Top 10 Notes for June 12th
1. Today is a significant day for SpaceX, marking what is poised to be the largest IPO ever, raising $75 billion. I think a 25% to 30% increase at the opening would be ideal. Anything higher could potentially attract short-sellers and weaken shareholder confidence. We definitely don’t want a scenario like what happened with Figma or Cerebras.
2. Stock futures are trending upwards, fueled by hopes for a peace agreement between the US and Iran that could reopen the vital Strait of Hormuz. It makes me wonder if a deal could be reached before next week’s G7 summit. Oil prices are responding predictably; the US benchmark WTI is down over 3%, dropping below $85 a barrel. The 10-year US Treasury yield remains relatively steady. Overall, this should create a favorable setup for today’s market performance.
3. In the latest financial results, Adobe announced the departure of CFO Dan Dern, who is moving to Marvell. It’s interesting to see such transitions—moving from software to semiconductors reflects a larger trend in the market. Meanwhile, there’s already a search underway for a successor to Shantanu Narayan, the long-standing CEO. Even with solid sales and profits for the quarter, Adobe’s stock took a 7% hit. There’s still this prevailing notion that things are advancing well, despite recent downgrades from various analysts.
4. Advanced Micro Devices (AMD) recently received an upgrade from Buy to Hold at Citi. Analysts are optimistic that its Agentnic AI platform will significantly boost AMD’s CPU sector. They also recognize AMD as a credible competitor in the GPU market, especially against established player Nvidia. Citi forecasts that Meta is likely to purchase more AMD chips than the market currently anticipates.
5. JP Morgan has raised its price target for Nokia from $14 to $21, which seems like a logical move given Nokia’s transformation into an AI networking company, especially with its partnership with Nvidia. Earlier this month, I suggested holding off on buying Nokia until a pullback occurred—well, it looks like we’ve had that pullback now.
6. The Nasdaq 100 is about to see some significant changes, with new additions such as Astera Labs, CoreWeave, Nebius, Rocket Lab, and Teradyne, all set to join before markets open on June 22nd. Some well-known companies in the AI infrastructure space are being excluded, including Charter Communications and Cognizant Technology Solutions, which is interesting considering many funds are linked to the Nasdaq through the Invesco QQQ ETF.
7. It’s quite surprising that Bank of America has lowered its price target for its entire Medical Devices group, which includes companies like Intuitive Surgical and Medtronic. This segment was performing well, but it seems things have taken a turn for the worse recently, leading to some notable price-to-earnings compression.
8. On a more positive note, Williams-Sonoma is back on Bank of America’s buy list, with a price target that remains at $250, indicating a potential upside of about 15%. Analysts believe the company finds itself in a favorable demographic situation, benefiting from a more resilient customer base. CEO Laura Alber has successfully positioned WSM as an affordable luxury brand. For those connected with our group, TJX stands out as another specialty retailer, primarily operating in the value segment with HomeGoods.
9. In its latest report, Barclays has lowered FedEx’s price target from $450 to $425, as the stock adjusts to the FedEx Freight spinoff. However, FedEx remains one of Barclays’ top picks in the transportation sector. Analysts expect earnings and valuations to rise as the economy recovers and FedEx enhances its network integration. We have ownership of both FedEx and FedEx Freight in our portfolio.
10. Keefe Brouillette has indicated that Google, under Alphabet Inc., poses a growing threat to Zillow and other real estate platforms as it expands into real estate advertising. Goldman Sachs has echoed this sentiment, downgrading Zillow’s price target from $53 to $40.
