Yahoo Finance Live anchors discuss Morgan Stanley halving its price target on FedEx, Citi lowering its forecast on McDonald's, and Cantor Fitzgerald initiating coverage of Lucid.
BRAD SMITH: Let's take a look at some calls of the day. We're going to start things off with FedEx. Morgan Stanley slashing its price target on the company from $250 to $125, saying the shipping company has been reset following its profit warning. And shares are still holding onto gains. Of course, the broader markets higher here in the US today. And FedEx still holding on to some slight gains.
But I think more broadly, FedEx had really been one of these first companies even prior to the next earnings season set to kick off, really giving that warning more macroeconomically, but globally as well. And that really kind of gives some type of glean into how business to business partnerships are faring, but also on the end consumer and the volumes that they're seeing start to decline as well.
JULIE HYMAN: Yeah, I mean, this definitely feels like an after the fact price cut, right, in this particular case because the stock's already had its tumble of 29% since it came out and changed its forecast. So it's basically like an acknowledgment of reality, right?
BRAD SMITH: Right, yeah.
BRIAN SOZZI: Well, I think the bottom line with FedEx is that they need to show, I think, investors a couple of good quarters. And by that, I mean, some form of stabilization in the top line. And then when it comes to expenses, that all these expenses, I think they promise they're going to cut close to $3 billion in cost last week. They need to start-- that needs to start showing up on the bottom line at some point.
BRAD SMITH: Yeah, absolutely here.
BRIAN SOZZI: All right, we're also watching shares of McDonald's after Citi said they see increasingly less favorable risk-reward with the stock and lowered their price target from $275 to $246. I have a full story on this note now on the Yahoo Finance home page. But I will say this. Looks like a lot of focus by John Tower. He's been on with us a lot, the analyst that covers restaurants and McDonald's over at Citi, talking about risk to Europe. So a real slowdown in Europe potentially hurting McDonald's business. Even though that US might stay pretty well in terms of sales, Tower more concerned about the trends overseas, and the US may be not able to offset that.
BRAD SMITH: It's a difference in taste profiles, too. I mean, McDonald's menu looks vastly different in different parts of the world. And so in acknowledging where they're even able, at this point, to navigate where they would need certain products, inventory to actually get through to their franchisees, that could be a far more materially detrimental process that they're wading through, but also even the pricing mechanisms for themselves to get those products, and for the franchisees to have to figure out, all right, how do we just continue to pass that cost on to the consumer who's looking for some type of discount on the fast food items?
JULIE HYMAN: Yeah, I mean, we keep talking about the stronger dollar throughout the show. This is an example of the stronger dollar is going to bite McDonald's. It's a double whammy.
BRIAN SOZZI: I like that.
JULIE HYMAN: Slowing-- no, I didn't even mean to do that.
BRIAN SOZZI: You did it.
JULIE HYMAN: It's a double whammy, right? On the one hand, you've got slowing economies around the globe. Are people going to be eating out less, even at a value proposition like McDonald's? And secondly, when they do bring those profits back home, they're worht less.
BRIAN SOZZI: Less super sized profits for McDonald's.
JULIE HYMAN: There you go. All right, I'm looking at shares of Lucid. They are higher today. We're seeing a boost for a lot of the EV makers. Lucid in particular rising after Cantor Fitzgerald initiated coverage of the electric vehicle maker with an overweight rating, a $23 price target, which is well above where it is now.
And the analysts there saying the brand has greater efficiency, longer range, faster charging than its competition. They're also looking at potential for the company to capture about 2% of the global EV market by 2026. Now, to me, that's pretty remarkable, given that Lucid is a luxury product. We're not talking about like a 1 to 1 with Tesla competition. We're talking about that this is a much higher end vehicle.
BRIAN SOZZI: Yeah, I'm generally fascinated on how a Lucid, even a Polestar, fare during any form of recession. It would be their first recessions that they go through. What does bear-- what do bear markets mean for a super luxury purchase like Lucid? I suspect we're about to find out.
BRAD SMITH: Yeah, I think it's amazing what Peter Rawlinson has been able to build over at Lucid, really taking so much of what he was able to engineer over at Tesla over to a new and launching a new brand in Lucid, and ultimately at the higher end. Because knowing exactly where people had gravitated towards these products early on, Tesla had differentiated itself by saying, you know what? No, we're going to not go mass market out the gate. We're going to go luxury. That's exactly what Lucid did. And we're seeing continuously how some of the investors and the analysts are cozying up to that strategy from Peter Rawlinson and the team.
JULIE HYMAN: Indeed.