GameStop Corp. fired Chief Executive Matthew Furlong on Wednesday and said that its board had elected activist investor Ryan Cohen as its executive chairman, effective immediately.
Shares of the videogame retailer and meme stock sank 19% after hours following the brief press release detailing the move. That release did not offer a reason for Furlong’s firing and was made shortly ahead of the chain’s quarterly results.
GameStop GME, +5.75%,
in its earnings release, said it would not be holding a conference call to discuss those results. But in a filing detailing those financials, the company said Cohen’s leadership would be good for shareholders.
“We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders,” GameStop said.
Cohen, the co-founder and former CEO of online pet-supplies retailer Chewy Inc. CHWY, -4.10%,
became GameStop’s board chairman in 2021, after joining the board that year and building up a stake in the company earlier. His influence at the company, as the Wall Street Journal reported in 2021, led to feuding with management and an explosion in popularity among the meme traders who helped launch GameStop’s stock higher. He also amassed and then sold off a stake in Bed Bath & Beyond, the home-goods retailer that is in the process of closing up shop.
GameStop announced the move on Wednesday as it struggles to put up a consistent profit and tries to cut costs. Under Cohen’s control, the company has redoubled its focus on physical stores — as more of the gaming industry becomes more online and mobile — after initially making a bigger push toward e-commerce.
GameStop, in a separate filing on Wednesday, said Cohen’s responsibilities would include “capital allocation, evaluating potential investments and acquisitions, and overseeing the managers of the company’s holdings.”
In that filing, GameStop said that Furlong was fired without cause. According to his offer letter in 2021, Furlong is due any unvested stock that would have vested in the next six months. According to the terms outlined in that letter, Furlong would have been eligible to receive nearly $2.5 million in stock in August. He’ll also receive $100,000 in base salary. The filing also said Furlong had resigned as a company director.
The company also said it appointed Mark Robinson as its general manager and principal executive officer. Robinson has worked as vice president and general counsel at the company since January 2022, and held other roles at GameStop since 2015, the filing said.
GameStop also said it appointed Alain Attal as the lead independent director of the board and dissolved the Strategic Planning and Capital Allocation Committee.
For its first quarter, GameStop reported a net loss of $50.5 million, or 17 cents a share — far narrower than the $157.9 million, or 52 cents a share, in the same quarter last year. Net sales were $1.24 billion, down from $1.38 billion in the prior-year quarter. GameStop ended the quarter with cash and cash equivalents of $1.06 billion.
Popular videogames, such as “The Legend of Zelda: Tears of the Kingdom” and “Hogwarts Legacy,” seem likely to help GameStop’s sales up ahead. And the company has cut costs in an effort to improve profitability.
The company reported a profit in the prior quarter, helped by holiday-season demand. Still, the two analysts polled by FactSet don’t expect another profitable quarter until this year’s holiday quarter.
Wedbush analyst Michael Pachter, in a note last week, noted that broader challenges for the retailer include “a shift towards digital, mobile and subscription software (and away from the traditional packaged business).”
GameStop shares are down 29% over the past 12 months. By comparison, the S&P 500 Index SPX, -0.38%
is up 2.7% over that period.
Best Buy Co., Inc. (NYSE:BBY – Get Rating) has been assigned an average recommendation of “Hold” from the twenty-one brokerages that are covering the firm, MarketBeat Ratings reports. One investment analyst has rated the stock with a sell rating, seven have assigned a hold rating and nine have given a buy rating to the company. The average 1-year price objective among brokers that have issued a report on the stock in the last year is $78.44.
Several equities analysts have recently commented on the stock. TheStreet downgraded shares of Best Buy from a “b-” rating to a “c” rating in a report on Thursday, May 25th. StockNews.com assumed coverage on shares of Best Buy in a research note on Thursday, May 18th. They set a “hold” rating on the stock. SpectralCast reaffirmed a “maintains” rating on shares of Best Buy in a research note on Friday, May 26th. Citigroup reduced their target price on shares of Best Buy from $72.00 to $62.00 and set a “buy” rating on the stock in a research note on Thursday, May 18th. Finally, Wells Fargo & Company reduced their target price on shares of Best Buy from $80.00 to $75.00 and set a “buy” rating on the stock in a research note on Friday, May 26th.
Best Buy Stock Performance
Shares of NYSE BBY opened at $72.83 on Friday. The firm has a 50 day moving average of $73.29 and a 200 day moving average of $79.19. The company has a current ratio of 0.98, a quick ratio of 0.32 and a debt-to-equity ratio of 0.41. The firm has a market capitalization of $15.93 billion, a price-to-earnings ratio of 12.32, a price-to-earnings-growth ratio of 1.50 and a beta of 1.51. Best Buy has a 12-month low of $60.78 and a 12-month high of $93.32.
Best Buy (NYSE:BBY – Get Rating) last posted its quarterly earnings results on Thursday, May 25th. The technology retailer reported $1.15 earnings per share for the quarter, topping analysts’ consensus estimates of $1.12 by $0.03. The business had revenue of $9.47 billion during the quarter, compared to analyst estimates of $9.53 billion. Best Buy had a net margin of 2.93% and a return on equity of 51.95%. The company’s revenue was down 11.1% on a year-over-year basis. During the same period in the prior year, the business posted $1.57 earnings per share. On average, research analysts anticipate that Best Buy will post 6.02 earnings per share for the current year.
Best Buy Announces Dividend
The business also recently declared a quarterly dividend, which will be paid on Thursday, July 6th. Investors of record on Thursday, June 15th will be issued a $0.92 dividend. This represents a $3.68 annualized dividend and a yield of 5.05%. The ex-dividend date of this dividend is Wednesday, June 14th. Best Buy’s payout ratio is presently 62.27%.
