Consumer Spec - Pre Market Wrap
GS: Discretionary No Longer Oversold | Macau Reset — MLCO Cut, MGM China Up, Wynn/Galaxy Pair | BBY CEO Meeting Constructive, EL Reinstated $100, HAS Top 2026 Toy, BURL Record Intentions | NKE Update
Light tape into Monday, with the consumer wire dominated by single-name broker action and no covered earnings releases. A clear example of a light tape can be seen in the table of consumer gappers, which shows CELH +0.26% as the second largest gapper in the 180 consumer names we cover.
In terms of research, I like Morgan Stanley MNST positive note on pricing and both MS and Jefferies highlighting Macau negative growth numbers and a bear case to MLCO, downgraded by MS today. In other notes, BBY sentiment turning bullish post incoming CEO Bonfig meetings at Evercore, Keybanc, Jefferies, though Switch 2 compares loom. EL reinstated Buy at Goldman $100 on Beauty Reimagined, HAS Jefferies' 2026 top toy pick at $120 on MTG. BURL record Net Purchase Intentions, MNST OW on Red Bull pricing.
MACRO & MARKETS
GOLDMAN: DISCRETIONARY NO LONGER OVERSOLD
May 2026 trough: The spread hit its most extreme reading of the 5-year window at -9.7 pp on May 20, with GSXUCOND's 30-day return at -9.7% vs. RSP at essentially flat (+0.01%). Sharp June reversal: GSXUCOND has staged a modest recovery — its rolling 30-day return surged to +9.8% by June 18, while RSP's 30-day return stood at +4.1%, pushing the spread to +5.6 pp — the widest positive reading since late 2025.
US STRATEGY (BTIG): PREFER SMALL-CAPS OVER STRETCHED SEMIS, OPTICAL CRACKING
Small-caps have quietly outperformed the SPX in recent weeks and are nearing a YTD relative breakout, which the firm prefers over the crowded tech/AI trade where snap-back risk remains despite seemingly bulletproof price action. The SOX has logged 9 daily gains of 5%+ over the last 60 sessions, a frequency last matched in January 2009 and otherwise only seen from April 2000 to January 2003 (either at major tops or in the depths of bear markets), while the SOX/NDX ratio is +46% over 12 weeks, a level barely exceeded in 2000 to 2001.
Within the AI complex, optical names (AAOI, CIEN, LITE; all not rated) are beginning to crack and warrant close watching given AI buildout exposure, while equal-weight industrials remain firm with constructive charts on CR, GVA, IEX, and WAB (all not rated). Korea is flashing concentration risk with the KOSPI up 2.25% Thursday despite 85% of components closing lower, while DXY has broken out of a 15-month base and gold is breaking down from a multi-month top, with these trends expected to persist so long as DXY holds above 100 and XAU stays below ~4400 (USD/JPY also nearing 2024 highs).
CONSUMER STREET RESEARCH
Upgrades
No upgrades in consumer sector today
Downgrades
Melco Resorts (MLCO) Cut to Equal-Weight at Morgan Stanley; PT $6
Initiations
No initiations in consumer sector today
EARNINGS REPORTS
Paste
ANALYST RESEARCH & NEWS
MNST: MORGAN STANLEY REITERATES OW ON RED BULL US PRICE HIKE CONFIRMATION, PT $103
The firm says a Beverage Business Insights newsletter confirms its prior May call that Red Bull will take high-single-digit US pricing on August 1, with the increase already largely priced into Monster shares but the detail still a competitive positive after Red Bull declined to follow MNST’s mid-single-digit November 2025 hike. The analyst notes a 9.8% increase on Red Bull’s core 8-oz can, 7.5% on 12-oz, 6.1% on 16-oz, and 5.1% on 20-oz, modeling roughly 7% weighted pricing post-promotion, with each 300bps of US/global pricing worth about 5%/9% to 2027 EPS assuming 20% elasticity and ~65% decremental margins. More significantly, the analyst frames the move as a longer-term signal that the category is shifting away from clumsy, episodic increases toward consistent, mix-driven RGM pricing beginning in 2027, supported by a 2027 margin inflection (after a forecast ~35bps 2026 compression), reaccelerating US share (Q2 down only 42bps yoy, +12bps in the last four weeks), and a record 2026 innovation slate. The firm carries an 11% post-2026 organic sales growth forecast versus 8% consensus, sees ~10% EPS upside to 2028 consensus, and flags a hypothetical alcohol divestiture as roughly 3% EPS accretive.
