Morgan Stanley posted impressive third-quarter earnings, with an EPS of $1.88 per share, well above the estimate of $1.58. Revenue also surpassed expectations at $15.38 billion versus $14.41 billion anticipated. The bank’s wealth management division saw a 14% sales increase from a year ago, reaching $7.27 billion.
French luxury goods giant LVMH reported a significant decline in sales in the Asia region, excluding Japan. Sales dropped 16% in the latest quarter after a 14% fall in the previous quarter, indicating that China’s government stimulus is not effective. Georges Kern, CEO of Swiss luxury watchmaker Breitling, confirmed the poor performance in China but noted that sales in the U.S. are up double digits.
Dutch semiconductor equipment maker ASML posted a disappointing sales outlook, leading to a decline in other global chip stocks. The outlook particularly affects low-end chips produced by Samsung and Intel. Nvidia CEO Jensen Huang, however, highlighted AI as a bright spot in the industry.
Investors are showing increased interest in transportation stocks, specifically J.B. Hunt. Some analysts argue that this is a misguided move driven by playing the market cycle. Johnson & Johnson reported a solid quarter driven by strong sales of its oncology drugs.
Morgan Stanley outperforms earnings forecasts
Despite a lag in its MedTech division, analysts have raised their price targets. RBC Capital increased its target to $181 from $178, and Morgan Stanley raised its target to $175 from $169.
Wells Fargo aims to become a top-three bank under CEO Charlie Scharf. The bank plans to achieve this through investment banking, credit cards, and corporate lending. Scharf believes they can accomplish this after seven years of restructuring.
UnitedHealth is facing pricing pressure in its Medicare Advantage plans, leading the company to cut its FY25 and FY26 EPS estimates. Despite this, the stock remains popular among analysts. Yum Brands has been downgraded to hold from buy by TD Cowen due to the removal of Taco Bell breakfast items, which is expected to create a headwind.
The downgrade appears linked to McDonald’s successful pricing strategy. Stephens downgraded Emerson Electric to hold from buy, fearing that it would fully acquire Aspen Tech at a dilutive price. Analysts have shown more enthusiasm for Dover and Eaton due to their involvement in data centers and mega projects.
Former President Donald Trump has proposed tariffs on Mexican-imported cars, which could directly conflict with the spirit of NAFTA/USMCA. In 2023, General Motors produced about 19% of the nearly 3.8 million cars made in Mexico, and Stellantis aims to build the Ram there.
