Mounjaro manufactured by Eli Lilly and Company packaging is seen in this illustration photo taken in a pharmacy in Krakow, Poland on April 9, 2024.
Nurphoto | Nurphoto | Getty Images
My top 10 things to watch Monday, August 12
1. Wall Street is trying to build on its comeback after the S&P 500 last Monday had its worst session in nearly two years. Inflation data is key to the market this week. In my Sunday column, I wrote that the market on paper should be great, and not on edge, with the Fed ready to cut interest rates. We’ll explore the market’s disconnect further at noon ET on Wednesday, when we hold our August Monthly Meeting for Investing Club members. We executed lots of trades last week and will be looking for places to put cash to work this week.
2. Club holding Disney over the weekend offered fresh details on its plan to invest $60 billion in its experiences division over the next decade. The announcements, which included four new cruise ships, came just a few days after Disney earnings were hurt by demand problems at its profit-engine theme parks. Perhaps the company was distracted by Saturday’s event when it reported third-quarter results, as executives acted as if there was nothing wrong with the parks, which was obviously the wrong approach.
3. Deutsche Bank upgraded Club name Eli Lilly to buy from hold and upped its price target to $1,025 a share from $725. Lilly’s blowout quarter “helped settle some nerves in a volatile backdrop,” analysts wrote, adding that its long-term revenue growth outlook is almost unmatched, except for its main rival in the booming weight-loss drug market, Wegovy maker Novo Nordisk. Deutsche Bank also downplayed competition concerns — echoing a point we made in our earnings writeup for Club members last week.
4. Bank of America and Barclays lowered their price targets on Array Technologies after the maker of solar-tracking technology lowered its 2024 guidance due in part to project timing delays. That’s a similar issue facing its main rival in the space, Club holding Nextracker, which disappointed investors earlier this month when executives said longer project lifecycles were pushing out backlog conversion into revenue. Still, Array’s challenges seem far worse than Nextracker’s.
5. Club stock Starbucks climbed Monday as activist pressure heats up at the coffee chain, which is struggling with business slowdowns in both the U.S. and China. On Friday evening, The Wall Street Journal reported that Starboard Value has taken a stake in Starbucks, joining Elliott Management as activists with known positions in the company. As I said after Elliott’s investment surfaced last month, activist involvement is exactly the jolt Starbucks needed.
6. Stifel lifted its price target on Palo Alto Networks to $360 a share from $330 ahead of the cybersecurity firm’s fiscal 2024 fourth-quarter results next week. The analysts, who maintained their buy rating on the stock, said spending on cyber products looks to have held up well in the May-to-July quarter. However, they cautioned that Palo Alto’s initial 2025 guidance could be conservative due in part to minimize the risk of eventually needing to reduce it, like what happened in fiscal 2024. Palo Alto also is a Club holding.
7. Goldman Sachs initiated coverage of Mondelez International with a buy rating, calling the maker of Ritz Crackers and Oreo cookies a “high-quality core holding” capable of delivering earnings growth above peers in the packaged-food sector. Goldman’s bullishness is hardly a surprise. Everyone seems to love this one.
8. Qualcomm, another much-loved stock, got hit with a downgrade at Wolfe Research. Analysts went to a hold-equivalent rating from outperform, citing concerns that Apple‘s progress on developing a modem internally will start to have an impact on longtime supplier Qualcomm. Shares of Qualcomm were moving lower Monday morning.
9. Piper Sandler cut its price target on Restaurant Brands to $75 a share from $82 while keeping its hold-equivalent rating on the stock. Better-than-expected sales at Tim Hortons helped the company deliver quarterly revenue and earnings beats last week. It really was not a great quarter.
10. Can SharkNinja, which is up more than 70% already this year, keep climbing higher? CEO Mark Barrocas is set to join me on “Mad Money” on Monday night. The appliance maker reported a strong quarter last week and had a highly successful Amazon Prime Day. The company continues to enter into new categories, plus management teased an undisclosed beauty project that’s on track to launch in the fourth quarter.
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