Investment Review №352. Playing Defense

Walmart, Target

Walmart (WMT) shares fell >9% in a single session to their lowest level since November 2025, despite both WMT and Target (TGT) beating consensus on revenue and EPS, expanding margins on tariff refunds and posting double-digit digital growth. The divergence was driven by the key retail KPI—comps. For both retailers, Q2 comps slowed sequentially, but the market response could not have been more different. Target’s (TGT) comps slowed to 3.8% YoY, yet shares hit a two-year high as traffic and average ticket remained positive for the second straight quarter, with growth broad-based across categories. Walmart faced a more meaningful headwind in Health & Wellness tied to the Maximum Fair Price program. U.S. ex-fuel comps slowed to 2.6% YoY—the weakest pace since 2022. Ex-Health & Wellness, comps would have grown 3.4% YoY, but even that read-through and constructive management commentary failed to offset the negative market reaction.

 

Comparable Sales, YoY.
Source: FactSet

 

North American Barrick

The upcoming North American Barrick IPO is shaping up as a key 2H26 catalyst for the gold-mining sector. The newco will include Barrick’s 61.5% stake in Nevada Gold Mines, 60% of Pueblo Viejo, the Fourmile project—transferred at Newmont’s request—and other North American assets. Barrick-owned (GOLD) assets produced ~2.0m oz of gold in 2025. Following the agreement with Newmont (NEM), which transfers Fourmile, Mike and Fiberline into NGM for $1.95bn, the combined resource base approaches 100m oz. The market is valuing the newco at >$60bn, implying ~7.1x 2027E EV/EBITDA—broadly in line with major North American gold miners. Barrick continues to target a late-2026 IPO while retaining control. In our view, the listing could unlock value through a standalone valuation of the high-quality asset base in low-risk jurisdictions, with Fourmile offering a potentially material long-term production kicker.

Barrick’s Production Portfolio Before and After the Expected IPO, koz
Source: FactSet, Freedom Broker analysis

 

Marvell, Alphabet

On August 20, Marvell Technology (MRVL) announced a long-term agreement with Google (GOOGL) to develop components for the TPU ecosystem through FY33. Importantly, Marvell is not developing the TPU itself—the scope covers AI-inference accelerators, storage and networking controllers, memory interfaces and near-memory compute, all closely aligned with capabilities built through M&A over the past 18 months. Economics are structured around ~$12.2bn of equity warrants, equal to ~6.6% of shares outstanding, with vesting tied to up to $120bn of cumulative Marvell custom-chip revenue from Google through FY33. Google unlocks 240,042 shares for every $500m it spends on Marvell products, implying <0.03% dilution per $500m of revenue—a modest price for substantial revenue visibility. The bigger read-through is for Broadcom (AVGO), which develops the TPU itself. Marvell’s access to the TPU ecosystem creates a credible competitive threat—even if it does not displace Broadcom, it could materially weaken Broadcom’s pricing power.

 

Cumulative revenue of Marvell Technology for FY27-33, $ bn
Source: Marvell Technology, FactSet, Freedom Broker

 

Cisco Systems

On August 12, Cisco Systems (CSCO) delivered record 4Q FY26 results across key metrics, but the margin story was less clean—operating margin expanded despite a second straight quarter of gross-margin compression. The company beat across the board and raised FY27 guidance by more than at any point in the current cycle. Cisco also raised its AI-revenue outlook, while non-AI growth is running at ~2x its long-term model. Backlog supports the broader demand story: growth was broad-based, not reliant on the largest hyperscalers, with momentum accelerating outside AI. The caveats remain familiar. Gross margin is again expected to decline, recurring revenue is barely growing, and most of the guidance upgrade is concentrated in a single product category. The market focused on these pressure points—and CSCO’s relatively full valuation—sending shares down 8.45% on August 13.

 

Estimated revenue growth rates of CSCO's busines for FY27-28, %
Источники: Cisco Systems, Freedom Broker

 

Moderna, Merck

Moderna (MRNA) and Merck’s (MRK) personalized mRNA cancer vaccine became the sector’s biggest catalyst, with preliminary Phase 3 data showing that the Keytruda combination met its primary endpoint. The regimen significantly extended recurrence-free survival vs. Keytruda monotherapy and also reduced the risk of distant metastases. The market reaction was explosive: Moderna surged 177%, while Merck gained >12%. For Moderna, the readout offers its first meaningful post-pandemic revenue diversification opportunity. For Merck, it could extend the Keytruda franchise—which accounts for 49% of revenue—beyond the drug’s 2028 patent expiry. The setup remains high-risk: only initial data have been disclosed, with the full safety profile and overall-survival benefit still unknown. The next major catalyst could come at the ESMO conference in October. 

 

MRNA & MRK: 12M Share Price Performance
Source: FactSet