Blackberry rallies on earnings beat, Darden jumps on earnings, Toast surges on debut

Yahoo Finance Live breaks down which companies are making big moves in the market this morning.

Video transcript

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EMILY MCCORMICK: Welcome back to "Yahoo Finance Live." We have a few minutes to go until the opening bell this Thursday, September 23. And stocks are trying to make a bid higher here after the Federal Reserve's latest monetary policy decision and updated summary of economic projections.

Now, we should note here that we have the Dow futures pacing towards a sharply higher open. Those are up more than 180 points, or about 1/2 a percentage point. We also have the S&P 500 and NASDAQ headed toward back-to-back sessions of gains.

But we also want to take a look at a couple of stocks making major moves this morning. One of those is Blackberry. Now, it's the top Trending Ticker right now on the Yahoo Finance web page and of course, a long-standing darling of that Reddit-fueled meme trade from earlier this year. But today, the move does look to be driven by fundamentals.

The company just reported second quarter results yesterday that topped expectations. We saw adjusted revenue coming in at $175 million, still down 34% year on year, but better than the $167 million consensus. Now, adjusted losses per share were also narrower than expected. And we also saw a new executive appointment here, Blackberry naming John Giomateo as president of the company's cybersecurity business starting in early October. He'd previously been president and chief revenue officer at the cybersecurity company McAfee.

But guys, this stock is up 44% year to date, down almost 6% in the last month specifically. A lot of that tied to this Reddit-fueled trade and a little bit of cooling on that front. But at least looking today, it does look like these fundamental drivers are really fueling the stock move, right, Brian?

BRIAN SOZZI: Well, there's a couple of ways you can look at it. I think if you want to call a spade a spade, the quarter on its own, just looking at the financial statements and the tone of the earnings release, it stunk. I mean, the gross profit margins were down 1,300 basis points year over year. Margins were down in two of their primary segments.

Really, the margins were only up in their key internet of things business. Overall, not necessarily a great quarter. Now secondarily, they did exit the quarter with about $772 million in cash. That was good. And I think why you see the stock making the move higher in the pre-market is John Chen, I would say, the CEO of BlackBerry. He gave a pretty bullish earnings call over the night, really talking about auto production volumes are starting to pick back up slightly compared to what happened over the summer months because of the chip supply shortage.

And that is likely to benefit Blackberry's orders going forward. He did take a strong, I would say, upbeat stance with respect to forward-looking guidance, in large part because of their business with automakers. One of their key partners, of course, is Ford.

EMILY MCCORMICK: And then another company that we're watching this morning, just reported earnings results earlier before the bell today. That was Darden Restaurants. And this company reporting first quarter sales up 51% over last year, beating expectations. We saw comparable sales beat expectations, as well as those EPS from continuing operations. So a lot of good news here coming out of Darden Restaurants, coming out of the restaurant industry.

And Julie, a good sign here about customer traffic coming back online after what had been such a massive pandemic-induced slump.

JULIE HYMAN: Yeah. I mean, if you look at the comps, they look amazing because it's looking at them over 2020, overall comparable sales of 47 and 1/2 percent. But it's a little more impressive, perhaps, when you look at their forecast for comparable sales, which are still expected to be quite robust. So the company's forecasting comps up 27% to 30%. That is an increase from its prior forecast. And that's for the full year, it's fiscal 2022.

So that's something to keep in mind. It is continuing to be optimistic. And Brian Sozzi, adding to the many, many companies that we have heard from this quarter who were announcing increased buyback authorizations. For this company, it's another $750 million that it is authorizing for buybacks here.

BRIAN SOZZI: Yeah, just staying on buybacks, look, you saw that Dell news cross the wires this morning, $5 billion new buyback. They're having an investor day today. Really, it is the buyback bonanza right now out there on Wall Street, especially after the pullback in markets this week.

