Delta Airlines Posts Full-Year Loss for First Time Since 2009 But CEO Bastian Eyes Recovery in 2021

Delta Airlines, one of the major players in the United States aviation industry, reported a loss for the fourth consecutive time in the December quarter and a full-year 2020 loss for the first time in 11 years as COVID-19 travel restrictions significantly dented air travel demand but CEO Ed Bastian said he expects 2021 to be the year of recovery.

The Airline company which provides scheduled air transportation for passengers and cargo reported a quarterly adjusted loss of $2.53​​ per share, worse than the Wall Street consensus estimate of $2.47​​ per share loss.

“The current operating environment will remain incredibly challenging as demand fluctuates with COVID-19 headlines & vaccine rollout. The work Delta has done on costs should provide leverage once demand improves. Delta is bullish on a second-half recovery, and there are certainly encouraging signs, but we are cautious near-term as vaccine distribution has been disappointing,” noted Helane Becker, equity analyst at Cowen and Company.

“We are reiterating our Market Perform rating on the common shares of Delta Air Lines. We are maintaining our $44 price target, which is based on 10x 2022E EPS. The air travel industry continues to be depressed by the ongoing coronavirus pandemic and related restrictions.”

The Atlanta-based airline said its revenue slumped 65.3% to $3.97 billion from a year ago​, worse than the market expectations of $3.59 billion. The company reported December quarter 2020 GAAP pre-tax loss of $1.1 billion and loss per share of $1.19 on total revenue of $4.0 billion.

For full-year 2020, the company reported GAAP pre-tax loss of $15.6 billion and loss per share of $19.49 on total revenue of $17.1 billion. Full-year 2020 adjusted pre-tax loss of $9.0 billion and adjusted loss per share of $10.76 on adjusted operating revenue of $15.9 billion.

“While our challenges continue in 2021, I am optimistic this will be a year of recovery and a turning point that results in an even stronger Delta returning to revenue growth, profitability and free cash generation,” said Ed Bastian, Delta’s chief executive officer.

Following this optimism, Delta Airlines shares closed 2.5% higher at $41.47 on Thursday. However, the stock fell more than 30% in 2020.

“Despite the pandemic, we continue to see clear reasons to expect a resounding recovery post-vaccine in both leisure and business travel. We are maintaining our $43 per share fair value estimate for Delta,” said Burkett Huey, equity analyst at Morningstar.

Delta Airlines Stock Price Forecast

Eleven analysts who offered stock ratings for Delta Airlines in the last three months forecast the average price in 12 months at $46.33 with a high forecast of $54.00 and a low forecast of $40.00.

The average price target represents an 11.72% increase from the last price of $41.47. From those 11 analysts, three rated “Buy”, seven rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $55 with a high of $86 under a bull scenario and $29 under the worst-case scenario. The firm currently has an “Overweight” rating on the airlines’ stock.

Several other analysts have also recently commented on the stock. JP Morgan lowered the target price to $49 from $51. Cowen and company cut to market perform from outperform; raises target price to $44 from $36. BofA Global Research raised the price objective to $42 from $38.

In addition, Credit Suisse upped the target price to $47 from $38. UBS raised the target price to $47 from $32. Citigroup upped price objective to $48 from $38. Jefferies initiates with a hold rating and a price target of $40.

Analyst Comments

“4Q results were an expected tough end to a historically bad year for the industry, but a decent 1Q guide and bullish commentary on the call about the potential for a traffic rebound, particularly in corporate, reinforce our bullish view on the Airline space and our OW on Delta Airlines (DAL) as our top Legacy pick,” said Ravi Shanker, equity analyst at Morgan Stanley.

“DAL has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. With ample liquidity, we see limited liquidity risk here. Additionally, we continue to see Delta Airlines’ (DAL) international alliances and partnerships as strategic assets, despite recent writedowns.”

Upside and Downside Risks

Risks to Upside: 1) COVID-19 Vaccine timing. 2) Business Travel Recovery. 3) Industry Rationalization & Fare Stability – highlighted by Morgan Stanley.

Risks to Downside: 1) COVID-19 Second Wave. 2) Slower International Travel Rebound. 3) DAL has a significant underfunded pension liability at 78% funded status.

