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Globe and Mail
6 hours ago
- Business
- Globe and Mail
Is U.S. stock rally near ‘Mag 7' turning point?
As investors brace for the busiest week of the U.S. earnings season, with four of the 'Magnificent Seven' tech giants reporting, debate is picking up again about these megacap firms' influence over U.S. equity indexes and whether we could be seeing the beginnings of true market broadening. By some measures, this small clutch of tech titans' profits, market cap, and valuations as a share of the wider market has never been bigger. Broader indices are at record highs, but strip out these firms and the picture is much less rosy. Indeed, since the beginning of 2023, the S&P 500 composite - the benchmark 'market cap' index increasingly dominated by the 'Mag 7' - has gained 67 per cent, more than double the 'equal-weight' index's 32 per cent. Only two years ago, the S&P 500 composite/equal-weight ratio was 0.66, meaning the composite index was worth around two-thirds of the equal weight index. That ratio is now 0.84, the highest since 2003. There's good reason for that. According to Larry Adam, chief investment officer at Raymond James, 12-month forward earnings estimates for the S&P 500 have outpaced estimates for the equal-weight index by 14 per cent. And Tajinder Dhillon, senior research analyst at LSEG, notes that the 'Mag 7' last year accounted for 52 per cent of overall earnings growth. Many investors and analysts consider it unhealthy to have the fate of the entire market dependent on so few companies. It may be fine when they're flying high, but not so much if one or two of them take a dive. Plus, it makes stock picking more difficult. If the market basically goes where the 'Mag 7' or Nvidia go, why should an investor bother buying anything else? That's a recipe for market inefficiencies. There have recently been nascent signs that the market may be broadening out beyond tech and AI-related names, largely thanks to positive news on the trade front. Last week, the equal-weight index eclipsed November's high to set a fresh record. Raymond James's CIO Adam notes that the equal-weight index outperformed the S&P 500 last week for the fourth week in the last 13. More of the same this week would mark its first monthly outperformance since March. Can it hit this mark? Around 160 of the S&P 500-listed firms report this week, including Meta and Microsoft on Wednesday and Amazon and Apple on Wednesday. It's not a stretch to say these four reports will move the market more than the rest combined. LSEG's Dhillon says the Mag 7's share of total earnings growth is expected to fall to 37 per cent this year and 27 per cent next year. The expected earnings growth spread between Mag 7 and the wider index in the second quarter - 16.4 per cent vs. 7.7 per cent - is the smallest since 2023, and will shrink more in Q3, he adds. Larry Adam at Raymond James, however, thinks the recent market broadening is a 'short-term normalization' rather than a 'material shift.' He thinks the earnings strength of the tech-related sectors justifies the valuation premium on these stocks. Regardless, what we know for sure is that fears about the market's concentration and narrowness have been swirling for years and there has yet to be a reckoning. The equal-weight index's rise to new highs last week suggests the rising tide is lifting all boats, not just the billionaire's yachts. Essentially, the Mag 7 and large caps are outperforming, but if you peel back the onion, other sectors like financials and industrials are also doing well. And look around the world. Many indices outside the U.S. that aren't tech-heavy are approaching or printing new highs also, like Britain's FTSE 100 and Germany's DAX. 'To see the largest names leading isn't a worrisome sign, especially as they are backing it up with very strong earnings,' says Ryan Detrick, chief market strategist at Carson Group. 'This isn't a weak breadth market, it is broad based and a very healthy rally.' This week's earnings might go some way to determining whether this continues for a while yet. Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Reuters
17 hours ago
- Business
- Reuters
Is U.S. stock rally near 'Mag 7' turning point?
