Daily News Round Up
Friday, 16 May 2025
- Recession Risks Remain Despite Trade Truce, Inflation Concerns Persist: Despite a temporary reprieve from recession fears due to the US-China trade deal, multiple sources indicate significant downside risks remain, particularly tied to the impact of ongoing tariffs. JPMorgan Chase CEO Jamie Dimon warns a recession is still possible, while economists predict inflationary pressures (or deflationary in the case of raw materials) from tariffs kicking in over the coming months ((Fox Business), (Seeking Alpha)). This creates uncertainty for equity valuations.
- Shifting Monetary Policy & Rising Rates Reflect Inflationary Concerns: Fed Chair Powell signaled potential shifts in monetary policy to address volatile inflation and supply shocks ((Fox Business)). Concurrently, rising interest rates and increasing term premiums suggest investors are demanding higher compensation for holding US debt, reflecting concerns about inflation, deficits, and the impact of trade policies ((Seeking Alpha)). These conditions could pressure risk assets and particularly impact rate-sensitive sectors.
- Tariffs Impacting Corporate Earnings & Supply Chains, Leading to Strategic Shifts: Companies are actively responding to the environment created by tariffs. EU exports to the US surged ahead of expected tariff increases ((WSJ)), while several companies (including Deere and Edible Garden) are adjusting earnings forecasts or implementing strategic changes (e.g., shifting to shelf-stable products) in response to trade uncertainty and its economic effects ((FMP) , (FMP)). Private equity firms also highlighted the impacts to their earnings.
- Mixed Corporate Earnings and Upgrades Highlight Sector Divergence: While some companies are exceeding expectations (Walmart, Hafnia), others (Alibaba) are facing headwinds. Analyst upgrades (e.g., Pinterest to Outperform) indicate pockets of opportunity ((FMP)). This divergence suggests a need for selective stock picking rather than broad market exposure. Additionally, Q1 earnings showed a dichotomy with some companies beat estimates, while others (like Edible Garden) largely missed ((FMP)).
- Regulatory Scrutiny and Staffing Cuts at the SEC: The US is challenging EU digital regulations, and the SEC has experienced significant staffing reductions, particularly in key legal and enforcement divisions ((WSJ), (Reuters)). These developments could create uncertainty for companies operating in regulated industries and impact enforcement activity.
What happened yesterday?
Macro
Economic Growth: The US-China trade deal delays an imminent recession, possibly into the end of 2025, or early 2026, although there are other policies that could cause a recession. Inflation data is still not showing any effects of tariffs, or other inflationary policies. (Seeking Alpha)
Economic Growth: JPMorgan Chase CEO Jamie Dimon said that while he hopes the U.S. will avoid a recession, it remains a possibility if tariffs weigh on economic activity. (Fox Business)
Economic Growth: Financial markets continue to absorb the ripple effects of the Trump administration’s sweeping tariff policies. (New York Post)
Inflation: Tariffs are deflationary for raw materials, not inflationary, as they destroy demand and lower commodity prices. Both China and the US housing markets are weakening, with China already in recession and US fundamentals deteriorating. (Seeking Alpha)
Inflation: Fed Chair Jerome Powell spoke about how the central bank’s monetary policy framework could shift if inflation is more volatile and supply shocks more common. (Fox Business)
Inflation: Rising interest rates reflect market concerns over inflation, deficits, and the potential impact of tariffs under current administration policies. Inflation expectations and term premiums are both increasing, signaling that investors demand higher compensation for holding US debt. (Seeking Alpha)
Interest Rates: JGBs were mixed in the early Tokyo session, but the market may track overnight declines in U.S. Treasury yields. (WSJ)
International relations: The State Department is leading a broad campaign against European Union rules intended to protect online users. (WSJ)
International relations: Markets may remain volatile despite the trade truce between the U.S. and China. Trade negotiations may be long and unpredictable. (Seeking Alpha)
Policy: Jay Powell says volatility could be coming (InvestorPlace)
Policy: Wall Street’s top regulator the U.S. Securities and Exchange Commission saw the biggest drop in staff numbers at agency divisions handling legal affairs, investment management and trading and markets following buyout programs offered by President Donald Trump’s administration, data provided to Reuters showed on Thursday. (Reuters)
