Stocks in focus: Take-Two Interactive, Lululemon, AutoZone, Ford

Yahoo Finance Live hosts Emily McCormick and Adam Shapiro break down several of the trending stocks.

Video Transcript

EMILY MCCORMICK: It's time now for our 2&2, two stocks Adam is watching and two stocks I'm watching during today's session. And take a look at shares of Take-Two. The video game maker's stock is off about 15% this afternoon after it announced it would be purchasing Zynga, the creator of the game "Farmville" in a cash and stock deal valued at about $11 billion.

Now the deal is set to add Zynga's mobile gaming portfolio to Take-Two's existing PC and console gaming platforms, which currently include "Grand Theft Auto" and "Bioshock." Now Take-Two said it expects this will create about $100 million in annual cost synergies within two years of the close of the deal and more than $500 million in annual net booking opportunity over time.

Now, despite this guidance, Take-Two shares are sharply lower this afternoon. Shares are also down about 33% over the past year. And the stock has been seen as part of that stay at home tech trade. Now while Take-Two shares are sinking, also amid the broader drop across tech stocks today, Zynga shares are soaring. Now that cash and stock offer amounts to about $9.86 per share for Zynga shareholders. And that does represent an about 64% premium to that stock's closing prices on Friday.

Then there are shares of Lululemon. Now this is another stock that is under some pressure today as well. Now Lululemon said this morning that it expects to see a hit to fourth quarter revenue and profits due to impacts related to Omicron. Now Lululemon CEO Calvin McDonald said in a press release this morning, quote, "We started the holiday season in a strong position, but have since experienced several consequences of the Omicron variant, including increased capacity constraints, more limited staff availability, and reduced operating hours in certain locations."

Now with the updated guidance, Lululemon expects fourth quarter net revenue to beat toward the low end of its range of $2.125 billion to $2.165 billion. And it also expects adjusted earnings per share to be toward the low end of its $3.25 to $3.32 range. Now those shares are down about 2% this afternoon and are also down by more than 16% so far in 2022. Adam.

ADAM SHAPIRO: Emily, take a look at AutoZone shares. On Friday, they closed to, what, 2,014 bucks a share. But a lot of weekend warriors damaged their cars over the weekend. Stock took a hit when they opened this morning. They're still trading down, but back above 2,000 bucks. Here's a couple of things you should know. UBS analyst downgraded AutoZone from buy to neutral. But the stock last year was up tremendously, 77%. It hit a 52-week high at the end of last year, $2,110 a share.

IHS Markit data shows that the average car on the road today-- are you sitting down for this-- 12 years. And it's not going to get much better because the shortage of new cars, used cars expected to last well into 2022. JD Power reported that 89% of new vehicles bought by consumers sold near or above the manufacturer's suggested retail price in 2019, before the pandemic, that was 12%. So in other words, people are going to try and fix their cars. They're going to head to the Zone, Auto Zone. But today, shares off.

Then check out Ford. Ford's been on fire, no doubt about that. Shares are down right now almost 3%. Goldman Sachs has a neutral rating on this stock. Argus Research last week raised their price target to $29. A lot of this, by the way, the F-150 Lightning on fire. That EV is going to take the world by storm.

Mike Ward over at Benchmarks increased his price target for Ford to $29 from $24 and maintained a buy rating. Said, quote, "Ford's product line is the best in decades. The company is on track to end the year with a positive net cash balance at its auto operations of $7 billion." We'll get the official numbers in February when Ford reports not only January sales, but also gives us the final quarter of the year for 2021 and the full year, how they did.