And there we have the-- we're coming up against the opening bell. EngageSmart, they are ringing the opening bell to commemorate their IPO. Again, another IPO coming to market. It's been a very, very strong IPO market so far in September.

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And there we have the opening bell on Wall Street there. We'll wait for those first trades to settle. But guys, real quick on Darden here, I'll mention two things. One, the fine dining part of their business, that's where primarily they operate, Capital Grille. Sales for that business, average weekly sales are pacing above the sales pre-pandemic. So I would imagine maybe some people are going back, having some office functions, going to meet clients. Perhaps they're doing it at Capital Grille.

Also Darden, we continue to talk about is inflation transitory? Will it eventually subside? If you look at Darden, the answer is no. Three months ago, Darden was looking for inflation over the next 12 months of 3%. They just jacked that up today now looking for 4% inflation. To me, that's not exactly transitory inflation.

EMILY MCCORMICK: Absolutely. And Brian, just on the topic of the restaurant industry, another stock that we're watching today, seeing a lot more muted moves, actually seeing a bit of a pullback from what we saw yesterday is Toast. And that's that restaurant software and payments company. Just began trading on the New York Stock Exchange yesterday.

We saw a massive jump in the shares during that first day of trading. Those were up 56%. It had sold shares the day before in its IPO above its targeted range. And this really has been, even though it just did go public, really been lumped into this category of the recovery stocks. There were reports last year that Toast had cut half of its workforce during the pandemic, as restaurants closed down.

But now at least, it does seem to indicate that this company has rebounded. If we take a look at the fundamentals here, Toast's losses and revenue about doubled to a net loss of 235 million on revenue of 704 million in the first six months of 2021 compared to a year ago.

But guys-- and Brian I'll turn to you on this one-- it does seem like, at least for now, Wall Street is showing a little bit more enthusiasm for these newly public companies.

BRIAN SOZZI: And I'll write the article for everyone out there watching in real time, "Four Reasons Why Wall Street is Bullish on Toast" here. And I just wrote this down on my nifty notepad right now. One, fun name. Who doesn't like the name Toast? It's a name you could easily relate to. We all love our toast, especially the $10 avocado toast.

Two, it's a SaaS play, recurring revenue. Wall Street loves recurring revenue companies. Three, the model is very, very easy to understand. They sell hardware and software into restaurants, very easy model to understand. And then last but not least, it's a cyclical play. I mean, look at these results at Darden today, very, very strong results telling you people are going out there.

They're spending, despite concerns about the Delta variant, slowing economy. They're back in restaurants to whatever extent. And that likely benefits a name like Toast.

EMILY MCCORMICK: Absolutely. And then I want to turn finally to one more stock that we're keeping an eye on. And that is Joby Aviation. Now, not necessarily a company that's an earnings story or an IPO story. But it is all about a new bullish initiation actually coming out from Morgan Stanley on this stock. The company now rated new overweight at that firm with a price target at $16, trading just over $10 a share now.

But Julie, if we take a look here at this company, Joby Aviation, a lot of optimism here. It's kind of one of these frontier tech companies working in this transportation space. And it does seem that Wall Street as well as retail investors have been pretty enthusiastic about this space overall.

JULIE HYMAN: Yeah, you have these sort of cool tech companies that grab the market's attention. And Joby seems to be one of these, the sort of electric aviation space that a lot of people are looking at.

And Morgan Stanley is saying that this is potentially the real deal. So the company says bull case valuation range could be $45 to $60, even though, as you said, the price target here is $16. So there could be a lot of potential growth in this area.

But again, it's sort of a long-term potentiation call here. And we don't really know what the future of this space looks like quite yet. But it's cool to see pictures of electric planes.

BRIAN SOZZI: Cool photos. Yeah, that's neat. I'm not going on one, though.

JULIE HYMAN: Exactly.

EMILY MCCORMICK: Definitely something that we love to watch here at Yahoo Finance. And again, makes for some good visuals, if nothing else.