Arguably the best result last night came from Shopify, which beat analyst expectations by nearly 30% as its AI capabilities attracted more merchants to its e-commerce platform. By contrast, there was a rare miss from Novo Nordisk, with its weight-loss drug Wegovy undershooting expectations. Disney posted its first ever profit from the combined streaming businesses of Disney+, Hulu and ESPN+, but warned of more challenging trading in its theme parks. Occidental Petroleum beat consensus on higher production and crude prices.
We are nearing the end of US reporting season and tomorrow will see the last in our series of daily updates for this quarter. The highlight tonight will be the Q2 result from the health care giant Eli Lilly.
Walt Disney
Disney comfortably exceeded consensus EPS estimates, driven mainly by a much better performance in the Entertainment division. The combined streaming businesses of Disney+, Hulu and ESPN+ posted a profit for the first time. Revenue was in line with forecasts and up 4% yoy with weaker sales and licencing of content offsetting a better-than-expected performance by US theme parks. After the strong Q3 EPS performance, Disney said it anticipates full year EPS growth of at least 20% (consensus 12%). It did, however, predict a short-term “moderation in demand” in the theme parks due to a softening consumer environment. Shares fell nearly 5%.
Novo Nordisk
Weaker sales of Novo Nordisk’s weight-loss drug Wegovy in Q3 sent its shares down 8%. This is a rare miss from a company that has seen its shares put on more than 200% since the launch of Wegovy in June 2021 amid a series of profit beats. This has caused investors to worry about competition from Eli Lilly, which reports tomorrow. Overall sales guidance was raised by 2% due to improving GLP-1 Rx trends. Volume trends are improving, which suggests the negative reaction overnight may be short-lived.
Shopify
Shopify beat Q2 EPS expectations by 27% as its AI-enabled tools brought more merchants onto its e-commerce platform. Some of the new brands using Shopify include Toys "R" Us, Mas+ by Lionel Messi and Dios Mio Coffee by Sofia Vergara. Sales were 2% higher than forecast, but good cost discipline magnified the beat at the bottom line. Shares rose 18%, reversing the negative trend since it issued downbeat sales forecasts after its Q4 2023 and Q1 2024 results. The implied outlook for Q3 2024 is 25% higher than consensus.
Occidental Petroleum
Higher oil production in Colorado and higher realised crude prices underpinned a significant profit beat in Q2, with EPS coming in 33% above consensus. Output in the U.S. Permian basin and in the Gulf of Mexico was at the higher end of the company's guidance. Q3 production is expected to increase about 140,000 boepd to 1.390m boepd. The recent acquisition of CrownRock has strengthened Occidental's position in the Permian basin.
The story so far
With nearly all companies now having reported, the median EPS beat is 4.2% and the median EPS growth 9.5%. The top share price reactions have been to Shopify, Spotify and Uber. The most negative have been to Intel, Snap and Ford.
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