Insider Buying and Selling
In other news, CEO Corie S. Barry sold 25,511 shares of the company’s stock in a transaction on Tuesday, March 21st. The shares were sold at an average price of $77.95, for a total transaction of $1,988,582.45. Following the completion of the sale, the chief executive officer now owns 364,041 shares of the company’s stock, valued at $28,376,995.95. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this link. In other Best Buy news, CAO Mathew Watson sold 578 shares of the company’s stock in a transaction dated Thursday, June 1st. The shares were sold at an average price of $71.82, for a total value of $41,511.96. Following the transaction, the chief accounting officer now owns 22,974 shares of the company’s stock, valued at $1,649,992.68. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available at this link. Also, CEO Corie S. Barry sold 25,511 shares of the company’s stock in a transaction dated Tuesday, March 21st. The shares were sold at an average price of $77.95, for a total transaction of $1,988,582.45. Following the completion of the transaction, the chief executive officer now directly owns 364,041 shares in the company, valued at approximately $28,376,995.95. The disclosure for this sale can be found here. In the last quarter, insiders sold 81,617 shares of company stock valued at $6,189,818. 0.56% of the stock is owned by corporate insiders.
Institutional Trading of Best Buy
Several hedge funds have recently made changes to their positions in the business. International Assets Investment Management LLC purchased a new stake in shares of Best Buy during the fourth quarter worth approximately $26,000. Arlington Partners LLC purchased a new stake in shares of Best Buy during the first quarter worth approximately $28,000. Exos TFP Holdings LLC purchased a new position in Best Buy in the third quarter valued at approximately $29,000. Mitsubishi UFJ Morgan Stanley Securities Co. Ltd. purchased a new position in Best Buy in the fourth quarter valued at approximately $30,000. Finally, Clear Street Markets LLC increased its stake in Best Buy by 90.6% in the first quarter. Clear Street Markets LLC now owns 385 shares of the technology retailer’s stock valued at $30,000 after purchasing an additional 183 shares during the last quarter. Institutional investors and hedge funds own 78.48% of the company’s stock.
Best Buy Co, Inc engages in the provision of consumer technology products and services. It operates through two business segments: Domestic and International. The Domestic segment includes operations in all states, districts, and territories of the U.S., operating under various brand names, including Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video, Napster, and Pacific Sales.
Further Reading
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Best Buy (NYSE:BBY – Get Rating) and ICZOOM Group (NASDAQ:IZM – Get Rating) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.
Institutional and Insider Ownership
78.5% of Best Buy shares are owned by institutional investors. 0.6% of Best Buy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Best Buy and ICZOOM Group’s gross revenue, earnings per share (EPS) and valuation.
Gross Revenue
Price/Sales Ratio
Net Income
Earnings Per Share
Price/Earnings Ratio
Best Buy
$46.30 billion
0.35
$1.42 billion
$5.91
12.39
ICZOOM Group
N/A
N/A
N/A
N/A
N/A
Best Buy has higher revenue and earnings than ICZOOM Group.
Analyst Recommendations
This is a summary of current recommendations and price targets for Best Buy and ICZOOM Group, as reported by MarketBeat.com.
Sell Ratings
Hold Ratings
Buy Ratings
Strong Buy Ratings
Rating Score
Best Buy
1
6
10
0
2.53
ICZOOM Group
0
0
0
0
N/A
Best Buy currently has a consensus price target of $78.44, suggesting a potential upside of 7.14%. Given Best Buy’s higher possible upside, equities analysts clearly believe Best Buy is more favorable than ICZOOM Group.
Profitability
This table compares Best Buy and ICZOOM Group’s net margins, return on equity and return on assets.
Net Margins
Return on Equity
Return on Assets
Best Buy
2.93%
51.95%
9.47%
ICZOOM Group
N/A
N/A
N/A
Summary
Best Buy beats ICZOOM Group on 8 of the 8 factors compared between the two stocks.
Best Buy Co., Inc. engages in the provision of consumer technology products and services. It operates through two business segments: Domestic and International. The Domestic segment includes operations in all states, districts, and territories of the U.S., operating under various brand names, including Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video, Napster, and Pacific Sales. The International segment is made up of all operations outside the U.S. and its territories, including Canada, Europe, China, Mexico, and Turkey. It also markets its products under the brand names: Best Buy, bestbuy.com, Best Buy Direct, Best Buy Express, Best Buy Mobile, Geek Squad, GreatCall, Magnolia and Pacific Kitchen and Home. The company was founded by Richard M. Schulze in 1966 and is headquartered in Richfield, MN.
ICZOOM Group Inc. is primarily engaged in sales of electronic component products to customers principally in Hong Kong and mainland China through its B2B e-commerce trading platform. It also provides services to customers such as temporary warehousing, logistic and shipping and customs clearance. ICZOOM Group Inc. is based in SHENZHEN, China.
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Target Corp.’s stock is up 0.1% Friday after snapping its longest losing streak in 23 years amid an anti-LGBTQ+ backlash against the retail giant.
The stock ended Thursday’s session up 0.2% to snap the losing streak. Target TGT, +1.57%
shares had ended Wednesday’s session down 2.2%, marking their ninth consecutive decline, and the stock’s longest losing streak since an 11-day stretch that ended Feb. 24, 2000, according to Dow Jones data. Wednesday also marked the stock’s lowest close since Aug. 11, 2020.
Target Corp.’s stock, which is on its longest losing streak in 23 years, was downgraded to neutral from overweight Thursday by JPMorgan, which cited “too many concerns rising” in relation to the retail giant.
The stock ended Wednesday’s session down 2.2%, marking its ninth straight decline and the stock’s longest losing streak since an 11-day stretch that ended Feb. 24, 2000, according to Dow Jones data. Wednesday also marked the stock’s lowest close since Aug. 11, 2020.
Macy’s Inc.’s stock slid 9% in premarket trading Thursday, after the department-store chain posted weaker-than-expected fiscal first-quarter sales and cut its full-year guidance to reflect a challenged consumer.
The New York-based company M posted net income of $155 million, or 56 cents a share, for the quarter to April 29, down from $286 million, or 98 cents a share, in the year-earlier period. Adjusted per-share earnings were also 56 cents, ahead of the 45-cent FactSet consensus.
O Shaughnessy Asset Management LLC decreased its position in Tempur Sealy International, Inc. (NYSE:TPX – Get Rating) by 1.7% during the fourth quarter, according to its most recent disclosure with the Securities and Exchange Commission. The firm owned 17,810 shares of the company’s stock after selling 302 shares during the quarter. O Shaughnessy Asset Management LLC’s holdings in Tempur Sealy International were worth $611,000 at the end of the most recent quarter.
