## **My Top 10 Things to Watch Wednesday, Aug. 7**
This week’s market is buzzing with earnings reports, and investors are keeping their eyes peeled for clues about the state of the economy. **Disney** is a major highlight, delivering a strong earnings beat and positive streaming results, while **Airbnb**’s disappointing performance raises concerns about slowing travel demand. **CVS Health**, meanwhile, sees its profit outlook dampened by higher medical costs. Read on for a quick rundown of the key takeaways from these and other important companies.
### **Key Takeaways**
* **Disney** delivered a strong performance, surpassing earnings estimates and raising guidance.
* **Airbnb** reported disappointing results, highlighting slowing demand from U.S. tourists.
* **CVS Health** exceeded earnings expectations but cut its full-year profit outlook due to rising healthcare expenses.
* **Reddit**’s strong user growth and solid revenue beat are positive signs for the social media platform.
* **Super Micro** faces challenges with margin issues, leading to a downgrade and a significant stock drop.
* **Instacart** surprised with a strong earnings beat, indicating positive momentum in the grocery delivery sector.
* **Fortinet**’s excellent performance reinforces the strength of the cybersecurity market.
* **Caterpillar** continues to be a battleground stock, with analysts revisiting their price targets.
* **Wynn Resorts** faces headwinds from the Macau market, causing analysts to lower their price targets.
* **Toast** faces growing competition and pressure on average revenue per user, raising concerns about its future trajectory.
## **Disney: A Welcome Blowout**
**Disney** exceeded analysts’ expectations on both the top and bottom lines, reporting adjusted earnings per share (EPS) of $1.39 for the third quarter, a 35% increase year-over-year. The company’s combined streaming businesses, **Disney+**, **Hulu**, and **ESPN+**, reported their first-ever profit, ahead of schedule. This signals a positive shift in the company’s streaming strategy. The entertainment segment also outperformed, growing by 4%, surpassing expectations.
While Disney’s performance was impressive, shares still dropped by about 1% in pre-market trading. This suggests that investors may have already factored in the positive news, or are focusing on the company’s future challenges.
## **Airbnb: Slowing Demand Raises Concerns**
**Airbnb** delivered disappointing second-quarter results, revealing a slowdown in demand from U.S. guests. This reflects a possible peak in travel demand, a trend that could impact the company’s future performance. Shares plummeted by 14% as investors reacted to this concerning news.
## **CVS Health: Higher Medical Costs Weigh on Outlook**
**CVS Health** exceeded earnings estimates, reporting adjusted EPS of $1.83 against an expected $1.73. Revenue also came in slightly higher than projected. However, the company’s positive news was overshadowed by a **full-year profit outlook cut** due to rising medical costs. CVS Health now expects 2024 adjusted earnings of $6.40 to $6.65 per share, down from a previous forecast of at least $7 per share. This highlights the challenges facing the retail drugstore chain as it navigates a changing healthcare landscape.
## **Reddit: User Growth Fuels Positive Sentiment**
**Reddit**’s second-quarter earnings report showcased positive momentum with a strong revenue beat and impressive user growth. Revenue reached $281 million, surpassing the expected $254 million. The platform also reported a significant increase in daily active users, reaching 91.2 million, exceeding estimates of 84.5 million. Analyst confidence in the company’s future prospects was reflected in the upward price target adjustments by Piper Sandler and Loop Capital.
## **Super Micro: Margin Issues Dampen Prospects**
**Super Micro**, a server maker, experienced a significant setback with **margin issues**. This led Bank of America to downgrade the company to “hold” from “buy.” The company’s conference call was described as “terrible” with a major EPS miss, despite meeting revenue estimates. Super Micro also announced a 10-for-1 stock split in an attempt to stimulate investor interest. However, the stock price plunged by over 14%, reflecting investor concerns about the company’s future performance.
## **Instacart: A Surprise Win**
**Instacart** surprised investors with a strong earnings beat, delivering earnings of 20 cents per share, surpassing analysts’ expectations of 13 cents. This positive development, similar to Uber’s impressive performance, indicates a strong trajectory for the grocery delivery business. The company, publicly traded as **Maplebear**, is currently valued at just 9 times EBITDA, suggesting a potentially attractive valuation. Despite prior layoffs and a restructuring effort, the company seems to be regaining momentum. This news boosted shares by over 9%.
## **Fortinet: Cybersecurity Strength Continues**
**Fortinet**, a cybersecurity company, delivered a strong performance in its second quarter, exceeding analysts’ expectations. The company reported EPS of 57 cents, surpassing the consensus estimate of 41 cents. Billing performance was also strong, and the company is projecting full-year adjusted earnings in the range of $2.13 to $2.19 per share, well above the $1.76 per share consensus estimate. This performance further underscores the robust health of the cybersecurity market.
## **Caterpillar: A Battleground Stock**
**Caterpillar** is proving to be a battleground stock, with analysts issuing both upward and downward price target adjustments. Despite the mixed sentiment, the industrial giant exceeded Wall Street profit expectations in the second quarter, earning $5.99 per share versus the $5.54 forecast. This strong performance suggests a resilient track record for the company, but analysts remain divided about its long-term trajectory.
## **Wynn Resorts: Macau Headwinds**
**Wynn Resorts** saw its price target revised downward by several analysts, reflecting concerns about the casino operator’s performance in Macau. This negative sentiment prompted investors to exit their positions in the company. Wynn’s reliance on the Chinese market, particularly Macau, exposes it to significant geopolitical risks and uncertainties. The company’s ability to deliver robust results in Las Vegas and Boston in the upcoming quarters will be a critical factor in determining the future direction of its stock.
## **Toast: A Looming Turn?**
The growth of **Toast**, a SaaS company focused on the restaurant industry, may be facing challenges. The company is experiencing pressure on its average revenue per user (ARPU) due to increasing competition and a more competitive landscape. This may raise concerns about Toast’s ability to sustain its growth trajectory, leading to a possible shift in investors’ sentiment.
The market is dynamic, and these companies’ performances will continue to evolve. Keeping an eye on these key factors will help investors navigate the current landscape and make informed decisions.
Amy Poehler and Maya Hawke voice Joy and Anxiety, respectively, in Disney and Pixar’s “Inside Out 2.”
Disney | Pixar