ORLANDO, Florida, July 28 (Reuters) - As investors brace for the busiest week of the U.S. earnings season, with four of the 'Magnificent Seven' tech giants reporting, debate is picking up again about these megacap firms' influence over U.S. equity indexes and whether we could be seeing the beginnings of true market broadening. By some measures, this small clutch of tech titans' profits, market cap, and valuations as a share of the wider market has never been bigger. Broader indices are at record highs, but strip out these firms and the picture is much less rosy. Indeed, since the beginning of 2023, the S&P 500 composite - the benchmark 'market cap' index increasingly dominated by the 'Mag 7' - has gained 67%, more than double the 'equal-weight' index's 32%. Only two years ago, the S&P 500 composite/equal-weight ratio was 0.66, meaning the composite index was worth around two-thirds of the equal weight index. That ratio is now 0.84, the highest since 2003. There's good reason for that. According to Larry Adam, chief investment officer at Raymond James, 12-month forward earnings estimates for the S&P 500 have outpaced estimates for the equal-weight index by 14%. And Tajinder Dhillon, senior research analyst at LSEG, notes that the 'Mag 7' last year accounted for 52% of overall earnings growth. Many investors and analysts consider it unhealthy to have the fate of the entire market dependent on so few companies. It may be fine when they're flying high, but not so much if one or two of them take a dive. Plus, it makes stock picking more difficult. If the market basically goes where the 'Mag 7' or Nvidia go, why should an investor bother buying anything else? That's a recipe for market inefficiencies. There have recently been nascent signs that the market may be broadening out beyond tech and AI-related names, largely thanks to positive news on the trade front. Last week, the equal-weight index eclipsed November's high to set a fresh record. Raymond James's CIO Adam notes that the equal-weight index outperformed the S&P 500 last week for the fourth week in the last 13. More of the same this week would mark its first monthly outperformance since March. Can it hit this mark? Around 160 of the S&P 500-listed firms report this week, including Meta and Microsoft on Wednesday and Amazon and Apple on Wednesday. It's not a stretch to say these four reports will move the market more than the rest combined. LSEG's Dhillon says the Mag 7's share of total earnings growth is expected to fall to 37% this year and 27% next year. The expected earnings growth spread between Mag 7 and the wider index in the second quarter - 16.4% vs. 7.7% - is the smallest since 2023, and will shrink more in Q3, he adds. [Why does he believe this will be the case?] Larry Adam at Raymond James, however, thinks the recent market broadening is a "short-term normalization" rather than a "material shift". He thinks the earnings strength of the tech-related sectors justifies the valuation premium on these stocks. Regardless, what we know for sure is that fears about the market's concentration and narrowness have been swirling for years and there has yet to be a reckoning. The equal-weight index's rise to new highs last week suggests the rising tide is lifting all boats, not just the billionaire's yachts. Essentially, the Mag 7 and large caps are outperforming, but if you peel back the onion, other sectors like financials and industrials are also doing well. And look around the world. Many indices outside the U.S. that aren't tech-heavy are approaching or printing new highs also, like Britain's FTSE 100 and Germany's DAX. "To see the largest names leading isn't a worrisome sign, especially as they are backing it up with very strong earnings," says Ryan Detrick, chief market strategist at Carson Group. "This isn't a weak breadth market, it is broad based and a very healthy rally." This week's earnings might go some way to determining whether this continues for a while yet. (The opinions expressed here are those of the author, a columnist for Reuters)
Yahoo
13-07-2025
- Business
- Yahoo
Raymond James Predicts Up to ~760% Surge for These 2 ‘Strong Buy' Stocks
With the summer of 2025 in full swing, all eyes are once again on President Trump's trade moves. Over the past week, Trump has announced a sweeping series of tariff hikes: a 35% tariff on most Canadian imports, new 30% tariffs targeting goods from both the European Union and Mexico, and a 50% tariff on copper imports from Brazil. He's also warned that unless new trade agreements are reached soon, even broader tariff increases could kick in for other major trading partners as early as August 1. Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Naturally, all this has stirred up some uncertainty – especially for investors trying to read the tea leaves on inflation, supply chains, and overall market direction. And yet, Raymond James CIO Larry Adam sees plenty of reason for optimism when looking at the bigger picture. 'For investors, market ups and downs are nothing new. Despite interim setbacks, the S&P 500 has delivered a robust average annual return of ~11% since 1985. Bull markets historically last six times longer than bear markets and produce returns five times more powerful. The takeaway? Stay focused on the long term,' Adam notes. That long-term perspective leads to a clear track, and Adam elaborates on it, saying, 'We continue to favor U.S. equities, where the outlook remains brighter… We expect two rate cuts by year end and two more in 2026, helping growth pick up to 1.5% next year. Trump's 'One Big Beautiful Bill' could also provide a modest boost, even if it adds to the deficit.' Against this backdrop, Raymond James analysts have zeroed in on two stocks they believe are set for substantial growth in the coming year – including one with a potential upside as high as 760%. As if that weren't compelling enough, both names also earn a Strong Buy rating from the analyst consensus, according