Other institutional investors also recently modified their holdings of the company. Balyasny Asset Management LLC bought a new position in shares of Tempur Sealy International in the 3rd quarter worth approximately $28,792,000. Point72 Asset Management L.P. purchased a new stake in shares of Tempur Sealy International in the third quarter worth $22,587,000. Browning West LP increased its holdings in shares of Tempur Sealy International by 9.7% during the third quarter. Browning West LP now owns 10,430,289 shares of the company’s stock valued at $251,787,000 after acquiring an additional 925,000 shares in the last quarter. Bank of Nova Scotia raised its position in shares of Tempur Sealy International by 257.1% in the 4th quarter. Bank of Nova Scotia now owns 1,035,484 shares of the company’s stock worth $35,548,000 after purchasing an additional 745,507 shares during the last quarter. Finally, Select Equity Group L.P. bought a new position in Tempur Sealy International in the 1st quarter worth about $15,416,000. 99.43% of the stock is currently owned by hedge funds and other institutional investors.
Tempur Sealy International Price Performance
TPX opened at $37.43 on Tuesday. The company has a current ratio of 1.24, a quick ratio of 0.69 and a debt-to-equity ratio of 79.80. Tempur Sealy International, Inc. has a 12-month low of $20.03 and a 12-month high of $44.28. The business’s fifty day simple moving average is $37.55 and its 200-day simple moving average is $37.24. The company has a market capitalization of $6.44 billion, a price-to-earnings ratio of 16.20, a PEG ratio of 0.88 and a beta of 1.69.
Tempur Sealy International (NYSE:TPX – Get Rating) last posted its quarterly earnings data on Tuesday, May 9th. The company reported $0.53 earnings per share for the quarter, topping analysts’ consensus estimates of $0.51 by $0.02. Tempur Sealy International had a negative return on equity of 522.46% and a net margin of 8.39%. The firm had revenue of $1.21 billion during the quarter, compared to analysts’ expectations of $1.21 billion. During the same quarter last year, the firm earned $0.69 EPS. The business’s quarterly revenue was down 2.5% on a year-over-year basis. On average, equities research analysts anticipate that Tempur Sealy International, Inc. will post 2.7 earnings per share for the current fiscal year.
Tempur Sealy International Announces Dividend
The business also recently disclosed a quarterly dividend, which will be paid on Tuesday, June 6th. Stockholders of record on Tuesday, May 23rd will be paid a dividend of $0.11 per share. The ex-dividend date of this dividend is Monday, May 22nd. This represents a $0.44 annualized dividend and a dividend yield of 1.18%. Tempur Sealy International’s payout ratio is currently 19.05%.
Analyst Upgrades and Downgrades
Several research analysts have issued reports on TPX shares. Wedbush decreased their target price on shares of Tempur Sealy International from $50.00 to $45.00 and set an “outperform” rating for the company in a report on Thursday, April 20th. StockNews.com began coverage on Tempur Sealy International in a report on Thursday, May 18th. They issued a “hold” rating for the company. Truist Financial lifted their target price on shares of Tempur Sealy International from $32.00 to $46.00 and gave the stock a “buy” rating in a research report on Wednesday, February 1st. KeyCorp raised their target price on Tempur Sealy International from $35.00 to $48.00 and gave the stock an “overweight” rating in a research report on Wednesday, February 1st. Finally, William Blair reissued a “market perform” rating on shares of Tempur Sealy International in a report on Monday, February 13th. Four investment analysts have rated the stock with a hold rating, six have assigned a buy rating and one has issued a strong buy rating to the company. Based on data from MarketBeat, the company presently has an average rating of “Moderate Buy” and a consensus target price of $42.67.
Tempur Sealy International, Inc develops, manufactures, markets, and distributes bedding products. It operates through the North America and International segments. The North America segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in the U.S.
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A national obsession with a new class of weight-loss drugs is turning dangerous, doctors and researchers say, as many patients are inappropriately prescribed Wegovy, Ozempic and similar medications and supply shortages generate a market for unauthorized, potentially risky copycat versions of these drugs.
Social media buzz about the drugs has promoted the mistaken perception that the medications are appropriate for a broad swath of people who may want to shed a few pounds–with disastrous consequences for some patients, doctors say. Patients who previously recovered from eating disorders, for example, are coming in for treatment because they “have had their eating disorder reactivated by use of these medications,” said Dr. Elizabeth Wassenaar, a regional medical director at the Eating Recovery Center, which specializes in treating the disorders. Some patients have wound up in the hospital, she said, and in some cases the providers who prescribed the drugs were unaware of the patients’ eating-disorder history. “It’s a real warning to people who prescribe these medications that it’s not without risk,” she said.
Some doctors also question whether the safety of the drugs has been adequately studied in older adults, who may have an undesirable loss of lean muscle mass when taking the medications. That complicates an ongoing debate about whether Medicare should cover these drugs for weight loss.
And patients of all types are put at risk, experts say, by the illegal production of knock-off versions of the medications. The Food and Drug Administration and several state pharmacy boards in recent weeks have warned that some compounding pharmacies are producing unauthorized versions of the drugs–which poses particular safety concerns for injectable drugs such as Wegovy, said David Margraf, a pharmaceutical research scientist with the Resilient Drug Supply Project at the University of Minnesota’s Center for Infectious Disease Research and Policy. “It’s not just a victimless crime,” he said. “People can be severely injured.”
Novo Nordisk NVO, +0.33%,
the maker of Wegovy and Ozempic, itself sought to tap the brakes on the craze around these drugs in a statement posted on its website this month, saying it’s concerned about reports of the drugs being used “for purely cosmetic or aesthetic weight loss,” unauthorized versions of the drugs hitting the market, and “insufficient clinical evaluations by some telehealth providers” promoting the drugs.
Drugs such as Novo Nordisk’s Wegovy, Ozempic and Rybelsus and Eli Lilly’s LLY, -0.36%
Mounjaro mimic the effects of a gut hormone known as GLP-1, which can help control blood-sugar levels and reduce appetite. (Mounjaro also affects another hormone called GIP.) Ozempic, Rybelsus and Mounjaro are FDA-approved for treatment of type 2 diabetes, while Wegovy is approved for people with obesity and certain people with excess weight combined with weight-related medical problems.