WMT: MORGAN STANLEY REITERATES OW, SAYS NEGATIVE STORE-ONLY COMPS DON’T THREATEN PROFIT, PT $140
The firm says decelerating Walmart US Store-Only comps, which turned to -0.6% and -1.2% in the latest two quarters, do not pressure profitability because the eCommerce flywheel and its high-margin Membership and Advertising streams now drive the bulk of EBIT growth. The analyst notes that adjusting for Maximum Fair Prices drug-pricing regulation, estimated at roughly a 130bps drag on Store-Only comps given Pharmacy’s weighting, underlying Store-Only comps were positive in 1FQ27, while the gross-profit-dollar impact stays immaterial as vendors absorb the cuts. The analyst adds that Walmart Connect advertising income accelerated to +44% yoy in 1FQ27 from +24% in 4FQ25 and Membership fee income is tracking in the high-20% range. On scenarios, the firm models mid-single-digit Walmart US EBIT growth if Store-Only comps hold flat to -1%, a low-teens rate if they stay flat to +1%, and flat segment EBIT if they erode to -3% to -4%, with the $140 target set on ~44.2x F’28e EPS of $3.16.
Grocery competition – Aldi is aggressively ramping its US store count as part of a $9B expansion plan (it will soon have more locations than Kroger) in a bid to capture share from others in the industry (FT)
WHR: BOFA REITERATES UNDERPERFORM ON HIGHER-COST REFINANCING, CUTS PO TO $36 FROM $43
The firm says Whirlpool completed a $2.0B issuance of senior secured second-lien notes, split between $1.0B of 7.50% notes due 2031 and $1.0B of 7.875% notes due 2034, plus a new $2.0B ABL revolver, with proceeds used to retire near-term 2026 and 2027 euro-denominated maturities, repay the existing revolver, and cover transaction costs. The analyst notes the deal clears near-term refinancing risk and adds liquidity runway but comes at a meaningfully higher cost of capital, with the shift from low-cost euro notes to higher-yield secured debt seen lifting annualized interest expense by $106mm in 2027, weighing on free cash flow and extending the path to target leverage, such that balance sheet improvement is more maturity extension than true deleveraging. The analyst adds that 2026E/2027E EPS estimates are cut 62%/41% to $0.96/$2.57 to reflect the step-up in interest, a more conservative 2Q price-cost outlook, and lower FCF conversion. The firm reiterates Underperform on soft discretionary demand, a competitive appliance backdrop, and limited visibility to balance sheet repair absent a housing recovery, lowering the price objective to $36.
Today MS Downgraded MLCO and also Jefferies has a negative note on Macau growth
MACAU GAMING (MORGAN STANLEY): TOO EARLY TO BUY DESPITE CHEAP VALUATION; UPGRADE MGM CHINA, DOWNGRADE MELCO AND SANDS CHINA
The firm says Macau stocks look inexpensive but estimate revisions remain negative on a GGR slowdown and negative operating leverage, with high free cash flow and dividend yield not yet appreciated by investors, and prefers MGM China and Wynn Macau heading into 2Q results. The analyst notes negative EBITDA revisions should continue given 2026 quarterly GGR growth forecasts of roughly 2% to 3% yoy for 2Q-4Q, though EV/EBITDA at 7.2x versus a 12.8x long-term average, FCFE of 9.5% versus 7.1%, and dividend yield spreads are nearing pre-COVID levels. The firm upgrades MGM China to Overweight on strong 2Q EBITDA, share gains, low capex, and a 6% yield with only a 50% payout, and stays Overweight on Wynn Macau, where it sits 9% above consensus on 2Q26e EBITDA with an 8.3% yield viewed as sustainable. The analyst adds that Melco and Sands China are downgraded to Equal-weight tactically as negative revisions persist, with the Melco estimate 5% below consensus on weaker international operations and Macau share pressure, and Melco still not having resumed dividends since COVID.