to the TipRanks database. Let's break down what's behind the bullish sentiment. Achieve Life Sciences (ACHV) We'll start with a stock that is bursting with upside potential. Achieve Life Sciences is both a biopharmaceutical company and a penny stock – two niches known for their ability to deliver outsized returns. Central to the company's growth story is its lead program: developing treatments for nicotine dependence. Nicotine, the key addictive ingredient in tobacco products, has been connected to multiple health problems, including recurrent headaches, high blood pressure, dangerous blood clotting, sleep disorders, and changes in heart rhythm. The most common way that people satisfy their nicotine cravings is through smoking, which brings along its own array of health issues, from COPD to various cancers. This isn't just a health challenge – it's a massive market opportunity. There are 29 million smokers in the US alone, some 16 million Americans living with smoking-related illnesses, and globally, about 8 million smoking-related deaths each year. Achieve is targeting the problem with the development of cytisinicline, a naturally derived drug candidate designed to reduce withdrawal symptoms and make it easier to quit smoking or vaping. What sets cytisinicline apart is its robust clinical profile. The drug has delivered strong Phase 3 data on smoking cessation, with a favorable safety record to match. In the ORCA-2 and ORCA-3 trials, cytisinicline consistently produced statistically significant improvements in abstinence rates versus placebo. In ORCA-3, 30.3% of participants in the 12-week arm achieved continuous abstinence during weeks 9 to 12, compared to 9.4% with placebo, and about 20.5% remained abstinent through week 24 versus 4.2% for placebo. The safety profile was favorable, with mostly mild to moderate side effects and no treatment-related serious adverse events. These findings were reinforced by the ORCA-OL trial, where the independent DSMC's third safety review identified no concerns with long-term cytisinicline use. Now, Achieve is gearing up for the next phase: FDA approval and commercial launch. At the end of June, the company submitted a New Drug Application (NDA) to the FDA. If approved, cytisinicline will become the first FDA-approved drug therapy for nicotine addiction in the past two decades. To support its commercialization efforts, Achieve recently announced a strategic partnership with Omnicom and has raised about $45 million. Moreover, Achieve is not stopping with traditional smokers. The company is advancing cytisinicline as a potential treatment for nicotine dependence in e-cigarette users as well. In the Phase 2 ORCA-V1 trial, cytisinicline produced higher quit rates than placebo among individuals seeking to quit vaping, with no serious adverse events reported. Following these results, Achieve held an end-of-Phase 2 meeting with the FDA and reached agreement on the design of a pivotal Phase 3 trial for vaping cessation. With that green light, the company plans to kick off the ORCA-V2 Phase 3 study in the first half of 2026. Put it all together – the compelling data, the unmet need, the imminent FDA milestone, and a bargain-bin $2.32 share price – and it's no wonder Raymond James analyst Gary Nachman thinks now is the time to get in on the action. 'Our Strong Buy rating is supported by a significant unmet need still in the [nicotine addiction] market that is a major global public health concern, with current options resulting in very low quit rates. Cytisinicline has a compelling clinical profile with strong Phase 2/3 data. Cytisinicline shows high smoking cessation quit rates and a favorable safety profile compared to PFE's Chantix (peak sales $1.1B) that is now generic. Cytisinicline has a proven mechanism that is similar to Chantix, but is naturally derived and more selective resulting in fewer AEs, has 50+ years of safe use in E. Europe, and now a submitted NDA with a de-risked regulatory pathway,' Nachman opined. 'There is a large opportunity in smoking cessation that is ripe for the taking and an expanded partnership with Omnicom should help with the US launch, and potentially big upside from vaping as well… A partnership/acquisition to maximize value is possible,' the analyst added. All of this helps explain Nachman's Strong Buy rating on ACHV, which comes with a $20 price target. If his thesis plays out, investors could be looking at a whopping ~760% gain over the next 12 months. (To watch Nachman's track record, click here) And it's not just Nachman who sees big upside here. The broader analyst community is similarly upbeat: in the past 3 months, ACHV has picked up 4 Buy ratings with no Holds or Sells, earning it a consensus Strong Buy status on Wall Street. Meanwhile, the average price target of $15.25 points to a 557% upside from current levels. (See ACHV stock forecast) Avidity Biosciences (RNA) The next stock catching Raymond James' attention is Avidity Biosciences, a clinical-stage biotech firm aiming to develop a new class of RNA therapeutics – drug candidates designed to tackle the root genetic causes behind a variety of serious diseases. The company is building its pipeline using its proprietary Antibody Oligonucleotide Conjugates platform, or AOC. This platform blends the targeting abilities of monoclonal antibodies with the gene-silencing power of oligonucleotide therapies, creating agents that can home in on disease drivers at the genetic level with notable selectivity and precision. Through this approach, Avidity aims to address conditions that have long eluded effective treatment. At present, the company's primary targets are skeletal muscle diseases, especially within the muscular dystrophy class. Avidity has developed a robust research pipeline, which includes three lead drug candidates that are advancing through clinical trials. These three programs – Del-zota, Del-desiran, and Del-brax – are each aimed at specific muscle disorders: