markets

5/22/25

Wall Street has cut its UnitedHealth EPS forecasts by >20% for each of the next 3 years

UnitedHealth has been rocked by negative headline after negative headline in the last five weeks, with yesterday’s latest — a report that alleged it coordinated with nursing homes to reduce hospitalizations — contributing to another 6% fall in the company’s stock. News that the regulator will increase its audits of Medicare Advantage, which broke late last night, is now putting further pressure on UnitedHealth, again in the red in premarket trading.

In the wake of the deluge of unfavorable news, management change, and no financial guidance for the coming year, Wall Street analysts have been slashing estimates for America’s largest healthcare insurance provider — and with little information to go off, they haven’t discriminated much between the next few years.

Data from FactSet reveals that the mean earnings-per-share estimate for 2025 has been slashed by 24% so far this year. The forecast for 2026 is down 22%, while the average evaluation of 2027 EPS also fell 23%.

Those are pretty huge cuts, but they haven’t kept pace with the stock’s decline, which has slumped 48% since April 16. That leaves the stock on just ~13x this year’s earnings, a significant derating since the market’s evaluation in mid-April, when it traded on ~19.5x price to earnings.

Related reading: Move over Tesla, UnitedHealth is the battleground stock for retail traders this week as options trading explodes

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9m

Oracle rips as backlog builds, but company misses on top and bottom lines

Oracle shares shot higher after hours as the company reported a growing backlog, even though its fiscal Q1 results fell slightly short of expectations. The company reported:

Adjusted earnings per share of $1.47 vs. expectations of $1.48.
Revenue of $14.93 billion vs. expectations of $15.04 billion.

Shares were up 21% in after-hours trading, which is a pretty crazy stock move for a company with a market cap of more than $675 billion.

The market was likely impressed by a giant build in the company’s “remaining performance obligations” or RPO — which is how the company measures the value of signed cloud computing deals that haven’t yet been reported as revenue. In a statement, CEO Safra Catz said:

"We signed four multi-billion-dollar contracts with three different customers in Q1. This resulted in RPO contract backlog increasing 359% to $455 billion. It was an astonishing quarter — and demand for Oracle Cloud Infrastructure continues to build. Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars.”

Oracle Announces Fiscal Year 2026 First Quarter Financial Results

Oracle Announces Fiscal Year 2026 First Quarter Financial Results

The market was likely impressed by a giant build in the company’s “remaining performance obligations” or RPO — which is how the company measures the value of signed cloud computing deals that haven’t yet been reported as revenue. In a statement, CEO Safra Catz said:

"We signed four multi-billion-dollar contracts with three different customers in Q1. This resulted in RPO contract backlog increasing 359% to $455 billion. It was an astonishing quarter — and demand for Oracle Cloud Infrastructure continues to build. Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars.”

markets

28m

Robinhood rides index inclusion rally to record close

Robinhood Markets notched a new closing high Tuesday, as the crypto, stock and options brokerage continued to ride a rally set off by the announcement that it would be added to the S&P 500.

(Robinhood Markets, Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

Robinhood appears to be benefiting from the so-called inclusion effect, a market phenomenon where companies that are added to major market indices can see a price move as index funds — whose holdings must mirror the membership of the index — rush to buy the stock.

And for what it’s worth, it seems like Robinhood will upon entry — effective prior to the market open on Sept. 22 — be the top-performing member of the index. As, its roughly 220% gain in 2025 is more or less double that of the current leader, Seagate Technology Holdings.

markets

28m

GameStop posts impressive Q2 results with big sales beat

Don’t call it a comeback!

GameStop is jumping aftermarket as the video games and collectibles retailer posted an impressive set of second-quarter results.

Net sales: $972 million (estimate $823 million)

Adjusted diluted earnings per share: $0.25 (estimate $0.16)

Note: these consensus estimates, compiled by Bloomberg, are from only two analysts.

The sales beat is particularly noteworthy, as the company had already done an exemplary job of expense control to help protect its bottom line. Revenues were up more than 20% versus the year-ago quarter, the biggest annual jump in sales since the company (and the world) was emerging from the pandemic in 2021.

The options market implies a move of +/- about 9.4% on earnings.

For a while, GameStop’s ability to generate positive net income was purely a function of the interest earnings on its substantial cash hoard. But now, GameStop has strung together five consecutive quarters of positive operating cash flows for the first time in its history!

This was the quarter in which the company began to act upon its bitcoin treasury strategy, raising money through the sale of convertible notes and using some proceeds to purchase the crypto asset.

Because of how much market value has been ascribed to potential for GameStop CEO Ryan Cohen to use its significant cash holdings to transform the company, the prospect of converting cash into bitcoin initially did not sit too well with investors following the announcement of this new strategic push in March.

Shares of the once-upon-a-time meme stock really didn’t get too much love during retail frenzies earlier in the summer, and were down about 25% year to date heading into this release.

As of the close of the quarter, its bitcoin holdings were valued at $528.6 million.

Western Digital Seagate Technology Rise to top of S&P 500

Data storage is so hot right now

A rapid turnaround in profitability helps explain how Seagate Technology and Western Digital have clawed to the top of S&P 500 this year.

Matt Phillips3h

markets

4h

Why Apple usually falls on a new iPhone launch

You can only shock the world so many times, and a thinner phone with a better camera isn’t always going to cut it.

That, in short, is why Apple has tended to go down on days when it’s introduced a new iPhone to the world, as this great chart from Bespoke Investment Group shows:

Bespoke iPhone announcement Apple performance — Source: Bespoke Investment Group

On average, the tech giant falls 0.4% on the release date and is negative more than 70% of the time, perhaps a useful tidbit on this, the day of the iPhone 17 launch.

One more thing....

A potentially complicating factor to the aforementioned data is that Apple has often done quite well in the six months leading up to a new iPhone announcement, roughly 5 percentage points better than its typical six-month return, as shown above. That’s not the case this time, with Apple shares up about 5% over the past six months compared to a typical near 20% advance in the prelude to a new iPhone drop.

So it’s not like expectations about how big of a catalyst this can be for the company are sky-high and due for a sharp retrenchment, especially given Apple’s relatively lackluster progress in developing AI capabilities relative to its megacap tech peers. But a seemingly low bar to clear hasn’t necessarily been a boon for the company on the big day, either.

In any event, staring too closely at the minutiae of all this may be missing the forest for the trees.

“While this info may be helpful to traders, we doubt it’s something that long-term shareholders are too worried about given the huge compounding returns the stock has provided during the iPhone era,” Bespoke wrote.

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