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Nike stock rises on strong profit results

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Last Week’s Highlights

Nike beats profits estimates

Nike beat Wall Street expectations for first-quarter profit, thanks to higher prices on its products that offset declining demand and cost pressures. The company also forecasted an increase in gross margins for the second quarter, managed to reduce its inventories and scared off investor concerns. Nike plans to focus on the running shoe market, revamp its basketball shoe portfolio, and expand its presence in specialty running stores. Although some investors are concerned about competition and a decline in the value of the Jordan brand, the company is optimistic about its ability to maintain pricing and avoid deep discounting during the holiday season. In the first quarter, the company posted a profit of $1.45 billion, beating estimates.

Peloton goes up on new partnership

Peloton shares experienced a 16% increase after announcing a strategic agreement with Lululemon, which establishes Peloton as the exclusive digital fitness content provider for Lululemon beginning in 2024. This five-year global partnership also makes Lululemon Peloton’s primary sportswear partner. Lululemon Studio members will have access to Peloton content beginning in November, and co-branded apparel will be sold in retail stores and online beginning in October 2023. The deal comes at a crucial time for Peloton, which is struggling with falling demand for its products. However, Peloton’s shares have fallen 41% this year due to its weak financial results, and analysts have mixed views on its future, with a median price target implying a potential upside of 67.5%.

Coming Up This Week

New EA game keeps Wall Street optimistic

Electronic Arts has had amazing success with launching its new soccer game, “EA Sports FC 24,” which marks a significant shift away from its annual partnership with FIFA. Despite the cancellation of the FIFA agreement due to high licensing demands, EA has exceeded expectations and broken records with the launch of EA Sports FC. During its first weeks of release, gamers noticed few differences between this game and EA’s previous FIFA titles. That’s why analysts are optimistic about EA’s potential in this field, rating its stock a “Moderate Buy” and forecasting a potential upside of 21.06% with an average price target of $145.71.

Intel to open a new chip plant

Intel is opening a new chip plant in Ireland, marking a turnaround attempt for the chipmaker that has faced market competition from AMD and Nvidia. This facility in Ireland focuses on large-scale extreme ultraviolet lithography production, a task that usually requires expensive machines from a Dutch company. Although Intel is looking to expand its production capacity, some analysts are skeptical about the company’s future, with opinions split between buy, sell, and hold shares, and a limited upside potential of 2.58% based on the average target price. The Irish plant could be crucial for Intel’s future innovations, but it also faces challenges in terms of employee availability, which could affect the company in the short term in terms of costs and opportunities.

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Market News

On Friday, the S&P 500 closed lower on investor concern over a report on U.S. inflation and its potential impact on the Federal Reserve’s interest rate policy. The decline marked the end of a weak third quarter for stocks, with the S&P 500, Dow Jones, and Nasdaq experiencing their first quarterly declines in 2023.

For the quarter, the S&P 500 was down 3.6%, the Dow was down 2.6% and the Nasdaq was down 4.1%. For September, the S&P 500 fell 4.9%, the Dow declined 3.5% and the Nasdaq lost 5.8%.

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