👟 Deckers, the Shining Light in Shoes

MARKET UPDATE

Good Morning Investor! Shares of retailer Abercrombier & Fitch (ANF) rallied a further 7% last week leading into earnings on Wednesday. The stock is now up a whopping 378% over the past 12 months. Additonally, solar panel maker First Solar (FSLR) has rallied a further 10%, pushing it into a 60% surge year-to-date.

TODAY’S BIG HEADLINES

• Deckers, the Shining Light in Shoes

• Intuit Fails to Inspire Confidence

• The Semiconductor Wars Have Begun

CONSUMER DISCRETIONARIES

Deckers, the Shining Light in Shoes👟

Cinderella of the Shoe Market: Despite many fashion brands such as Nike (NIKE) and Adidas (ADDYY) suffering amidst the chaos of consumer spending woes, Deckers (DECK) has stepped onto the scene like a well-heeled protagonist. While other brands stumbled in their stilettos, Deckers donned its Hoka sneakers and in-again Ugg boots, and blew away expectations for its quarterly earnings, resulting in a 14% surge in share price.

Retail Therapy: Deckers, the unsung hero of the shoe kingdom, unveiled its quarterly earnings report, leaving investors grinning like Cheshire cats. Let’s break it down for the fiscal year:

• Revenue grew 18% to $4.29 billion, exceeding estimates of $ billion.

• Net Income skyrocketed 47%, reaching $759.6 million, greatly exceeding expectations thanks to a profit margin increase from 14% to 18%. This was thanks to efficiency at scale.

• Earnings per share was $29.36, up 50.56% year-over-year, leaving analysts flabbergasted.

Deckers’ Crystal Ball: Management dropped some forward guidance that could make even a Wall Street skeptic crack a smile. Here’s the scoop. Deckers provided a confident revenue growth forecast of 10%, reaching $4.7 billion for fiscal year 2025, along with earnings per share of $29.50, above previous estimates of $26.50.

The Shoe Stars: It appears that the Hoka Sneakers and the back in-form Ugg boots are the main drivers of growth, with the two groups seeing sales growth of 34% and 15% respectively. It seems that the Uggs are back, baby! It’s like they took a hiatus, did some soul-searching, and returned with a vengeance. While their other brand Teva saw a 16% decline.

INFORMATION TECHNOLOGY

Intuit Fails to Inspire Confidence💻

Death and Taxes: Last week, Intuit (INTU), the proud parent of TurboTax, Quickbooks, Credit Karma, and MailChimp, unveiled its quarterly earnings. The stock reacted like a vampire at a garlic festival, selling off over 8% in market hours on Friday. And that’s after solid earnings, so what gives?

Copycats in Suits: It seems like every company in the market is playing a high-stakes game of Simon Says, all mimicking each other’s cautious forecasts. The result? A stock market version of a mosh pit. And Intuit, it seems, is crowd surfing. Here’s the rundown:

• Revenue was a slight beat, coming in at $6.74 billion, above the estimates of $6.65 billion. This represents a 12% growth rate on an annualised basis.

• With regards to profits, Intuit reported a non-GAAP EPS of $9.88 which steamrolled estimates of $9.38, and growing 11% year-over-year.

Price Target Massacre: Unfortunately, after the earnings call, several analysts started slashing their price targets for the stock like a horror movie villain. Stifel and Bank of America were among the culprits, while others maintained their targets. Piper Sandler even had the audacity to up their price target by $10 per share to $760.

Guidance, the Suckerpunch: Despite the CEO’s best efforts to sprinkle some AI magic dust, the company’s forward guidance was a bit of a party pooper. For the upcoming quarter, Intuit forecasted adjusted earnings per share of $1.83 per share with $3.08 billion in revenue. This doesn’t stack up well against the analyst consensus estimates of $1.92 adjusted earnings per share and sales of $3.05 billion. Seems like the growth train is taking a pit stop.

Wall Street Whispers and Winks: Shares of the tax software provider are now flirting with negative territory on a year-to-date basis, meanwhile, the stock is still up a solid 49% over the past 12 months.

SEMICONDUCTORS

The Semiconductor Wars Have Begun⚔️

Chip Wars: Amid a trade-battle that’s tenser than a long-tailed cat in a room full of rocking chairs, the Biden administration has been throwing billions at companies like Micron (MU), Intel (INTC), and Taiwan Semiconductor (TSM). The goal? To build chip factories in the US faster than you can say “semiconductor”, shifting production away from China and Taiwan. Biden’s CHIPs ACT is the poster child of this effort. But China, not one to be outdone, has rolled up its sleeves and announced a whopping $47.5 billion funding program, aptly named Big Fund III. This is China’s largest ever semiconductor investment fund and a clear sign that the Xi Jinping administration isn’t about to sit back and watch the US hog the semiconductor limelight.

Chips Have Hit the Fan: Some would say this retaliation was as inevitable as a rain check in London. After all, the Biden administration has been imposing restrictions on the sales of advanced chips and chip-making machinery to China. Despite the new fund’s impressive $47.5 billion total value, it’s still playing second fiddle to the US’ 2022 Chips and Science Act, which included $39 billion in grants for chipmakers, and a staggering $75 billion in loans and guarantees.

Rise of the Chips: As expected, shares of Chinese semiconductor manufacturers rallied faster than fans at a rock concert. Semiconductor Manufacturing International Corp (HKG: 0981) and Hua Hong Semiconductor (HKG: 1347) both saw their stocks rise by 8.1% and 10% respectively.

MORE NEWS

Additional market-moving events🌎

Musk vs Altman: Elon Musk’s xAI has raised $6 billion in funding for its race against ChatGPT, now valuing the company at $18 billion. (The Verge)

Google Stumbles Again: Google’s AI has been making yet another series of high-profile blunders, including telling users to eat rocks, use glue for pizza and jump off the golden gate bridge. (CNBC)

No Side Hustle Needed: Housekeepers are now earning six-figure salaries taking care of wealthy individuals’ homes in Florida due to massive demand. (CNBC)

EARNINGS

This Week’s Earnings Calendar📅

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500.

Here’s how the two stocks have performed since then:

• Evolution AB: 1,169.00 SEK (📉-10.93%)

• Hims & Hers Health: $16.88 (📈+16.66%)

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