Check out FX Empire’s earnings calendar

European Equities: Economic Data, U.S Stimulus, and Corporate Earnings in Focus

Economic Calendar:

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was another bullish day for the European majors on Thursday, with the EuroStoxx600 rising by 0.72% to lead the way. The CAC40 and the DAX30 weren’t far behind, with gains of 0.33% and 0.35% respectively.

Concerns over a continued surge in new COVID-19 cases across the EU and beyond took a back seat on the day.

Impressive trade data from China and the hope of a sizeable U.S stimulus package supported the European majors. In December, China reported a 19.1% surge in exports, with imports rising by 6.5%.

While the EuroStoxx600 rose for a 3rd consecutive day, political uncertainty in Italy and extended lockdown measures limited the upside, however.

The Stats

It was a quiet day on the economic calendar. 4th quarter GDP numbers from Germany were in focus in the early part of the session.

In 2020, the German economy contracted by 5%, following growth of just 0.6% from 2019 with interest.

According to Destatis,

  • The contraction in 2020 brought to an end a 10-year period of economic growth for Germany.
  • Compared with the Global Financial Crisis slump of 5.7%, the contraction was only marginally less severe.
  • All economic sectors felt the impact of the COVID-19 pandemic.
  • In industry excluding construction contracted by 9.7% compared with 2019.
  • Household consumption fell by 6.0%, while government final consumption expenditure rose by 3.4%.
  • Gross fixed capital formation fell by 3.5%, with gross fixed capital formation in machinery and equipment sliding by 12.5%.
  • A continuous 14-year upward trend in employment also came to an end in 2020, with employment falling by 1.1%.

On the monetary policy front, the ECB monetary policy meeting minutes provided few surprises, however.

From the U.S

It was a quieter day on the economic calendar. The weekly jobless claims figures were in focus late in the session.

Import and export price figures for December were also released but had a muted impact on the European majors.

In the week ending 8th January, initial jobless claims jumped from 784k to 965k. Economists had forecast an increase to 795k.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Volkswagen rallied by 3.92% to lead the way, with Continental rising by 1.76%. BMW and Daimler saw more modest gains of 1.17% and 1.35% respectively.

It was also a bullish day for the banks. Deutsche Bank rallied by 3.59%, with Commerzbank rising by 1.95%.

From the CAC, it was another mixed day for the banks. BNP Paribas and Soc Gen rose by 0.23% and by 0.63%, while Credit Agricole slid by 1.74%.

It was also a mixed day for the French auto sector. Peugeot rose by 2.42%, while Renault fell by 1.07%.

Air France-KLM rallied by 3.01%, with Airbus SE seeing a 4.65% gain on the day.

On the VIX Index

It was back into the green for the VIX  on Thursday, to mark just the 3rd daily gain in 11 sessions. Reversing a 4.80% gain from Wednesday, the VIX rose by 4.68% to end the day at 23.25.

The NASDAQ and the Dow slipped by 0.12% and by 0.22% respectively, with the S&P500 falling by 0.38%.

Disappointing labor market figures pinned the U.S majors back on Thursday. Expectations of a $1.9tn spending package, however, limited the downside on the day.

Also on the day, FED Chair Powell reassured the markets that there would be no rate hike any time soon or any tapering of its bond purchases.

VIX 150121 Daily Chart

The Day Ahead

It’s relatively busy day ahead on the economic calendar. Key stats include Eurozone trade data and finalized inflation figures from France and Spain.

Expect finalized December inflation figures to have a muted impact on the majors.

From the U.S, retail sales, industrial production, and consumer sentiment figures will influence late in the session.

Away from the economic calendar, COVID-19 news and vaccination rates and Italian politics will remain in focus along with chatter from Capitol Hill.

Corporate earnings will also garner interest later today, with Citigroup, JPMorgan Chase, and Wells Fargo scheduled to release earnings.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 26 points, with the DAX down by 24 points.

For a look at all of today’s economic events, check out our economic calendar.

Asset Manager BlackRock’s Earnings Beat Wall Street Estimates; Target Price $890

The world’s largest asset manager BlackRock reported better-than-expected earnings in the fourth quarter with 11% increase in full-year revenue reflecting strong organic growth, record performance fees and 17% growth in technology services revenue.

The New York-based multinational investment management corporation reported net income of $10.18 per share, beating the Wall Street estimate of $9.17.

