Spirit Airlines (SAVE) stock rose on Friday after the airline raised its fourth-quarter outlook. This comes after a federal judge blocked a potential merger with JetBlue (JBLU).
Citigroup makes Marvell Technology (MRVL) top specialty semiconductor, rather than previously No. 1 Nvidia (NVDA), due to Marvell's revenue growth and AI potential Nominated.
Celsius Holdings (CELH) shares fell after Bank of America downgraded the stock from “buy” to “neutral,” citing competitive pressures expected to weigh on growth. The company also lowered its price target for the energy drink maker.
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Editor's note: This article was written by angel smith
video transcript
Josh Lipton: Now, let's check out some trend tickers in today's trade. We begin today's session with Spirit Airlines stock soaring after the company raised its fourth-quarter outlook, now expecting $1.3 billion in revenue. There are actually a lot of headlines about this, Jared.
Jared Breichle: yes.
Josh Lipton: Spirit Airlines is clearly doomed after a judge blocked its merger with JetBlue, saying the partnership would harm consumers. But now the company is saying, “Okay, frankly, we still think a merger is the best opportunity.'' Incidentally, Reuters reports that Spirit is indeed pushing JetBlue to challenge the decision to block the merger.
So let's see how it goes. And apart from that, the company also gave us some new financial aspects to consider. Fourth-quarter earnings are expected to be at the high end of that range, and investors are hoping for that.
Jared Breichle: of course. And avoiding this elephant in the room, we gathered some famous traders, some famous day traders from Platform X, formerly known as Twitter. Dave Portnoy, I managed to buy it yesterday. He was, in a way, I don't want to say the best tick, but as soon as he said he bought Spirit, some news came down and boom.
Josh Lipton: That headline was a hit.
Jared Breichle: Yes, that headline that was a big hit yesterday got about 25% support. But the stock price was already over and had fallen considerably before then. As for the whole drama here, I like the Bloomberg Intelligence summary. They argue that a U.S. judge's rejection of the JetBlue-Spirit merger has left Spirit with little choice. Their illiquidity, low operating margins, and low cash generation dwarf these purchase obligations.
Looking to the future, $1.5 billion of debt will come due or need to be refinanced in 2024. So if you don't have a source of funding, you're going to struggle here. I've seen this before where there's a merger coming up, but I think this is his second one that we're talking about today. And when it's just that program, that number one option, gets thrown out the window, there are some ripple effects that occur.
Josh Lipton: Yeah, Portnoy, by the way, I'm really talking a lot about X today, I mean, he's swinging really hard at this name in an attempt to elevate himself.
Jared Breichle: Well, he's winning. If I can finally win on this trade that beat me yesterday, I'll be talking the book too. Good luck to Dave there.
NVIDIA ceded its throne to Marvell Technology, losing its spot as Citigroup's top specialty chip stock. The stock jumped on the news, with analyst Atif Malik citing strong growth and revenue potential for AI optical technology. So let's talk about another brand. You're probably wondering where it is, sorry, I was trying to get the graph and it's not showing up here.
But there have been a number of upgrades recently, and they're not just from Raymond James. There's also Cowen. They raised their price target to $75 from $75. William O'Neill raised his price target for Susquehanna to $80 from $65 and for Citi to $75 from $61.
Josh Lipton: Yes, City, just listen. They believe in the bottom line. This is just a ploy to capitalize on the AI boom, right? We were just talking to Fred from Macquarie about that. They believe the stock could rise, especially due to growth in the AI optics market.
They seem to think that Marvell is anticipating troughs in markets such as enterprise networking and carriers. So he ended up buying Marvel. But he also likes his NVIDIA, so I'd like to be clear about that. However, enjoy listening to this 20%-plus run of his until CES. I don't know — they're both doing great. So, we know what NVIDIA is doing, but Marvell is also up about 80% over the past year.
Jared Breichle: Yes, I agree. I was looking for heat maps. I don't know my semiconductor heatmap, but it basically confirms what you just said.
Josh Lipton: By the way, it's not just the City. I mean, the streets love this.
Jared Breichle: Yeah, I was just reading this long list.
Josh Lipton: More than 85%.
Jared Breichle: I was a little surprised, but there–
Josh Lipton: More than 85% say this is a buy and zero sells.
Jared Breichle: Consensus trading is there.
Josh Lipton: Now, Celsius stock has finally fallen as BofA Securities downgraded the company to Neutral and lowered its price target to $65. So the Bank of America team, Jared, is no longer a fan. They move from buy to neutral.
Why is love lacking? Well, they think competitive pressure, that's going to be a problem. So names like Monster and Red Bull could weigh on growth this year. They talk about lack of differentiation in innovation, increased competition. They believe that will be a problem for Celsius to meaningfully expand its share here.
Jared Breichle: Yes, its competitors, namely Monster, remain Monsters, not just in name, but in their stock price performance over the past 25 years. But here's a note from an analyst. Analysts say, “We're talking about the uncertainty around sales growth, and the impact of that is creating a more favorable risk-reward profile than if we were benefiting from sales momentum.'' It's a Pepsi distribution contract that's weighing heavily on me. ” And here is another quote. “We warn that a lack of differentiating innovation and increased competition are potential obstacles to Celsius' ability to significantly increase market share, and we forecast fourth-quarter sales of $351 million to $300 million.” We're lowering it to $41 million.'' By the way, here we are with one minute left to the bell, and our adjusted EBITDA target is $56.5 to $55 million. The stock price target is also maintained at $65.
Josh Lipton: Yes, so he downgraded and moved to the sidelines, but kept his goals. By the way, stock prices are doing well. It's up about 60% over the past 12 months, which is clearly enough for BofA. They moved to the sideline.
