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Business Insider
2 minutes ago
- Business Insider
One of Wall Street's biggest bulls sees tech powering an 11% gain in stocks through the rest of 2025
The US stock market looks like it's going to keep powering through to new records, says one of the biggest bulls on Wall Street. Christopher Harvey, the chief US equity strategist at Wells Fargo, predicts that the S&P 500 will reach 7,007 by the end of the year. His forecast — now one of the most optimistic on Wall Street — implies the benchmark index climbing another 11% from its current levels, or a 19% gain for the year. Speaking to Bloomberg about his thesis on Monday, Harvey pointed to a handful of reasons that would keep the market climbing higher: AI boom. Mega-cap tech stocks will likely keep climbing higher, Harvey said. He brushed off concerns that the hype over artificial intelligence resembled the dot-com bubble in the 1990s, noting that many companies today have stronger fundamentals. Large-cap tech and AI stocks have been on a tear since their low in early April, shortly after President Donald Trump announced his Liberation Day tariffs. The Roundhill Magnificent Seven ETF is up 41% from its April 8 low. "What we're seeing is the winners continue to win. The uber-cap companies have the higher margins, are gaining more market share. There is a real secular trade in AI that will continue," Harvey said. Strong mergers and acquisition activity. Dealmaking has remained relatively strong on Wall Street, another factor that should support the market, Harvey said. Strategic M&A activity was up 11% year-over-year from January through May, according to an analysis from the consultancy Bain & Company. "We think that M&A will continue to be very, very healthy up and down the capitalization," Harvey added. The US consumer remains strong. Americans keep spending, despite concerns that tariff-related price increases could shut off an important engine of the economy. Consumers ramped up their spending more than expected last month, with retail sales rising 0.6%, according to the US Census Bureau. The Fed is likely to cut interest rates. The central bank looks on track to e ventually lower interest rates despite hesitation stemming from President Donald Trump's tariffs in recent months. Investors are pricing in two or three rate cuts from the Fed by the end of 2025, according to the CME FedWatch tool. Those bullish factors override any concerns investors have over the market, Harvey said, pointing to concerns about the impact of tariffs and Trump's escalating feud with Fed Chair Jerome Powell. Investors are worried that tariffs could raise inflation while hampering economic growth, and that Trump could interfere with the Fed's independence, which could stoke inflation down the line. "We had seen Trump 1.0. We know his style," Harvey said, referring to the belief that the president goes hard on his policies before softening his tone. Harvey was one of the few strategists on Wall Street who stuck to his original S&P 500 target for the year, even during the historic sell-off in April as Trump unveiled his slate of tariffs. Forecasters like Goldman Sachs and JPMorgan lowered their stock forecasts and lifted their recession odds, before reversing once Trump paused most tariffs.
CNBC
2 minutes ago
- CNBC
Credit card startup Imprint beats big banks for Rakuten co-brand deal
There's a new player making waves in an industry dominated by big banks. Imprint, the 5-year-old credit card startup, beat out banks in a competitive bidding process for a new co-branded card from online shopping platform Rakuten, CNBC has learned. The deal, which is set to be announced later Tuesday, is the most recent sign that Imprint is gaining traction in the co-branded credit card industry. The New York-based startup also just raised $70 million in additional capital, boosting its valuation by 50% to $900 million less than a year from its previous round, according to Imprint CEO Daragh Murphy. Credit card partnerships with retailers, airlines and hotels are some of the most hotly contested deals in finance. Brands often go through extensive bidding processes to select a card company, while the companies compete for the right to issue cards to millions of loyal customers. The industry's largest players include JPMorgan Chase, Capital One, Citigroup and Synchrony. "We're talking to Fortune 500 companies about being their partner and them choosing us over Synchrony, over Barclays, over U.S. Bank," Murphy said in an interview. "We have to kind of walk and talk like we're a big, important company, even though we still have a startup ethos." That's why the company recently raised capital, bringing its total to $330 million, most of which is held on the firm's balance sheet, according to Murphy. Those funds help show potential partners that Imprint has staying power, he said. Imprint also has about $1.5 billion in credit lines from banks including Citigroup, Truist and Mizuho, which it uses to extend loans to card customers, Murphy said. The startup is also behind the cards from brands including Eddie Bauer, Brooks Brothers and Turkish Airlines. To offer its credit cards, Imprint usually partners with one of two small banks, First Electronic Bank or First Bank and Trust. Imprint handles the customer experience, including the technology and credit decisions, while using the credit card rails of regulated banks. In the case of the Rakuten card, Imprint is relying on the American Express network, which