Duchenne muscular dystrophy (DMD), myotonic dystrophy type 1 (DM1), and facioscapulohumeral muscular dystrophy (FSHD), respectively. Each of these candidates has shown solid progress. Del-zota, Avidity's program for Duchenne muscular dystrophy, has demonstrated strong increases in exon skipping and dystrophin production, along with an encouraging safety profile. Based on these results, the company expects to submit its first Biologics License Application (BLA) for del-zota by year-end. Meanwhile, del-desiran has delivered impressive data in early clinical trials, with patients experiencing not only reductions in toxic RNA but also meaningful signs of functional improvement. These encouraging results have been further supported by the ongoing MARINA-OLE extension study, which continues to show sustained benefit with longer-term treatment. On the strength of these findings, the program advanced into the pivotal Phase 3 HARBOR trial. The company previously noted that enrollment would be completed by mid-2025, setting the stage for comprehensive data readouts in the first half of 2026. Rounding out the pipeline, the del‑brax program for FSHD is also advancing steadily. Initial data from the FORTITUDE study demonstrated significant reductions in DUX4 gene expression, and with an FDA‑validated accelerated approval pathway now in place, Avidity launched the pivotal FORWARD Phase 3 trial. This global, 18‑month, randomized, placebo‑controlled study is expected to deliver topline results by H2 2026. With all three programs advancing toward key clinical and regulatory milestones, Raymond James analyst Martin Auster sees strong prospects for success here. 'We have high conviction in del-zota (DMD44) to become the first approved drug from Avidity's antibody oligonucleotide conjugate (AOC) platform. Del-desiran (DM1) has been derisked through Ph1/2 biomarker and functional data, and a positive Ph 3 outcome in ~H1 2026 could be transformative for Avidity given del-desiran's first-mover potential and a large DM1 market opportunity (~$5B+ TAM). Del-brax has an even larger potential first-mover advantage in FSHD (opportunity for a strong competitive moat); we project accelerated approval in 2027 supported by cDUX biomarker data and 12-month placebo-controlled functional data,' Auster stated. Auster's high conviction is reflected in his Strong Buy rating on RNA and a $65 price target, which suggests a potential 107% upside from current levels. (To watch Auster's track record, click here) That's far from the only upbeat take on this stock. RNA enjoys a Strong Buy consensus, based on 18 recent analyst ratings – with 17 Buys and just a single Hold. At its current price of $31.45, the stock's average target price of $64.44 suggests RNA could surge ~105% in value over the next year. (See RNA stock forecast) To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment. 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Yahoo
20-05-2025
- Business
- Yahoo
US stock futures down after Monday's comeback
U.S. stock futures point to a lower open, a day after stocks made a comeback to close higher despite Moody's stripping the U.S. of its top AAA rating. The broad S&P 500 index eked out a sixth straight winning session as investors shrugged off the downgrade because it "doesn't reveal anything new—the US fiscal trajectory has been unsustainable for some time," said Larry Adam, chief investment officer at Raymond James. The S&P 500 is now just around 3% from its record high. At 6 a.m. ET, futures linked to the blue-chip Dow slipped -0.21%, while S&P 500 futures fell -0.37% and tech-heavy Nasdaq futures dropped -0.47%. Most companies have already reported quarterly results, but there remain a few that investors will keep an eye on. Retailer Home Depot's results are due before the market opens and homebuilder Toll Brothers reports after the close. Later this week, big box retailer Target will report quarterly results. The Senate advanced landmark cryptocurrency legislation that would create the first-ever U.S. regulatory framework for digital tokens known as stablecoins that are pegged to the value of the dollar. The Senate voted 66-32 with help from some crypto-friendly Democrats after bipartisand negotiations to clear the 60-vote threshold required to advance the measure. Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday. This article originally appeared on USA TODAY: US stock futures down after Monday's comeback 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
Yahoo
14-05-2025
- Business
- Yahoo
Raymond James sticks with 5,800 S&P 500 target
Raymond James cut its S&P 500 (SP500) earnings-per-share estimate for 2025 from $270 to $250$255, citing softer economic activity and muted corporate spending, yet left its year-end index target of 5,800 intact, based on a steady GDP growth outlook. The firms' Chief Investment Officer, Larry Adam, points to a landmark U.S.-China deal that slashes American tariffs on Chinese imports from 145% to 30% and Chinese duties on U.S. goods from 125% to 10% for 90 days, reopening supply lines and easing fears of acute shortages. Markets cheered the tariff reprieve: the S&P 500 rallied roughly 3% off its recent lows after the announcement. Despite the tariff truce's relief, Adam cautions that equity valuations are already stretched, leaving limited runway for multiple expansion without a stronger earnings backdrop. He calls the outlook cautious optimism, noting that while downside risks have receded, upside drivers remain scarce absent an unexpected boost to corporate profits. Why it matters: A lower EPS range underscores the tug-of-war between policy catalysts and real-world economic headwinds, forcing investors to temper return expectations even as trade tensions ebb. Investors will focus on Q2 earnings and Fed commentary for clues on whether this tariff window can sustain growth and revive profit momentum. This article first appeared on GuruFocus. Sign in to access your portfolio