Billions of dollars in drug sales hinge on the breadth of the patient population prescribed these medications. Last year, more than 5 million prescriptions for Ozempic, Mounjaro, Rybelsus or Wegovy were written for weight management, up from just 230,000 in 2019, according to data and analytics firm Komodo Health. Obesity drugs could be a $54 billion market by 2030, up from $2.4 billion in 2022, Morgan Stanley said in a report last year. Reports of GLP-1 drug users seeing improvements in addictive behaviors such as smoking and drinking have lately amplified interest in the medications.
The drugs have become such a cultural phenomenon that Walmart during its quarterly earnings call last week blamed the medications for a shift in consumer-spending patterns that pressured its margins. In the first quarter, the company saw “a shift to health and wellness,” John Rainey, Walmart Inc.’s WMT, +0.18%
executive vice president and chief financial officer, said on the call with analysts. “And part of that is related to these GLP-1 drugs that are to treat diabetes,” he said, adding that the shift “comes at a lower margin, and so that has some impact on our business as well.”
Noom, a digital health company that for years has emphasized a behavioral approach to weight management, this week announced a new program that will make Ozempic, Wegovy, Mounjaro and other medications available to eligible patients. “Prescriptions are not the goal of our program. They’re very much an adjunct,” Dr. Linda Anegawa, Noom’s chief of medicine, told MarketWatch. Medical professionals will review patients’ entire health history, order labs to assess their metabolic health, and engage in video visits with patients as they determine what treatments might be appropriate, she said.
Telling your brain you’re not hungry
The reason GLP-1 drugs help control weight is pretty straightforward, said Dr. Daniel Drucker, who helped discover GLP-1 and is senior scientist at Lunenfeld-Tanenbaum Research Institute in Toronto. When people take these drugs, he said, they simply eat less because they feel more full. “GLP-1 will tell your brain that you’re not hungry,” he said, and people taking these medications may feel less stressed about food or find themselves thinking less about food. And the effects may go beyond eating, he said, as some people also see improvements in smoking, drinking, and other addictive or compulsive behaviors. “These are really interesting areas for further investigation,” he said. Drucker has been a consultant or speaker for Novo Nordisk, Pfizer PFE, -0.61%
and other pharmaceutical companies.
Novo Nordisk said in a statement to MarketWatch that it is not conducting any dedicated clinical studies to evaluate Ozempic, Rybelsus or Wegovy in patients with substance-use disorders or addiction-related illnesses, and Eli Lilly said it does not have any studies planned for investigating tirzepatide–the active ingredient in Mounjaro–for treatment of addiction.
Adolescents’ use of the drugs for weight loss is a particular concern for some doctors. Wegovy is approved for treatment of obesity in children 12 and older. “The adolescent mental health crisis is unprecedented,” said Wassenaar, with many teens suffering severe mood disorders, eating disorders, and suicidality, and teens struggling with depression may think, “if I lose weight, I’ll feel better and people will like me. There’s this magic drug, and all I have to do is inject it.” And if patients can start taking these drugs as early as 12 years of age, “we just don’t know what that’s going to do to them in 10 or 20 years,” she said, because there’s not enough long-term data.
Novo Nordisk said in a statement to MarketWatch that “teenage obesity is linked to weight-related health problems such as high blood pressure, high cholesterol and type 2 diabetes,” and that cutting calories and increasing physical activity may not be enough for some patients. “The decision to prescribe an anti-obesity medication is at the discretion of the physician and the patient/parents,” the company said.
Eli Lilly said that tirzepatide is not currently being studied for chronic weight management in children or adolescents.
Many patients may have trouble filling lower-dose Wegovy prescriptions through September, according to drugmaker Novo Nordisk.
Novo Nordisk via AP
Some doctors are also concerned about broad use of the drugs among older adults. Many older adults have sarcopenia, an age-related loss of muscle mass and strength that can contribute to frailty and fall risk later in life–and losing weight can mean an additional loss of muscle mass that may not be advisable for some patients, doctors and researchers say.
While “there’s a huge push to get Medicare to cover these drugs, it’s not really certain whether they would be helpful in this population or actually more harmful,” said Judy Butler, a research fellow at PharmedOut, a research and education project at Georgetown University Medical Center. Noom is not enrolling patients over age 60 in its new program, Anegawa said, partly because “we really don’t have enough data yet with many of these drugs in the geriatric population.”
In the pivotal clinical trials for Wegovy, 9% of the Wegovy-treated patients were between 65 and 75 years of age, and 1% were 75 and older, Novo Nordisk said in a statement. “No overall differences in safety or effectiveness have been observed between patients 65 years of age and older and younger adult patients,” the company said. In an ongoing cardiovascular outcomes trial, about 38% of patients are 65 or older, the company said.
By law, Medicare generally does not cover drugs prescribed for weight loss–although some drugmakers and industry groups are pushing to change that. Some of the drugs now generating intense demand also come with a hefty sticker price: Wegovy, for example, has an estimated annual net cost of about $13,600, according to the Institute for Clinical and Economic Review. If Medicare coverage rules changed and 10% of beneficiaries with obesity used Wegovy, total annual Medicare Part D spending on the drug could be as much as $26.8 billion, according to a recent study published in the New England Journal of Medicine. That’s more than 18% of the net total Part D spending by beneficiaries and the Medicare program in 2019.
Dangerous copycats
There are potential physical as well as financial costs. Side effects of the drugs can range from nausea and vomiting to gallbladder problems, inflammation of the pancreas, and thyroid cancer.
More broadly, some doctors question the prescribing of drugs solely based on obesity, absent other risk factors. “If somebody is obese and has diabetes, high blood pressure, and high cholesterol, losing weight may improve those parameters, but obesity on its own does not need to be treated,” said Dr. Adriane Fugh-Berman, a professor at Georgetown University Medical Center and director of PharmedOut. “It’s cardiovascular fitness that is important, no matter what weight you are,” she said. “We should stop focusing on the weight itself as a risk factor.”
