🌾 The Midday Trade: Going Against the Grain

Plus, how US regulators plan to investigate companies leading the AI industry

Pencils down, it’s time for lunch. Here’s what you missed this morning:

  • 🟨 | Market Snapshot: US stocks were mixed at the start of today’s trading session as investors await the nonfarm payrolls report, which will be released tomorrow morning.

  • 🤖 | In focus: Companies at the forefront of the AI revolution may soon be hampered by US regulators. The FTC and the DOJ are planning to open antitrust investigations into Nvidia, OpenAI, and Microsoft. Interestingly, the investigations will focus on the companies’ conduct, not mergers and acquisitions, which is what antitrust suits normally target.

  • 💼 | Noteworthy: Last week, the number of Americans applying for unemployment benefits rose to a four-week high of 229,000, notably above the 219,000 estimate. Unit labor costs also rose less than expected in the first quarter, alluding to a cooling labor market.

  • 🌾 | The Midday Trade: Going Against the Grain. Scroll down for more.

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STREET STATS

MORNING MOVERS

HOOD: Shares of Robinhood surged after it announced that it agreed to buy cryptocurrency exchange Bitstamp for around $200 million in cash (CNBC)

LULU: Lululemon’s stock rose after the company boosted its full-year profit outlook and raised its stock repurchase program by $1 billion (YF)

FIVE: Five Below reported disappointing quarterly results and guidance, missing estimates on revenue and EPS, which caused shares to plummet (Barron’s)

SMAR: Workplace technology platform Smartsheet saw its shares pop after releasing its quarterly report, which beat earnings and revenue estimates (YF)

CXM: American software company Sprinklr reported weak guidance for the current quarter and full year, causing its stock to dive (SA)

TOP CALLS

Couchbase: Barclays Maintains Equal-Weight on Couchbase, Lowers Price Target to $27 (Trade It)

Lululemon: JP Morgan Maintains Overweight on Lululemon Athletica, Lowers Price Target to $457 (Trade It)

Ollie’s: Loop Capital Maintains Buy on Ollie's Bargain Outlet, Raises Price Target to $100 (Trade It)

Dollar Tree: JP Morgan Maintains Overweight on Dollar Tree, Lowers Price Target to $135 (Trade It)

Brown-Forman: JP Morgan Maintains Neutral on Brown-Forman, Lowers Price Target to $44 (Trade It)

Adobe: BMO Capital Maintains Outperform on Adobe, Lowers Price Target to $525 (Trade It)

THE MIDDAY TRADE

Lowe’s

According to Mizuho, despite soaring stock prices, investors who prefer to take a contrarian approach can find value in companies undervalued by Wall Street analysts. 

For instance, Mizuho believes that the Wall Street consensus on Lowe’s (LOW) is wrong. Analyst David Bellinger has given it a $280 price target, a $29 upside from Tuesday’s close. 

The hardware store is one of the firm’s top picks, as it is bullish on its same-store sales and DIY market exposure. The stock is currently trading at a discount to both its competition and the overall market.

PayPal

Mizuho also likes fintech company PayPal (PYPL). The stock is up just under 3% YTD, putting it at an attractive price point, according to the firm’s analysts. 

It is currently trading below its historical spread when compared to its competition, and analyst Dan Dolev believes it will eventually be at a premium. 

Dolev is bullish on its new product, “Fastlane,” and believes it could provide a significant boost to margins. The analyst has given the stocks a $90 price target, representing a 42% upside from Tuesday’s close.

Oracle

Oracle (ORCL), up just over 16% YTD, made the list as well. Analysts are bullish on its cloud computing service Oracle Cloud Infrastructure as a driving force for growth. 

According to Siti Panigrahi, investors are undervaluing OCI’s effectiveness and the company as a whole. The stock is trading around 33% cheaper than Amazon Web Services (AMZN), yet provides a similar product. Additionally, Panigrahi believes Oracle will increase its margins by 45% by 2026. He has set a $160 price target for the stock, a 33% upside from Tuesday’s close. 

These stocks could provide a lot of upside for investors seeking often-overlooked investments.

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SURVEY THE STREET

It’s well known that Boeing has had a rough year — its stock is down roughly 25% year-to-date.

Whether it’s Boeing’s Starliner having continued helium leaks or its spate of commercial plane malfunctions, the company is undergoing a serious manufacturing and reputability crisis.

Boeing’s board is searching for a new CEO to steer the planemaker out of this crisis, but the real question is whether they’ll act fast enough to correct the stock’s tailspin.

Will Boeing Have a New CEO This Year

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