00:00:02
Speaker 1: Bloomberg Audio Studios. Podcasts. Radio. News. The Stock Movers Report. Your roundup of companies making moves in the stock market. Harnessing the power of Bloomberg data.
00:00:17
Speaker 2: Right now, let's take a look at some of the stocks making news in the week ahead. I'm John Tucker, along with Christine Aquino, the Bloomberg Managing Editor for MarketsLive. Good to see you. Thanks for stopping by. So next week, we get Constellation Brands, Pepsi, and Delta Airlines, among others. Let's start with Constellation Brands, the people behind, among other things, Corona Beer. I was doing a back of the envelope calculation, how much beer that I've had to drink over the years.
00:00:47
Speaker 3: Tell me.
00:00:48
Speaker 2: It's a lot.
00:00:49
Speaker 3: That's your back of the envelope calculation.
00:00:51
Speaker 2: Apparently, like with younger folks today, this is kind of an outlier, but I'm kind of an outlier. Drinking less. When God's name is wrong with him.
00:01:01
Speaker 3: Apparently, that's the trend now. And that is a big challenge for a company like Constellation Brands, right? I mean, just generally, right? Our blooming intelligence analysts say Taking a look at the beer market, which is over $ 100 billion, and they're looking at this and seeing just a decline in this market generally because we have, as you mentioned, John, just the younger generation not drinking anymore and not drinking as much. And they're preferring hemp-derived beverages like THC beverages over alcohol. And then there's, of course, the GLP-1 usage trend as well. And all of this combined, really just creates a very challenging market for anyone in a beer business. And that's what Constellation Brands is going to be going up against in terms of their earnings.
00:01:49
Speaker 2: This stock, the ticker symbol STZ, they've been on the longest losing streak since, what, 1986? Yeah. It's not like it's a buy-the-dip story either at this point.
00:02:01
Speaker 1: No.
00:02:01
Speaker 3: I mean, I think a lot of analysts in this space are really looking at more structural changes when it comes to the customer base and their habits and... how that's going to impact a lot of the companies in this space. Also because there's a crowding out effect, right? There's a lot of them within that space competing for market share. And traditionally with older generations, they've done all right. But just the changes that we're seeing now all coming together with decreased alcohol consumption, increased GLP usage, all these things combining to really make it a tough environment for Constellation Brands and all of its other peers.
00:02:38
Speaker 2: Next up, PepsiCo. Now, people aren't drinking beer. Are they chopping down Fritos and that stuff? Apparently not. I think a lot of the same issues apply to PepsiCo.
00:02:49
Speaker 3: Absolutely. A lot of the same issues. And that's why we've seen for PepsiCo specifically, a couple of downgrades of late. JP Morgan downgrading company to neutral from overweight. And that's exactly what they're concerned about, right? Just the food and beverage segments underperforming, particularly in North America. And They've also cited salty snacks in particular has been lackluster, probably tied to the increase in GLP-1 usage, if you ask me. And then we also saw them cut Deutsche Bank to a hold from a buy previously. Again, analysts there citing that they don't necessarily see a clear path for improvement given soft demand. And then, of course, higher costs on the other end as well. It's kind of squeezing the company both ways.
00:03:31
Speaker 2: How much pricing power does PepsiCo have? I mean, they have recently raised prices.
00:03:35
Speaker 3: Yeah, absolutely. And I think that is the worry for analysts as well, right? Like they have managed to wield up pricing power in previous quarters, but at a time when consumers are struggling to afford groceries and gas, the question is how much more can they squeeze out of these consumers? And the fact that there are these analysts now warning that we may be getting to the end of that peak in demand, I think really bodes ill for PepsiCo's earnings coming up next week.
00:04:05
Speaker 2: All right, let's finish up with one of the airline stocks, Delta Airlines. One of the headlines that was recently out, they were getting criticism. Elon Musk was making fun of Delta's Wi-Fi. They apparently snubbed Sterling. But I'm not sure that's really going to show up in earnings.
00:04:23
Speaker 3: No, not necessarily, though. Very interesting anecdote.
00:04:26
Speaker 1: I mean.
00:04:26
Speaker 3: Again, for airlines, it's all about fuel costs. And that's been a big issue for just the space in general, right? And our global intelligence analysts, again, seeing pressure for a lot of airlines in the third quarter. We've seen fair increases, of course. As consumers, we've definitely felt that, particularly over the summer. And some of that probably will compensate for higher fuel costs. But To what extent, right? And so I think their expectation is that margins will likely be lower. Though, you know, again, some of those higher yields, slower capacity growth will help those results. But to a limited extent, I think at this point, that increase in fuel doesn't seem to be Letting up, at least for the end users. And that's really going to hurt airlines moving forward.
00:05:11
Speaker 2: And to be sure, Delta is a premium airline. They cater to the premium flyers. So I would expect they're a little more insulated if price increases go up because of fuel prices.
00:05:24
Speaker 3: Yeah, I mean, there's definitely an element of that. And of course, you know, they're a full service carrier. And as you mentioned, you know, they have a more diverse customer base. And so we do have a higher income segment of their customer base, probably. being a little bit more resilient to the idea of higher costs. And again, like there are people willing to pay up for first class or business class seats, especially on long haul flights. But just in general, though, the pressure of higher fuel costs, not necessarily relenting. And so it's really a question of how much can they make up in terms of revenue from that higher income segment is going to be one of the key questions for the set of results.
00:06:04
Speaker 1: The Stock Movers Report from Bloomberg Radio. Check back with us throughout the day for the latest roundup of companies making news on Wall Street. And for the latest market-moving headlines, listen to Bloomberg Radio Live. Catch us on YouTube, Bloomberg.com, and on Apple CarPlay and Android Auto with the Bloomberg Business app.