allows users to get Amex purchase protections and other perks. It is using First Electronic Bank to help issue the cards. "Though we're not a regulated bank, we're effectively building a bank," Murphy said. "We have to do all the same things as a bank. We're a capital markets company; we're a compliance company; we're a risk and credit and fraud company; we're a technology company." To gain a toehold in the market for co-branded cards, which can be used anywhere credit cards are accepted, Imprint decided it would focus on a seamless digital experience for customers, Murphy said. That requires technology integration that is difficult for established players who rely on third-party companies including Fiserv to complete transactions, he said. "The banks are in trouble because they don't own the technology that the credit card runs on," Murphy said. "Every credit card in your wallet, whether it's Chase, Amex or from Citi or Synchrony, they rely on two or three different third parties to power the technology." Imprint also decided to set itself apart by making it easy for customers to pay off their loans, Murphy said. Card companies including Bread Financial and Synchrony make a far larger percentage of revenue from late fees than Imprint does, he said. "You shouldn't have all these regressive late fees, and you shouldn't make it hard to pay," Murphy said. "The easier we make it to pay, the more likely you are to use the card, and the more likely you are to use the card, the better it is for everybody." Finally, Murphy said the company's low customer acquisition costs allow it to fund more rewards for his customers. The new Rakuten card, for instance, offers users an extra 4% in cash back in addition to what customers earn through shopping on the online portal, capped at $7,000 in spending per year. Users also earn 10% in cash back while dining at Rakuten's partner restaurants, and 2% cash back on groceries and non-partner restaurants.
Yahoo
29 minutes ago
- Yahoo
Coca-Cola (NYSE:KO) Posts Q2 Sales In Line With Estimates
Beverage company Coca-Cola (NYSE:KO) met Wall Street's revenue expectations in Q2 CY2025, with sales up 1.4% year on year to $12.54 billion. Its non-GAAP profit of $0.87 per share was 3.9% above analysts' consensus estimates. Is now the time to buy Coca-Cola? Find out in our full research report. Coca-Cola (KO) Q2 CY2025 Highlights: Revenue: $12.54 billion vs analyst estimates of $12.55 billion (1.4% year-on-year growth, in line) Adjusted EPS: $0.87 vs analyst estimates of $0.84 (3.9% beat) Roughly maintained full-year guidance for organic growth and adjusted EPS Operating Margin: 34.1%, up from 21.3% in the same quarter last year Free Cash Flow Margin: 26.9%, up from 25.6% in the same quarter last year Organic Revenue rose 5% year on year (15% in the same quarter last year) Sales Volumes fell 1% year on year (2% in the same quarter last year) Market Capitalization: $301.6 billion Company Overview A pioneer and behemoth in carbonated soft drinks, Coca-Cola (NYSE:KO) is a storied beverage company best known for its flagship soda. Revenue Growth Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. With $47.15 billion in revenue over the past 12 months, Coca-Cola is one of the most widely recognized consumer staples companies. Its influence over consumers gives it negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don't have). However, its scale is a double-edged sword because there are only a finite number of major retail partners, placing a ceiling on its growth. For Coca-Cola to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets. As you can see below, Coca-Cola grew its sales at a tepid 4.5% compounded annual growth rate over the last three years, but to its credit, consumers bought more of its products. This quarter, Coca-Cola grew its revenue by 1.4% year on year, and its $12.54 billion of revenue was in line with Wall Street's estimates. Looking ahead, sell-side analysts expect revenue to grow 5.3% over the next 12 months, similar to its three-year rate. This projection is above the sector average and indicates its newer products will help support its historical top-line performance. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Volume Growth Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there's a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive. To analyze whether Coca-Cola generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations. Over the last two years, Coca-Cola's average quarterly volume growth was a healthy 1.1%. Even with this good performance, we can see that most of the company's gains have come from price increases by looking at its 10.4% average organic revenue growth. The ability to sell more products while raising prices indicates that Coca-Cola enjoys some degree of inelastic demand. In Coca-Cola's Q2 2025, sales volumes dropped 1% year on year. This result was a reversal from its historical levels. A one quarter hiccup shouldn't deter you from investing in a business, and we'll be monitoring the company to see how things progress. Key Takeaways from Coca-Cola's Q2 Results Revenue was in line while EPS beat partly due to better-than-expected gross margin. The company roughly maintained full-year guidance for organic growth and adjusted EPS, which is comforting. Overall, this was a quarter with few surprises. The stock remained flat at $69.93 immediately after reporting. Coca-Cola underperformed this quarter, but does that create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
