Mid-Morning Look

Tuesday, August 05, 2025

U.S. stocks opened higher overnight as technology and communications remain key market drivers on AI hype, but recent signs of a weakening economy are raising some concerns following the poor payrolls report on Friday and now today a weaker ISM services report that pushed stocks lower initially. Earnings this quarter (Q2) have been stellar with big beats (see data below) but commentary about the outlook and tariff fears are starting to get louder, while market participants are hopeful of Fed rate cuts in September and subsequent meetings to help boost the economy. After a barrage of earnings this morning, including upside momentum for AXON, PLTR, LDOS, CMI, PFE amid biggest S&P gainers and IT, VRTX, TDG, HSIC, ZBRA among the top S&P decliners we have another big earnings night ahead tonight including chip giant AMD as well as AMGN in the Dow, auto names RIVN, LCID and in tech SMCI, ANET, SNAP, ALAB among others. Earnings thus far, of 372 S&P 500 companies reported thus far vs 385 LY (fiscal qtr ending May-Jul, per Reuters): 83% beat vs 82% LY; avg beat 14% vs 19% LY, avg miss -23% vs -23% LY; avg yr/yr earnings growth 14% vs 7% LY and median yr/yr earnings growth 9% vs 7% LY. Oil prices are weaker along with crypto while gold edges higher along with the dollar.

In trade news, the EU said that European Union goods entering the US face a flat 15% tariff, including cars and car parts. The rate includes the Most Favored Nation (MFN) tariff and won’t exceed 15% even if the US raises tariffs on items like semiconductors and medicines. Also, Swiss President Karin Keller-Sutter and Business Minister Guy Parmelin flew to Washington on Tuesday in a last-ditch effort to avoid the 39% tariffs announced by President Donald Trump on exports to the United States (up from the prior 31% levy). US-India tensions in focus after President Trump said he would substantially hike tariffs due to India’s purchases of Russian oil; India has said it is being targeted by the US and EU. President Donald Trump said on Tuesday the U.S. was close to a trade deal with China and that he would meet his Chinese counterpart Xi Jinping before the end of the year if an agreement is struck.

• S&P Global July final services PMI at 55.7 (vs flash 55.2)
• U.S. ISM services sector activity unexpectedly flatlined in July with little change in orders and a further weakening in employment. The Institute for Supply Management (ISM) said its nonmanufacturing purchasing managers index (PMI) slipped to 50.1 last month from 50.8 in June (vs. est. for 51.5 reading) as new orders measure declined to 50.3 last month from 51.3 in June, with export orders falling back into contraction for the fourth time in five months. The employment index fell to 46.4, the lowest level since March, from 47.2 in June. It has contracted in four of the last five months.

• In Healthcare Facilities/Services: AGL shares tumble as announced that Steve Sell has stepped down as President, CEO, and Director, reported Q2 revenue and EBITDA below the low end of Q2 guidance of $1.435B 1.505B and withdrew guidance for the year. EHC shares rose on beat and raise quarter, highlighted by an 8% EBITDA beat driven by strong comp sales revenue growth and good expense management. HIMS shares fell after reporting a mixed quarter with revenue missing and EBITDA exceeding Street expectations; Q2 revenue of $544.8MM missed consensus estimates of $550.8MM; FY25 revenue/ EBITDA guidance reiterated, including ZAVA.
• In Semiconductors: INTC factories are yielding low rate of viable panther lake chips, show little improvement from late 2024, Reuters reported saying Intel struggles with manufacturing high-quality panther lake laptop chips; GFS shares fell as Q2 was in-line but expects Q3 revenue of $1.68B, plus or minus $25M vs expectation for $1.79B. ICHR shares fell after a CEO transition to precede the result announcement, and their quarterly execution in the print and guide was a little better and in-line on sales, but gross margin failed to expand; LSCC reported in-line Q2 results and guided Q3 slightly higher as stronger Comms and Compute (C&C) offset weaker Industrial and Auto (I&A). NVTS reported inline results but offered guidance that came in well below the Street’s expectations, sending shares lower; guides Q3 revs $9.5-10.5Mm vs est. $15.67Mm. SLAB Q2 revenue grows 33% yr/yr, beating analyst expectations; however, net income and operating income missed analysts’ estimates, while announced new Series 3 devices, and upcoming developer conference.

• AXON +18%; rose as Q2 beat with non-GAAP EPS of $2.12 (consensus $1.44) on revenue of $668.5M, up 33% y/y (consensus $641.0M), outperformance on adjusted EBITDA of $171.6M, up 38% y/y (consensus $160.2M), and guided to adjusted EBITDA of $665.0M-$685.0M, versus the consensus of 674.3M.
• CSTL +33%; shares surged after Q2 2025 revenue of $86.2M topped expectations of $71.4M; raises full-year 2025 revenue guidance to $310-320M from prior $287M-$297M; Q2 test report volume increased 6% y/y.
• DD +2%; as Q2 top/bottom line beat benefiting from strength in its electronics and healthcare segments; guides Q3 results just above estimates and raises its FY25 adjusted EPS view to $4.40 from $4.30-$4.40 (consensus $4.30) and boosts FY25 revenue view to $12.85B from $12.8B-$12.9B (est. $12.8B);
• MDGL +7%; shares jumped on results; Q2 net sales rise to $212.8M from $14.6M year-ago, driven by demand for NASH treatment Rezdiffra while secures new U.S. patent for Rezdiffra, extending protection to 2045.
• PLTR +8%; reported its 8th straight quarter of revs growth acceleration, from 13% growth in Q2’23 to a just reported Q2’25 growth rate of 48%, while at a $4B revs scale and raised the full year 2025 total growth guidance to 45% from 36%, without compromising on the non-GAAP margin target, which was inched up to 46%.
• PRIM +11%; reported a very strong quarter on revenue and margins as revenue grew +20.9% y/y across both segments at rates higher than our model but was most pronounced in the Energy segment (+27% vs. our 9%), EBITDA came in at $155M vs. above estimate, and raised adjusted EPS guidance from $4.20-$4.40 to $4.90-$5.10
• STAA +44%; to be acquired by ALC for about $1.5 billion in cash; Alcon will pay $28 a share in cash for Staar, a 51% premium to Monday’s closing price.
• YMAB +104%; to be acquired by SERB Pharmaceuticals in deal valued at $412M; Y-mAbs shareholders will receive $8.60 a share in cash, equating to a premium value of about 105% to Monday’s closing price of Y-mAbs shares.

• COIN -4%; as announces proposed private offering of $2.0B of convertible senior notes.
• HIMS -3%; after reporting a mixed quarter with revenue missing and EBITDA exceeding Street expectations; Q2 revenue of $544.8MM missed consensus estimates of $550.8MM; FY25 revenue/ EBITDA guidance reiterated, includes ZAVA.
• INSP -27%; posted a +$3M/+$0.25, driven by slightly better US Inspire performance (albeit on lowered expectations 2x this year) and lower R&D spend but announced a sizable guidance cut that sees full-year top-line growth going to +12-13% (prior +17-18%) and adjusted EPS to $1.00-$1.10 (prior $2.20-$2.30).
• NVTS -20%; reported inline results but offered guidance that came in well below the Street’s expectations sending shares lower; guides Q3 revs $9.5-10.5Mm vs est. $15.67Mm.
• VRTX -11%; shares tumble after results; said that its next-generation non-opioid pain reliever, VX-993, failed to significantly outperform placebo in a Phase 2 trial.