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Luke Kawa11/25/24

No rain, big gains as coffee prices surge to 27-year high

Bad news for fans of high-quality coffee.

A dearth of rainfall in Brazil is causing commodity analysts and government agencies to curb their estimates for how many coffee beans will be produced and exported in the near term.

The price of arabica futures — the premium bean compared to the more common robusta grade — has soared to its highest level since May 1997 as its most important growing region in Brazil sees paltry precipitation. Both varieties of bean are up more than 60% this year.

Recent forecasts from the US Foreign Agricultural Service post in Brazil suggest year-end inventories will be at “an exceptionally low level,” according to Colin Fenton, 22V Research’s head of commodities research, who continues to recommend long positions in arabica coffee as well as raw sugar.

Last week, Nestle said it would keep raising its selling prices in light of this input cost pressure. The likes of Starbucks and Keurig Dr Pepper are also getting squeezed by this boom time for bean prices.

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Rivian is on pace for its best-ever trading day, as analysts dig into Q4 results

EV maker Rivian is on track to log its best trading day on record Friday, as investors pour in following its fourth-quarter earnings report and 2026 guidance and analysts issue bullish appraisals of the shares.

Rivian shares are up more than 30% on Friday afternoon, easily surpassing its previous best trading day, which came in January 2025.

“We continue to remain confident in the long-term vision that RIVN is amid a massive transformation,” said Wedbush’s Dan Ives in a fresh note on Friday. The firm maintained its $25 price target and “outperform” outlook and wrote that the launch of Rivian’s upcoming lower-cost SUV, the R2, is “crucial.”

Rivian received uprgrades from Deutsche Bank (to “buy” from “hold”) and UBS (to “neutral” from “sell”) following its results.

On its Thursday earnings call, Rivian said it expects its delivery volume of its existing vehicle lineup to land “roughly in line with... 2025 total volumes.” Given the automaker’s full-year delivery guidance, that statement implies 2026 R2 deliveries to land between 20,000 and 25,000 units.

Self-driving features also appear to be boosting investor optimism. On Thursday’s earnings call, CEO RJ Scaringe said the company would enable “point to point” driving in its vehicles later this year. In a podcast interview released Thursday, Scaringe predicted that by 2030 it will be “inconceivable to buy a car and not expect it to drive itself.” Rivian is targeting “a little sooner than that,” Scaringe added.

Rivian shares are also likely benefitting from something of a snap back: before the release of its Q4 results, Rivian shares had been hammered recently, down 38% since their recent high in December.

Rivian climbs after posting better-than-expected Q4 results; sees R2 SUV hitting the market in Q2

Rivian climbs after posting better-than-expected Q4 results; sees R2 SUV hitting the market in Q2

“We continue to remain confident in the long-term vision that RIVN is amid a massive transformation,” said Wedbush’s Dan Ives in a fresh note on Friday. The firm maintained its $25 price target and “outperform” outlook and wrote that the launch of Rivian’s upcoming lower-cost SUV, the R2, is “crucial.”

Rivian received uprgrades from Deutsche Bank (to “buy” from “hold”) and UBS (to “neutral” from “sell”) following its results.

On its Thursday earnings call, Rivian said it expects its delivery volume of its existing vehicle lineup to land “roughly in line with... 2025 total volumes.” Given the automaker’s full-year delivery guidance, that statement implies 2026 R2 deliveries to land between 20,000 and 25,000 units.

Self-driving features also appear to be boosting investor optimism. On Thursday’s earnings call, CEO RJ Scaringe said the company would enable “point to point” driving in its vehicles later this year. In a podcast interview released Thursday, Scaringe predicted that by 2030 it will be “inconceivable to buy a car and not expect it to drive itself.” Rivian is targeting “a little sooner than that,” Scaringe added.

Rivian shares are also likely benefitting from something of a snap back: before the release of its Q4 results, Rivian shares had been hammered recently, down 38% since their recent high in December.

