Here are the top 10 things to watch for Tuesday, Feb. 13:
1. Bond Yields Surge: On Tuesday, bond yields surged to approximately 4.28% on the 10-year Treasury after larger-than-expected increases in the consumer price index for January. This caused stocks to accelerate their declines. The data suggests that the Federal Reserve should hold off on cutting interest rates anytime soon. I believe a rate cut in May is unlikely. We advocate for the Fed to wait because the economy is currently robust.
2. Hot CPI Numbers: In January, the headline CPI rose by 0.3% month over month, surpassing the expected 0.2%, and increased by 3.1% year over year, exceeding the anticipated 2.9%. The core rate, which excludes food and gas prices, also saw a higher-than-expected increase of 0.4% month over month and 3.9% year over year, in line with estimates.
3. Coca-Cola's Performance: Coca-Cola exceeded revenue expectations and met estimates on earnings per share in the fourth quarter. Increased prices helped offset lower volume in North America. PepsiCo experienced similar soft demand in the region. We've previously mentioned that new weight loss and diabetes drugs from Novo Nordisk and Eli Lilly could potentially impact soda and snack food companies.
4. Biogen's Earnings Miss: Biogen reported quarterly earnings and revenue below expectations. Guidance was slightly conservative, with concerns about declining multiple sclerosis drug sales and costs associated with its Alzheimer's drug, Aduhelm. Instead, Biogen is focusing on Leqembi for Alzheimer's. Eli Lilly's similar drug, donanemab, is awaiting FDA approval.
5. Jefferies Raises Eli Lilly's Price Target: Jefferies increased Eli Lilly's price target to $853 per share from $814 and maintains its buy rating. Orforglipron is considered crucial to Lilly's GLP-1 strategy and is one of the few significant ways their obesity portfolio differs from Novo Nordisk. Orforglipron, a weight-loss pill, is still undergoing clinical trials.
6. Stifel Upgrades Palo Alto Networks: Stifel raised Palo Alto Networks' price target to $410 per share from $280, reflecting the stock's record performance. Palo Alto shares closed near $372 on Monday, close to the all-time high of nearly $381 on Friday. Stifel expects earnings to be in line with or slightly above expectations.
7. UBS Optimistic about Nvidia: UBS increased Nvidia's price target to $850 per share from $580 and maintains a buy rating. Analysts are bullish ahead of the company's earnings next week.
8. Morgan Stanley's View on Disney: Morgan Stanley considers Disney's participation in a sports streaming bundle as a low-risk proposition.
9. Bernstein's Rating on Apple: Bernstein reiterates a hold-equivalent rating on Apple. Analysts believe that Apple Services, such as Apple Music and Apple TV+, have significant pricing power.
10. Morgan Stanley's Endorsement of Ford: Morgan Stanley reaffirms Ford as a top pick. Analysts anticipate that the continued slowdown in EV demand may prompt traditional original equipment manufacturers to seek cost-saving measures or adjust spending levels in response to higher combined volumes.
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