“The EPS beat reflected a combination of better than expected revenues across most segments (led by perf fees), as well as several favourable below the line items. Adj op income came in +$92M vs our est. Long-term flows of +$116.2B were in line with our estimate with solid contributions from most active segments. The base fee rate declined 0.15 bps q/q, mostly due to lower sec lending and MM fee waivers,” said Daniel T. Fannon, equity analyst at Jefferies.

“This is the second quarter in a row of solid revenues, with a record annualized base fee growth of +13% in the period. The trends inflows remain broad-based and dominated by strength across the active segments as well as in iShares. The biggest positive on the quarter is the continued positive contribution from Active Equity and Active Fixed Income flows.”

However, upbeat earnings did not help BlackRock’s shares, which traded 3% lower at $756.04 on Thursday. The stock rose more than 40% in 2020.

BlackRock Stock Price Forecast

Six analysts who offered stock ratings for BlackRock in the last three months forecast the average price in 12 months at $791.33 with a high forecast of $890.00 and a low forecast of $602.00.

The average price target represents a 4.12% increase from the last price of $760.00. From those six analysts, five rated “Buy”, one rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $890 with a high of $1,338 under a bull scenario and $413 under the worst-case scenario. The firm currently has an “Overweight” rating on the investment manager’s stock.

Several other analysts have also recently commented on the stock. ValuEngine lowered shares of BlackRock from a hold rating to a sell rating. BMO Capital Markets upped their price objective to $602 from $594 and gave the company a market perform rating. Deutsche Bank upped their price objective to $802 from $795 and gave the company a buy rating.

In addition, Wells Fargo & Company upped their price objective to $805 from $700 and gave the company an overweight rating. At last, Citigroup upped their price objective to $800 from $690 and gave the company a buy rating.

Analyst Comments

“We believe BlackRock (BLK) is best positioned on the asset mgmt barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive 14% EPS CAGR (2020-22e) via 5% avg LT organic growth & continued op margin expansion,” said Simeon Gutman, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. We expect the premium to widen as BLK takes share in the midst of market dislocation and executes on improving organic revenue growth trajectory.”

Upside and Downside Risks

Risks to Upside: 1) Growth in highly scalable iShares franchise driving margin expansion and strong EPS growth. 2) Further growth in tech & high fee products such as alts, active equities, and multi-asset – highlighted by Morgan Stanley.

Risks to Downside: 1) Market share loss in ETFs; lack of positive op leverage in declining markets. 2) Worse than expected base fee pressure through pricing initiatives or mix shift. 3) Greater regulatory scrutiny; liquidity challenges in products.

Other major banks will report their quarterly earnings on Friday.

Check out FX Empire’s earnings calendar

Nordstrom Shares Slump About 3% on Disappointing Holiday Season Sales

Seattle-based luxury department store chain Nordstrom said net sales declined nearly 22% in the nine-week holiday season as shoppers avoided department stores due a fresh spike in COVID-19 cases, sending its shares down about 3% in extended trading on Wednesday.

However, digital sales surge 23% over last year and represented 54% of total sales compared with 34% from the same period in fiscal 2019. The specialty retailer forecasts to deliver positive earnings before interest and taxes (EBIT) and operating cash flow for the fourth quarter.

“We expect the consensus 2020 EPS estimate to fall about 9% on today’s release (about -32c lost on the full year as the 46c Street 4Q estimate likely falls to about 14c as implied by y/y EBIT margin contraction). On the positive side, holiday-related headwinds that impacted the quarter likely abate going forward,” wrote Kimberly Greenberger, equity analyst at Morgan Stanley.

“We slightly lower our 4Qe EBIT margin estimate to be in-line with management’s -500 bps y/y forecast. More specifically, we marginally lower both 4Q gross margin and SG&A rate by 15 bps each due to the aforementioned headwinds, yielding -500 bps y/y EBIT margin (2.3% vs. 2.6% prior).”

Following this announcement, Nordstrom shares fell about 3% to $36.5 in extended trading on Wednesday; the stock plunged over 20% in 2020.

Nordstrom will hold an analyst event on Feb. 4 and report its full earnings on March 2. We expect to update our model and analysis after these events, although we do not anticipate any significant changes to our long-term view or valuation. The firm is likely to report an EPS loss of more than $4.00 for 2020, but we forecast positive EPS in 2021 (our current expectation is $1.57),” said David Swartz, equity analyst at Morningstar.

