMP)
Wendy’s (NASDAQ:WEN): Guggenheim downgraded Wendy’s (NASDAQ:WEN) from Buy to Neutral and withdrew its price target, citing concerns about growth strategy and franchisee dynamics. The firm believes Wendy’s needs to rebalance priorities between global unit expansion and improving domestic franchisee returns. Guggenheim is concerned about the brand’s aggressive enforcement of development agreements and its commitment to 3–4% global unit growth, suggesting a shift towards boosting same-store sales and enhancing franchisee cash-on-cash returns in the U.S. Despite a roughly 10% free cash flow yield, Guggenheim is taking a wait-and-see approach. (FMP)
