Mid-Morning Look

Thursday, July 10, 2025

U.S. stocks open mixed, with Small caps and the Dow leading, while the S&P 500 and Nasdaq lag behind weakness in technology. Major averages are holding at or near record highs (S&P, Nasdaq and the Dow) following a tremendous run off April lows, as Wall Street continues to digest the potential tariff impact on the economy. Not a lot of macro news overnight outside of President Trump announcing a 50% tariff on Brazil starting on August 1^st if a new deal can’t be reached. Lone piece of economic data today was positive with jobless claims falling from prior week/below estimates. Among the most active stock sectors today: airlines taking off after DAL reported a quarterly earnings beat and improved guidance lifting the sector; food stocks mixed, getting an M&A deal with KLG being acquired by Ferrero in $3B deal, while CAG shares slide on top/bottom line misses and lower guidance; in the rare earth space, MP shares soar on DoD announced deal. Early on, technology and communications are the biggest laggards while materials, REITs, Healthcare and Consumer discretionary the biggest moves higher.

• In Software: ORCL was upgraded to Overweight at Piper and raise tgt to $270 from $190 on higher estimates factoring in the increased visibility into enterprise momentum that may contribute another layer of growth on top of the OpenAI/Stargate opportunity to support. PTC shares surged in the final minutes of the trading day Wednesday, jumping as much as 17% after Bloomberg reported ADSK is working with advisers to evaluate a cash-and-stock buyout of PTC, citing people familiar with the matter. https://tinyurl.com/4jdmuyk7 ; WDAY downgraded from Neutral to Underweight at Piper and cut tgt to $235 from $255 citing potential AI-driven headcount drag coupled with eroding CIO appetite for material investments in applications posing a risk to the WDAY platform.
• In Retailers: HELE posted Q1 sales decline 10.8% to $371.7M, missing analyst expectations of $397M while EPS of $0.41 was well short of the $0.85 estimate; said faces substantial operating loss due to non-cash asset impairment charges; guides Q2 EPS $0.45-$0.60 below consensus $1.21 and sales $408-$432M, missing the $475M est.; said sees tariff-related impacts on operating income reduced to less than $15M. BKE June 2025 net sales increase 4.7% to $106.5M and comp sales +3.8%. COST headline total comp, excluding gas and FX, of 6.2% was slightly ahead of May at 6.0%, while the U.S. comps, excluding gas and FX, of 5.5% matched May’s results. Total comps were 5.8%, an acceleration from 4.3% in April.

• DAL +13%; posted a quarterly beat and upbeat forecast asQ2 adj EPS $2.10 vs. est. $2.07 on revs $15.51B vs. est. $15.45B; guides FY adj EPS $5.25-$6.25 vs. est. $5.35; forecast a Q3 adj profit of $1.25-$1.75 vs. est. $1.31 (AAL, UAL, LUV, ALK, JBLU shares rose).
• DALN +209%; after Media giant Hearst has agreed to buy Dallas Morning News publisher DallasNews for about $75 million in cash, paying $14 per share (vs. $4.39 closing price prior).
• EL +5%; reinstated coverage at Bank America with a Buy and $110 price objective, implying 30% upside potential noting the company generates $14B of revenue from 25 brands including Estee Lauder, Clinique, M∙A∙C and La Mer, making it the #2 player in the 160B global prestige beauty market.
• FCEL +5%; after the company and data center developer Inuverse sign MoU to deploy up to 100 megawatts (MW) of fuel cell-based power in phased increments starting in 2027 at the AI Daegu Data Center (AI DDC) in South Korea.
• KLG +30%; to be acquired by Ferrero for $23 per share in deal valued at $3.1B (confirms last night report by WSJ of M&A interest) https://tinyurl.com/2kbrs2bc
• MP +52%; after saying it has entered into public-private partnership with the U.S. Department of Defense to build-out domestic rare earth magnet supply chain and reduce foreign dependency (other rare earth names TMC, USAR, CRML active as well on news).

• AXTI %; after cutting its Q2 revenue view to $17.5M-$18M from $20M-$22M, below consensus $20.85M citing slower than expected issuance of export control permits for gallium arsenide products, weaker demand environment in China.
• CAG -3%; after Q4 revs $2.78B missed the $2.83B consensus estimate and adj EPS of $0.56 missed the $0.58 on weaker guidance as forecasts FY26 adj EPS $1.70-$1.85, below analysts’ estimate of $2.19.
• ERJ -8%; along with weakness in other US listed Brazilian stocks (NU, JBS, GGB) after President Trump also placed a 50% tariff rate on Brazil, including energy.  
• HELE -25%; posted Q1 sales decline 10.8% to $371.7M, missing analyst expectations of $397M while EPS of $0.41 was well short of the $0.85 estimate; guides Q2 EPS $0.45-$0.60 below consensus $1.21 and sales $408-$432M, missing the $475M est.
• MBLY -4%; after 50M share Spot Secondary priced at $16.50 overnight.
• MEI -20%; shares fell after earnings results as Q4 adjusted EPS loss ($0.77) vs. loss (-$0.23) y/y and revs down to $257.1M vs. $277.3M y/y on weaker guide saying experienced a significant ramp down in expected demand from one of our largest EV customers and delays with other EV customers.
• MREO -36%; after the biotech firm said the Phase 3 portion of a study for an experimental drug to treat osteogenesis imperfecta will progress toward final analysis, dashing hopes that the trial would be stopped early on positive data; shares of partner RARE declined as well.