“In the long term, we forecast revenue growth and operating margins of about 2% and 5%, respectively. We view Nordstrom as fully valued as its shares trade at a slight premium to our per share fair value estimate of $33.50.”

Nordstrom Stock Price Forecast

Eleven analysts who offered stock ratings for Nordstrom (JWN) in the last three months forecast the average price in 12 months at $24.00 with a high forecast of $35.00 and a low forecast of $11.00. The average price target represents a -36.14% decrease from the last price of $37.58. From those 11 analysts, two rated “Buy”, seven rated “Hold” and two rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $19 with a high of $35 under a bull scenario and $10 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the specialty retailer’s stock.

Several other analysts have also recently commented on the stock. Credit Suisse raised the target price to $39 from $26. Keybanc upped the price objective to $42 from $35. Wedbush increased the stock price forecast to $35 from $17. In November, Nordstrom had its target price lifted by Telsey Advisory Group to $28 from $24. Zacks Investment Research upgraded Nordstrom from a sell rating to a hold rating and set a $17 price target.

Analyst Comments

“Secular Challenges Eclipse Nordstrom’s (JWN) Strengths: JWN’s standout service, competitive pricing, coveted product, and seamless multichannel shopping experience differentiate JWN from department store peers and should stay relevant L-T, especially as high-end consumers kick start spending again,” Morgan Stanley’s Greenberger added.

“However, department store margins appear in secular decline, largely driven by channel shift to lower margin eCommerce sales, and JWN is not immune. Although we think JWN can remain highly relevant, its future earnings growth rate appears limited.”

Upside and Downside Risks

Risks to Upside: 1) Strength at the high end causes a meaningful rebound in-store comps and eComm. 2) EBIT margins stabilize after multi-year declines. 3) Capital spending on IT/Tech decelerates, potentially allowing JWN to drive expense leverage on a 1-2% comp. 4) Rack.com proves resilient– highlighted by Morgan Stanley.

Risks to Downside: 1) 2020 COVID-19/recession impact more severe than anticipated. 2) CECL has a greater impact than forecasted to credit revenue.

Check out FX Empire’s earnings calendar

European Equities: ECB Policy Meeting Minutes, U.S Stats, and COVID-19 in Focus

Economic Calendar:

Thursday, 14th January

ECB Monetary Policy Meeting Minutes

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was a relatively bullish day for the European majors on Wednesday. The CAC40 rose by 0.21%, with the DAX30 and the EuroStoxx600 both gaining 0.11%.

Concerns over a continued surge in new COVID-19 cases across the EU and beyond pegged the majors back mid-week.

A continued rise and low vaccination rate across the EU, in particularly, raised the threat of an extended lockdown period.

An extended lockdown period would further delay any economic recovery. The negative sentiment weighed on bank stocks, as well as the auto sector and travel stocks.

In spite of the doom and gloom, Carrefour delivered the upside for the CAC40, with a 13.42% jump on the day. News of a possible takeover by Alimentation Couche-Tard led to the breakout.

The Stats

It was a relatively quiet day on the economic calendar. Industrial production figures for the Eurozone were out in the early part of the European session.

In November, industrial production rose by 2.5%, month-on-month, following a 2.3% increase in October.

According to Eurostat,

  • Production of capital goods rose by 7.0% and intermediate goods by 1.5%.
  • By contrast, production of durable consumer goods fell by 1.2%, non-durable consumer goods by 1.7%, and energy by 3.9%.
  • Ireland registered a 52.8% surge in production to lead the way, with Greece recording a 6.3% rise in production.
  • Portugal and Belgium saw production fall by 5.1% and by 3.5% to lead the way down, however.
  • Year-on-year, industrial production fell by 0.6%.

On the monetary policy front, ECB President Lagarde was also in focus mid-week. Lagarde stated that the ECB will be paying close attention to the FX impact on prices. The ECB President was careful to point out, however, that the ECB will monitor and not target FX movements.

From the U.S

It was a busier day on the economic calendar. December inflation figures were in focus.

Core consumer prices rose by 0.1% in December, month-on-month, following a 0.2% increase in November. The annual rate of core inflation held steady at 1.6% in December.

