Kaushik
$AMZN BofA - AWS regaining strength, and retail growing margins; Buy PT $210
Retail revenues in 2Q missed expectations and stock was down 7% after-hours on likely upside expectation reset (despite AWS beat). However, we remain constructive on the two key stock drivers: 1) improving AWS trends (growth accelerated most vs. peers in 2Q, AI still early) & 2) retail margin growth still intact into holidays (3Q profit could grow q/q and expect 4Q margins to be up y/y). Amazon remains our top large cap stock given AWS acceleration and AI opportunity, though we lower our sum of parts PT to $210 (from $220) given slightly lower growth estimates (we lower 2025E sales by 1.8%) & comp multiples.
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$AMZN BofA - AWS regaining strength, and retail growing margins; Buy PT $210
Retail revenues in 2Q missed expectations and stock was down 7% after-hours on likely upside expectation reset (despite AWS beat). However, we remain constructive on the two key stock drivers: 1) improving AWS trends (growth accelerated most vs. peers in 2Q, AI still early) & 2) retail margin growth still intact into holidays (3Q profit could grow q/q and expect 4Q margins to be up y/y). Amazon remains our top large cap stock given AWS acceleration and AI opportunity, though we lower our sum of parts PT to $210 (from $220) given slightly lower growth estimates (we lower 2025E sales by 1.8%) & comp multiples.
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Kaushik
$MELI JPMorgan - Strong 2Q24 Top Line Across Segments Drives EBIT Ahead of Consensus
MELI reported a beat across the board in 2Q24, coming ahead of Bloomberg consensus on main lines, albeit more in line with JPMe on EBIT for “wrong” reasons: our numbers did not incorporate FX weakness in the quarter. Brazil e-commerce came particularly strong, with another quarter of acceleration, Mexico held up a strong pace and Argentina surprised to the upside, despite still weak.
Payments and Credit also kept a strong pace. Moreover, shipping subsidies declined q/q, despite expansion of fulfillment. We reiterate our OW on MELI.
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$MELI JPMorgan - Strong 2Q24 Top Line Across Segments Drives EBIT Ahead of Consensus
MELI reported a beat across the board in 2Q24, coming ahead of Bloomberg consensus on main lines, albeit more in line with JPMe on EBIT for “wrong” reasons: our numbers did not incorporate FX weakness in the quarter. Brazil e-commerce came particularly strong, with another quarter of acceleration, Mexico held up a strong pace and Argentina surprised to the upside, despite still weak.
Payments and Credit also kept a strong pace. Moreover, shipping subsidies declined q/q, despite expansion of fulfillment. We reiterate our OW on MELI.
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Kaushik
$NET PT Raised to $99 at RBC Capital
Cloudflare delivered an impressive quarter in what continues to be an uneven macro, highlighted by a revenue beat and FY raise of a higher magnitude. The GTM evolution continues to track positively and fundamental drivers remain compelling. While Cloudflare has not broken out contribution from GenAI-related revenue, we'd bucket NET as one of the few software companies seeing tangible benefit today joining the likes of MSFT & NOW. Overall, we are bullish on the LT thesis as NET remains one of our favorite growth ideas that is separating from peers
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$NET PT Raised to $99 at RBC Capital
Cloudflare delivered an impressive quarter in what continues to be an uneven macro, highlighted by a revenue beat and FY raise of a higher magnitude. The GTM evolution continues to track positively and fundamental drivers remain compelling. While Cloudflare has not broken out contribution from GenAI-related revenue, we'd bucket NET as one of the few software companies seeing tangible benefit today joining the likes of MSFT & NOW. Overall, we are bullish on the LT thesis as NET remains one of our favorite growth ideas that is separating from peers
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Kaushik
$TEAM Goldman Upgrades to Buy
