(News Bulletin 247) – Three CAC 40 companies saw their shares change trajectory during this results season after their management spoke to analysts. These conference calls can change the situation on the stock market, depending on the clarifications provided by managers.

This is an important meeting during a listed company publication: the “call”, that is to say the speaking of management to analysts during a conference call.

This intervention can sometimes be neglected by investors, simply for reasons of time. Depending on the company and the type of publications (turnover or half-year results), these “calls” can last between half an hour and 2.5 hours. For example, the one which followed Totalenergies’ annual results lasted 2 hours and 15 minutes.

The fact remains that these conferences often provide important elements for understanding both the publication (this is the goal), the perspectives, or specific subjects.

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The key Capgemini conference

There is no shortage of examples. On paper LVMH saw its sales decline by 6% on a comparable basis in Asia-Pacific over the first three months of 2024, which could raise questions about activity in China. But in the process, the financial director, Jean-Jacques Guiony, specified that the Chinese “cluster”, that is to say the sales of Chinese consumers in China but also abroad (which are thus counted in other regions), had increased by 10% over the quarter in the fashion and leather goods division. Indications which were deemed “reassuring” by Stifel.

When it published its annual results, Capgemini gained almost 7%. This increase was not so much due to the annual accounts or even the outlook as to the indications given during the conference call by the general director, Aiman ​​Ezzat,.

“More than the solid 2023 results or the slightly accurate 2024 outlook on the growth side, attention was focused (…) on the trajectory of growth recovery in 2024. After a first quarter of more marked contraction than expected, management indicated that organic growth should reach +5% to +9% in the fourth quarter of 2024, paving the way for solid embedded growth for 2025″, underlined Invest Securities.

Three reversals during the last season

It also happens that the conference call completely changes the situation. This is what happened in quick succession with three residents of the CAC 40, during the last results season.

First with STMicroelectronics. The Franco-Italian semiconductor group had, at the end of April, published results below expectations for the first quarter and lowered its 2024 targets. But the stock turned around during the morning, going from a sharp decline to a clear increase (the action closed up 5.4%). This about-face was triggered by reassuring indications from the group’s management on the different customer segments and on the margin, during the conference call.

For Société Générale, on the contrary, it was a cold shower. The group’s shares were up around 4% following results above expectations for the first quarter of 2024. It suddenly turned around during the analyst call. In question, uninviting comments from the financial director, Claire Dumas, on the trajectory of net interest margins in retail banking in France.

“The stock’s reversal was triggered by the management call. The lack of clarity regarding sensitive issues for the stock, such as potential regulatory impacts on the CET1 ratio (following possible on-site inspections) and the persistent problems concerning net interest income in France, is frustrating,” Thomas Hallett, analyst at KBW, explained to News Bulletin 247.

Stellantis shares were already falling by 3%-4% following the publication of lower-than-expected revenues in the first quarter of 2024. But the movement suddenly accelerated during the conference call held by financial director Natalie Knight . The manager had indicated that the group anticipated a current operating margin of between 10% and 11% in the first half of the year compared to more than 14% over the same period of 2023. Natalie Knight had also made less than encouraging comments on the European market, calling it of “difficult” with “pressure” on prices. A financial intermediary qualifies all of these indications as “live profit warning”. “They dropped a bomb,” judges another.

No “adults in the room” at Tesla

Moreover, sometimes analysts expect clarification from the conference call on subjects that do not appear in the accounts. And the lack of response can be punished. As the Agefi-Dow Jones agency reported at the time, EssilorLuxottica had been sanctioned on the stock market after having delivered its activity for the third quarter of 2020. Analysts pointed out the lack of progress on two very important issues at the time, namely the search for a general director and the proposed takeover of the Dutch GrandVision, which gave rise to a battle in court (and which will be finalized in July 2021).

At the end of January, the Tesla management conference call following the (bad) 2023 results left a bitter taste in Dan Ives, famous tech analyst at Wedbush. “We were wrong to expect (Elon) Musk and his teams to appear as adults in the room at the conference and provide a strategic and financial overview of the ongoing price reductions, margin structure and fluctuating demand….Instead, we got a long-term view of Tesla and another conference call that looks like a trainwreck,” he scathed.

The case of Forvia, last March, turns out to be quite unusual. The group’s annual results themselves were satisfactory but management had clearly not provided sufficient explanations on its cash flow during the conference call. The stock had plunged around 20% over two sessions, with investors fearing that the improvement in cash generation was hiding a wolf, even though there was nothing to indicate it. This pushed management to organize a second conference two days later to clarify the situation, with some success.

Apple and AI

To end on a positive note, let us emphasize that it is entirely possible to delight the market by giving it what it wants. Last week, Apple delighted Wall Street with good prospects and a record share buyback program.

But investors undoubtedly also appreciated the offensive speech by its CEO, Tim Cook, on artificial intelligence. “Management expressed confidence several times during the earnings conference call that Apple is well positioned to benefit from generative AI,” Bank of America noted.