Month-on-month, consumer prices rose by 0.4%, following a 0.2% increase in November.

The stats were in line with economic forecasts.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. BMW and Daimler fell by 1.32% and by 1.38% respectively. Continental and Volkswagen saw relatively modest losses of 0.50% and 0.28% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day down by 0.46% and by 0.49% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole fell by 0.69% and by 0.52% respectively, while Soc Gen rose by 0.07%.

It was a bearish day for the French auto sector, however. Peugeot fell by 0.62%, with Renault sliding by 2.93%.

Air France-KLM fell by 0.81%, with Airbus SE ending the day down by 0.94%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Wednesday, marking an 8th day in the red from 10 sessions. Following on from a 3.11% decline on Tuesday, the VIX fell by 4.8% to end the day at 22.21.

The NASDAQ and the S&P500 rose by 0.43% and by 0.23% respectively, while the Dow slipped by 0.03%.

VIX 140121 Daily Chart

The Day Ahead

It’s another relatively quiet day ahead on the economic calendar. Full-year GDP figures are due out of Germany.

The markets are expecting dire numbers, however, which should limit the impact on the majors. On Wednesday, ECB President stood by the ECB forecasts for 2020 and 2021.

Later in the day, the ECB Monetary Policy meeting minutes will draw some attention.

From the U.S, the weekly jobless claims figures will provide direction later in the session.

Ahead of the European session, trade data from China will set the tone.

Away from the economic calendar, COVID-19 news and vaccination rates will remain a key driver along with chatter from Capitol Hill.

From Italy, another government coalition in crisis will also be a concern amidst the COVID-19 pandemic.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 77 points, with the DAX up by 38 points.

For a look at all of today’s economic events, check out our economic calendar.

Target Corp Sales Surge Over 17% in Holiday Season; Target Price $211

The eighth-largest retailer in the United States Target Corp said comparable sales in holiday period grew more than 17%, driven largely by a 4.3% increase in traffic and a 12.3% increase in average ticket.

The retail corporation said its store-originated comparable sales grew over 4%, while comparable digital sales doubled.

Target Corp shares closed about 2% higher at $199.10 on Tuesday; the stock rose 40% in 2020.

“Shares of Target have increased and outperformed the industry in the past six months. The company has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide seamless hopping experience. Markedly, the company has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail and scape,” noted analysts at ZACKS Research.

“Target’s impressive third-quarter fiscal 2020 performance is the testimony of the same, wherein both the top and the bottom lines grew year-over-year. Notably, comparable sales rose for the 14th straight quarter, gaining from strength in the digital channel as consumers shift to online shopping amid coronavirus-led social distancing. Target witnessed sturdy market-share gains in all five core merchandise categories”

Target Corp Stock Price Forecast

Nineteen analysts who offered stock ratings for Target Corp in the last three months forecast the average price in 12 months at $194.83 with a high forecast of $211.00 and a low forecast of $175.00. The average price target represents a -2.14% decrease from the last price of $199.10. From those 19 analysts, 14 rated “Buy”, five rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $180 with a high of $225 under a bull scenario and $125 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the mass-market retail company’s stock.

Several other analysts have also recently commented on the stock. Credit Suisse raised the target price to $211 from $192. Goldman Sachs upped the target price to $212 from $194. Target had its target price increased by Raymond James to $200 from $180. They currently have a strong-buy rating on the retailer’s stock.

In addition, MKM Partners upgraded shares of Target from a sell rating to a neutral rating and increased their price target for the stock to $156 from $127. Telsey Advisory Group reaffirmed an outperform rating and set a $175 target price. At last, Jefferies Financial Group started coverage and set target price at $180.00.

Analyst Comments

“Target Corp (TGT) has firmly established itself as a winner in Retail and deserves a premium multiple vs. historical valuations. Although the business is delivering strong results, we believe the stock price already reflects high expectations,” said Simeon Gutman, equity analyst at Morgan Stanley.

“We see a positive risk/reward skew but think results will moderate and the stock path may be uneven, keeping us Equal-weight.”

Upside and Downside Risks

Risks to Upside: 1) A sustained pickup in comps. 2) Less gross margin pressure/more expense leverage than anticipated. 3) Step up in buybacks boosts EPS growth. 4) A new real estate monetization strategy– highlighted by Morgan Stanley.