Dr. Robert Gabbay, chief science and medical officer at the American Diabetes Association, counters that “obesity is a disease, and therefore needs to be treated as such.” Although there are people with obesity who don’t have other serious conditions, he said, “that’s relatively uncommon.”
Despite the concerns, shortages of the drugs persist. Novo Nordisk says it anticipates that many patients will have trouble filling lower-dose Wegovy prescriptions through September.
For patients who are relying on GLP-1 drugs for treatment of diabetes, even a short-term interruption in access to the drugs can cause blood-glucose levels to rise and result in serious complications, Gabbay said. Patients also tend to gradually ramp up dosage of these drugs to get to the effective dose, he said, and if they lose access to the medication “they might have to start back at the beginning again,” putting them several months behind on their treatment.
The shortages can also create risks for a broader set of patients, experts say, as they spur demand for copycat versions of the drugs. The approved active ingredient in Wegovy and Ozempic is semaglutide in its base form, but some compounding pharmacies may be using salt forms of semaglutide, the FDA said in a late April letter to the National Association of Boards of Pharmacy. “We are not aware of any basis for compounding a drug using these semaglutide salts that would meet federal law requirements” restricting the types of active ingredients used in compounding, the FDA said in the letter. Boards of pharmacy in several states, including West Virginia, North Carolina and Mississippi, have also recently issued warnings about compounded semaglutide.
Novo Nordisk said in the statement posted on its website this month that it is “actively monitoring and taking action against” entities unlawfully selling compounded semaglutide, adding that no FDA-approved generic versions of semaglutide currently exist.
Unauthorized compounded versions of the drugs could raise serious concerns about sterility and other quality-control issues, the Resilient Drug Supply Project’s Margraf said. “If this drug is in high demand and there isn’t enough supply, people will find a way to get it from a gray-market source,” he said. “People are going to find ways around the laws and potentially harm patients.”
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Nvidia Corp. headed toward market-capitalization gains of nearly $200 billion in after-hours trading Wednesday, which could put the chip maker within sight of becoming only the seventh U.S. company to top a valuation of $1 trillion.
Nvidia ended Wednesday’s session with a market cap — the total value of all shares in existence — of roughly $754.3 billion, according to FactSet. A 25% increase would add nearly $189 billion to that total, putting the company within striking distance of $1 trillion. Only six U.S. companies have ever attained a $1 trillion market cap: Apple Inc. AAPL, +0.16%
and Microsoft Corp. MSFT, -0.45%
are currently worth more than $2 trillion apiece; Google parent Alphabet Inc. GOOGL, -1.35%
and Amazon.com Inc. AMZN, +1.53%
have valuation of more than $1 trillion; and Facebook parent Meta Platforms Inc. META, +1.00%
and Tesla Inc. TSLA, -1.54%
have both touched the $1 trillion plateau previously.
Nvidia’s market cap was ahead of both Meta and Tesla as of Wednesday’s close, with both worth less than $650 billion, showing the potential fleeting nature of such a valuation. Nvidia’s record market cap is $834.4 billion, established on Nov. 29. 2021, according to Dow Jones Market Data.
If Nvidia’s gains hold through Thursday’s trading session, the company could challenge for the largest one-day market-cap gain in history. The biggest currently on record was Amazon’s $191.2 billion increase on Feb. 4, 2022, according to Dow Jones Market Data, followed closely by a $190.9 billion gain by Apple on Nov. 10, 2022. Nvidia also stands to gain more than rival Advanced Micro Devices Inc. AMD, +0.14%
is worth in total — AMD ended Wednesday’s session with a market cap of $174.4 billion.
Nvidia is closing in on the rare $1 trillion plateau because of huge gains in its stock this year, as hopes and hype about generative AI have flooded the tech sector. After OpenAI debuted its ChatGPT AI offering, and investor Microsoft quickly integrated the chatbot into many of its services, expectations for the technology have exploded.
Despite the hype, most companies have avoided providing hard figures for revenue gains expected from AI. Nvidia’s fiscal second-quarter forecast — which calls for roughly $11 billion in sales, nearly 33% higher than Nvidia’s previous quarterly record of $8.28 billion — could be seen as the first sign of a wave of fresh spending coursing through the tech sector.
Other companies have indicated that they will be forced to spend to develop their technology before reaping large financial rewards from it. Microsoft, for example, disclosed to investors last month that capital expenditures are increasing as it builds AI capabilities into its Azure cloud-computing platform — spending that is largely going toward Nvidia.
That is a rather typical path for large jumps in tech spending: Companies that make the necessary hardware see gains before the companies that use that gear can develop offerings that take advantage of it. Other gear makers joined Nvidia in the sharp move higher in after-hours trading Wednesday, including AMD, which gained more than 10%; chip maker Marvell Technology Inc. MRVL, -1.31%,
which increased more than 5%; and networking specialist Arista Networks Inc. ANET, +0.53%,
which added about 5%.
Alphabet and Microsoft stocks both increased around 2% in after-hours trading, and software companies that have made AI a core part of their offerings also saw gains. Palantir Technologies Inc. PLTR, -3.24%
and C3.ai Inc. AI, +2.54%
shares both increased more than 8%, for example.
Shares of Lowe’s Companies Inc. dropped Tuesday, after the home-improvement retailer beat fiscal first-quarter profit and sales expectations but cut its full-year outlook, citing lower demand for discretionary items.
Net income for the quarter to May 5 was $2.26 billion, or $3.77 a share, after income of $2.33 billion, or $3.51 a share, in the same period a year ago. Net income fell while earnings per share increased as the number of shares outstanding used to calculate EPS dropped 9.8% to 597 million.
Excluding nonrecurring items, such as an asset-sale gain, adjusted EPS of $3.67 beat the FactSet consensus of $3.44.
Total sales declined 5.5% to $22.35 billion, above the FactSet consensus of $21.60 billion, while the same-store sales decline of 4.3% missed expectations for a 3.4% decline.
Cost of sales fell less than sales, down 5.1% to $14.82 billion, as gross margin contracted to 33.7% from 34.0%. The value of merchandise inventory as of May 5 fell 3.5% from a year ago to $19.52 billion.
The stock LOW, -1.51%
shed 1.0% ahead of the open, but pared earlier premarket losses of as much as 3.4%.
