Stocks making the biggest moves midday: U.S. Steel, CVS Health, SolarEdge and more

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CNBC 04 May, 2021 - 11:14am 28 views

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U.S. Steel — Bucking declines in the broader market, shares of U.S. Steel rose 5.8% in midday trading after Credit Suisse upgraded the stock to outperform from underperform. Analyst Curt Woodworth told clients in a note that the surge in prices for steel made it clear that the industry was in a "super cycle." He sees U.S. Steel stock rallying 42% from where it closed on Monday.

CVS Health — Shares of the pharmacy retailer gained 3.8% just after 11 a.m. in New York after CVS said it earned $2.04 per share in the first quarter, above the $1.72 expected. CVS sales, which also topped expectations, rose at its stores as customers flocked to the company's locations to receive their Covid-19 vaccine. The company raised its full-year forecast.

Microsoft, Apple, Amazon, Facebook, Alphabet — Shares of Big Tech stocks dropped on Tuesday with the Nasdaq Composite down over 2%. Shares of Netflix lost 1.6%, and Microsoft dropped 2.1%. Amazon and Facebook shed about 2.6%. Apple dropped 3.8% and Alphabet fell more than 3%.

SolarEdge – Shares of the solar inverter maker dropped more than 14% after the company warned that margins could be lower going forward, thanks to higher freight costs. SolarEdge did, however, top analyst expectations during the period. The company earned 98 cents per share excluding items, while revenue came in at $405.5 million. Analysts surveyed by FactSet were expecting earnings of 80 cents per share and $395.4 million in revenue.

Under Armour – Shares dipped just shy of 3.6% despite the company beating top and bottom line estimates during the first quarter. The retailer reported adjusted earnings per share of 16 cents on revenue of $1.26 billion. Analysts surveyed by Refinitiv were expecting the company to post a per-share profit of 3 cents on $1.13 billion in revenue. Separately, Under Armour said it reached a settlement with the Securities and Exchange Commission over claims of disclosure failures.

Kroger, Alberstons — Shares of the grocery chains fell about 3.6% and 2%, respectively after Goldman Sachs said the return of restaurants and rising food prices should put pressure on supermarket stocks in the months ahead. Goldman downgraded Kroger to sell from neutral and Albertsons to neutral from buy, saying the companies were likely to be pinched by weakening demand and higher costs.

Quest Diagnostics — Shares of Quest Diagnostics gained 2% after UBS upgraded the stock to buy from neutral, saying industry fundamentals appeared to be at their healthiest point in more than a decade even as the revenue stream from Covid testing wanes.

Avis Budget — The car rental company's shares dropped 4% despite a better-than-expected earnings report. Avis reported a loss of 46 cents per share, less than the expected loss of $2.16 per share, according to Refinitiv. Revenue also topped estimates. Avis management commented on the chip shortage and did not provide forward-looking guidance.

iRobot — Shares of iRobot fell 11% after reaffirming the range of its profit guidance, which is on the low end of analysts' expectations. The company, however, reported EPS of 41 cents per share, well above the 9 cents per share expected on Wall Street, according to Refinitiv. Revenue also topped estimates.

Arconic — The industrial company's share price surged more than 16% after beating on the top and bottom lines of its quarterly results. Arconic reported earnings of 46 cents per share on revenue of $1.68 billion. Analysts projected earnings of 27 cents per share on revenue of $1.54 billion.

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Warren Buffett says Berkshire Hathaway is seeing 'very substantial inflation' and raising prices

CNBC 04 May, 2021 - 12:00pm

Warren Buffett is seeing inflation among Berkshire Hathaway's collection of businesses as the economic recovery from the Covid pandemic kicks into high gear.

"We are seeing very substantial inflation," the Berkshire chairman and CEO said at the conglomerate's annual shareholder meeting Saturday. "It's very interesting. We are raising prices. People are raising prices to us and it's being accepted."

"We've got nine homebuilders in addition to our manufacture housing and operation, which is the largest in the country. So we really do a lot of housing. The costs are just up, up, up. Steel costs, you know, just every day they're going up," the legendary investor added.

Berkshire Hathaway owns one of the nation's largest homebuilders Clayton Homes, along with companies such as Benjamin Moore paints and Shaw flooring.

Inflation has begun to accelerate recently due to multiple factors, including increasing demand and struggles with some areas of the supply chain, as well as just easier comparisons with the pace of a year ago. The core personal consumption expenditures price index, which excludes volatile food and energy prices, rose 1.8% in March, the fastest pace since February 2020. The headline number increased 2.3%, the quickest pace for that measure since 2018.

Federal Reserve Chairman Jerome Powell reiterated last week that he expects inflation to show a temporary move higher then settle back to around the central bank's 2% target. The Fed has resolved not to raise interest rates until the economy sees full, inclusive employment, so long as inflation doesn't run too far above the goal.

Higher price pressures could weigh on stocks as inflation erodes the value of future company profits, and can cause a spike in Treasury yields.

For a full recap of Buffett's comments at the annual meeting, see here.

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