📝 Your Q125 Earnings Playbook

Plus, Sam Altman's ambitious plan to extend lifespans by a decade...

Happy Friday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟥 | US stocks fell today as investors took profits after a winning week for all three major indexes.

  • 📈 | One Notable Gainer: NextEra Energy (NEE) shares surged more than 5% after taking a key step toward reviving the Duane Arnold nuclear plant.

  • 📉 | One Notable Decliner: Texas Instruments’ (TXN) stock slipped 7.5% despite an earnings beat, as its lackluster outlook signaled an ongoing chip slump.

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S&P 500 Heatmap. Credit: Finviz

All Stock Heatmap. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

United Airlines, American Express, Novo Nordisk

UAL (+1.9%) Is There More Upside For United Airlines Stock After An Upbeat Q4? (Forbes)

AXP (-1.4%) American Express Earnings Show Its Card Members Keep Spending. Why the Stock Is Falling. (Barron’s)

NVO (+8.5%) Novo Nordisk stock pops on phase I data for new weight-loss drug amycretin (YF)

CF (-7.5%) JPMorgan cuts CF Industries stock rating, lowers price target (Investing.com)

TWLO (+20.1%) Twilio stock surges after company issues optimistic 2027 profit forecast (CNBC)

OVERHEARD ON THE STREET

AP: US home sales hit a nearly 30-year low in 2024 for the second straight year, as high mortgage rates, rising prices, and a limited supply kept buyers sidelined.

Reuters: US business activity hit a nine-month low in January, but hiring accelerated.

Bloomberg: US consumer sentiment fell for the first time in six months, driven by worries over unemployment and the potential impact of tariffs on inflation.

Forbes: In March, Tesla will begin US deliveries of its revamped Model Y SUV, the Juniper, priced at $60,000.

WSJ: Despite challenges like tech outages, mergers, and staffing issues, US airlines improved in 2024. Here are the best and worst of the bunch.

TOMORROW’S TRADE IDEA, TODAY

Your Q125 Earnings Playbook

Playing Both Sides of the Coin

The first earnings season of 2025 is upon us. It’s off to a strong start.

Thus far, nearly 80% of companies that have reported saw an earnings beat. And, according to CNBC Pro, that streak could continue. A number of stocks set to report next week could beat Wall Street expectations and see a boost to their stock price, the publication projects.

However, that likely won’t be the case across the board. According to Wolfe Research, several companies could see disastrous earnings reports, potentially presenting a good opportunity to sell short. Here’s a cheat sheet for spotting each side of the coin.

Potential Winners

Using data from Bespoke Investment Group, CNBC Pro searched for companies that historically beat earnings estimates and saw their stock price rise as a result. 

Meta (META) is one such company. The Facebook-owner has historically exceeded earnings projections a whopping 88% of the time. On average, its stock price jumps nearly 2% the next trading day. It reports after the bell next Wednesday.

Mastercard (MA) has an even better track record. It beats earnings 93% of the time, the highest amount of the group. Its stock tends to rise around 1.7% following its report, which is slated for next Thursday.

Axos Financial (AX), Western Alliance Bancorp (WAL), and Deckers Outdoor (DECK) are a few other companies that fit the criteria.

Potential Losers

On the flip side, Wolfe Research searched for stocks that are in the bottom 20% in terms of their earnings quality relative to their sector. Each stock was given a score of 0-100, with a lower score signaling a higher likelihood of coming up short of expectations — resulting in a significant price drop. 

Southwest Airlines (LUV) came in with a score of 16. Bank of America (BAC) recently downgraded it to Underperform, with analyst Andrew Didora saying that shares are currently trading at the top of their historical valuation ranges. 

Other companies with low scores included Western Digital (WDC), AbbVie (ABBV), and, perhaps surprisingly given its recent track record, Tesla (TSLA) at 19.

No one on Wall Street has a crystal ball. But CNBC and Wolfe would say, don’t be surprised if history rhymes next week.

Next week, there will be more...

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ON OUR RADAR

CNBC: Ahead of his California fire site visit, President Trump recommended overhauling FEMA to shift more disaster relief costs to states.

Axios: A House Republican introduced a resolution to allow Trump and future presidents to serve a third term, despite the current 22nd Amendment term limit.

BI: Trump's White House announced deportation flights have begun, with the military assisting in the operation.

WSJ: President Trump’s executive orders caused operations to cease at several government agencies, including Health and Transportation.

Fortune: A Sam Altman-backed AI biotech secured $1B to pursue its ambitious goal of extending the human lifespan by 10 years.

THURSDAY’S POLL RESULTS

What do you believe is the best way to play the Stargate AI announcement?

🟨🟨🟨🟨🟨⬜ Blue-chip stocks

🟩🟩🟩🟩🟩🟩 Pick-and-shovel plays

And, in response, you said:

  • “Probably a little of both.”

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