Risks to Downside: 1) Comps moderate as TGT laps tough compares. 2) Disappointing GM trajectory due to greater than anticipated headwinds from the digital mix shift, negative category mix shift, and markdowns. 3) High expense growth due to wage inflation.

Deutsche Post Shares Gain on Strong Profit Outlook; Target Price EUR 53

The world’s largest courier company Deutsche Post forecasts operating profits to grow this year and next after recording more than 50% jump in the last quarter as the coronavirus pandemic drove a massive shift towards e-commerce deliveries.

German multinational package delivery and supply chain management company forecasts EBIT to further grow in 2021 from the underlying base in 2020 of around EUR 5.4 billion. Moreover, the company’s EBIT for 2022 is expected to be above 2021.

The outlook for the aggregated free cash flow for the period 2020 to 2022 is revised to more than EUR 6 billion, up from the previous EUR 5.0 – 6.0 billion. The total gross capex for the period is now expected to be at around EUR 9.5 billion.

The courier company said it will provide a detailed outlook for the years 2021 and 2023 when it releases its comprehensive consolidated annual results on March 9.

Deutsche Post shares closed 2.15% higher at €41.83 on Tuesday; the stock rose about 20% in 2020.

“We think the positive share reaction to DPDHL’s beat in 4Q and upgraded guidance up to 2022 is justified: the group pre-announced 4Q results with 11% 4Q EBIT beat vs Bloomberg consensus, and new FY21 outlook implies a 4% upgrade to FY21 consensus expectations,” noted Rasika Sankpal, equity analyst at Morgan Stanley.

“While FY22 outlook has also been upgraded (to above EUR5.4bn, vs upper range at above EUR5.3bn previously), this is already in line with consensus. EBIT upgrade is also driving higher FCF, which is reassuring.”

Deutsche Post Stock Price Forecast

Sixteen analysts who offered stock ratings for Deutsche Post in the last three months forecast the average price in 12 months at €45.60 with a high forecast of €53.00 and a low forecast of €37.50.

The average price target represents a 9.21% increase from the last price of €41.76. From those 16 analysts, 14 rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of €37.5 with a high of €51.5 under a bull scenario and €21 under the worst-case scenario. The firm currently has an “Overweight” rating on the courier company’s stock.

Several other analysts have also recently commented on the stock. Deutsche Post AG received a €50.00 price objective from research analysts at Sanford C. Bernstein. JP Morgan set a €49.52 price target and gave the stock a “buy” rating. Barclays set a €47 target price and gave the company a “buy” rating.

In addition, UBS Group set a €45.00 price target and gave the company a “buy” rating. Warburg Research set a €40 price objective and gave the stock a “neutral” rating. At last, Baader Bank set a €40 target price and gave the company a “buy” rating.

Analyst Comments

“The group outlined several productivities and cost control measures at P&P and progress has been made over the year, providing conviction that management is on track. Reiteration of FY20 group EBIT targets at the CMD underscores support for the mid-term FCF profile and valuation attractions,” Morgan Stanley’s Sankpal added.

“DHL is a solid business with a return on capital substantially above its cost of capital. Margins still have room to grow toward best-in-class levels, but capital employed, and contract structures could limit the full closure of the gap. DP’s P/E multiples still lag leading peers in each business unit, indicating there is more room for upside in every business.”

Upside and Downside Risks

Risks to Upside: 1) Pricing Power. 2) Cost Control. 3) Increased efficiencies. 4) Working capital management– highlighted by Morgan Stanley.

Risks to Downside: 1) Global trade risks. 2) GDP growth slowdown. 3) Wage inflation. 4) In addition, DP could be subject to regulatory reviews that impact operations and cash flows.

Check out FX Empire’s earnings calendar

European Equities: Eurozone Industrial Production and COVID-19 in Focus

Economic Calendar:

Wednesday, 13th January

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Nov)

Thursday, 14th January

ECB Monetary Policy Meeting Minutes

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was a mixed day for the European majors on Tuesday, with the DAX30 and CAC40 falling by 0.08% and by 0.20% respectively. The EuroStoxx600 recovered from early losses to the back day up by 0.05%.

Concerns over the continued rise in new COVID-19 cases and low vaccination rates across the Eurozone pinned back the majors.

Hopes of an economic recovery were evident, however, with autos, banks, and travel stocks amongst the front runners.