On the MLCO downgrade, MS sees no near-term triggers despite inexpensive valuation and prefers to revisit on a more constructive Macau outlook. The analyst flags an unattractive dividend yield profile with no meaningful payout and any future distribution likely lagging peers, balance sheet and cash flow constraints from elevated gearing and heavy capex pressuring attributable FCF/EPS, and a conglomerate-driven de-rating as ongoing royalty buybacks and overseas investments dilute focus. Weak international operations continue to pressure the overall earnings profile.
MACAU GAMING (JEFFERIES): WEEKLY GGR -15% YOY, PREMIUM WEAK, PREFER WYNN AND GALAXY
Macau GGR for the seven days ended June 21 averaged ~MOP600mn/day, up 2.4% WoW but down 15% versus June 2025 ADR, with the firm citing World Cup distraction over the Dragon Boat Festival, weaker premium demand, and June seasonality, partially offset by above-range win rates. MTD mass tracked -12 to -15% MoM and VIP -16 to -19% MoM, with win rate normal at 3.0 to 3.3%; Jefferies’ industry sources estimate MOP560 to 630mn/day for the rest of the month, implying MOP18.2 to 18.9bn for full June and -10 to -13% YoY (vs consensus -1% and Jefferies +4%). Dragon Boat visitation tracked ahead of last year, with Macau logging over 151k arrivals on June 19 (day one of the three-day holiday) versus 397k total over the same 2025 period. The analyst prefers Wynn and Galaxy given premium leadership during a period of greater outcome dispersion driven by execution, and despite premium valuations (Wynn at 10.1x, Galaxy at 6.6x vs ~6.5x peer average) argues investors should reward best-in-class operators amid slowing growth.
Few brokers provide color on June 18th sell-side gathering in NYC, with the stated purpose of "properly" introducing Jason Bonfig, a 27- year company veteran who takes over as CEO on November 1st.
BBY: EVERCORE ISI CEO TRANSITION, TRENDS TO DECELERATE ON TOUGH COMPARES
The firm relays Bonfig’s four priorities: advancement (retail media and tech), expanding reach, elevating the experience, and a human-powered customer focus; second-year Best Buy Ads and the 3P Marketplace have both topped targets, with domestic Marketplace GMV near $250mn. Expansion runs through smaller-format stores (roughly 12k to 15k and 20k to 25k sq ft) recast as fulfillment, service, and experiential hubs, including new Meta Labs in 50 locations, while larger boxes shift computing to the front and free back-of-house space for experiences. On current trends, May quarter-to-date comps ran up high single digits but management guides 2Q to roughly +1% and holds the full-year comp range at down 1% to up 1%, with June/July facing tougher compares against last year’s Switch 2 launch (about $200mn of 2Q sales) and a strong early back-to-school and Windows 10 computing pull. The analyst notes offsetting tailwinds: decisive 2Q appliance actions (majors turning positive in May), the mid-June industry-wide RGB TV launch where Best Buy is the only national retailer for roughly a year, and a favorable inventory cost position ahead of memory-driven price increases.
