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Adobe down, Fedex up, AT&T pops on analyst rating

Yahoo Finance's Emily McCormick details Adobe stock falling on earnings, and Fedex stock rising ahead of earnings, and AT&T stock popping on an analyst call.

Video Transcript

KARINA MITCHELL: There is nothing secondhand about the market moves. And our Emily McCormick is keeping an eye on, always on top of it all. And she is here now with us with three tickers of note. And Emily, first, you say Adobe is falling today on a lower sales forecast.

EMILY MCCORMICK: Oh, that's right, Karina. Adobe is really just one of a number of software and growth names that we're seeing really coming under pressure today. As we can see, that stock is off more than 10% this afternoon. And that's after the company offered a current quarter and full year forecast that missed Wall Street's estimates. Now these also overshadowed otherwise strong and better than expected results for Adobe's latest quarter. But diving into this guidance, Adobe sees revenue for the current quarter ending in February coming in at about $4.2 billion, whereas consensus analysts were looking for about $4.4 billion.

And for the full year sales guidance, that was also a little bit light, with the company seeing about $17.9 billion in revenue versus the $18.2 billion the Street was looking for. Now in terms of what this means for the stock, I do want to read a quote here from Citi's Tyler Radke, who said, quote, "With two consecutive softer quarters, we expect investors to grow increasingly wary that Adobe is facing new headwinds, either reopening or competitive."

So, again, this outlook here and potentially slowing growth for Adobe suite of software offerings is spooking Wall Street. Those shares down more than 10% this afternoon, though we are seeing, again, a broader downward move in tech stocks as a whole, including in other major tech names like Apple. So really, a double whammy here hitting Adobe shares. Guys.

JARED BLIKRE: And Emily, I know you're also tracking FedEx. We got their earnings after the bell, which I believe either you or me will be breaking. But only one quarter ago, there was a lot of disappointment around that earnings release. The stock was down 9%. What are investors expecting today?

EMILY MCCORMICK: Well, Jared, we do have a little bit of a lowered bar for expectations heading into FedEx as a result. As you mentioned, they did really disappoint compared to consensus expectations in the latest quarter that we got last quarter. But if we take a look at the stock, it really has underperformed peers, including UPS. And this company, though, is still really important to watch in terms of their earnings since they do serve as a bellwether for global economic growth. And this time of year in particular will be a good indicator of how shipping volume is shaping up heading into the holidays, and whether supply chain disruptions are still impacting companies.

But FedEx is expected to post slower sales growth for its fiscal second quarter compared to recent quarters. The Street is looking for 9% year on year revenue growth to reach about $22.4 billion for this fiscal second quarter. And that would compare to about 14% growth in the prior quarter this year. Now Bloomberg Intelligence Senior Industry Analyst Klaskow writes, quote, "FedEx's share weakness has been driven by management's inability to offset rising costs with rates increases." So definitely keep an eye on margins tonight for FedEx as well, guys.

KARINA MITCHELL: And Emily, you're also watching AT&T, which saw a jump on Morgan Stanley's upgrade to overweight. Is that right?

EMILY MCCORMICK: That's right, Karina. So we did get a bullish call here coming from Morgan Stanley. At session highs, AT&T stock was up as much as 6.9% in its biggest gain since April 2020, rather. And analyst Simon Flannery at Morgan Stanley raised the firm's recommendation on the stock to overweight from equal weight and said that there are, quote, "a number of catalysts to unlock value by mid 2022."

Now, one of these catalysts is expected to be the closing of the WarnerMedia and Discovery merger. That was announced back in May this year and consisted of AT&T spinning off its media operations and combining those with Discovery's. Now we should also note that Morgan Stanley also upgraded its broader view on the telecom industry as a whole to in-line from cautious, noting that there are historically attractive valuations in this space right now. So all of this is coalescing to really help push up AT&T stock this afternoon. As we can see here, up more than 6% as we speak, guys.

KARINA MITCHELL: All right, Emily McCormick, thank you so much. Second to none, like I said.