Speaker 1: Bloomberg Audio Studios. Podcasts. Radio. News. The Stock Movers Report. Your roundup of companies making moves in the stock market. Harnessing the power of Bloomberg data.
00:00:17
Speaker 2: Right now, let's take a look at some of the stocks making news in the week ahead. I'm John Tucker, along with Christine Aquino, the Bloomberg Managing Editor for MarketsLive. Good to see you. Thanks for stopping by. So next week, we get Constellation Brands, Pepsi, and Delta Airlines, among others. Let's start with Constellation Brands, the people behind, among other things, Corona Beer. I was doing a back of the envelope calculation, how much beer that I've had to drink over the years.
00:00:47
Speaker 3: Tell me.
00:00:48
Speaker 2: It's a lot.
00:00:49
Speaker 3: That's your back of the envelope calculation.
00:00:51
Speaker 2: Apparently, like with younger folks today, this is kind of an outlier, but I'm kind of an outlier. Drinking less. When God's name is wrong with him.
00:01:01
Speaker 3: Apparently, that's the trend now. And that is a big challenge for a company like Constellation Brands, right? I mean, just generally, right? Our blooming intelligence analysts say Taking a look at the beer market, which is over $ 100 billion, and they're looking at this and seeing just a decline in this market generally because we have, as you mentioned, John, just the younger generation not drinking anymore and not drinking as much. And they're preferring hemp-derived beverages like THC beverages over alcohol. And then there's, of course, the GLP-1 usage trend as well. And all of this combined, really just creates a very challenging market for anyone in a beer business. And that's what Constellation Brands is going to be going up against in terms of their earnings.
00:01:49
Speaker 2: This stock, the ticker symbol STZ, they've been on the longest losing streak since, what, 1986? Yeah. It's not like it's a buy-the-dip story either at this point.
00:02:01
Speaker 1: No.
00:02:01
Speaker 3: I mean, I think a lot of analysts in this space are really looking at more structural changes when it comes to the customer base and their habits and... how that's going to impact a lot of the companies in this space. Also because there's a crowding out effect, right? There's a lot of them within that space competing for market share. And traditionally with older generations, they've done all right. But just the changes that we're seeing now all coming together with decreased alcohol consumption, increased GLP usage, all these things combining to really make it a tough environment for Constellation Brands and all of its other peers.
00:02:38
Speaker 2: Next up, PepsiCo. Now, people aren't drinking beer. Are they chopping down Fritos and that stuff? Apparently not. I think a lot of the same issues apply to PepsiCo.
00:02:49
Speaker 3: Absolutely. A lot of the same issues. And that's why we've seen for PepsiCo specifically, a couple of downgrades of late. JP Morgan downgrading company to neutral from overweight. And that's exactly what they're concerned about, right? Just the food and beverage segments underperforming, particularly in North America. And They've also cited salty snacks in particular has been lackluster, probably tied to the increase in GLP-1 usage, if you ask me. And then we also saw them cut Deutsche Bank to a hold from a buy previously. Again, analysts there citing that they don't necessarily see a clear path for improvement given soft demand. And then, of course, higher costs on the other end as well. It's kind of squeezing the company both ways.
00:03:31
Speaker 2: How much pricing power does PepsiCo have? I mean, they have recently raised prices.
00:03:35
Speaker 3: Yeah, absolutely. And I think that is the worry for analysts as well, right? Like they have managed to wield up pricing power in previous quarters, but at a time when consumers are struggling to afford groceries and gas, the question is how much more can they squeeze out of these consumers? And the fact that there are these analysts now warning that we may be getting to the end of that peak in demand, I think really bodes ill for PepsiCo's earnings coming up next week.
00:04:05
Speaker 2: All right, let's finish up with one of the airline stocks, Delta Airlines. One of the headlines that was recently out, they were getting criticism. Elon Musk was making fun of Delta's Wi-Fi. They apparently snubbed Sterling. But I'm not sure that's really going to show up in earnings.
00:04:23
Speaker 3: No, not necessarily, though. Very interesting anecdote.
00:04:26
Speaker 1: I mean.
00:04:26
Speaker 3: Again, for airlines, it's all about fuel costs. And that's been a big issue for just the space in general, right? And our global intelligence analysts, again, seeing pressure for a lot of airlines in the third quarter. We've seen fair increases, of course. As consumers, we've definitely felt that, particularly over the summer. And some of that probably will compensate for higher fuel costs. But To what extent, right? And so I think their expectation is that margins will likely be lower. Though, you know, again, some of those higher yields, slower capacity growth will help those results. But to a limited extent, I think at this point, that increase in fuel doesn't seem to be Letting up, at least for the end users. And that's really going to hurt airlines moving forward.
00:05:11
Speaker 2: And to be sure, Delta is a premium airline. They cater to the premium flyers. So I would expect they're a little more insulated if price increases go up because of fuel prices.
00:05:24
Speaker 3: Yeah, I mean, there's definitely an element of that. And of course, you know, they're a full service carrier. And as you mentioned, you know, they have a more diverse customer base. And so we do have a higher income segment of their customer base, probably. being a little bit more resilient to the idea of higher costs. And again, like there are people willing to pay up for first class or business class seats, especially on long haul flights. But just in general, though, the pressure of higher fuel costs, not necessarily relenting. And so it's really a question of how much can they make up in terms of revenue from that higher income segment is going to be one of the key questions for the set of results.
00:06:04
Speaker 1: The Stock Movers Report from Bloomberg Radio. Check back with us throughout the day for the latest roundup of companies making news on Wall Street. And for the latest market-moving headlines, listen to Bloomberg Radio Live. Catch us on YouTube, Bloomberg.com, and on Apple CarPlay and Android Auto with the Bloomberg Business app.