BBY: KEYBANC STAYS SECTOR WEIGHT AFTER CEO/CFO MEETING, INCREMENTALLY POSITIVE ON INITIATIVES
The firm says it came away from a meeting with CEO Corie Barry, incoming CEO Jason Bonfig, CFO Matt Bilunas, and Head of IR Mollie O’Brien incrementally positive on the durability of Best Buy’s initiatives, appliance competitiveness, and the new store opportunity, with the CEO transition viewed as coming at a time of strength as trends stabilize and growth businesses build momentum. The analyst notes management sees Marketplace and Best Buy Ads helping retain customers and improve profitability, with Marketplace growth fueling the advertising business and incremental in-store ad opportunities, while a shift toward smaller store formats is viewed as beneficial. Keybank adds management believes it has improved sharper pricing, inventory availability, and delivery speed in appliances, and saw strong sequential TV improvement in 1Q ahead of new RGB offerings. The firm flags that KFL spending data slowed over the prior two weeks to -1.8% QTD through June 14 from +5.0% through May 31, lapping last year’s Switch 2 launch, but still sees comps tracking above the 1.1% consensus while watching the deceleration, remaining Sector Weight on June trend softness, tougher gaming comparisons, product inflation, and a difficult discretionary backdrop.
BBY: JEFFERIES MORE POSITIVE AFTER INCOMING CEO MEETING
The firm came away increasingly constructive following a Thursday sit-down with incoming CEO Jason Bonfig, flagging his deep vendor relationships as a critical asset amid the industry’s memory chip shortage, his prior role securing BBY’s initial RGB TV exclusivity, and his oversight of the 3P marketplace and Ads businesses as drivers of the next leg of margin expansion. The RGB TV launch is imminent, with staff trained and a broad marketing push starting end of month, and delivery, install, and haul-away bundled into the purchase price; separately, a recent Best Buy Ads tech upgrade now enables simultaneous store-takeover campaigns across geographies and demographics, which the analyst sees as a growth accelerant for the high-margin stream. Bonfig likens the AI cycle setup to the early Wi-Fi era (historically favorable for BBY) and expects the U.S. 3P marketplace ramp to scale meaningfully faster than Canada, where he led the build-out. On appliances, the firm sees delivery as the structural differentiator, with more rural-store inventory and extended next-day cut-offs positioned to capture duress-driven urban and suburban share.
BTI, PM: MORGAN STANLEY REAFFIRMS OW POST HAYPP GROUP CEO CALL
A recent fireside call with Haypp Group CEO Gavin O’Dowd reinforces the firm’s conviction in OW BTI and PM, with the analyst flagging recent US regulatory developments (marketing orders for On! and Zyn, the FDA’s first fruit-flavoured vape authorisation, and Zyn Ultra now live on Haypp’s US platforms) as a step-change for the nicotine pouch category. State tax pressure, including NY’s 75% wholesale rate (roughly $3 per can), is described as manageable and unlikely to materially impact category growth, while the draft European TPD3 revision is expected to start restrictive but settle more balanced after negotiation. The analyst notes industry dynamics increasingly favour the three majors (PM, BAT, Altria) given regulatory expertise, scale, and product-quality advantages, with smaller players concentrated in single regions; roughly 30% of products Haypp sells today did not exist a year ago, and the US market could look fundamentally different in 12 months as European-tested SKUs arrive. Category tailwinds cited include improving product quality, better PK curves accelerating cigarette switching, and flavour innovation (with ~72% of UK pouch users previously on flavoured vapes), against US consumption of ~4 pouches/day versus 11 to 12 in Scandinavia.
NKE: CEO Elliott Hill conceded that Nike's turnaround is proceeding more slowly than originally anticipated, citing the sheer scale of operational remediation required and compounding macro pressures from U.S. tariffs and rising oil prices weighing on consumer spending. In a Financial Times interview published Monday, Hill acknowledged that the depth of the company's challenges only became fully apparent upon assuming the role, noting Nike is not yet delivering a consistent brand, product, and marketing experience on a global basis. He framed consistency across markets and business segments as the critical prerequisite for revenue and profit recovery, indicating the full impact of the restructuring will likely become visible early next year as new product launches scale globally. Hill also pointed to ongoing work to optimize operating overhead and organizational structure for improved efficiency. Shareholders can expect a more detailed strategic update at Nike's November investor day. The commentary underscores that while the directional thesis remains intact, the cadence of execution carries incremental uncertainty relative to initial expectations.
