The mood is cautious this morning as earnings begin to roll in. Specifically, futures tied to the S&P 500 are flat right now, as are Dow Jones futures- with the tech-heavy Nasdaq index futures up 0.2%.
So far Bank of America is trading down 2% in Wednesday’s pre-market after reporting an earnings beat but a revenue miss. Revenue of $20.3B dropped 11% year-over-year and fell short of consensus expectations by $5680M. BAC also reported provision for losses of $1.4B, significantly lower than the analyst consensus of $1.96B, with Q3 NII sinking 17% year-over-year to $10.1B.
More positively, Goldman Sachs is now up 3% after both earnings and revenue beat expectations. Third quarter GAAP EPS beat by $4.24, while revenue soared 29.6% year-over-year to $10.78B, beating consensus by $1.38B. “The increase compared with the third quarter of 2019 reflected higher net revenues across all segments, including significant increases in Asset Management and Global Markets” explained the firm.
Aside from the banks, healthcare giant UnitedHealth also posted a solid earnings beat. UNH reported Q3 Non-GAAP EPS of $3.51 (topping consensus by $0.43) and revenue of $65.12B (up 7.9% year-over-year, and $1.15B better than the Street). “We’re encouraged to see those we serve respond to the incentives we offered to safely seek care as the health system continued to recover in the quarter” said David S. Wichmann, CEO of UnitedHealth Group.
Surging higher this morning is Nio after JP Morgan upgraded the Chinese electric vehicle maker to buy. The stock is rocketing 10% right now after analyst Nick Lai explained: “We expect Nio to be a long term winner in the premium space among Chinese brands vs. Xpeng leading the mass market, while BYD should likely see strong EV demand with rising external battery sales from 2022.”
Another auto stock in the headlines- Ford is now set to delay the launch of its plug-in hybrid Escape sport-utility vehicle to 2021. Thousands of similar Kuga SUVs have been recalled in Europe due to fire-related recharging problems. “We’re moving production to next year while we investigate what happened to the Kuga in Europe,” Mike Levine, a company spokesman, told Bloomberg. “None have been sold in the U.S.”
Meanwhile Bed Bath & Beyond is up 5.5% in pre-market trading as the company announced agreements to sell its Christmas Tree Shops retail brand, its institutional Linen Holdings business, and a distribution center in Florence, New Jersey for $250 million. The home goods retailer has been selling its non-core assets to optimize its portfolio and increase its financial strength.
Last but not least: GameStop is surging 7% after Richard Mashaal’s Senvest Management disclosed 3.6 million shares in the video game retailer (a 5.54% stake). The New York based fund uses a contrarian, value-based investment strategy for its $1 billion assets under management. “We seek out of favour, unloved, misunderstood, and underappreciated companies where expectations, sentiment and valuations are all low. Over one or two or three years they can change and improve, for a better outlook, so they are no longer unloved, and get multiple expansion,” Mashaal told The Hedge Fund Journal back in 2017.
