Three things I learned from the market today – Thursday, 15 May

The "things I Learned from the market today" is a daily series sharing insights from my coverage of the ASX 200 Live blog.

Price Discovery

Xero (ASX: XRO) delivered a mixed FY25 result but bullish sentiment eventually took hold, driving the stock sharply higher and within 3% of all-time highs.

Here are the key price points:

• Open: -0.7% ($172.5)

• Low: -2.5% ($169.5)

• Close: +4.7% ($182.05)

The initial weakness was likely driven by the bottom line miss, with net profit after tax up 30% year-on-year to $227.8 million but falling short of $244.5 million consensus (a 6.8% miss).

Despite the weaker profit print, everything else was relatively in-line or better-than-expected. As we noted in the live blog:

• Operating revenue up 23% to $2.1bn, in-line with consensus

• Subscribers up 6% to 4.41m vs. 4.47m consensus (1.3% miss)

• Average revenue per user up 15% to $45.08 vs.$42.38 consensus (6.3% beat)

• Average monthly churn remained low at 1.03%

The bottom line is that either narrative could have taken hold – bears flag a weak profit outcome and high costs while bulls highlight the strong operational performance and pricing power. But once the initial volatility cleared up, the share price made a clean directional move to close at session highs.

CEO Volatility

Treasury Wine Estates (ASX: TWE) CEO Tim Ford unexpectedly stepped down after a 14-year career with the company and five years as chief executive.

Sam Fischer will succeed Mr Ford as CEO from 27 October 2025. Mr Fischer is the current CEO of Lion (owned by Kirin Group), an alcohol beverage industry leader whose portfolio spans beer, wine, spirits and ready to drink beverages.

Treasury Wine shares opened 2.2% lower, fell as much as 7.9% before closing around the midpoint at a 4.7% decline.

While the change was unexpected, the successor was broadly well-received, given Fischer’s deep experience in the alcohol industry and China market.

It's worth noting that Mr Ford beneficially owns approximately 925,000 Treasury Wine shares (approx $8.5m worth at current prices), which isn't a massive shareholding relative to the company's $7.3 billion market cap.

I guess the weakness is somewhat driven by the need for a formal guidance update or strategic outlook from incoming leadership.

Aristocrat's bullish price cut

Aristocrat shares tumbled 8.8% on Wednesday after reporting a broad set of weaker-than-expected numbers for 1H25, including:

• Revenue up 8.7% to $3.03bn vs. $3.19bn ests (5.0% miss)

• Normalised EBITDA up 12.8% to $1.24bn vs. $1.37bn ests (9.4% miss)

• Normalised NPATA up 5.6% to $732.6m vs. $804.3m ests (8.9% miss)

• Interim dividend up 22.2% to 44 cents per share vs. 42 cents ests (4.7% beat)

The miss was largely driven by weakness in gaming and higher corporate costs.

Analysts across the board have consistently rated Aristocrat as a buy for its defensive and solid earnings, attractive growth outlook, strong balance sheet, and M&A optionality.

Most analysts including UBS, Goldman Sachs and Macquarie lowered their target prices by 2-5% but retained Buy or buy-equivalent ratings.

"However in our view, the fundamentals haven't changed: Aristocrat is still a double- digit grower (UBSe 11% EPSA CAGR FY25-30) underpinned by a high quality core gaming franchise accompanied by scalable growth in Interactive and capital to be deployment or returned," UBS analysts said in a note this morning.

Aristocrat shares finished the Thursday session 1.8% higher, closing right on its 200-day moving average.