Southwest down despite activist deal, strong gains

44 minutes ago

Southwest Airlines (LUV) announced a settlement with Elliott Investment Management on Thursday morning, ending a months-long battle with the activist investor who has called for significant changes in leadership and business strategy at the airline.

Southwest agreed to reduce the board to 13 seats by the 2025 shareholder meeting, with Elliott-sponsored candidates taking five of those spots, while a sixth replacement seat would go to former Chevron (CVX) CFO Pierre Breber. The new board members will replace six retiring members on November 1, including Executive Chairman Gary Kelly, who previously served as CEO of Southwest.1

As part of the settlement, Elliott has agreed to drop its call for a special shareholder meeting in December, as Elliott partner John Pike and portfolio manager Bobby Xu said they believe the airline is now well positioned to “improve business performance, to stimulate operational implementation and evaluate additional measures.” changes to create long-term shareholder value.”

News of the settlement came shortly after Southwest reported third-quarter results that exceeded Wall Street expectations.

The airline reported total revenue of $6.87 billion, up nearly 6% from the same period last year and slightly ahead of Visible Alpha analyst estimates. Net profit fell sharply year-on-year to $67 million from $193 million last year, but did not fall as far as analysts expected, to $19.8 million.

The airline also said it plans to buy back $250 million of stock in the fourth quarter, its first “accelerated share repurchase program” since it announced a new $2.5 billion share buyback plan last month.

Shares of Southwest initially soared in premarket trading following the release of quarterly results, but began falling with news of the Elliott deal.

The stock fell 6% in mid-afternoon trading, returning to where it was at early 2024.

–Aaron McDade

Tesla is riding on optimism about its 2025 prospects

1 hour and 19 minutes ago

Shares of Tesla (TSLA) are rising a day after the company’s third-quarter results, which analysts at Wedbush called an “Aaron Judge-like performance.”

The company noted Tesla’s forecast of 20% to 30% growth in vehicle deliveries next year, “compared to street numbers in the 10%-12% range coming to market.” Wedbush maintained his Outperform rating and $300 price target, using the moment to compare Tesla to Judge, the slugger who put up mega numbers for the New York Yankees this season.

However, not every analyst is buying it. JPMorgan called the results a return to Musk’s “exuberant predictions,” which “may or may not serve as guidance.”

The company’s own outlook is for 12% growth. JPMorgan maintained its Underweight rating but raised its price target from $130 to $135.

The electric vehicle maker posted third-quarter net income of $2.17 billion, or 62 cents per share, compared with $1.85 billion, or 53 cents per share, a year ago. That result exceeded According to analyst estimates, margins rose from 17.9% to 19.8%.

Shares of Tesla rose 21% to around $258 on Thursday afternoon, putting the stock back into positive territory for 2024.

–Andreas Kessel

Honeywell shares fall as company lowers outlook

3 hours and 24 minutes ago

Shares of Honeywell International ( HON ) fell Thursday morning after the aerospace and safety equipment maker missed sales estimates and cut its revenue guidance as demand for its industrial automation products collapsed.

Honeywell reported third-quarter revenue rose nearly 6% year over year to $9.73 billion, while analysts polled by Visible Alpha expected $9.89 billion. Adjusted earnings per share (EPS) of $2.58 exceeded expectations.

Sales in the Industrial Automation segment fell 5% to $2.50 billion, which the company blamed on “volume softness in warehouse and workflow solutions and safety and sensing technologies.”

CEO Vimal Kapur said the company “performed in a challenging environment in the third quarter.” Kapur added that it has made significant progress this year “in the simplification and optimization of the Honeywell portfolio,” including the planned spin-off of its Advanced Materials division and the exit from its personal protective equipment business ( PPE). acquisitions.

The company said that due to the completion of these purchases, along with third-quarter results and management’s guidance for the remainder of the year, it lowered its 2024 sales forecast to a range of $38.6 billion to $3.88 billion, compared to the previous forecast of $39.1 billion. to $39.7 billion. It narrowed the range of adjusted earnings per share from $10.15 to $10.25, from $10.05 to $10.25.

Shares of Honeywell fell 4.5% in recent trading and were the second-biggest decliners in the Dow Jones.

–Bill McCol

IBM Stock sinks due to disappointing sales

5 hours and 5 minutes ago

Shares of IBM ( IBM ) fell nearly 6% early Thursday and were the Dow Jones’ biggest fallers after the company reported quarterly revenue that fell short of Wall Street estimates.

The company late Thursday reported third-quarter revenue of $14.97 billion, up 1% year-over-year and 2% in constant currency terms, but lower than the consensus estimate of $15.07 billion from analysts polled by Visible Alpha. Infrastructure revenues fell by 7% and consultancy revenues remained the same.

IBM posted a net loss of $330 million, or $0.36 per share, due to pension settlements of $2.7 billion. Analysts had expected earnings of $1.72 billion, or $1.84 per share.

IBM Chief Executive Officer (CEO) Arvind Krishna said the group expects fourth-quarter revenue growth, in constant currency terms, to be “consistent” with the third quarter, driven by strong software sales. Krishna said the company’s “AI business now exceeds $3 billion, up more than $1 billion quarter-over-quarter.”

Even after falling early Thursday, IBM shares are up nearly 35% this year.

–Nisha Gopalan

UPS shares are rising as the shipping giant returns to growth

6 hours and 19 minutes ago

Shares of United Parcel Service (UPS) rose in premarket trading as the company reported third-quarter results that topped analyst expectations.

The shipping giant reported revenue of $22.2 billion, beating the consensus estimate of $21.94 billion from analysts compiled by Visible Alpha. Net income came in at $1.54 billion, or $1.80 per share, above expectations, which came in at $1.36 billion and $1.59 per share.

Thursday’s results mark the first time in nearly two years that UPS returned to year-over-year revenue and profit gains, after both UPS and rival FedEx (FDX) reported declines following spikes in shipping demand during the pandemic.

Shares of UPS rose 9% to $143, trading at their highest level in three months.

–Aaron McDade

Futures linked to major indices mixed

7 hours and 35 minutes ago

Futures tied to the Dow Jones Industrial Average fell 0.2%.

S&P 500 futures rose 0.5%.

Nasdaq 100 futures rose 0.9%.