Reddit Stocks: What meme stocks are trending today? – October 11, 2023

US futures

• Dow Jones Industrial Average is up 0.4%
• S&P 500 is up 0.4%
• Nasdaq 100 is up 0.5%

US futures are trading higher today as investors and traders await for the minutes from the Federal Reserve’s meeting in September, with markets keen to find out more clues on the central bank’s interest rate path following several Fed members providing dovish commentary and signalling that tighter conditions may allow it to leave rates alone for the rest of the year. Several more Fed members speak before the minutes are released today, including Christopher Waller, Raphael Bostic and Susan Collins.

We have US PPI out ahead of the FOMC minutes. Economists believe PPI rose 0.3% month-on-month in September and core PPI, which is more closely-watched by the Fed, is expected to rise 0.2%.

Meanwhile, US treasury yields have continued to ease today and help support stocks, with the 10-year bond yield falling back below 4.6% for the first time this month.

The conflict in the Middle East continues to be felt in financial markets. Safe-haven bets like gold remain in play, with the metal up 0.7% today and at a two-week high.

Most discussed Reddit stocks

Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:

1. Tesla
2. Palantir
3. NVIDIA
4. Lockheed Martin
5. Netflix
6. Visa
7. RTX Corp
8. Advanced Micro Devices
9. C3.ai
10. Apple

Most active US stocks before the bell

Below are the most active stocks with a valuation of at least $500 million before the bell, based on trading data taken from Bloomberg:

1. Nikola
2. Plug Power
3. Palantir
4. Tesla
5. IonQ
6. ChargePoint
7. Exxon Mobil
8. Pioneer Natural Resources
9. AMD
10. Lucid Group

US premarket winners and losers

Here are the stocks worth at least $500 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:

Top US stocks to watch

Let’s have a look at the top stocks to watch today.

Exxon Mobil to buy Pioneer Natural Resources

Exxon Mobil is down 2.1% after confirming it has struck a deal to buy Pioneer Natural Resources following over a week of speculation, which will see the oil giant complete its biggest takeover in more than two decades.

Exxon Mobil is paying $253 per share in an all-stock deal for Pioneer, which is up 2.3% at $242.77 this morning. That price gives Pioneer a valuation of $59.5 billion, just shy of the $60 billion touted by media reports.

The deal will make Exxon Mobil the leader in the popular Permian basin in Texas and New Mexico, allowing it to create a comfortable buffer versus other big producers like Occidental, and take its daily output above 4.5 million barrels of oil equivalent per day, while also giving it more room to explore.

Walgreens finds CEO ahead of earnings

Walgreens Boots Alliance is up 1.4% and at its highest level in over a month after announcing it has appointed Tim Wentworth as its new chief executive, charging him with turning the business around amid a slump in its share price and falling profits.

The pharmacist, which reports quarterly results tomorrow, had been left rudderless after CEO Rosalind Brewer and chief financial officer James Kehoe left the business. That injected a lot of uncertainty over its outlook and strategy.

Walgreens Boots lowered its guidance in the last quarter and said US consumer spending was tightening. Revenue is forecast to rise 7.3% from last year in the fourth quarter to $34.83 billion and adjusted EPS is seen falling 33% to $0.78. Adjusted operating profit is the company’s headline number and analysts see it rising 1.8% to $757.4 million.

Assuming it meets those expectations, it is on course to report a 4.4% rise in annual revenue to $138.49 billion and a 20.6% drop in full-year adjusted EPS to $4.00, which would be at the very bottom of the company’s revised guidance range.

We already have some preliminary guidance for the new financial year, so investors will want to see if Walgreens is feeling more optimistic, pessimistic or largely the same about its prospects than it was three months ago. Walgreens said it is anticipating a mid-single digit rise in adjusted operating profits, with EPS figures to rise at a slower pace due to higher tax rates.It appears the new CEO, who led Cigna’s health services business before joining, has had little time to catch-up to outline any major changes tomorrow.

Birkenstock IPO: Is the bar too high?

German sandal maker Birkenstock will be the next company to test the appetite of investors when it completes its IPO today, but has it set the bar too high?

The listing has been priced at $46 per share, in the middle of its target range after wisely deciding against aiming for the top-end like most other big-name listings in recent weeks. Still, it is coming to market with a lofty valuation and that sets a high bar.

Birkenstock’s valuation sits at 6.9x annual sales and over 45x earnings, based on its last set of full year results. Those multiples are higher compared to other big players in the footwear space, such as Nike, Puma, Deckers, Crocs and Skechers, all of which trade at just 1.0x to 3.0x forward sales and much lower earnings multiples. 

That valuation could be hard to swallow for markets. Birkenstock would have to deliver rapid revenue and earnings growth to justify it, and that looks all the less likely considering the brakes are coming down on consumer spending and the economic outlook is becoming more challenging.

You can find out more in Everything You Need to Know About the Birkenstock IPO.

