Zoom Raises FY2025 Forecasts, Expands Share Buyback Plan by $1.2 Billion

LOCAL MARKET COMMENTARY

South Africa's Top 40 index fell by 0.8% on Monday, closing at 76,530 points, while the All Share index dropped 0.86% to end at 84,875 points. Investors are focusing on upcoming economic data, including the business cycle indicator, producer inflation, and trade and budget balances. Meanwhile, AfriForum will return to the Pretoria High Court on Friday (29 November) to seek refunds for consumers affected by over 100 municipalities' unlawful electricity tariff hikes implemented on 1 July. This follows a Supreme Court of Appeal decision last week allowing energy regulator Nersa and the South African Local Government Association (Salga) to challenge a June high court ruling that deemed the tariff increases illegal.

EUROPEAN MARKET COMMENTARY

European stocks ended slightly higher on Monday, supported by positive sentiment from the U.S. markets. Investors are now focused on upcoming European economic data, including Germany's preliminary inflation figures set for Thursday. However, Germany's business morale dropped more than expected in November, reinforcing concerns about its status as the weakest performer in the G7 this year. European Central Bank Chief Economist Phillip Lane emphasized the need for caution in maintaining restrictive policies, commending the gradual approach to interest rate reductions.

US MARKET COMMENTARY

Wall Street's major indices closed higher on Monday, with the Russell 2000 small-cap index reaching an all-time high following Scott Bessent's nomination as U.S. Treasury Secretary, which helped lower bond yields. Investors are now eyeing the upcoming Personal Consumption Expenditure report, the Federal Reserve's preferred inflation measure, as the U.S. approaches the Thanksgiving holiday. Market sentiment remains divided on whether the Fed will pause or cut rates in December, with the CME Group's FedWatch Tool indicating a 56.2% chance of a 25 basis-point cut.

ASIA MARKET COMMENTARY

Asia-Pacific markets declined this morning as traders focused on key economic data. Singapore’s manufacturing output for October is expected to show a 2.2% year-on-year increase, down from the 9.8% surge in September, according to Reuters. Meanwhile, Japan's service producer price index for October rose to 2.9%, slightly higher than September's 2.8%, signalling continued cost pressures in the sector.

CURRENCY MARKET COMMENTARY

South Africa's rand gained strength on Monday as investors showed optimism at the start of the week, anticipating several significant month-end economic data releases. The U.S. dollar strengthened significantly against major currencies this morning after President-elect Donald Trump announced plans to sign an executive order imposing tariffs on imports from Mexico, Canada, and China.

COMMODITY MARKET COMMENTARY

Gold prices remained stable this morning after a sharp 3% drop in the prior session, bolstered by safe-haven demand following President-elect Donald Trump's announcement of plans to impose tariffs on imports from Canada, Mexico, and China. Meanwhile, oil prices edged lower in early trading, continuing their decline as investors assessed the potential impact of a ceasefire between Israel and Hezbollah, which could reduce oil's geopolitical risk premium.

Barloworld Limited (BAW) -1.78%

Barloworld achieved a 29% reduction in gross debt to R7.9 billion and successfully derisked its UK pension fund. However, financial performance weakened, with revenue declining by 6.9% to R41.9 billion and operating profit from core activities down 12.6% to R3.8 billion. Headline earnings per share (HEPS) from group operations fell 21%, while continuing operations experienced a smaller 12% decline. Despite these setbacks, the EBITDA margin remained steady at 12.2%, and an ordinary dividend of 310 cents per share was declared, up from 300 cents in 2023.

Oceana Group Limited (OCE) +1.17%

Oceana Group’s 2024 highlights for continuing operations include a modest 0.7% revenue increase to R10.1 billion. Operating profit grew 9.5% to R1.63 billion, while profit after tax rose 12.5% to R1.11 billion. Earnings per share climbed 14.5% to 920.9 cents, with headline earnings per share increasing 13.5% to 917.6 cents, reflecting strong overall performance.

Invicta Holdings Limited (IVT) 0.00%

For the period ending 30 September 2024, Invicta’s shareholders’ equity decreased by 10% to R5.04 billion. Revenue rose slightly by 2% to R4 billion, and operating profit before financing and forex impacts increased 11% to R368.9 million. However, profit for the period dropped 23% to R273.8 million. Basic and headline earnings per share declined by 17% and 14%, respectively, with sustainable headline earnings per share also down 14% to 240 cents. Net asset value per share improved by 4% to 5,203 cents, but no dividend was declared.

Zoom Video Communications, Inc. (ZM) +3.67%

Zoom Video Communications raised its fiscal 2025 revenue and profit forecasts on Monday, citing strong demand for its video conferencing software amid the hybrid work shift and an expanded product portfolio. The company also announced a $1.2 billion expansion to its share repurchase plan. Zoom now expects annual revenue of $4.65–$4.66 billion, up from the previous $4.63–$4.64 billion range. Full-year adjusted earnings per share are forecast at $5.41–$5.43, compared to the earlier projection of $5.29–$5.32. For the third quarter, Zoom posted $1.18 billion in revenue, beating estimates of $1.16 billion, with adjusted earnings per share of $1.38, surpassing the expected $1.31.

Bath & Body Works, Inc. (BBWI) +16.51%

Bath & Body Works increased its full-year profit forecast on Monday and predicted a smaller decline in annual sales, driven by robust holiday demand for candles and fragrances. The company now expects fiscal 2024 sales to fall by 1.7%–2.5%, an improvement from the previous 2%–4% decline projection. Adjusted earnings per share are now forecast at $3.15–$3.28, up from the earlier range of $3.06–$3.26. For the third quarter, Bath & Body Works reported adjusted earnings of 49 cents per share, surpassing analyst expectations of 47 cents, while sales grew 3% to $1.61 billion, exceeding estimates. Shares soared 22% after the announcement.

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