KR: GUGGENHEIM CUTS PT TO 71 FROM 78, MAINTAINS BUY ON MEASURED PRICING RESET
Guggenheim lowered the price target on KR to $71 from $78 while maintaining a Buy rating. The firm says a measured, “pay as you go” price investment approach is preferable to front-loaded, reset-funded, and potentially disruptive aggression, but the adverse market reaction reflects realization of the conventional supermarket model’s strategic limitations. The analyst notes CEO Greg Foran’s mid-May Bloomberg interview elevated expectations around the speed and magnitude of price adjustments, with the actual market-by-market, multi-year timetable disappointing some investors. The firm argues the measured approach optimizes learnings and execution, supporting sustainable share gains, margin expansion, and a low-double-digit TSR. Shares now trade at 5.9x 2026E EBITDA after underperforming the S&P 500 by 35pp since March 6.
BROS: PIPER SANDLER RAISES PT TO 68 FROM 61, KEEPS NEUTRAL ON 7 BREW COMPETITION
Piper Sandler raised the price target on BROS to $68 from $61 while maintaining a Neutral rating. The note is a deep dive into recent unit development trends in the Limited Service Beverage category, with a specific focus on emerging brands BROS and private competitor 7 Brew. The firm flags that in 2025, 7 Brew opened more stores and added more system sales dollars than BROS did, a dynamic the analyst says has quickly moved front and center from an investment community debate perspective. The firm expects focus on this specific competitor, rather than competition more broadly, to only increase in magnitude over time.
EL: GOLDMAN SACHS REINSTATES BUY WITH 100 PT ON BEAUTY REIMAGINED EXECUTION
Goldman Sachs reinstates coverage on EL with a Buy rating and a 12-month price target of $100. The firm believes the market is underestimating the sustainability of EL’s growth momentum following several years of execution challenges and underperformance, citing a new leadership team, new strategic vision, and updated One ELC operating model. The analyst notes execution against Beauty Reimagined has driven a return to top-line growth in FY26 (after three years of consecutive declines) and 300bps of YoY operating margin expansion so far, versus FY19-25 contraction of 950bps. The firm pushes back on investor skepticism around transformational M&A given Puig merger talks have terminated, and flags +MSD long-term prestige beauty category growth plus faster gross-margin-accretive innovation as durability drivers.
HAS: JEFFERIES NAMES TOP TOY PICK FOR 2026, REITERATES BUY WITH 120 PT
Jefferies names HAS its best toy stock to own in 2026 and a Top Pick, reiterating Buy with a $120 price target. The firm frames the story as transformation rather than turnaround, anchored by Magic: The Gathering and Wizards of the Coast, which contributed over 85% of EBIT last year. The analyst notes WotC delivers high-30s to low-40s percent margins on strong tabletop demand and expanding digital monetization, with engagement solid across both players and collectors. The firm calls MTG a top-tier trading card game fitting more with the premium hobby ecosystem than traditional toys, and says HAS‘s higher-quality earnings mix, conservative guidance posture, and current valuation do not reflect its evolution into an IP-driven gaming platform.
BURL: UBS FLAGS AS 2026 OUTPERFORMER ON RECORD NET PURCHASE INTENTIONS
UBS positions BURL for outperformance in 2026 following a survey of 1,000 U.S. consumers on apparel, footwear, and accessories purchases. The firm says Burlington’s consumer demand signal reaccelerated sharply, with Net Purchase Intentions rising to 24% in March 2026 versus -2% in the year-ago period, a 26pp swing and the strongest level in the survey’s history. The result ran about 10pp above the 14% survey average, indicating forward demand performance materially superior to peers. The analyst adds that stable past-frequency growth of 17% vindicates the view that current traffic strength is converting into forward intent. 53% of BURL customers expect a net increase in apparel budgets, with 62% of all respondents reporting better financial health than a year ago and 66% expecting further improvement over the next 12 months.
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EARNINGS CALENDAR