Trade: The European Union’s exports to the U.S. hit a record high in March as businesses stockpiled goods ahead of an expected rise in tariffs that was announced by President Trump in early April. (WSJ)
Trade: Market momentum following the U.S.-China trade truce has put stocks back in sight of record highs but wariness about the economic fallout from remaining tariffs and higher equity valuations could slow gains in the near term. (Reuters)
Trade: The fortresses and cobbled streets of the ancient Croatian town of Dubrovnik are often crowded with tourists eager to visit the locations from the Game of Thrones television series or the Star Wars: The Last Jedi film. (Reuters)
Trade: The U.S.-U.K. trade pact spares the British auto industry from the worst of President Trump’s sweeping tariffs while casting doubt over its prospects in a key growth market. (WSJ)
Trade: Economists have predicted that Trump’s tariffs would drive up prices, and many expect the impact to show up in June or July. (New York Post)
Industry
Banking: A booming ‘private credit’ industry aims to include 401(k) investors; tariff-driven economic stress poses risks. (WSJ)
Financial Technology: Private equity firm Thoma Bravo has sold its remaining stake in Nasdaq for proceeds of about $3.4 billion, Bloomberg News reported on Thursday. (Reuters)
Insurance: The state of California approved State Farm’s request for an emergency 17% increase in homeowners insurance rates as the company deals with financial challenges after the LA wildfires. (Fox Business)
Private Equity: Tariff-related uncertainty appeared to weigh on the outlook of the Big Four private equity firms as they reported first-quarter earnings. All of the Big Four firms added to their total AUM in the first quarter, led by Blackstone, which reported quarterly inflows of $61.6 billion. (Seeking Alpha)
Corporate
Agilysys, Inc.: Agilysys (NASDAQ:AGYS) is projected to report an EPS of $0.26 on May 19, 2025, an 18.8% decrease year-over-year, while revenue is expected to increase by 14.6% to approximately $71.28 million. The company’s P/E ratio is 102.83, its price-to-sales ratio and enterprise value-to-sales ratio are both about 8.78, a debt-to-equity ratio of 0.24, and a current ratio of 1.14. Earnings projections have remained stable over the past 30 days. (FMP)
Alibaba (BABA): Alibaba (BABA) reported fourth-quarter revenue of 236.45 billion yuan ($32.58 billion), a 7% increase year-over-year, slightly below the consensus estimate of 237.91 billion yuan. The cloud intelligence division experienced an 18% year-over-year revenue increase, reaching 30.13 billion yuan ($4.15 billion). Cainiao revenue decreased by 12%, totaling 21.57 billion yuan ($2.97 billion) due to operational restructuring. The company’s shares closed down by more than 7% following the results. (FMP)
Allianz SE: Allianz SE (ALIZF) is Europe’s largest insurer by market capitalization, reporting earnings per share (EPS) of $7.15 on May 15, 2025, slightly below the estimated $7.20. Revenue was approximately $58.42 billion, exceeding the estimated $20.18 billion. Q1 2025 net profit declined by 2.1%. Key financial ratios include a price-to-earnings (P/E) ratio of 14.47, a price-to-sales ratio of 1.03, an enterprise value to sales ratio of 0.79, and an earnings yield of 6.91%. Allianz reaffirmed its 2025 financial targets despite higher costs. (FMP)
BigBear.ai Holdings, Inc.: BigBear.ai Holdings, Inc. (NYSE:BBAI) is facing a class action securities lawsuit, alleging false statements and deficiencies in accounting review policies concerning the 2026 Convertible Notes, potentially leading to restatement and delayed SEC filings. Investors can contact Levi & Korsinsky by June 10, 2025. On May 13, 2025, CFO Peffer Julie sold 20,000 shares at $3.65 each and 25,924 shares at $3.35 each, retaining 684,153 shares. Financially, BBAI has a negative P/E ratio of -4.68, a negative earnings yield of -21.35%, a low debt-to-equity ratio of 0.054, a current ratio of 1.66, an enterprise value to sales ratio of 6.00, a price-to-sales ratio of 6.60, and a negative enterprise value to operating cash flow ratio of -31.51. (FMP)