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Advance Auto Parts climbs as store closures power earnings beat amid revamp

Shares of Advance Auto Parts are up more than 8% in early trading on Friday, following the release of the company’s fourth-quarter results.

Advance Auto posted adjusted earnings of $0.86 per share in Q4, more than twice the $0.41 per share expected by analysts polled by FactSet. Same-store sales grew 1.1%, below the 2.2% consensus.

The retailer closed 522 stores in its fiscal year 2025 as part of an overhaul it first announced in 2024. It plans to open between 40 and 45 stores this year.

Looking ahead, Advance Auto said it expects comparable-store sales to grow between 1% and 2% in 2026. Wall Street expected 2.13%.

In-line core CPI inflation a relief after recent history of January price spikes

The January CPI report is out.

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Applied Materials soars as Wall Street scrambles to boost price targets after “narrative-changing quarter”

Wall Street has fresh conviction that Applied Materials is a winner as the AI boom forces an expansion of chipmaking capacity.

The semicap company reported a top- and bottom-line beat, along with Q2 guidance that exceeded estimates, after the close on Thursday, sending shares sharply higher. Applied Materials is trading up double digits as of 8 a.m. ET.

“This is finally the narrative-changing quarter that we have been waiting for,” wrote Needham & Co. analyst Charles Shi, who boosted his price target to $440 from $390. “With AMAT shaking off the bad China narrative and returning to a strong AI-driven beat-and-raise cycle, we expect AMAT valuation gap vs. peers will narrow as AMAT should re-rate higher.”

The numbers speak for themselves, but the words on the conference call didn’t hurt either.

“Management’s decidedly more constructive tone on the call (relative to a more muted/conservative tone on the last call) we think was underpinned by a sharp acceleration in customer orders and activity levels in the quarter,” wrote JPMorgan analyst Harlan Sur, who lifted his price target to $400 from $260.

He spotlighted the strong outlook for its advanced packaging business given “AMAT’s #1 position in HBM where spending is inflecting higher as the absorption of previously shipped equipment concludes and additional capacity/capability is required amid burgeoning demand growth and customers’ rapid technology transitions (HBM3e > HBM4 > HBM4e and beyond).”

Other sell-side shops that took a more more optimistic view and upped their price targets include:

Keybanc, up to $450 from $380;
Barclays, up to $450 from $360;
Wells Fargo, up to $435 from $350;
Citi, up to $420 from $400;
Morgan Stanley, up to $420 from $364;
And Mizuho, up to $410 from $370.

Applied Materials jumps after posting better-than-expected Q1 results, strong Q2 outlook

Applied Materials jumps after posting better-than-expected Q1 results, strong Q2 outlook

“This is finally the narrative-changing quarter that we have been waiting for,” wrote Needham & Co. analyst Charles Shi, who boosted his price target to $440 from $390. “With AMAT shaking off the bad China narrative and returning to a strong AI-driven beat-and-raise cycle, we expect AMAT valuation gap vs. peers will narrow as AMAT should re-rate higher.”

The numbers speak for themselves, but the words on the conference call didn’t hurt either.

“Management’s decidedly more constructive tone on the call (relative to a more muted/conservative tone on the last call) we think was underpinned by a sharp acceleration in customer orders and activity levels in the quarter,” wrote JPMorgan analyst Harlan Sur, who lifted his price target to $400 from $260.

He spotlighted the strong outlook for its advanced packaging business given “AMAT’s #1 position in HBM where spending is inflecting higher as the absorption of previously shipped equipment concludes and additional capacity/capability is required amid burgeoning demand growth and customers’ rapid technology transitions (HBM3e > HBM4 > HBM4e and beyond).”

Other sell-side shops that took a more more optimistic view and upped their price targets include:

Keybanc, up to $450 from $380;
Barclays, up to $450 from $360;
Wells Fargo, up to $435 from $350;
Citi, up to $420 from $400;
Morgan Stanley, up to $420 from $364;
And Mizuho, up to $410 from $370.

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