Blackstone eyes Disney’s Indian assets

Blackstone is up 0.2% amid reports it is holding preliminary discussions with Disney about acquiring a stake in its Indian arm, which has been attracting several suitors after Disney said it was open to a sale or finding a partner in the region.

The reports, from unnamed sources speaking to Reuters, said conversations were held last week. Other reports have suggested some Indian billionaires have also been interested. Disney is up 0.7% on the news.

Novo Nordisk delivers blow to DaBita and Baxter

DaVita and Baxter International, both of which make money from providing dialysis to patients, are down 9% to 16% this morning after Danish pharmaceutical giant Novo Nordisk revealed a recent trial of its buster Ozempic drug showed early success in treating kidney failure in patients with diabetes.

Novo Nordisk is now ending the trial about one-year ahead of schedule on the recommendation of the monitoring board overseeing it, suggesting progress is being made faster than anticipated. Final results are now expected in the first half of 2024. Novo Nordisk shares on the NYSE are up 2.9% this morning.

Tesla stock hits 3-week high

Tesla shares are up 1.1% at $266.65 and set to open at a three-week high as markets place their bets ahead of the third-quarter earnings next week, when we will find out the financial impact of that big delivery miss in the third quarter.

The company delivered far fewer vehicles than anticipated in the period, which was put down to factory downtime. However, it is still stoking concerns that demand is wavering, especially as inventory levels barely reduced in the period, and that more price cuts will be needed this year and next, which is resulting in lower earnings estimates.

Citigroup became the latest broker to lower its target price on Tesla this morning, trimming it to $271 from $278. The average target price set by Wall Street currently sits at $237, according to a Refinitiv consensus. That is about 10% below the current share price.

Rally in defence stocks tempers

Defence stocks are facing some resistance after popping this week in response to the conflict in the Middle East, with Lockheed Martin down 0.3% at $434, RTX Corp is flat at $73.40 and Northrop Grumman up 0.4% at $467 in premarket trade today.

Appetite for defence stocks has increased as geopolitical tensions rise, but the rally is now tempering. UBS issued its view on the trio this morning and said Northrop Grumman offers the most upside potential, giving it a Buy rating and a $555 price target.

UBS gave Lockheed a Neutral target this morning and set a price target at $470. The broker also issued a Neutral rating on RTX with an $80 price target.

Palantir hits 2-month high on AI contract

Palantir shares are up 0.7% before the bell and at a two-month high. The stock has benefited from the interest in defence stocks this week due to its close ties to the US military and announced yesterday that it has won a new contract worth up to $250 million to help the US Army test-out new AI and machine learning capabilities.

Netflix sees target price slashed before results

Netflix shares are up 0.5% at $375 after a wave of brokers cut their target price on the streaming giant ahead of its third-quarter results out next week, although all of them still see significant upside potential from current levels.

Piper Sandler lowered its view to $400 from $440, TD Cowen cut its target to $500 from $515, while Morgan Stanley reduced its target to $430 from $450. Netflix shares are currently wedged between the 200-day moving average at $372 and the 20-day moving average at $384, with both levels having been tested yesterday and holding.

Can Apple stock break above $178.50?

Apple shares are up 0.3% at $178.90 this morning and once again trying to clear the 50-day moving average at $178.50, having tried and failed to move above here over the last two sessions.

Chip stocks hit multi-week highs

AMD shares are up 0.6% and set to open at a five-week high. The chipmaker announced yesterday that it has agreed to buy Nod.ai to expand its AI software. It said the deal will “significantly enhance out ability to provide AI customers with open software that allows them to easily deploy highly performant AI models tuned for AMD hardware”.

NVIDIA shares are up 1% at $462.61 and set to open at a one-month high today after TD Cowen raised its target price on the chipmaker to $700 from $600. The average target price on the stock currently sits at $634, according to a consensus from Refinitiv, implying there is over 38% potential upside from current levels.

Both stocks have mildly outperformed the wider chip space over the past month, with the Philadelphia Semiconductor Index trading at its highest level in over three weeks.

Watch US banks ahead of Q3 earnings

US banks are also on the radar this week as JPMorgan, Wells Fargo and Citigroup will kick-off the third-quarter earnings season this Friday, with others like Bank of America, Morgan Stanley and Goldman Sachs to follow next week.

It is expected to be a tough quarter, with most expected to report a decline in earnings. We also expect commentary about consumer health and the economic outlook to be more cautious, especially as we approach 2024. However, markets have priced-in a bleaker outlook looking at the declines in share prices and valuation multiples trending below historical averages, with some having recently hit multi-year lows.

You can find out what to expect from the industry as a whole in our US Banks Q3 Earnings Preview.

Meanwhile, we have also taken a look at the largest bank in the US, JPMorgan, which is the only major player that has gained ground this year. We believe it will continue to outperform in an otherwise muted sector considering it is expected to report the best improvement in earnings and isn’t trading at a premium.

You can find out more in our JPMorgan Q3 Earnings Preview.