The stock market has come under pressure in recent days, as investors worry that a strong economy could prompt the Federal Reserve to leave interest rates higher for a longer period of time. Despite reports that job creation figures for June were weaker than some had expected, major market indexes appeared poised for a modest decline at the open on Friday morning, adding to Thursday's fairly steep losses.
Heading into the weekend, a couple of stocks were in the headlines early Friday. Levi Strauss (LEVI 0.19%) reported its latest financial results, and shareholders weren't happy with the trends that the jeans maker is seeing. Meanwhile, Rivian Automotive (RIVN 6.10%) got a boost for a second day in a row, with favorable comments from Wall Street analysts building buzz about the electric vehicle (EV) manufacturer. Here are all the details you need to know about these two must-watch stocks.
Levi works through tough times
Shares of Levi Strauss were down 8% in premarket trading on Friday morning. The maker of iconic jeans and other apparel products reported fiscal second-quarter financial results for the period ended May 28 that indicated just how much uncertainty there is in the consumer economy right now.
Levi's numbers were mixed. Revenue of $1.3 billion was down 9% year over year, with much of the decline coming from a calendar shift of wholesale shipments that pushed some sales into the previous quarter. However, direct-to-consumer revenue jumped 13%, with 20% gains from Levi's e-commerce channel and solid growth in company-owned conventional retail and outlet stores. Adjusted net income was down almost 80% to $15 million, working out to $0.04 per share.
Geographically, Levi's saw a lot of disparity across the globe. Performance in the Americas was ugly, with a 22% drop in sales and a 66% plunge in operating income. However, Asia was a pocket of strength for the company, as an 18% rise in sales prompted a 68% jump in the segment's bottom line.
What prompted the stock's decline was likely the reduction in full-year guidance that Levi's announced. The company now sees sales growth of 1.5% to 2.5% for fiscal 2023, which is at the lower end of its previous range. The company cut its earnings projections by $0.20 per share, setting a new range of between $1.10 and $1.20 per share. Moreover, with the possibility of macroeconomic conditions worsening, shareholders seem not to be entirely confident even in the lowered numbers.
Rivian gets into overdrive
Elsewhere, shares of Rivian Automotive climbed 5%, adding to yesterday's 6% gain. The EV company earned favorable comments from analysts at Wedbush, who had good things to say about Rivian's prospects to keep gaining ground.
Wedbush's analysts boosted their price target on Rivian stock by $5 per share, setting a new target of $30. The move comes on the heels of other analyst comments earlier in the week, with D.A. Davidson having upgraded its rating on the stock from underperform to neutral and Needham having added Rivian shares to its conviction list.
Wedbush sees Rivian starting to execute on its business model more effectively, with recently released data from the second quarter showing sizable growth in vehicle production and deliveries. That process has taken longer than many had hoped, with hiccups having raised doubts about the EV company's prospects to stand up to larger rivals.
With Rivian delivery vans starting to hit the road in Europe, investors are getting more excited about the automaker's future. There's still a long way to go, but things look clearer for Rivian than they did earlier this year.
