Futures slump, Arista down, Gildan beats, Hudbay falls, Bumble drops
We unlocked a new level of parenting, our eldest got her ears pierced. At 7-years old she felt ready to make the decision herself and I was so proud of how brave she was as she told the women at Claire’s holding piercing guns to her ears, “I’m ready, go!” She didn’t cry and beamed after. I thought to myself, well that was easy. Then I thought, maybe too easy. Catch up with me in 10 years to see if we can trace her 15 piercings back to this moment.
The latest episode of In the Money with Amber Kanwar is now up on YouTube. We spoke with Evan Mancer of Cardinal Capital Management about investing in dividend growers.
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April fool: Futures are lower and bonds are dipping after US President Donald Trump hinted at 25% tariffs on autos, pharmaceuticals, and semiconductors that could be announced April 2nd. As usual, he gave himself an out. “When they come into the United States and they have their plant or factory here there is no tariff, so we want to give them a little bit of a chance,” he said from Mar-a-Lago. European markets are all lower halting what has been a stunning rally so far in 2025 (Euro Stoxx 50 +12% year-to-date). Another development is a possible end to the war in Ukraine as Russia and United States meet in Riyadh to hash out terms of how it would end. Conspicuously absent was Ukraine or representatives from Europe which leads to uncertainty about how the deal might shake out. “…While the direction of travel may be very uncomfortable for Europe politically, markets have been more focused on the prospect of any agreement to end the war rather than the type of agreement,” notes Jim Reid of Deutsche Bank. This is all gravy for gold which is advancing to another record high. Another factor weighing on the tape are earnings in the US with big drops in Arista Networks (more below), Toll Brothers (sales miss, disappointing forecast) and chemical company Celanese (warning about slow global demand). Today we have 22 companies on the TSX reporting results, although almost all are after the bell today.
Not enough: Shares of Arista Networks are down 5% in the pre-market despite better than expected earnings and boosting its sales outlook for 2025. The cloud networking company has benefitted from AI demand and saw sales increase 25% from last year. However, the stock is under pressure because a 5th potential hyperscaler customer dropped off. Nevertheless, the company retained its forecast for $750 million in sales from AI suggesting there are other ways to make up for the lost potential revenue. Investors are also feeling nervous about the fact that Meta now only makes up 15% of sales whereas last year it was 21% of sales. “We would note that the last time Meta revenue declined (CY20) it was followed by two years of very strong growth,” wrote Evercore’s Amit Daryanani. He recommends investors buy the dip in the stock today. “Arista revenue with Meta should grow in CY25. Outside of the Meta concerns, which should abate as Arista goes through the year, the quarter was largely positive…” he wrote.
Shirts off: Keep on eye on shares of plain t-shirt maker Gildan Activewear after it beat profit expectations and boosted its dividend 10%. The outlook for profit also points to a rosy outlook. “The high-point of the EPS guidance represents a potential EPS increase of 19% Y/Y, which would result in the fastest growth rate of the last three years,” wrote Martin Landry at Stifel. The company also announced some management changes including a new CFO. “We believe the shares will react well to these results…” wrote Landry. Gildan is trading around an all-time high and is up nearly 40% since its founder/CEO Glenn Chamandy was reinstated after a down-to-the wire activist battle. Evan Mancer of Cardinal Capital Management was active on that file calling for Chamandy to be reinstated after he was fired at the end of 2023. Despite the rally, he still sees more upside on the stock.
Soft rock: Shares of Hudbay Minerals are down 8% in the pre-market after the miner’s production forecast came in softer than expected. While earnings beat expectations, analysts note that the forecasted production for copper was lower than expected while costs are higher than expected. “Despite solid Q4 results, we expect shares will react negatively to the weaker 2025 guide,” wrote TD’s Craig Hutchison.
Tumble: Investors are swiping left on dating app Bumble with shares plunging 20% in the pre-market and poised to open at a 5-month low. Total sales fell 5% from last year but the company is warning investors that sales next quarter will fall even more. Bumble says sales could drop between 7-10% next quarter, worse than the 6% decline expected. Bumble went public during the 2021 IPO heyday and is down nearly 90% from the peak. It has been a massive underperformer compared to the likes of Match (which has also struggled) and Grindr (which has doubled).
