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'There's nothing perfect in this world of growing apples.' Extreme weather could complicate future harvests.
Honeycrisp apples on the tree at Tougas Family Farm in Northborough, Massachusetts (Jessica Rinaldi/Getty Images)

The remarkable rise of the Honeycrisp and Cosmic Crisp apples

When it comes to apples, America cannot get enough of the crunch factor.

America is a land of diversity where people, cultures, and inspirations clash to create a melting pot of different ideas. But ask a room full of people what their favorite apple is and these days you might get a lot of the same answer: Honeycrisp.

The apple of our eyes

Unfortunately, as reported by The Wall Street Journal earlier this week, farming them is something of a nightmare. Honeycrisps are easily bruised, often grow too densely for their own good, have to be hand-clipped from trees due to their thin skin, and can be afflicted by diseases that blotch the fruit. They are, as one farmer put it, a “diva.”

They’re also valuable, however, dubbed “moneycrisps” by some. And, along with the Cosmic Crisp and Pink Lady, they’re soaring up the apple production league tables toward icons like Gala and Red Delicious, which have seen production drop over time.

Apple production in the US
Sherwood News

Per data from USApple, the core of the apple-eating market is increasingly the three varieties that make a mouth-watering crunchCosmic Crisp, Pink Lady, and Honeycrisp — production volumes of which have jumped 3,391%, 63%, and 17% in the last five years, respectively.

Remarkably, a study published all the way back in 2013 essentially predicted this boom, finding that when consumers assessed apples based on their appearance, they looked for size and color. When evaluating taste they wanted sweetness and crispness. And they’re willing to pay: per retail price data tracked by USApple, Honeycrisp was the most expensive apple in 2023-24, at $1.88, compared to Gala at $1.49 and Red Delicious apples at $1.26.

But, with production expenses for fruit farms rising across the board, up 49% over the last decade, even producers of the “moneycrisp” have been feeling the pressure in the industry’s bottom line — and the new, crunchier, and crispier varieties also tend to have more volatile prices.

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Margins, and selling the news: analysts look to explain Oracle's tumble

The somewhat counterintuitive tumble in Oracle shares continued into afternoon trading Friday, despite Wall Street analysts’ more-or-less favorable reaction to Oracle’s investor day presentation Thursday, where executives said the company’s AI cloud business would eventually sport margins of between 30%-40%, far better than the figures reported by The Information back on Sept. 7.

And yet, the stock is on its way to its worst day in the last six months. What gives?

Gil Lauria, who covers Oracle for D.A. Davidson & Co. — who has it at “hold” with a $300 price target — has a theory, telling Sherwood:

“Investors are disappointed that the entire growth acceleration in Oracle is from the Oracle Cloud Infrastructure business, and that Oracle expects the rest of the business to grow low single digits.

The other disappointment came from Oracle acknowledging that the GPU rental business only had 30-40% gross margins, far lower than the 80% gross margins for the rest of the business.”

Other analysts we’ve chatted with on background say they’re not convinced the margin story is the source of today’s slump, pointing to the also plausible explanation that the drop might just be a sign traders bought the stock ahead of the presentation to analysts on Thursday anticipating positive announcements, and now they’re selling simply selling the news.

Gil Lauria, who covers Oracle for D.A. Davidson & Co. — who has it at “hold” with a $300 price target — has a theory, telling Sherwood:

“Investors are disappointed that the entire growth acceleration in Oracle is from the Oracle Cloud Infrastructure business, and that Oracle expects the rest of the business to grow low single digits.

The other disappointment came from Oracle acknowledging that the GPU rental business only had 30-40% gross margins, far lower than the 80% gross margins for the rest of the business.”

Other analysts we’ve chatted with on background say they’re not convinced the margin story is the source of today’s slump, pointing to the also plausible explanation that the drop might just be a sign traders bought the stock ahead of the presentation to analysts on Thursday anticipating positive announcements, and now they’re selling simply selling the news.

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Analysts generally like what they heard from Oracle, but shares are down

The big news out from the Oracle AI World conference was broadly positive: that margins on cloud infrastructure can be as high as 35%, and that the company predicts $166 billion in infrastructure revenue by 2030.

And in the wake of that news, today UBS raised its price target for Oracle shares to $380 from $360, saying they are undervalued.

But investors appear to have some concerns about Oracle’s huge capex plans, which are fueled by huge AI infrastructure deals with OpenAI and Meta, as shares dropped over 7% in Friday trading.

Analysts have pointed to Oracle’s high cash burn as it pursues its AI build-out and potential financing needs as flies in the ointment that could blunt the impact of the companys strong longer-term growth forecasts.

On Friday, Jeffries analysts wrote:

Questions remain about ORCLs capex requirements to meet growing demand, as there was no forward-looking commentary on capex at the Analyst Day. Capex will need to ramp in line with [Oracle cloud infrastructure] revenue growth, raising concerns about ORCLs financing options to support this expansion.

However, if thats the reason why the stock is getting hit today, it would mark a distinct change in how investors are evaluating the AI trade. Companies have tended to be increasingly rewarded for their aggressive capex commitments to enhance the boom, based on optimism that investments in this would-be revolutionary technology will bear fruit.

Fridays dip comes on the back of a strong run leading up to the yesterdays investor conference, fueled by a flurry of AI headlines. Oracle shares have gained over 18% in the past three months and more than 70% so far this year, well outpacing the Nasdaqs approximately 7% and 16% rise over the same time periods.

markets

AST SpaceMobile drops after Barclays cuts rating to “underweight”

AST SpaceMobile, which provides cellular services from space, dove in early trading after Barclays analysts cut their rating on the shares to “underweight” (essentially a sell) from “overweight” (or a buy), citing “excessive” valuation on the still money-burning company. The fact that analysts went from “buy” to “sell” — with no momentary stop at a “hold” or “neutral” rating — makes it a fairly rare “double downgrade.”

They wrote:

“Valuation has run ahead of fundamentals... In our last update, we increased our price target from $38 to $60 as we took a more constructive view on pricing; we found it supportive that TMUS/Starlink launched a text only service for $10 per month and believe that AST products which will be richer (text, call, broadband) could see higher prices points. Since then the stock price has doubled from $48 to $95.7.”

With the shares up almost 120% over the last month through Thursday, and a price-to-forward-sales ratio of 140x — the Nasdaq Composite is around 5x — the stock might be due for a cooling-off period.

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Novo, Lilly fall after Trump says “the fat loss drug” will go down in price

Novo Nordisk and Eli Lilly slipped after the bell on Thursday, and continued to trade lower in the premarket session Friday, after President Trump told reporters on Thursday that “the fat loss drug” will go down in price.

Trump said GLP-1s like Novo’s Ozempic will be less than $150 out of pocket. Dr. Mehmet Oz, the Centers for Medicare & Medicaid Services administrator, interjected to say that those deals have not yet been finalized.

The Trump administration has been negotiating with drugmakers to bring down drug prices in the US. Currently, the popular weight-loss drugs made by Lilly and Novo cost between $300 and $500 a month out of pocket through the drugmakers’ direct-to-consumer platforms.

Hims & Hers, which sells compounded versions of Novo's weight loss shot, also fell on Friday. A monthly dose of Hims' compounded GLP-1 is about $200 a month, more than what Trump suggests the brand-name version could cost soon.

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