The Stats

It was a particularly quiet day on the economic calendar. There were no material stats to provide the majors with direction on the day.

From the U.S

It was a quiet day on the economic calendar. JOLTs job openings for November were in focus late in the European session.

In November, JOLTs job openings fell from 6.632m to 6.527m. With the U.S struggling to bring the COVID-19 pandemic under control, however, the numbers had a muted impact on the European majors.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Continental rallied by 3.19% to lead the way, with BMW and Daimler gaining 1.25% and 1.28% respectively. Volkswagen saw a more modest 0.10% rise on the day.

It was also a bullish day for the banks. Deutsche Bank rose by 1.00, with Commerzbank gaining 1.43%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rose by 0.80% and by 0.57% respectively, with Credit Agricole gaining 1.28%.

It was also a bullish day for the French auto sector. Peugeot rallied by 3.13%, with Renault rising by 1.74%.

Air France-KLM rallied by 3.57%, with Airbus SE eking out a 0.20% gain.

On the VIX Index

It was back into the red for the VIX on Tuesday, marking a 7th day in the red from 9 sessions. Partially reversing an 11.69% gain from Monday, the VIX fell by 3.11% to end the day at 23.33.

With economic data limited to JOLTs job openings, the U.S equity markets avoided another day in the red. Support came in spite of lingering concerns over the continued rise in new COVID-19 cases.

While hopes of significant stimulus remained positive for riskier assets, there was also some apprehension ahead of earnings season.

The NASDAQ rose by 0.28%, with the Dow and the S&P500 ending the day with gains of 0.19% and by 0.04% respectively.

VIX 130121 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the economic calendar. Industrial production figures for the Eurozone are due out in the early part of the session.

Following impressive figures from Germany last week and a pickup in Manufacturing sector activity, the numbers should have a limited impact on the majors.

From the U.S, inflation figures for December are due out. Barring particularly dire numbers, however, the stats should also have limited impact on the majors.

Progress towards Eurozone-wide vaccinations and hopes of more fiscal stimulus support from the U.S should leave the markets in forgiving mood.

On the monetary policy front, however, ECB President Lagarde could move the dial in a scheduled speech early in the session.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 5 points.

For a look at all of today’s economic events, check out our economic calendar.

Pfizer’s 2021 Earnings to be $3-3.10 Per Share, Says CEO Bourla

The world’s largest pharmaceutical company Pfizer is likely to post this year’s earnings in the range of $3 to $3.10 per share, according to chief executive officer Albert Bourla, speaking at a JP Morgan healthcare conference, Reuters reported.

That is also in line with the market expectations of $3.07 per share.

The company which ranked 64th on the 2020 Fortune 500 list of the largest United States corporations by total revenue, is expected to report its fourth-quarter earnings on February 2, 2021.

“We expect $39 billion in COVID-19 vaccine sales in 2021, and we see Pfizer/BioNTech dominating the vaccine market with nearly $14 billion in 2021 sales,” wrote Karen Andersen, sector strategist at Morningstar.

“Although we remain skeptical  of  AstraZeneca’s  ability  to  penetrate  the  U.S. market due to mixed phase 3 data so far, we assume the U.S. will see sufficient supply from Pfizer/BioNTech, Moderna, Novavax (70% probability), and Johnson & Johnson (50% probability)  to  achieve  herd  immunity  by  mid-2021.”

At the time of writing, Pfizer shares traded about 2% lower at $37.05 on Tuesday; the stock fell about 1% in 2020.

Pfizer Stock Price Forecast

Eleven analysts who offered stock ratings for Pfizer in the last three months forecast the average price in 12 months at $42.09 with a high forecast of $53.00 and a low forecast of $36.00.

The average price target represents a 13.97% increase from the last price of $36.93. From those eleven analysts, three rated “Buy”, eight rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $40 with a high of $48 under a bull scenario and $33 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the pharmaceutical company’s stock.

Several other analysts have also recently commented on the stock. Pfizer has been given a $40.00 target price by analysts at The Goldman Sachs. The firm currently has a “neutral” rating. Truist began coverage and issued a “buy” rating with $42.00 price target on the stock. Mizuho raised their price target to $44 from $43 and gave the company a “buy” rating.