We are upgrading Atlassian to Buy from Neutral with a $230 PT (vs $200 prior). We believe TEAM has passed the toughest portion of its cloud transition and can credibly deliver on a de-risked guide for Cloud growth, Data Center migrations, and margin trajectory. After a significant period of underperformance (TEAM -24% YTD vs. NASDAQ +16%), the Street seems to have adopted the narrative we outlined in May 2023 that suggested TEAM was likely to see an elongated cloud transition, choppy cloud growth (until visibility in the macro improves), and limited margin upside amid investments in growth. TEAM, -14% AH, seemed to reinforce these beliefs with an in-line revenue quarter with 100bps of OpM outperformance and 1300bps of FCF outperformance, while guiding FY25 revenue growth and OpM 200bps and 60bps below consensus, respectively. While management underscored their more conservative management philosophy and re-affirmed their FY27 financial targets, the stock is likely reflecting renewed skepticism that TEAM can deliver 20% CAGR and 25%+ OpM. We see the following dynamics supporting a constructive setup: 1) We are through the toughest portion of the cloud transition. Improving demand signals and conservative expectations (implied 1% increase in FY25 net new Cloud revenue vs. 8%/4% in FY24/FY23) contrast the Street's expectations for continued headwinds, 2) Normalizing Data Center growth post Server EOL, which can underwrite the company's total revenue visibility, and 3) Margin expectations now better reflect the business's multi-faceted investment needs, particularly as TEAM pivots from PLG to GTM, which should lead to gradual profit expansion and potential FCF upside. While a management transition and macro uncertainty still poses risk to the stock, we believe the risk/reward SKU is balanced to the upside. Coming out of Team '24 and entering FY25, we expect investor sentiment to improve as conviction is rebuilt around a steady execution narrative, which can drive a greater EV/Sales premium vs. peers."
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$TEAM Goldman Upgrades to Buy
We are upgrading Atlassian to Buy from Neutral with a $230 PT (vs $200 prior). We believe TEAM has passed the toughest portion of its cloud transition and can credibly deliver on a de-risked guide for Cloud growth, Data Center migrations, and margin trajectory. After a significant period of underperformance (TEAM -24% YTD vs. NASDAQ +16%), the Street seems to have adopted the narrative we outlined in May 2023 that suggested TEAM was likely to see an elongated cloud transition, choppy cloud growth (until visibility in the macro improves), and limited margin upside amid investments in growth. TEAM, -14% AH, seemed to reinforce these beliefs with an in-line revenue quarter with 100bps of OpM outperformance and 1300bps of FCF outperformance, while guiding FY25 revenue growth and OpM 200bps and 60bps below consensus, respectively. While management underscored their more conservative management philosophy and re-affirmed their FY27 financial targets, the stock is likely reflecting renewed skepticism that TEAM can deliver 20% CAGR and 25%+ OpM. We see the following dynamics supporting a constructive setup: 1) We are through the toughest portion of the cloud transition. Improving demand signals and conservative expectations (implied 1% increase in FY25 net new Cloud revenue vs. 8%/4% in FY24/FY23) contrast the Street's expectations for continued headwinds, 2) Normalizing Data Center growth post Server EOL, which can underwrite the company's total revenue visibility, and 3) Margin expectations now better reflect the business's multi-faceted investment needs, particularly as TEAM pivots from PLG to GTM, which should lead to gradual profit expansion and potential FCF upside. While a management transition and macro uncertainty still poses risk to the stock, we believe the risk/reward SKU is balanced to the upside. Coming out of Team '24 and entering FY25, we expect investor sentiment to improve as conviction is rebuilt around a steady execution narrative, which can drive a greater EV/Sales premium vs. peers."
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Kaushik
$INTC Citi PT to $25
Yesterday after the close, Intel reported results and guidance well-below Consensus mainly due to weakness in its PC businesses (58% of 2Q24 sales) and higher manufacturing costs. While the results were disappointing, we believe Intel’s internal manufacturing plan remains on track, which is key to our rating. However, we continue to doubt the foundry business will work and we believe it is not in the best interests of shareholders.
