Levi shares surge on earnings beat, IAC to acquire Meredith, Tilray misses revenue estimates

Yahoo Finance's Julie Hyman and Brian Sozzi break down the morning's top stock movers, including Levi, IAC, and Tilray.

Video transcript

- Coming up on The opening bell here this morning I'm Yahoo Finance Live, we've got stocks that are indicating a higher open here this morning, as we've been talking about a combination of factors here. The idea that it looks like Congress is closer to coming to some sort of agreement on the debt ceiling, at least to delay having to come to a more permanent agreement on it until December. We had jobless claims coming in lower and therefore better than estimated. That helping matters here as well. We haven't talked as much about it, but we are seeing a decline in some of the commodity prices that have been pressuring stocks in turn as of late. Bond yields by the way, at 1.55%.

Let's talk some individual movers here. One of them is Levi Strauss. That company coming out with third quarter sales above estimates, up 41% year over year and up 3% from 2019. So seeing an increase there. You can see earnings also beat estimates and the company raised its full year profit outlook, Brian Sozzi. And we're going to be talking to the CFO in the next hour and of course, we're going to be asking about inflation and maybe whether prices are going to continue to go up.

BRIAN SOZZI: Julie, is it Levi Strauss or Levi's? I always get it confused.

- Levi Strauss is the corporate name. Levi's, the brand name.

BRIAN SOZZI: Interesting. Fair enough. I knew you would have the answer for that. But look, good quarter. I would say a good quarter from Levi's. I was very interested to see-- just learn what they said on the earnings call last night, mostly as pertaining to cotton prices. We've seen a dramatic spike here in cotton prices.

Now, Levi's told analysts, they have all of their goods essentially signed, sealed, and delivered through the first half of next year. They are currently in negotiations for their cotton commitments or their clothing commitments for the second half of next year. They called out that they might only see a mid-single digit percentage price increase and they're likely to pass that on to consumers. So this was I think, alleviated some concerns on the Street about Levi's costs moving forward.

By and large, I mean, the demand cycle remains strong for this company as people rebuild their wardrobes from the pandemic. A lot of new styles out there. Seeing a lot more bell bottom jeans this fall. That is powering the top line for Levi's.

- I don't know that I've been seeing a lot of bell bottom jeans--

BRIAN SOZZI: I have. They've been out there.

- --on the streets of New York.

BRIAN SOZZI: They're back. With chunky boots. Chunky boots. I was looking at a good note from the folks over at Jefferies, Google searches for chunky boots and stomper boots on fire right now. Stomper boots, fire.

- Stomper boots. One thing that caught my eye this morning as well from the analyst notes, is that Levi's, its suppliers reach across 24 countries and none of those countries' accounts. For more than 20% of products. So we have talked a lot Soz, about suppliers about being too reliant on a particular supply chain and it sounds like that Levi has avoided that particular challenge, at least for now.

Looking at some of the other movers that we are watching, let's see, where are we going next? Are we going to IAC next? Want to go to IAC next?

BRIAN SOZZI: Sure, fire away.

- All right. IAC agreeing to buy the magazine publishing ops of Meredith. That includes things like "People Magazine", like "Better Homes and Gardens". The stuff that I know you love to read when you are on an airplane. $2.7 billion is the price on this. $42.18 a share for this deal. As we know, IAC is an aggregator of these kinds of properties and it goes under Dotdash, which is a unit of IAC. Saw some analyst commentary this morning from the folks, I believe, over at Jefferies that this could position Dot Dash for a spinoff. IAC of course, also known as incubating and then spinning things off, Soz.

BRIAN SOZZI: Quick, real time follow up. I'm catching a lot of flack in our Slack channel from the team on bell bottom jeans being back. I encouraged them all take a second out and go search this. I mean, these trends are out there. Bell bottom jeans this fall is a thing and so are stomper boots.

Now, on IAC, you mentioned that Jefferies note Julie here, and there are a couple of reasons why at least Jefferies is out here positive, I would say. Dotdash can help accelerate growth at Meredith's digital platform. Dotdash is a content view beast on the internet. That's what Dotdash does. D just consume eyeballs on the internet. They just have a magic potion to drive content to Dotdash and their other publications.

Also, Jefferies noting combined asset of Meredith reaches 95% of US women. That's certainly good. And then overall, it looks to be a good fit, according to Jefferies. But they are noting here, investors are mixed on the deal. In large part, I would think because this is Steve Price. This is one of IAC's biggest acquisitions ever.

- Yeah, so we'll see what ends up happening with that unit now as a part of IAC. Coming up on the opening bell in just a second here, as I've said, we are poised for a stronger open. And you and I are paying a lot of attention, as is most people on the Street to tomorrow's jobs report but ahead of that, seeing that strength here today. And ringing the opening bell in just about 30 seconds here this morning is going to be Life Time, which is a chain of gyms. Jeff Zwiefel is the president and chief operating officer. He's ringing the opening bell and he is going to be joining our programming later in the day. Remember, our around the bell coverage is brought to you by PIMCO, as we watch those folks ring and clap here this morning.

I wonder if they've-- a lot of the gym IPOs set up gym setups outside of the NYSE. We'll have to ask Jared Blikre if you got in a quick workout out front in his suit before--

BRIAN SOZZI: Life Time sellers are swole. Life Time Fitness. Sellers are swole.

- All right. Moving on to some of the other stocks that we are watching this morning. Maybe after you go to the gym, you need to kick back, relax when you get back home and you might avail yourself of some Tilray products. That company is out with its numbers. The company reported a 43% increase in first quarter revenue. Strong demand for cannabis, which is its main product. You can see it reported a smaller loss than was predicted, although sales fell a bit short of estimates. The stock is up but not seeing a huge increase here. But in general, the company has been seeing relatively strong demand.

And remember, it just has completed its deal to merge with Aphria earlier this year. And so says it had some savings as a result of that closure.

BRIAN SOZZI: I just want to make it clear, Julie. I'm not smoking any Tilray products after I get swole to gym. Not Life Time Fitness. But I think it's coming to a point now where Tilray has to step up here and show investors the benefits of its merger with Aphria. Now, they reiterated that they plan to save $80 million in costs from this merger. Now it really needs to start showing through to the bottom line here. And when you lose as much as they did in the quarter, I would suspect the Street is going to question them heavily on when these cost savings start to come through. For their sake, hopefully it's very soon.

- Yeah, for investors' sake as well, as they look towards an increase. By the way, Soz, it's legal now, man. You can admit to it. It's like saying you have a drink when you come home from the gym.

BRIAN SOZZI: Not for me.

- It's all right. There's no harm, no foul.

BRIAN SOZZI: I'm going protein shake or green matcha tea, one those two.

- I'm quite sure that you are Soz. You have to wonder about something like Tilray as well, like everything that we've been talking about, what's the effect of inflation on a business like this when you talk about fertilizer, for example. That's something that we've heard about from some of the agricultural companies. So it'll be interesting to see if there's any kind of pressure in that department as well.

All right, we are going to take a break right now. As we go to break, let's bring you what stocks are doing here a couple of minutes into the trading day. And we have been seeing a rally in stocks. And you can see here, the Dow leading those gains up by nearly 1%. We'll be right back with the check in on Chair Blikre on the floor of the New York Stock Exchange.