During the quarter, Lowe’s said it spent $2.1 billion to repurchase 10.6 million shares and paid out $633 million in dividends.
“We are pleased with the performance of our business despite record lumber deflation and unfavorable spring weather,” said Chief Executive Officer Marvin Ellison. “Although we delivered positive comparable sales in Pro and online for the first quarter, we are updating our full-year outlook to reflect softer-than-expected consumer demand for discretionary purchases.”
For fiscal 2023, the company lowered its guidance ranges for adjusted EPS to $13.20 to $13.60 from $13.60 to $14.00 and sales to $87 billion to $89 billion from $88 billion to $90 billion. The outlook for same-store sales was revised to down 2% to down 4% from flat to down 2%.
Meanwhile, Wall Street’s full-year estimates were within the lowered guidance ranges, as the FactSet consensus for EPS was $13.56. The estimate for sales was $88.36 billion and for same-store sales was a decline of 2.2%.
Lowe’s results came less than a week after rival Home Depot Inc. HD, -0.08%
reported a first-quarter profit beat — but sales missed expectations. Home Depot also lowered its full-year outlook.
The stock has gained 2.0% year to date through Monday, while Home Depot shares have dropped 8.0% and the S&P 500 index SPX, +0.02%
has advanced 9.2%.
Home Depot (NYSE:HD – Get Rating) had its target price cut by Wedbush from $300.00 to $290.00 in a research report report published on Wednesday morning, The Fly reports. Wedbush also issued estimates for Home Depot’s Q2 2024 earnings at $4.37 EPS, Q3 2024 earnings at $3.74 EPS, Q4 2024 earnings at $2.82 EPS, FY2024 earnings at $14.76 EPS, FY2025 earnings at $15.84 EPS and FY2026 earnings at $16.91 EPS.
A number of other brokerages have also commented on HD. Citigroup cut their price target on Home Depot from $332.00 to $327.00 in a report on Wednesday, May 10th. Sanford C. Bernstein cut their price target on Home Depot from $333.00 to $314.00 in a report on Wednesday. Piper Sandler cut their price target on Home Depot from $320.00 to $300.00 in a report on Wednesday, February 15th. Bank of America lowered their price objective on Home Depot from $360.00 to $346.00 in a research report on Wednesday, February 22nd. Finally, UBS Group lowered their price objective on Home Depot from $350.00 to $340.00 and set a buy rating on the stock in a research report on Wednesday, February 22nd. Thirteen investment analysts have rated the stock with a hold rating and fourteen have issued a buy rating to the stock. According to data from MarketBeat, the company currently has an average rating of Moderate Buy and a consensus price target of $323.25.
Home Depot Stock Down 1.5 %
HD opened at $290.88 on Wednesday. Home Depot has a twelve month low of $264.51 and a twelve month high of $347.25. The firm has a market cap of $294.57 billion, a P/E ratio of 17.73, a price-to-earnings-growth ratio of 1.89 and a beta of 0.93. The business has a 50 day moving average price of $290.67 and a 200 day moving average price of $306.12. The company has a debt-to-equity ratio of 113.02, a quick ratio of 0.33 and a current ratio of 1.27.
Home Depot (NYSE:HD – Get Rating) last issued its quarterly earnings results on Tuesday, May 16th. The home improvement retailer reported $3.82 EPS for the quarter, topping analysts’ consensus estimates of $3.80 by $0.02. Home Depot had a return on equity of 1,936.63% and a net margin of 10.75%. The company had revenue of $37.26 billion during the quarter, compared to analyst estimates of $38.35 billion. During the same period in the previous year, the company earned $4.09 earnings per share. The company’s quarterly revenue was down 4.2% compared to the same quarter last year. Research analysts forecast that Home Depot will post 15.01 EPS for the current year.
Home Depot Announces Dividend
The firm also recently announced a quarterly dividend, which will be paid on Thursday, June 15th. Stockholders of record on Thursday, June 1st will be issued a dividend of $2.09 per share. This represents a $8.36 annualized dividend and a dividend yield of 2.87%. The ex-dividend date is Wednesday, May 31st. Home Depot’s payout ratio is presently 50.94%.
Insider Activity
In other news, EVP Hector A. Padilla sold 1,502 shares of the company’s stock in a transaction on Wednesday, May 17th. The stock was sold at an average price of $293.09, for a total transaction of $440,221.18. Following the transaction, the executive vice president now owns 13,958 shares of the company’s stock, valued at $4,090,950.22. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. 0.19% of the stock is currently owned by insiders.
Hedge Funds Weigh In On Home Depot
Several large investors have recently made changes to their positions in HD. Slow Capital Inc. acquired a new position in Home Depot in the first quarter valued at about $25,000. Kalos Management Inc. acquired a new position in Home Depot in the first quarter valued at about $26,000. Fairfield Bush & CO. acquired a new position in Home Depot in the first quarter valued at about $27,000. Glassy Mountain Advisors Inc. acquired a new position in Home Depot in the fourth quarter valued at about $30,000. Finally, KB Financial Partners LLC acquired a new position in Home Depot in the first quarter valued at about $28,000. Institutional investors and hedge funds own 68.31% of the company’s stock.
The Home Depot, Inc engages in the sale of building materials and home improvement products. Its products include building materials, home improvement products, lawn and garden products and decor products. The firm operates through the following geographical segments: U.S., Canada and Mexico. It offers home improvement installation services, and tool and equipment rental.
Further Reading
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When Andrew Pessano was looking to create a state-of-the-art indoor pickleball facility in southern New Jersey and take advantage of the surging interest in the sport, he considered building it from scratch. But he and his partners realized it would take at least two years and likely cost well over $1 million.
So, Pessano and his team found a different way to achieve their goal: They leased a vacant big-box space — formerly home to a Burlington BURL, +0.44%
store, in fact — and turned it into Proshot Pickleball, a membership facility replete with eight cushioned courts, viewing decks, a pro shop and a players lounge.
Pessano says that since opening in mid-February, he’s already signed up more than 300 paid members. “The first couple of months we’re busy, busy,” he adds.