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$INTC Citi PT to $25
Yesterday after the close, Intel reported results and guidance well-below Consensus mainly due to weakness in its PC businesses (58% of 2Q24 sales) and higher manufacturing costs. While the results were disappointing, we believe Intel’s internal manufacturing plan remains on track, which is key to our rating. However, we continue to doubt the foundry business will work and we believe it is not in the best interests of shareholders.
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Kaushik
$LULU Goldman Sachs Downgrades to Neutral
Following recent execution challenges, lackluster innovation launches, and rising evidence of more regular promotionality, we see a more balanced risk-reward for the stock. We had previously maintained our constructive thesis on LULU despite a slowdown in US sales growth and signs of visible execution missteps this spring. At the time, our thesis was that the company could drive a sequential reacceleration in 2H growth on the back of an improvement in assortment (colors / accessories / sizes) and a strengthening innovation pipeline (including new fabric launches in women's leggings). Despite some weakness in our quarterly checks earlier this month, we had previously believed trends were stable enough to maintain our more constructive view on the stock. PT to $286.
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$LULU Goldman Sachs Downgrades to Neutral
Following recent execution challenges, lackluster innovation launches, and rising evidence of more regular promotionality, we see a more balanced risk-reward for the stock. We had previously maintained our constructive thesis on LULU despite a slowdown in US sales growth and signs of visible execution missteps this spring. At the time, our thesis was that the company could drive a sequential reacceleration in 2H growth on the back of an improvement in assortment (colors / accessories / sizes) and a strengthening innovation pipeline (including new fabric launches in women's leggings). Despite some weakness in our quarterly checks earlier this month, we had previously believed trends were stable enough to maintain our more constructive view on the stock. PT to $286.
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Kaushik
$AMZN Citi
With AWS revenue growth accelerating, faster shipping times improving conversion rates (as essentials gain share), and overall cost-to-serve declines, we believe Amazon delivered strong 2Q24 results. We were impressed with AWS revenue growth accelerating to +19% Y/Y, that paid unit growth accelerated to +11% Y/Y, and with margin expansion at AWS. The debate post earnings is likely to be on whether Amazon is entering an investment period given 3Q OI guidance came in below consensus. Yes investments are ramping as project Kuiper nears launch and Amazon incorporates AI across its services, but with multiple initiatives to improve shipping efficiencies and our view that Prime Video ads begin to ramp in 2H as new AWS instances deliver high-margin revenue growth, we believe Amazon can deliver continued growth & margin expansion such that 3Q OI guide could prove conservative. We reiterate our Buy and $245 TP.
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$AMZN Citi
With AWS revenue growth accelerating, faster shipping times improving conversion rates (as essentials gain share), and overall cost-to-serve declines, we believe Amazon delivered strong 2Q24 results. We were impressed with AWS revenue growth accelerating to +19% Y/Y, that paid unit growth accelerated to +11% Y/Y, and with margin expansion at AWS. The debate post earnings is likely to be on whether Amazon is entering an investment period given 3Q OI guidance came in below consensus. Yes investments are ramping as project Kuiper nears launch and Amazon incorporates AI across its services, but with multiple initiatives to improve shipping efficiencies and our view that Prime Video ads begin to ramp in 2H as new AWS instances deliver high-margin revenue growth, we believe Amazon can deliver continued growth & margin expansion such that 3Q OI guide could prove conservative. We reiterate our Buy and $245 TP.
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Kaushik
Seems likely $AMZN
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Seems likely $AMZN
$AMZN will they bring it down to $159s gapfill area tomorrow? tweet
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RT @marketplunger1: “Maybe I should check my portfolio to see how my stocks are doing.”
*Opens Schwab* https://t.co/kpxYxk1NsG
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RT @marketplunger1: “Maybe I should check my portfolio to see how my stocks are doing.”
*Opens Schwab* https://t.co/kpxYxk1NsG
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