SentinelOne (S) soared over 15% Wednesday afternoon, after the cybersecurity firm posted a narrower-than-expected third-quarter quarter loss and issued upbeat guidance. SentinelOne stock has gained 60% year-to-date.
Brown-Forman (BF-B) shares dropped as the Jack Daniel's parent company reported a 2% decline in net whiskey sales. The company trimmed its 2024 organic net sales outlook, though tequila and ready-to-drink revenues rose.
Bank of America (BAC) downgraded both Toast (TOST) and PayPal (PYPL) shares from "Buy" to "Neutral." Analysts see 2024 as a transition year for PayPal, while for Toast, increased competition and "slower top-line momentum" could be headwinds.
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JOSH LIPTON: Here's a look at some trending tickers. First up, SentinelOne. That stock soaring after the company reported a narrower-than-expected third-quarter loss, raised its revenue guidance for next year. So security software provider, Julie. Reported results. They look better than expected. Revenue jumped, it looks like, more than 40%. Guidance also looks solid.
Some interesting comments from the company too and saying macroeconomic headwinds. They noted that. But they said, listen, we exceeded our expectations.
Also talked about AI and modern cyber warfare, how attacks are rising. And their point being that's why cybersecurity, they argue, is still top of mind for CIOs.
JULIE HYMAN: Yeah, some of the analysts who cover the stock talking about positive free cash flow, that's something that is coming, that they maybe are moving their timeline up on. And something else we should mention about this company is that some of the other security company-- cybersecurity companies that we've heard from have not been as positive. It's been sort of a choppy--
JOSH LIPTON: True. Yeah.
JULIE HYMAN: --reporting season. So this one seems to stand out even more in contrast with some of those others that we've heard about.
JOSH LIPTON: Yeah, so moving higher today. We should point out it's up more than 60% this year, so no surprise.
When you kind of comb through some of the analyst notes, some, like the team at Jefferies, for example, telling clients, listen, they would characterize this as a solid report but, in their words, valuation just looks fair here. They have a hold. Not surprising when you see a move like that.
JULIE HYMAN: Yeah. Let's move on to Brown-Forman. The parent company of Jack Daniel's saying net whiskey sales are down 2% year over year. The shares down by 10% here.
The company coming out for its forecast for 2024, cutting its organic net sales forecast for that period of time. Second-quarter results-- fiscal-second-quarter results, earnings per share beat estimates. Net sales came in slightly light of estimates here.
I was looking through the release. It's interesting because they give first-half numbers for all of the booze that they sell. Whiskey sales, that 2% figure, which includes Jack Daniel's, down 2% in the first half. Ready to drink up 41%. That's obviously been a growth area. But tequila-- they own El Jimador and Herradura-- up about 2%. But whiskey just not doing great.
JOSH LIPTON: No. Dow Jones actually noting the stock is now on track for its worst year since 1999.
JULIE HYMAN: Wow.
JOSH LIPTON: And it says-- it's interesting. You mentioned the company, sort of the trends they're calling out. They did note what they see as this kind of slowdown in consumer spending. I think the money quote here was "evolving global macroeconomic conditions continue to create a challenging operating environment." So another thing, of course, we've heard from a lot of retailers.
JULIE HYMAN: Not drinking enough whiskey.
JOSH LIPTON: No. Got to milk that brown liquor.
JULIE HYMAN: I guess so.
JOSH LIPTON: Finally in the payments space, we're looking at Toast and PayPal stocks both downgraded by Bank of America. So this one-- these names have gotten hit, by the way, which is interesting. But BofA doesn't see even then a good reason to move in here.
So on PayPal, which has already been clobbered about-- it's down about 15% this year. Analysts here saying the company is going to be in a transition year, so they downgrade that name to neutral, move to the sidelines. They say they expect execs will try and earn Street credibility, drive sustained improvement in the top-line metrics, but this will likely take time, they say.
JULIE HYMAN: Yeah, that new CEO taking the reins I believe formally on January 1 here.
The downgrade also coming for Toast as part of this, and this was part of a big comprehensive note looking at the whole payment space for 2024. In the case of Toast, competition is intensifying. That stock going to neutral from buy. And the company says there could be risks that could inhibit any significant move higher here.
Aside from macro trends, they talk about competition from Square, from Clover, which is probably in addition to those Toast payment things, payment hardware that you see in restaurants. You see a lot of the Clover ones too. Also a company called Four. So that competitive landscape not great for Toast, in their view.
JOSH LIPTON: Yeah, interesting. They do like Square. If your listeners are wondering, well, OK, what do they actually like? They like Square. They say Square turned a corner with that latest print. Square's up about 10% this year.
JULIE HYMAN: And we should mention, by the way, we are going to get a look, a deeper dive into this payments outlook from the Bank of America analyst. That's Jason Kupferberg. We're going to talk to him on Friday and really dig into where investors should be looking in the payment space into 2024.