Mid-Morning Look

Wednesday, July 23, 2025

U.S. stocks open higher following deal news as President Trump said last night the US and Japan finally reached a deal which would impose 15% tariffs (vs previous 25% threat) on imports including autos, while Japan will invest $550B into the US and open their market to certain goods. Nikkei surged +4% and in Asia, while global autos rallied with Toyota +15%. Bessent also said yesterday US and China will hold 3rd round of trade talks next week. Also, the European Union plans to quickly hit the US with 30% tariffs on some €100 billion ($117 billion) worth of goods in the event of no deal and if US President Donald Trump carries through with his threat to impose that rate on most of the bloc’s exports after Aug. 1. As a part of a first wave of countermeasures, the EU would combine an already approved list of tariffs on €21 billion of US goods and a previously proposed list on an additional €72 billion of American products into one package, a European Commission spokesman said.

A couple of notable sector movers today include winners utilities/power stocks (GEV, TLN, CEG, NRG, OKLO, SMR, etc.) after BRA auction results for the 2026/2027 planned year as capacity auction at PJM Interconnection, the biggest US grid, was $329.17 per megawatt-day, a 22% increase from the previous year (and a ~300% increase from the 2023-2007 average). Japanese autos (TM, NSANY, HMC) shares rose after the US/Japan tariff news); semiconductors among losers, led by weakness in TXN after guidance weighed on auto chip players (ON, STM); handful of high short interest, beaten up/unloved plays seeing “meme madness” with unusual moves today in names like GPRO, LVLU, BYND, DNUT, RKT among others. Strength in Smallcaps with the IWM rising to 5-month highs, while the S&P 500 look for a 12^th closing high of the year. Still no Fed speakers this week ahead of the FOMC policy meeting next week and markets await key tech earnings tonight from GOOGL, TSLA, IBM.

• In Food & Beverages: TSN was downgraded to Market Perform from Outperform at Bernstein and cut tgt to $59 from $74, as part of an earnings preview as sees a challenged cattle supply environment with heifer slaughter rates remaining elevated. CALM reported a 72% y/y sales increase to $1.10 billion in Q2, topping the average analyst estimate, while the net average selling price/dozen climbed 55% to $3.305. LW rises on results and guidance as sales rose 4% y/y to $1.68B vs. est. $1.59B and better EPS ($0.87 vs. $0.63) while expecting FY26 sales in range $6.35B-$6.55B as midpoint above the $6.42B estimate.
• In Retailers: GPRO, LVLU, FLWS, BYND, KSS among the names recently rising on no news, other than “meme madness” as retailers look to high short interest/beaten up names; toy retailer HAS raised its annual revenue outlook to be up mid-single digits in constant currency terms, compared with prior predictions to be up slightly and sees FY ADJ ebitda $1.17B to $1.20B vs prior forecast $1.1B to $1.15B. BOOT was downgraded to Hold from Buy at Jefferies with a price target of $175 (down from $187) saying they remain confident in the company’s fundamentals, but cite valuation for the downgrade.
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• BKR +4%; delivered Q2 results with adj EBITDA exceeding forecasts, supported by a 3.5% top-line beat and stronger-than-anticipated margin expansion while raises FY25 revenue and EBITDA guidance for IET.
• GEV +14%; raises 2025 financial outlook; expects revenue to move towards the higher end of $36-$37B and expects free cash flow of $3-$3.5B, up from previous expectation of $2-$2.5B after posting Q2 beat.
• LII +9%; reports a 3% rise to $1.5B in Q2 revenue on favorable mix and pricing benefits while EPS for Q2 increases 14% to $7.82 and the firm raises FY 2025 EPS guidance to $23.25-$24.25, revenue growth to 3%.
• LW +18%; rises on results and guidance as sales rose 4% y/y to $1.68B vs. est. $1.59B and better EPS ($0.87 vs. $0.63) while expecting FY26 sales in range $6.35B-$6.55B as midpoint above the $6.42B estimate.
• TLN +8%; among many movers to the upside in nuclear stocks following PJM capacity auction results overnight, lifting CEG, LEU, NRG, OKLO, VST, VRT among others).
• TM +12%; along with gains in NSANY, TMC following the US/Japan trade deal announced last night where tariffs on Japanese cars will be lowered to 15% from 25%. Japan shipped roughly 1.4 million vehicles to the U.S. last year, the third-largest exporter after Mexico and South Korea.
• TMO +11%; 2Q revenue $10.85B (vs. $10.7B est.), Organic Rev Growth 2% (vs. 0.8% est.), Life Sciences, Lab Product Ahead, and adj EPS $5.36 (vs. $5.23 est.); forecasts 2025 ADJ EPS to be in the range of $22.22 to $22.84 per share and revs to be in the range of $43.6B-$42.B.

• ENPH -6%; delivered in-line revenue and upside to margin/EPS as the company continues to manage its supply chain well and sees the benefits of ongoing product design improvements, but shares fell as Q3 revenue guidance was below expectations.
• FI -19%; after lowering their 2025 organic revenue to rise about 10%, down from its prior view of 10%-12% growth, as payments volume growth at Clover has softened this year, up 8% in Q2, in-line with last quarter. Separately, Fiserv said it has agreed to buy a part of TD Bank’s merchant processing business in Canada.
• MARA -10%; after announces $850M convertible notes offering.
• OTIS -10%; as Q2 sales miss at $3.6B vs. est. $3.706B; guides FY revs $14.5B-$14.6B, down from prior $14.6B-414.8B and backs FY EPS of $4.00-$4.10; sees outlook FY organic growth 1%.
• ON -6%; along with other automotive semiconductor chip players STM, NXPI after TXN results.
• TXN -11%; reported strong 2Q results and provided mixed 3Q guidance (revs slightly above, while EPS missed due to lower OIE) and after growing revs +9% q/q in 2Q, 3Q growth is decelerating to +4% q/q, citing 2Q benefited from tariff related pull-ins, China saw tariff related pull-in activity.