European stocks started the day on May 21 with a slightly weaker note, marking a retreat from their recent impressive performance, with attention now shifting towards the upcoming earnings report from NVIDIA. The Stoxx 600 index dipped by 0.2%, showing a predominantly negative trend across most sectors, while futures for US equities remained relatively unchanged. Options markets in the US indicate significant anticipation for NVIDIA Corporation (NASDAQ:NVDA) earnings report this Wednesday, with traders expecting a notable shift in the chipmaker’s shares, reported Reuters.
JPMorgan Chase CEO Jamie Dimon signaled that his retirement might be closer than ever. This news could have a significant impact on the banking industry. Trump Media Enterprises, the media company founded by former President Donald Trump, reported a net loss of $327.6 million in the first quarter of 2024, despite generating only $770,500 in revenue. Home improvement retailer Lowe’s Companies reported better-than-expected earnings despite signs that consumers might be cutting back on spending on DIY projects. Bitcoin is currently experiencing a significant price increase, breaking the $71,000 mark for the first time since early April. Ethereum (Ether) is also experiencing a strong rally, jumping over 20% in response to ETF (Exchange-Traded Fund) optimism. This could signal increased institutional interest in the cryptocurrency space.
A Wall Street trading floor, chaotic with activity as traders and financial analysts analyze the company’s impact on the markets.
Meanwhile, in Asia, shares took a breather following a week-long streak of gains. Investors remained vigilant regarding commodity prices, especially with the Bloomberg Commodity Spot Index hitting its highest point since January 2023. Notably, gold and copper were trading near their historical peaks, adding to the market’s attention.
On another front, oil prices experienced a decline, influenced by various market metrics suggesting a subdued outlook, despite heightened geopolitical tensions ahead of an OPEC+ meeting on supply. Brent crude’s prompt spread narrowed to its smallest backwardation since January, indicating a potential shift in market dynamics, while the reduction in bets on crude price increases continued among money managers. Futures trading reflected a period of consolidation, with implied volatility levels nearing lows not seen since 2019.
From Chinese property market side, analysts suggest that China’s recent efforts to bolster the property sector will require patience to yield results. Despite these initiatives, S&P maintains its view that the market is still “searching for a bottom.” Edward Chan from S&P emphasizes the government’s seriousness in stabilizing the property sector but notes that significant stabilization requires improvements in homebuyers’ demand and confidence, which have been affected by a nearly three-year market downturn. According to CNBC, recent measures, including lowered down payment minimums and enhanced liquidity for developers, aim to address the challenges. However, analysts like Goldman Sachs’ Hui Shan and Nomura’s Ting Lu believe more substantial actions are needed, estimating a significant funding requirement to address inventory excess and stabilize prices. While progress is noted, challenges persist, as indicated by declining real estate investment and slower-than-expected retail sales growth. Rebuilding homebuyer confidence is crucial, particularly concerning delivery delays and economic uncertainty. Analysts anticipate further efforts from Beijing, including a national survey to assess funding needs for completing residential projects. Ultimately, restoring confidence in the presale system is seen as essential for a genuine recovery in China’s housing markets. As market players navigate these developments, attention remains keenly focused on unfolding events and their potential impact on investment strategies and market sentiment.
On the stock market front, analysts are bearish on stocks such as Zscaler, Inc. (NASDAQ:ZS) by lowering their price targets. For a comprehensive overview of Zscaler, Inc. (NASDAQ:ZS) and other stocks affected by such adjustments, see Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks .
Zscaler, Inc. (NASDAQ:ZS)
Price Reaction after the Price Target Cut: -0.45(-0.25%)
On May 20, Barclays analyst Saket Kalia revised down the price target for Zscaler, Inc. (NASDAQ:ZS) from $240 to $205 while maintaining an Overweight rating on the stock. Following this adjustment, Zscaler, Inc. (NASDAQ:ZS) stock price experienced a slight decrease of 0.25%. Zscaler, Inc. (NASDAQ:ZS) operates in the cybersecurity industry and is set to release its fiscal Q3 report on May 30. Kalia’s analysis anticipates billings of $584 million, but suggests that hitting $600 million is feasible, potentially alleviating concerns regarding the implied ramp-up in Q4. Despite expressing a desire to be more optimistic about the stock leading up to earnings, the analyst questions whether the Street’s projection of 23% billings growth for fiscal 2025 needs adjustment for the stock to be more attractive for investors.
Artisan Mid Cap Fund made the following comment about Zscaler, Inc. (NASDAQ:ZS) in its Q3 2023 investor letter:
“Notable trims in the quarter included Zscaler, Inc. (NASDAQ:ZS), BioNTech and Ingersoll Rand. Zscaler provides cloud-based Internet security solutions. In the quarter, it announced solid financial results including 43% revenue growth and 38% growth in billings, which were both ahead of expectations. We believe the dual trends of rising security vulnerability and increased enterprise digitization will lead to sustained demand, even in a recession. Cybersecurity remains a top concern for businesses and governments as cyberattacks can have devastating financial and reputational consequences. Meanwhile, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (e.g., Office 365 and Salesforce) and more remote workers than before the pandemic make operating IT infrastructures increasingly complex. The stock has been a top performer this year, and we decided to trim the position based on valuation considerations.”
You can visit Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks to see the other stocks that are downgraded.
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Disclosure: None. This article is originally published at Insider Monkey.
