CNBC’s Jim Cramer on Wednesday offered his thoughts on corporate earnings reports from some notable American companies that recently released quarterly results.
The Dow Jones and S&P 500 both rose more than 2% during the session and the Nasdaq Composite jumped more than 3%, but the “Mad Money” host gave all credit to groundbreaking data from Gilead Sciences about a potential antiviral to fight the coronavirus pandemic for boosting investor sentiment.
“That’s why the market roared higher today, and make no mistake, this move was all about remdesivir,” he said of the drug that is being studied in human trials. “I can say that with confidence because we’re right in the middle of earnings season and Wall Street hasn’t exactly been thrilled with many of these reports.”
Advanced Micro Devices
AMD reported profits in line with estimates and revenue beat projections, but the chipmaker offered a softer outlook than what analysts targeted. The stock fell 3.3% during the Wednesday session.
“I think that’s nonsense. AMD delivered an excellent quarter that was slowed by customers who’re dealing with a deadly virus that’s shut down vast swathes of the global economy,” Cramer said. “It’s a testament to the strength of AMD’s end markets — laptops, data centers, gaming — that the numbers were so strong even in this tough environment.”
Starbucks saw same-store sales plunge 10% in the quarter due to the coronavirus outbreak and lost traffic from closed cafes in both the U.S. and China. The top- and bottom-line numbers fell short of Wall Street’s forecast. Shares fell 2.3% Wednesday.
“There was no way this could be anything but a horrible quarter … but now China’s reopened and Starbucks is putting up new stores with alacrity there,” Cramer said. Soon “they’ll start opening their shuttered stores here in America. Once that happens, I bet Starbucks returns to growth mode, because people need their caffeine … The stock’s a buy.”
Boeing reported a loss of $1.70 per share on revenue of $16.91 billion, compared to analyst estimates of a loss of $1.61 per share and revenue of $17.31 billion. Shares climbed almost 6% Wednesday.
“This pandemic has wrecked the aerospace industry, and the 737 Max debacle sure doesn’t help,” Cramer said. “Boeing … desperately need[s] this virus to be contained. Remdesivir makes that a real possibility cause it starts the process of removing the huge and justifiable fear factor … If Boeing does a secondary [offering] here, buy.”
General Electric’s revenue fell 8% year-over-year in the three-month period. The industrial conglomerate reported collecting $20.52 billion in revenue, beating Wall Street’s expectations, but fell 3 cents short of estimates on the bottom line with 5 cents of earnings per share. The stock slid 3% during the session Wednesday.
“I don’t know what to say except that it’s better to be lucky than good, and they’re not lucky,” Cramer said. “Still, I believe in CEO Larry Culp. I believe in his ability to turn things around. With this remdesivir data, I think GE too is a buy.”
Alphabet, the parent of Google, saw shares surge nearly 9% during the Wednesday session after the tech giant reported earnings of $9.87 per share and revenue of $41.16 billion. The company posted a top-line beat, but missed profit expectations.
“The real reason Alphabet roared … the word they used was efficient. The word I used is profligacy, as in the end of an era of profligacy and the beginning of an era of aggressive profitability,” Cramer said. “When Alphabet has one of these periodic cycles where it’s trying to make as much money as possible, like it did coming out of the Great Recession, you’ve got to own this stock.”
Disclosure: Cramer’s charitable trust owns shares of Alphabet, Starbucks and General Electric.