Proshot Pickleball could be something of a model for the future of what is often described as the fastest-growing sport in the country; a game that shares elements with tennis, ping-pong and badminton. In short, pickleball could soon be coming to that vacant space in your local mall — or to that abandoned big-box store. (Consider all those soon-to-be-empty Bed Bath & Beyond locations.)
“Pickleball ‘will help America’s malls to become the social hub they once were.’”
The trend is already happening: A recent retail-outlook report from JLL, a company that tracks the commercial real-estate market, points to pickleball facilities in locations ranging from a former Saks Off Fifth store in Connecticut, to a shuttered Belk department-store location in Georgia.
Pickleball “court owners are targeting malls for expansion,” says the report.
Of course, no one is saying that pickleball won’t continue to be played in parks and other public spaces, or even people’s driveways. Inherent in the game’s appeal, say fans, is that it can be played just about anywhere. But there are notable factors driving the move into malls and other retail locations.
Begin with that surging interest in pickleball. Nearly 9 million Americans are now playing the game, the Sports & Fitness Industry Association reports — an astounding year-over-year increase of 85.7%.
All those players need places to play, but the lack of available public court space in many cities and towns has led to all sorts of skirmishes, with issues arising when players use tennis facilities or take up space in playgrounds. As one parent complained about the pickleballers when the turf war erupted at a New York City playground: “It’s not a coexistence, it’s a complete and utter takeover.”
That leaves more room for operators of private facilities, like the pickleball court owners that JLL cites, to enter the picture — and many concepts, even chains, are starting to emerge to address the demand. But where should they go? Again, building from scratch can take a lot of money, and time.
“Nearly 9 million million Americans are now playing pickleball, the Sports & Fitness Industry Association reports — an astounding year-over-year increase of 85.7%.”
Meanwhile, mall operators and landlords of other retail spaces, such as big-box stores, are continually looking for new concepts to bring into their spaces, especially as brick-and-mortar retail stores fight to stay relevant and afloat at a time when online shopping has become the norm for many Americans.
In turn, those concepts are more often about “experiences” rather than shopping, says James Cook, a research director at JLL. Think museums, golf simulators and pickleball.
It’s about redefining the retail landscape, Cook says. “The idea is this is something new and unique,” he adds of these emerging types of mall/big-box tenants, including pickleball facilities.
Mike Leigh, author of “Zen and the Art of Pickleball,” sees an especial logic to pickleball in malls. These retails spaces are all about bringing people together, something that is all too easily forgotten in a point-and-click world of online shopping. And pickleball is a game that’s inherently social because of its close-up nature.
So the two make a natural combo, Leigh says: Pickleball “will help America’s malls to become the social hub they once were.”
CityPickle, a New York City-based operator of pickleball facilities, opened a pop-up venue at the Hudson Yards development last year.
CityPickle
Still, there are plenty of arguments to the contrary, so this is not a one-size-fits-all solution.
America’s malls and other retail hubs have their share of empty spaces, but the situation may not be as dire as it seems, Cook says. The points to the current retail vacancy rate of 4.2% being “at historic lows,” noting that there’s been considerable recovery since the darkest days of the pandemic.
Moreover, he says, higher-end malls are doing especially well — and it’s those spaces that tend to be a good fit for experiential concepts like pickleball. In other words, these malls may like the idea, but they aren’t necessarily begging for tenants.
Plus, Cook says pickleball facilities can need lots of space — concepts often have a food-and-drink component for pre- and post-game socializing. And facility operators like to have outdoor space, if possible, for the warmer months. Such requirements can pose challenges in a traditional mall setup, he says.
“I think [pickleball] only works in some specific instances,” he says.
Pessano, of South Jersey’s Proshot Pickleball, points to another issue: If the space’s support columns aren’t situated far enough apart from one another, it will make it difficult to have enough courts to make for a viable business. And the ceiling height can’t be too low, either, he adds.
These discouraging realities notwithstanding, it appears pickleball operators will continue to consider abandoned mall spaces and big-box stores as a good option to create much-needed court space. Take CityPickle, a private operator that already set up a pop-up facility in New York City’s Hudson Yards mixed-use development in the past year, and is looking to establish permanent court spaces in the Big Apple and elsewhere.
CityPickle founders Mary Cannon and Erica Desai say they are considering abandoned retail locations as possibilities. They like the open space these places provide, and they say that landlords appreciate having tenants that bring the kind of buzz and energy that a pickleball facility offers.
Shares of Target Corp. seesawed to a gain early Wednesday, after the discount retailer reported fiscal first-quarter results that beat expectations and reiterated its full-year outlook, but provided a downbeat second-quarter profit view due to “softening sales trends.”
Net income for the quarter to April 29 fell to $950 million, or $2.05 a share, from $1.01 billion, or $2.16 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share fell to $2.05 from $2.19 but beat the FactSet consensus of $1.77.
Total revenue increased 0.6% to $25.32 billion, above the FactSet consensus of $25.26 billion, while same-store sales grew 0.7% to exceed the FactSet consensus for a 0.2% rise, as traffic rose 0.9%.
The stock rose 0.9% in premarket trading, but has swung from a loss of as much as 3.6% to a gain of as much as 2.4% after the results were reported.
“We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we’ve established with our guests,” said Chief Executive Officer Brian Cornell. “It’s required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now.”
Cost of sales declined 0.4% to $18.39 billion, as gross margin improved to 27.4% from 26.7%.
The value of inventory fell 6.5% from the sequential fourth quarter, and dropped 16.4% from a year ago, to $12.62 billion as of April 29.
“[W]e now expect shrink will reduce this year’s profitability by more than $500 million compared with last year,” said CEO Cornell. “While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue.
Looking ahead, Target said it was planning for a wide range of sales outcomes, given “softening sales trends” in the first quarter.
For the second quarter, the company expects same-store sales to be down in the low-single digit percentage range, compared with the FactSet consensus for a 0.1% increase. And adjusted EPS for the current quarter is expected to be $1.30 to $1.70, below expectations of $1.95.
For the full year, Target reiterated its guidance for same-store sales growth of 0.7% and for adjusted EPS of $7.75 to $8.75. That compares with the FactSet consensus for same-store sales growth of 0.6% and for adjusted EPS of $8.36.
