Coffee With Greta: Focus Turns To Earnings
DJIA Futures: -114 (-0.3%)
SPX Futures: -20 (-0.5%)
NASDAQ Futures: -58 (-0.5%)
Good morning friends!
Futures are slipping as traders digest earnings and gear up for more Fed speakers today.
Let’s get right to it!
CVS Beats Q4 Expectations, Confirms Oak Street Acquisition
CVS Health (CVS) shares are up 2.9% ahead of the open after beating Q4 earnings expectations and confirming it is buying Oak Street Health (OSH).
Here’s how the healthcare giant’s results compared to analysts’ estimates:
- Adjusted EPS: $1.99 vs $1.92 expected
- Revenue: $83.85 billion vs $76.32 billion expected
Revenue was up 9.5% year over year.
CVS expects adjusted EPS of $8.70 to $8.90 in 2023, in line with estimates of $8.84.
The company also announced an all-cash $10.6 billion deal to purchase primary-care provider Oak Street Health.
CVS will pay $39 per share for the company, OSH shares are up 5% ahead of the open.
CVS’s CEO said, “2022 was a year of progress, and we continue to build on that momentum with bold moves that will improve the health care experience.”
Oak Street will become part of CVS’s Health Care Delivery organization and the company’s current CEO will continue to lead the unit.
Uber Rallies On Earnings Beat
Uber (UBER) shares are 7% higher in premarket trade after beating Q4 expectations on the top and bottom line.
Here’s how the ride share giant’s results compared to analysts’ expectations:
- EPS: $0.29 vs $0.18 per share loss expected
- Revenue: $8.6 billion vs $8.49 billion expected
- Mobility gross bookings: $14.9 billion vs $14.8 billion expected
- Delivery gross bookings: $14.3 billion as expected
Revenue jumped 49% year over year.
The CEO said it was Uber’s “strongest quarter ever” capping off its “strongest year.”
The company also hit 2 billion trips in a single quarter for the first time.
Uber expects gross bookings to grow between 20% and 24% this quarter.
Chipotle Falls On Disappointing Q4 Earnings
Chipotle Mexican Grill (CMG) shares are falling 4.2% ahead of the open after reporting disappointing Q4 earnings.
Here’s how the restaurant chain’s results compared to analysts’ estimates:
- Adjusted EPS: $8.29 vs $8.90 expected
- Revenue: $2.18 billion vs $2.23 billion expected
It’s the first time Chipotle has missed expectations on the top and bottom line since Q3 2017.
Same-store sales rose just 5.6% vs analysts’ expectations for 6.9%.
The CFO said, “As we got around the holidays, we just didn’t see that pop, that momentum, that we normally see … frankly, we started the quarter soft, and we ended the quarter soft.”
But the CEO said those weaker restaurant traffic trends have already reversed in the new year.
Chipotle said it expects same-store sales growth in the high single digits this quarter while analysts are estimating 6.7% growth.
The CFO said the company is not planning anymore price hikes this year.
Mortgage Demand Jumps
Mortgage demand jumped last week as rates fell for the fifth week in a row.
The Mortgage Bankers Association reported total application volume jumped 7.4%.
That was led by a surge in refinance applications, which rose 18% weekly but were still 75% lower year over year.
Purchase applications rose 3% weekly and were 37% lower annually.
The increase came as the average 30-year fixed contract rate fell to 6.18% from 6.19%.
But those rates jumped sharply at the start of this week after the hot January jobs report on Friday and comments from the Fed chair that the bank could continue raising rates.
More Fed Speakers
Several Fed officials are scheduled to speak today, keeping the market on edge about the bank’s future plans.
New York Fed President John Williams, Fed Governor Lisa Cook, Fed Vice Chair Michael Barr, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, and Fed Governor Christopher Waller are all speaking at some point in the day.
These speeches come after Fed Chair Jerome Powell spoke to the Economic Club of Washington on Tuesday.
He said, “The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy.”
But he also said that process still “has a long way to go.”
Powell highlighted the strong January jobs report as an issue saying, “if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.”
In Case You Missed It
- Zoom (ZM) shares rallied 9.9% on Tuesday after announcing layoffs. The CEO made that announcement in a blog post. Zoom plans to cut about 15% of its workforce, impacting 1,300 employees. The CEO said the company needs to adapt to the “uncertainty of the global economy” and “its effect on our customers.” The stock is down 1.9% ahead of the open.