Wednesday's trading opened mixed. Alphabet/Google (GOOGL) shares fell while Microsoft (MSFT) gained. Amazon (AMZN) and several other major stocks were set to report after the close.
Fortinet (FTNT) - down 25%
Fortinet (FTNT) shares fell more than 20%, exactly 25%, on quarterly results. Expectations were high going in. The stock was up 119% year-to-date, which set up this sharp drop.
Adjusted earnings per share came in at 91 cents, above the 86 cents expected. Revenue was $2.08 billion, also a slight beat and an increase, but not enough given high expectations.
Product revenue rose 37%, down from 52% growth the prior quarter. Sales are cooling, and quickly in investors' eyes. Service revenue, which includes security subscriptions, was $1.31 billion, slightly below expectations. Fortinet cut its full-year service revenue forecast to between $5.15 billion and $5.17 billion. That matters because service revenue is a steady, recurring source.
Positives: earnings beat, total revenue up 28%, billings up 29%. Fourth-quarter guidance ranges from $2.16 billion to $2.25 billion. The outlook looked solid but did not reassure investors.
Caterpillar (CAT) - down 10%
Caterpillar (CAT) shares fell 10%, adding to recent weakness in a stock that has outperformed this year. Earnings were $7.20 per share versus $7.08 expected. Revenue was $20.68 billion, a beat.
Construction sector sales missed expectations. Caterpillar held its annual sales outlook steady, making this a "beat and hold" quarter rather than "beat and raise" - better than expected but stable.
Total revenue grew 17%, helped by AI-linked demand in power and energy. Power and energy sales grew about 18%, above expectations, driven by higher sales volumes and better prices. Construction sales also rose 18% but still fell short of expectations, drawing attention to the traditional equipment business, which cannot keep pace with the power business.
Order backlog hit a record $78.1 billion, higher than the prior quarter, but new order growth slowed. The annual tariff cost forecast is around $2.2 billion, with some cost recovery discussed. For this stock now, good is not good enough for Wall Street.
Eli Lilly (LLY) - up 7%
Eli Lilly (LLY) shares jumped more than 7% after quarterly results, driven by its GLP-1 weight-loss drugs. Adjusted earnings per share were $7.48 versus $6.50 expected. Revenue was $24.4 billion versus $22.6 billion expected. This was a "beat and raise" quarter.
Mounjaro and Zepbound carried the results. Mounjaro generated $10.72 billion in revenue, up 65% from a year ago. Zepbound earned $5.35 billion, up 49%. Both beat analyst estimates and together make up about two-thirds of Lilly's quarterly revenue, showing heavy dependence on these two drugs.
Guidance: annual revenue of $91 billion to $92 billion, and adjusted earnings of $35 to $36 per share. Comments covered expanding access through Medicare coverage. The obesity pill is not approved there yet and is a bit weak, but Zepbound and Mounjaro revenue makes up for it.
