In the Money: 5 Things to Know
Futures higher on tech stocks, Eli Lilly warns, CP Rail cuts outlook, Cameco beats
In this special episode of In the Money with Amber Kanwar, we unpack what a Mark Carney-led Liberal minority means for Canadian investors — from markets and monetary policy to energy and geopolitical strategy. This episode features Frances Horodelski, Jim Thorne of Wellington-Altus, and Eric Nuttall of Ninepoint Energy Partners. You can listen on Apple, Spotify or here.
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Lucky number 7: The S&P 500 had advanced for a 7th session in a row and the party looks set to continue for an 8th day thanks to Microsoft and Meta earnings. Measured in days, the S&P is on an impressive run. However, the S&P 500 has declined for three months in a row now. Investors shook off disappointing economic data yesterday and traded it for hope on the trade front after the White House said it was nearing deals. Higher than expected jobless claims aren’t doing much to dent the rally this morning with focus squarely on earnings. Tonight we get Amazon and Apple. On the TSX there are 14 companies reporting today including CN Rail after the bell.
In tech we trust: Shares of Microsoft (+9%) and Meta (+6.5%) are surging in the pre-market. I own both. Microsoft beat earnings expectations and showed strong growth in its cloud business. Sales in its Azure cloud business increased 33%, much better than the 29% growth expected, and said growth would be even higher in the next quarter thanks to AI and new cloud commitments from OpenAI. Citi’s Tyler Radke points out that the cloud business was driven by both AI and non-AI customers and this bodes well for other stocks. “The results imply core Azure growth decelerated by ~1pt, though non-AI workloads contributed to a larger portion of the beat which suggests positive read-throughs for consumption names (Snowflake, MongoDB, Elastic NV),” wrote Radke. Meta topped estimates and raised its spending plans as it continues to invest in AI. Sales at Meta grew 16% as it continues to buck the trend of weaker ad sales while profit was 23% higher than expected. Investors seem comfortable with the company’s plans to invest more in data centres because they are seeing returns on their AI platform. The company says their AI technology is reaching 1 billion monthly active users across its platforms (Facebook, Instagram, WhatsApp, etc). As an aside, they now have 350 million people using Threads (the rival to Twitter/x) which is up from 320 million users in January. I am still not really on it, but I guess I am part of the minority! Nvidia is loving the spending plans on AI infrastructure, the stock is up 4.5% in the pre-market.
Shedding pounds: Shares of Eli Lilly are under pressure after cutting its profit outlook. The stock has benefitted in the past for the tremendous demand for its Ozempic competitor product and that showed up this quarter as well. Sales in the US jumped nearly 50%. However, the company is taking a charge on its cancer business and investing more in R&D which will weigh on the bottom line. The stock is also under pressure as CVS says it is dropping Eli Lilly’s weightloss drug as a “preferred drug” and will start recommending Novo Nordisk’s drug instead. Overall, disappointing for investors as Evercore’s Umer Raffat says there was modest expectations the company would actually raise its profit outlook.
Trains & planes: Watch shares of Canadian Pacific Kansas City after the railway beat profit expectations and boosted its dividend 20% but warned that profit growth for the year would be lower than previously expected. CPKC now says earnings growth will be between 10-14% vs their prior view of 12-18%. This shouldn’t come as a major surprise given the tariff anxiety and the fact the stock is trading near a 1-year low. BMO’s Fadi Chamoun says the reduced profit outlook was “as expected.” He doesn’t think tariffs are going to dent the company’s longer term growth prospects. “Despite shifting trade policies, CPKC appears to continue to enjoy a strong pipeline of revenue synergy opportunities and has identified several growth avenues that have the potential to mitigate the impact of tariffs,” Chamoun wrote. I’ll also have my eyes on Bombardier after it reported better than expected sales growth (+19%) and lower than feared cash burn (-$304 million vs consensus -$360 million). Not only that, the company gave a forecast for 2025 after previously withholding this type of guidance due to trade uncertainty. However it looks light relative to expectations. “We expect a neutral/slightly negative trading reaction given the mid-point of the newly introduced (free cash flow) guidance is slightly below both our forecast and consensus, and EBITDA margins for the quarter and the year are also slightly below expectations,” wrote Benoit Poirier at Desjardins.
Glowing: Shares of Cameco are higher in the pre-market after profit came in well ahead of expectations on higher sales and higher prices. The uranium producer maintained its profit forecast for the year. The stock is off about 25% from its December peak and could put in a relief rally today. “Overall, given the solid Q1 beat and no changes to guidance, we view the update as positive for the shares on a First Look basis,” wrote Scotia’s Orest Wowkodaw.
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