Daily Brief United States: Tesla , Lululemon Athletica, Nextera Energy, ZEEKR, 10X Genomics, Perrigo, Balchem Corp, Propetro Holding, Urban-Gro and more

• Plunging sales & growing losses, severe price cuts & layoffs, failed FSD, M2 dropped for Robotaxi, and more, confirm that Elon Musk won’t fix Tesla’s most serious problems—which he created.
• He still demands his “unfathomable” pay package be restored, and his feckless, captured Tesla Board is doing exactly what he wants.
• But what Tesla’s Board should do, what it should have done years ago, is fire Elon Musk, the single greatest risk to Tesla’s future.

• Again, Tesla reports a 1Q24 sales with 4% miss but post market share price up more than 10% for 6 reasons. 1. Gross margin was stable on 15% sales drop;
• 2. ASP was stable; 3. Affordable EV on track for 2025; 4. Factory expansion to slow; 5. Optimus to sell end of 2025; 6. 2024 EV shipment higher than 2023.
• Near term risks to remain: 1. When will margin trough? 2. Why bother to buy EV if 2nd hand market collapsing? 3. Will Robotaxi/FSD bring in meaningful sales/profits soon?

• On March 21st, Lululemon reported FY23 results. All things considered, the results were good. Guidance, however, caused some upset. Lululemon shares are down ~29% this year; after being down just 6% before the report, and is currently the 8th worst-performing stock in the S&P 500.
• Lululemon’s implied 11.5% revenue growth for 2024 is a notable deceleration from years prior; having averaged an annual revenue growth rate of 24.4% over the last 5 years.
• This year’s revenue guidance is closer to, but still behind, the 5 years before that; where Lululemon averaged 15.7% annual revenue growth.

• While the market remains in consolidation/pullback mode and we are not out of the woods, it is possible that further downside is limited from here on the S&P 500
• Since late-February, we’ve discussed important gap support from 2/22/24 at 4983-5050 on the SPX, with bulls in control if above 4983. Selling last week has simply filled this gap
• 4920-4950 is now support near last week’s lows. Downgrade: Technology (XLK) to market weight. Upgrades: Manufacturing/Industrials (XLI) to overweight and Utilities (XLU) to market weight; individual stock buys highlighted.

• ZEEKR, a Chinese EV maker, plans to raise up to $500M in US IPO. The company put its offering on hold in 2023 due to a mismatch in valuation expectations.
• A fast-growing company will offer ADSs, and the size of the company’s potential IPO is down from their initial target of up to $1B, a negative sign for ZEEKR shares.
• EV stocks have significantly underperformed the broader market this year amid price wars, slow growth ahead and intense competition, especially in China.  

• 10x Genomics witnessed good momentum in 2023, achieving a 20% growth in total revenue amounting to $ 619 million.
• The primary contributing factor of this growth was the launch of Xenium that resulted in greater than 250 instrument sales in just its first year.
• The company’s entry into spatial biology was successful with spatial revenue amounting to over $135 million for the year.

• Perrigo Company plc’s fourth quarter and 2023 fiscal year results displayed stable growth in the company’s core operations, with an organic net sales increase of 2% for the year and EPS growth of 25% to $2.58, exceeding the prior year.
• Dimension such as significant growth in Skin Care, nutrition, and women’s health categories, as well as solid progress in the healthy lifestyle sector, underscore the company’s positive performance.
• Also contributing were supply chain reinvention program savings of $40 million and the strategic acquisition of HRA offering synergies of $30 million.

• Balchem Corporation’s sales in fourth quarter 2023 were marked by a slight dip, but the company still posted record operating earnings and free cash flow.
• It also achieved record fourth-quarter sales and earnings in the Human Nutrition & Health segment.
• Going back a bit, full year 2023 sales were down 2.1%, yet operational earnings recorded an increase of 9.6%.

• ProPetro has seen significant improvements in fundamentals over the past year, making it a more attractive investment opportunity
• Focus on downhole pumping services has allowed ProPetro to expand services and acquire new revenue streams
• Falling CAPEX, stable demand, clean balance sheet, and new capital allocation strategy centered around significant buybacks position ProPetro for growth

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• We are reiterating our Buy rating, $8 price target and projections for urban-gro with the company reporting 1Q24 (March) results after the close on Tuesday.
• We believe, given the timing of the initial guidance (March 28th), management will achieve 1Q results and reiterate initial 2024 guidance of revenue over $84 million and positive Adjusted EBITDA. Further we expect continued positives in terms of backlog and the potential for closed environment agriculture (“CEA”) to eventually shift into a positive driver.
• Given prior quarterly misses, we believe “making” guidance will be considered a positive by investors, and we look forward to urban-gro hopefully moving on the offensive later in 2024 as their integrated business model captures further cannabis and non-cannabis market share.