OP Wire 7/18 (OP – Lite)

Futures Rebound After Tech BatteringU.S. stock futures traded higher Thursday, rebounding after the Nasdaq Composite’s worst session since 2022 as investors grew wary of elevated tech valuations. The Nasdaq slumped 2.8% on Wednesday, its worst day since December 2022, while the S&P 500 dropped 1.4%. Meanwhile, the Dow Jones Industrial Average gained 0.6%, closing above 41,000 for the first time. TSMC’s strong results could boost tech confidence. More earnings, including Domino’s Pizza and Alaska Air, as well as economic data, are expected later today.TSMC Posts Strong Q2 Net ProfitTaiwan Semiconductor Manufacturing (TSMC) reported a 36% rise in second-quarter net profit, driven by high demand for AI chips. The chipmaker’s net profit reached T$247.85 billion ($7.6 billion), surpassing expectations. Despite geopolitical tensions and potential export curbs on China, TSMC remains a key player in the global chip market.Netflix Net Adds Set to ContractNetflix is expected to report lower net subscriber additions for Q2 compared to Q1. LSEG forecasts 4.82 million new subscribers, down from 9.3 million in Q1. Despite this, JPMorgan remains positive on Netflix shares, citing a strong content slate and benefits from cracking down on password sharing.ECB Set to Hold Rates SteadyThe European Central Bank is expected to keep interest rates unchanged at its latest policy meeting. Investors will focus on ECB President Christine Lagarde’s press conference for future rate guidance. Markets are pricing in nearly two rate cuts for the rest of the year, with the next move likely in September.Warner Bros Discovery to Split Up?Warner Bros Discovery is considering splitting its digital streaming and studio businesses from its legacy TV networks to generate greater shareholder value. The company has faced financial challenges, with its stock down nearly 27% this year. Strategic options, including a potential sale, are being explored to unlock value.
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$PG- Evercore ISI analyst Robert Ottenstein raised the firm’s price target on Procter & Gamble to $183 from $177 and keeps an Outperform rating on the shares. P&G remains “a reliable durable grower,” says the analyst, who contends that Street expectations for Q4 and FY25 look conservative, even without a rebound in China, and are likely underestimating Procter’s operating leverage in a neutral commodity environment.

$ALLY- RBC Capital analyst Jon Arfstrom raised the firm’s price target on Ally Financial to $49 from $46 and keeps an Outperform rating on the shares after its Q2 reanings beat. The company’s fundamentals were driven by margin improvement, stable balance sheet trends, and seasonally lower losses, and the management remains confident in the outlook, the analyst tells investors in a research note. RBC adds that Ally should produce consistent margin expansion in the coming quarters, which is the “primary driver” of its expected higher earnings and returns.

$AAPL- William Blair downgraded PayPal (PYPL) to Market Perform from Outperform without a price target. The analyst sees potential upside to 2024 and 2025 earnings estimates, saying PayPal continues reducing non-transaction expenses and buys back stock with its “robust” free cash flow. However, the firm does not anticipate the stock’s multiple will appreciably rise in the absence of accelerating payment volume growth or expanding transaction dollar margin. Blair is “increasingly convinced” that PayPal will have to reverse the decline in what is effectively its gross margin, and most important unit economic key performance indicator, for the stock to re-rate higher. It does not see this as a high probability outcome in 2024 or 2025. In addition, Apple’s (AAPL) ongoing consumer-facing fintech investments, primarily Apple Pay, “create intractable competitive challenges” for PayPal, adds the firm.

$MSFT- TD Cowen raised the firm’s price target on Microsoft to $495 from $470 and keeps a Buy rating on the shares. The firm expects modest upside in Azure to continue, with data points suggesting continued growth acceleration trends. Cowen’s checks remain mixed on O365 Copilot, but Street expectations are low and they expect in-line Office results. Overall, Cowen expects another healthy beat on growth and margins.

$TOST- Mizuho upgraded Toast (TOST) to Outperform from Neutral with a price target of $33, up from $21. With volumes approaching $200B by 2025, Toast would be the de facto fourth-largest retailer merchant in the U..S by volume, following the likes of Walmart (WMT) and Amazon.com (AMZN), the analyst tells investors in a research note. The firm’s analysis of the recent card network settlement court documents confirms that large merchants pay substantially lower credit card interchange fees. It sees potential opportunity for Toast to renegotiate interchange fees, thereby dramatically lowering its costs of credit processing over the medium-term.

$NVDA- Microsoft (MSFT) said that Xbox has partnered with NVIDIA GeForce NOW (NVDA) and Boosteroid to bring first-party Xbox titles to more players. “If you own any of the supported Xbox games on Steam and have an account to either streaming service, you can play your game in the cloud from anywhere,” the company said. “Just make sure that you link your Steam account to either NVIDIA GeForce NOW or Boosteroid. If you own any of the supported games on the Microsoft Store or have a valid Game Pass subscription, you can stream those titles on NVIDIA GeForce NOW by signing in with your Microsoft account.” 

Hey OP! Our chat plays and systems plays have been on point. Seeing amazing results from the members that are using the OP Wire along with our courses to stack & protect. Very exciting! Also very excited to announce something that I have been working on for all of you very soon so be ready – it’s gonna be awesome:)

Today I’ll be looking to scalp WMT puts as I expect it to retrace & fill its gap a little. See you all in chat 

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