Birkenstock: Birkenstock (BIRK) shares rose nearly 6% on Thursday following a strong second quarter. The company reported earnings per share of €0.56, exceeding the €0.54 consensus. Revenue increased 19% year-over-year to €574.3 million, surpassing the €567.2 million forecast. Operating profit grew 32% to €175.3 million, above the €160.5 million estimate, while Adjusted EBITDA rose 23% to €200.1 million. Gross margin expanded to 57.7%. Birkenstock raised its full-year revenue guidance to the high end of its previous 15%–17% range and upgraded its adjusted EBITDA margin outlook to between 31.3% and 31.8% (previously 30.8%–31.3%), now anticipating full-year adjusted EBITDA of €660–€670 million, above the €657.2 million consensus. (FMP)
Chase Corporation (AMEX:CCF): Chase Corporation (AMEX:CCF) specializes in manufacturing protective materials for industrial, construction, and electronics sectors. The current stock price is $127.49, a 0.03% increase of $0.05, with daily fluctuations between $127.49 and $127.51. Over the past year, the stock has ranged from a high of $135.27 to a low of $81.18. Its market capitalization is approximately $1.21 billion, and the trading volume is 278,740 shares. On May 15, 2025, UBS maintained a “Buy” rating with a “hold” recommendation when the stock price was $127.49. JPMorgan Chase is predicted to potentially reach a market capitalization of one trillion dollars. (FMP)
Deere & Company: Deere & Company (NYSE:DE) reported second-quarter adjusted earnings per share of $6.64, exceeding the $5.56 analyst consensus, and revenue of $12.76 billion, surpassing expectations of $10.98 billion. Production & Precision Agriculture sales decreased by 21% year-over-year. The company has revised its full-year net income forecast to a range of $4.75 billion to $5.50 billion, down from the previous $5.0–$5.5 billion range. Deere’s shares increased by over 3% following the announcement. (FMP)
Deere & Company: Deere & Company (NYSE:DE) reported an EPS of $6.64, exceeding the estimated $5.56, but was lower than last year’s $8.53. Quarterly revenue was $11.17 billion, surpassing the Zacks Consensus Estimate by 4.89%, but down from $13.61 billion a year ago. The Production & Precision Agriculture segment saw a 21% sales drop to $5.23 billion, Small Agriculture & Turf decreased by 6% to $2.99 billion, and Construction & Forestry declined by 23% to $2.95 billion. Deere adjusted its fiscal 2025 net income outlook to a range of $4.75 billion to $5.5 billion. Key financial metrics include a P/E ratio of 21.73, a price-to-sales ratio of 2.88, an enterprise value to sales ratio of 4.11, a debt-to-equity ratio of 2.88 and a current ratio of 2.20. Prior to the announcement, DE shares rose approximately 18%. (FMP)
Dillard’s: Dillard’s (NYSE:DDS) shares increased by approximately 6% on Thursday following the release of its first-quarter results. The company reported a net income of $163.8 million, or $10.39 per share, exceeding the analyst consensus of $8.92. Revenue was $1.53 billion, matching expectations. Comparable store sales decreased by 1% year-over-year, and total retail sales fell by 2% to $1.47 billion. Gross margin decreased to 45.5% from 46.2% a year prior. Operating expenses decreased by $5 million to $421.7 million. (FMP)
Edible Garden (NASDAQ:EDBL): Edible Garden (NASDAQ:EDBL) has a negative price-to-earnings (P/E) ratio of -0.66, indicating losses. Projected quarterly earnings for May 15, 2025, are an earnings per share of -$3.03 and revenue of $3.82 million. The company has shifted towards non-perishable products, leading to a 15% revenue increase from these offerings and a nearly fourfold increase in gross profit compared to the previous year. A negative enterprise value to operating cash flow ratio of -0.42 and a price-to-sales ratio of 0.24, along with an enterprise value to sales ratio of 0.26, are also reported. The debt-to-equity ratio is 0.93 and the current ratio is 1.19. (FMP)
Edible Garden AG Incorporated: Edible Garden AG Incorporated (NASDAQ:EDBL) reported Q1 earnings on May 15, 2025, with an EPS of -$2.47, significantly below the estimated -$0.74, and revenue of $2.72 million against an expected $4.48 million. The company reported a 15% increase in non-perishable revenue and a nearly fourfold increase in gross profit due to a strategic shift towards high-margin, shelf-stable products. Financial metrics include a negative price-to-earnings ratio of approximately -0.58, a price-to-sales ratio of about 0.21, an enterprise value to sales ratio of 0.23, a negative enterprise value to operating cash flow ratio of -0.38, a negative earnings yield of approximately -1.71%, a debt-to-equity ratio of approximately 0.93, and a current ratio of about 1.19. (FMP)
Electronic Arts Inc: Electronic Arts Inc. (NASDAQ:EA) stock has increased by **4.51%** over the past month, with a slight dip of **1.11%** in the last 10 days. The stock has an estimated **21.14%** increase potential and a target price of **$181**. The company holds a Piotroski Score of **8**, indicating strong operational efficiency, profitability, and liquidity. (FMP)