The stock has gained 5.3% year to date through Tuesday, while the Consumer Discretionary Select Sector SPDR exchange-traded fund XLY, -0.41%
has run up 14.1% and the S&P 500 index SPX, -0.64%
has advanced 7.0%.
Shares of Home Depot Inc. dropped Tuesday, after the home improvement retail giant reported fiscal first-quarter profit that topped expectations but sales that fell short, and it cut the full-year outlook, citing lumber deflation and bad weather.
Net income for the quarter to April 30 fell to $3.87 billion, or $3.82 a share, from $4.32 billion, or $4.09 a share, in the same period a year ago. That topped the FactSet consensus for earnings per share of $3.80.
Sales declined 4.2% to $37.26 billion, well below the FactSet consensus of $38.31 billion.
“Our sales for the quarter were below our expectations primarily driven by lumber deflation and unfavorable weather, particularly in our Western division as extreme weather in California disproportionately impacted our results,” said Chief Executive Officer Ted Decker.
Overall same-store sales fell 4.5% to miss the FactSet consensus for a 1.6% decline, with same-store sales in the U.S. falling 4.6%.
The stock sank 3.6% toward a seven-month low in premarket trading.
“Given the negative impact to first quarter sales from lumber deflation and weather, further softening of demand relative to our expectations, and continued uncertainty regarding consumer demand, we are updating our guidance to reflect a range of potential outcomes,” said Chief Financial Officer Richard McPhail.
For fiscal 2023, the company cut its EPS outlook to a decline of between 7% and 13% from a decline in the mid-single digit percentage range, and lowered its sales outlook to a decline of between 2% and 5% from approximately flat.
The stock has dropped 10.2% over the past three months through Monday, while the Dow Jones Industrial Average DJIA, +0.14%
has slipped 1.0%.
Fanatics Inc. will buy the U.S. operations of Australia’s PointsBet for about $150 million, in the company’s largest foray yet into sports betting.
PointsBet PBH, -18.70%
announced the deal Sunday night, specifying that the acquisition only applies to PointsBet’s U.S. assets, not its businesses in Australia and Canada. CNBC first reported the deal. Fanatics did not immediately reply to MarketWatch’s request for comment Sunday night.
PointsBet is an online sportsbook that launched in the U.S. in 2019, and operates in 15 states, including New Jersey, Iowa, Illinois and Colorado.
“Despite the strategic success building a valuable asset in the U.S., the costs of operating in a state-by-state environment, together with the requirement to build significant scale to compete against well capitalized operators, led us to explore a number of options,” PointsBet Chief Executive Sam Swanell said in a statement. “The sale of the U.S. Business to Fanatics Betting and Gaming delivers the most attractive risk-adjusted value outcome for shareholders compared to the risks and benefits of other options including the status quo.”
PointsBet shareholders are expected to vote on the sale at their annual meeting in late June.
The deal should increase pressure on U.S. sports-gambling companies such as DraftKings Inc. DKNG, -1.96%
and FanDuel. In late April, Fanatics launched sportsbook wagering for its customers in Ohio and Tennessee, and the Wall Street Journal reported at the time that the company pans to invest about $1 billion in its new sports-betting division.
In an interview, Fanatics CEO Michael Rubin told the Journal he wants Fanatics to be the world’s top sports-betting company within the next 10 years, and expects its betting operations to be profitable by 2025 or 2026.
In December, Florida-based Fanatics — which got its start in sports apparel and collectibles — closed a $700 million funding round, valuing it at about $31 billion, the Wall Street Journal reported. The privately held company is expected to eventually launch an IPO.
The numbers: The University of Michigan’s gauge of consumer sentiment fell to a preliminary May reading of 57.7 from an April reading of 63.5. That is the lowest level since November last year.
Economists polled by the Wall Street Journal had expected a May reading of 63.
Americans view on near-term inflation moderated slightly in May. They now expect the inflation rate in the next year to average about 4.5%. Inflation expectations had surged to 4.6% in April from 3.6 in March.
Inflation expectations over the next five years rose to 3.2% from 3% in April. That’s the highest reading since 2011.
Key details: A gauge that measures what consumers think about their financial situation — and the current health of the economy — fell to 64.5 from 68.2 in April.
Another measure that asks about expectations for the next six months moved down to 53.4 in May from 60.5 in the prior month.
Big picture: Consumer spending is the engine of the economy. If households grow concerned about the outlook and pull back, it could push the economy into recession.
And Federal Reserve officials won’t be pleased to see expectations of inflation over the long-term increase. They view expectations as a key source of future inflation pressure.
What UMich said: “Consumers’ worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff,” the press release said. In the most serious debt-ceiling standoff in 2011 consumer sentiment plummeted to recession levels but recovered quickly when the crisis was averted.
What are they saying? “While we don’t place too much weight on the relationship, if sustained, the latest plunge in consumer sentiment would be consistent with falling consumption in the second quarter. That would be alongside the probable hit to consumption from tightening credit conditions,” said Olivia Cross, assistant economist at Capital Economics.
The numbers: The cost of U.S. imported goods rose 0.4% in April, the Labor Department said Friday. This was the first increase this year.
Economists polled by the Wall Street Journal had forecast a 0.3% gain.
Over the past 12 months, the costs of imports has dropped 4.8%. That followed a 12.5% gain in the prior year.
Key details: The cost of imported fuel rose 4.5% in April after a 3.9% drop in the prior month. This was the first increase since last June.
The cost of imports excluding fuel were flat in April after a 0.5% decline in the prior month. Over the past year, nonfuel import prices are down 1.9%.
Exports prices rose 0.2% in April. They are down 5.9% over the past year.
Big picture: The stronger dollar last year dampened import prices and was a source of disinflation, but with the dollar softer this year, prices are firming.
One sign perhaps of the weaker dollar is that consumer goods prices ex-autos rose 0.2% in April and are up 1.1% annualized over the past three months, said Michael Gapen, U.S. economist at Bank of America Securities.
What are they saying? “Perhaps imported inflation is the first early signal of how brutal the fight against inflation will be in the coming months. Investors and traders should remember that the Fed’s target is 2%,” said Alex Kuptsikevich, senior market analyst at FXPro.