US OPEN: Wells Fargo puts pressure on Tesla shares

• Wall Street slightly drops early in Wednesday's session
• Wells Fargo recommendation bears Tesla shares more than 2.5% lower
• ZIM Integrated Shipping and Beauty Health earnings in the background

Wall Street indices started Wednesday's trading session slightly lower. The Nasdaq is currently losing nearly 0.23%, the S&P500 nearly 0.04% and the Russell 2000 nearly 0.02%. Technology companies lagged, dragged down by losing Tesla shares. Wells Fargo analysts significantly lowered their share price forecasts for the company.

Source: xStation5

The US2000 index is losing nearly 0.05% at the start of Wednesday's trading session, nevertheless, all the while the index remains within the local tops of the technical resistance zone close to 2100 points. A sustained breakout of this zone could encourage the buy side to test the 2132 points zone. The 2050 points zone, where the 50% abolition of the downward wave initiated in November 2021 runs, could now be considered a local support level. 

Company news

- The Pentagon has withdrawn the award of up to USD 2.5 billion in grants to Intel (INTC.US). The shares are losing nearly 2% early in the session. 

- Beauty Health (SKIN.US) shares are up 21% early in the session after the skincare company reported fourth quarter sales that exceeded consensus estimates. What's more, the company appointed Marla Beck as CEO:

FOURTH QUARTER RESULTS

• Net sales of $96.8 million, -1.4% y-o-y, estimated at $87.7 million
• Loss per share 7 cents vs. EPS of 3 cents a year ago, estimated loss per share of 9.5 cents
• Adjusted Ebitda $3.4 million, -79% y/y, estimated loss $4.41 million
• Adjusted gross margin 54.6% vs. 72.3% y/y
• Cash and cash equivalents $523.0 million, -8% y/y

Q1 FORECAST

• Sales $77m to $83 million, estimate $86.6 million
• Assumed loss of adjusted Ebitda $6 to $9 million

ANNUAL FORECAST

• Adjusted Ebitda above USD 40 million, estimate USD 31.6 million
• Net sales flat to low single-digit percentage growth

- Michael J Saylor, executive chairman of MicroStrategy (MSTR.US), is selling US$4.53 million  worth of shares in the company, according to an SEC filing. 

- ZIM Integrated Shipping (ZIM) loses 4% after the shipping company reported fourth-quarter results and provided annual guidance:

ANNUAL FORECAST

• Company sees adjusted Ebitda of $850 million to $1.45 billion, estimate $992.4 million 
• Projected adjusted Ebitda loss of $300 million to a profit of $300 million

FOURTH QUARTER RESULTS

• Revenue $1.21 billion, -45% y/y, forecast $1.22 billion
• Loss per share $1.23 vs. EPS $3.44 y/y, estimated loss per share $1.75
• Adjusted Ebit loss $49 million vs. profit $585 million y/y, estimated loss $173.2 millio
• Adjusted Ebitda $190 million, -80% y/y, estimate $106.3 million
• Adjusted Ebit margin -4% vs. 27% y/y
• Adjusted Ebitda margin 16% vs. 44% y/y
• Carried volume 786 K-TEU, -4.5% y/y
• Average freight rate per TEU $1,102, -48% y/y

COMMENTARY AND BACKGROUND

For 2024, the Company expects to generate adjusted EBITDA in the range of $850 million to $1,450 million and adjusted EBIT in the range of $300 million loss to $300 million profit.

Analyst action

• Wells Fargo downgrades shares of Tesla (TSLA.US) to an "underweight" rating from a recent "equal-weight" rating. The target price has been revised downward to $125 per share. It was previously at $200. The company's shares are losing 2.5 per cent before the start of the session. Analysts see adversity ahead in the face of disappointing deliveries and further price cuts.
• Evercore ISI raised its target price on shares of Ulta Beauty (ULTA.US) to $635 from its last recommendation of $565 per share. Its analysts expect sales performance to be better in 2024 than the company's preliminary guidance assumes.