Hafnia Limited: On May 15, 2025, Hafnia Limited (HAFN/HAFNI) reported earnings per share of $0.13, exceeding the estimated $0.12. Revenue reached approximately $340.3 million, significantly above the estimated $243.5 million. The company announced a $0.10 per share cash dividend, approved on May 14, 2025, with eligibility for shareholders registered by May 23, 2025. Key valuation metrics include a price-to-earnings (P/E) ratio of approximately 3.41, a price-to-sales ratio of about 0.91, an enterprise value to sales ratio of around 1.23, an enterprise value to operating cash flow ratio of approximately 3.48, and an earnings yield of 29.35%. Hafnia operates a fleet of over 120 vessels. (FMP)
IREN Limited: IREN Limited (NASDAQ:IREN) reported a 172% year-over-year increase in revenue for the third quarter of fiscal year 2025, driven by Bitcoin mining operations, and achieved a quarterly profit of $24.2 million. As of May 15, 2025, Macquarie maintained an “Outperform” rating with a stock price of $7.65. The stock currently trades at $7.68, a 3.70% decrease ($0.30 change) with a daily range of $7.35 to $7.79 and a 52-week range of $4.95 to $15.92. IREN has a market capitalization of approximately $1.72 billion, with today’s trading volume at 16.56 million shares, and trades at a three times forward sales multiple. (FMP)
Pinterest (NYSE:PINS): Wolfe Research upgraded Pinterest (NYSE:PINS) from Peer Perform to Outperform with a new price target of $40, citing improved fundamentals and valuation. Pinterest’s Performance+ ad product contributes 2-3 percentage points of growth. The platform is experiencing mid-teens percentage growth compared to the low double-digit expansion of the broader digital ad market. Pinterest trades at 13.5x projected 2026 EBITDA, a discount to peers (average of 24.5x). Year-to-date, Pinterest has risen 13%, outperforming Snap (-16%) and The Trade Desk (-33%), and matching Meta (+13%). (FMP)
Rhythm Pharmaceuticals, Inc. / Deciphera Pharmaceuticals / Krystal Biotech / AnaptysBio: Rhythm Pharmaceuticals (RYTM) has a Return on Invested Capital (ROIC) of -62.80% and a Weighted Average Cost of Capital (WACC) of 15.89%, resulting in a ROIC to WACC ratio of -3.95. Deciphera Pharmaceuticals (DCPH) has a ROIC of -60.55% and a WACC of 5.15%, yielding a ROIC to WACC ratio of -11.75. Krystal Biotech (KRYS) demonstrates a positive ROIC of 10.91% and a ROIC to WACC ratio of 1.39. AnaptysBio (ANAB) has a ROIC of -26.40% and a WACC of 13.46%, resulting in a ROIC to WACC ratio of -1.96. (FMP)
RWE: RWE will decide on whether to expand or extend share buybacks next year, its finance chief said, pouring cold water on hopes of some of its investors for a more aggressive approach. (Reuters)
Spotify / Microsoft / Visa: The Dow Jones led the mixed stock market action Thursday. Spotify, Microsoft and Visa are in or near buy zones. (Investors Business Daily)
TG Therapeutics, Inc.: TG Therapeutics (TGTX) has an ROIC of 11.28% and a WACC of 14.35%, resulting in a ROIC to WACC ratio of 0.79. Karyopharm Therapeutics (KPTI) has a negative ROIC of -310.56% and a WACC of 10.84%, giving a ROIC to WACC ratio of -28.64. Axsome Therapeutics (AXSM) has a negative ROIC of -76.54% and a WACC of 6.23%, creating a ROIC to WACC ratio of -12.28. Amicus Therapeutics (FOLD) demonstrates a ROIC of 55.32% and a WACC of 7.96%, yielding a ROIC to WACC ratio of 6.95. Aurinia Pharmaceuticals (AUPH) has a ROIC of 6.58% and a WACC of 9.46%, with a ROIC to WACC ratio of 0.70. Viking Therapeutics (VKTX) has an ROIC of -20.32% and a WACC of 7.69%, resulting in a ROIC to WACC ratio of -2.64. (FMP)
Walmart Inc: Walmart’s first-quarter earnings per share were $0.61, exceeding the consensus forecast of $0.58. U.S. comparable sales increased by 4.8% (excluding fuel), above the projected 4.1% rise. Revenue reached $165.51 billion, a 2.5% year-over-year increase. The company withheld earnings guidance for the current quarter due to tariff uncertainty but projected net sales growth of 3.5% to 4.5% for the period. For fiscal 2026, Walmart maintains its forecast of adjusted EPS between $2.50 and $2.60 and net sales growth of 3% to 4%. (FMP)
Waystar Holding Corp (WAY): NASDAQ:WAY stock increased by 7.06% over the past month, but declined by 3.39% in the last 10 days. Projections indicate a growth potential of 20.87% with a possible target price of $47.50. The Piotroski Score is 8, indicating strong financial health. (FMP)