In addition, BidaskClub cut shares of Pfizer to a “strong sell” rating from a “sell”. Barclays raised their price target to $37 from $35 and gave the company an “equal weight” rating. At last, Atlantic Securities cut shares to a “neutral” rating from an “overweight” rating and dropped their price target to $39 from $44.

Analyst Comments

“We project solid growth prospects, and the company’s COVID-19 vaccine offers significant accretion potential in 2021. But we expect COVID-19 vaccine sales and profits to decline significantly in 2022 and 2023,” noted David Risinger, equity analyst at Morgan Stanley.

“Pfizer’s dividend is set to adjust down in spring 2021 when Viatris begins paying a dividend. Pipeline execution will be key to investor perception, given late-decade patent expiration exposure.”

Upside and Downside Risks

Risks to Upside: Upside risks are COVID-19 vaccine sales above expectations, competitors’ vaccines less efficacious, core business financial upside, positive pipeline developments, and encouraging strategic action– highlighted by Morgan Stanley.

Risks to Downside: Downside risks are COVID-19 vaccine disappointments, core business shortfalls, pipeline disappointments, disappointing strategic action, and negative US drug pricing developments.

Check out FX Empire’s earnings calendar

Apparel Retailer Abercrombie’s Shares Soar After Sales Outlook Upgrade; Target Price $28

Ohio-based apparel retailer Abercrombie & Fitch’s shares soared on Monday after the company said net sales would decline lower than previously expected as strong digital sales offset store closures and capacity restrictions in North America and EMEA due to the COVID-19 pandemic.

The company, which owns the Hollister apparel brand, forecasts net sales to decline between 5% to 7%, better than the previous estimate of 5%-10%. Gross profit rate to be up at least 130 basis points to last year’s 58.2% versus plan of flat to up slightly, benefiting from reduced depth and breadth of promotions and markdowns relative to plan and to last year, the company said in the statement.

Abercrombie said operating expense, excluding other operating income, to be down at least 2% from fiscal 2019 adjusted non-GAAP operating expense of $566 million, reflecting savings in-store expenses due to closures and the recognition of rent abatements. This compares to plan of up 1% to 2%.

Following this, Abercrombie & Fitch shares surged over 7% to $23.04 on Monday; the stock rose about 20% in 2020.

Abercrombie & Fitch Stock Price Forecast

Eight analysts who offered stock ratings for Abercrombie & Fitch in the last three months forecast the average price in 12 months at $22.63 with a high forecast of $28.00 and a low forecast of $14.00.

The average price target represents a -1.78% decrease from the last price of $23.04. From those eight analysts, two rated “Buy, four rated “Hold” and two rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $14 with a high of $26 under a bull scenario and $7 under the worst-case scenario. The firm currently has an “Underweight” rating on the apparel retailer’s stock.

Several other analysts have also recently commented on the stock. Bank of America increased their price objective on shares of Abercrombie & Fitch to $18 from $9 and gave the company an underperform rating. B. Riley upped their target price to $27 from $22 and gave the company a buy rating.

In addition, Citigroup upped their target price on shares to $28 from $20. At last, Robert W. Baird upped their target price to $24 from $14 and gave the company a neutral rating.

Analyst Comments

“Shares of Abercrombie have outpaced the industry in the past six months. Markedly, the company is gaining from efficient expense management actions. This aided bottom-line growth during third-quarter fiscal 2020. Adjusted earnings surpassed the Zacks Consensus Estimate and also improved year-on-year. Moreover, gross margin witnessed considerable expansion,” noted analysts at ZACKS Research.

“Additionally, the company is gaining from strong digital sales, backed by higher traffic. This along with store optimization plans is likely to be an upside in the near term. Nevertheless, the coronavirus pandemic has been taking a toll on the company’s top line. Markedly, sales fell during the third quarter mainly due to soft traffic trends. Revenues were dismal across both Hollister and Abercrombie brands. Management expects such trends to persist in the fourth quarter as well.”

Upside and Downside Risks

Risks to Upside: Hollister US market share gains accelerate from teen apparel store closures. Square footage optimization boosts 4-wall profitability. The pursuit of strategic alternatives or ASR supports the share price – highlighted by Morgan Stanley.

Risks to Downside: COVID-19 prompts US mall traffic to decelerate below the -4% long-term average decline. Increased international outlays yield no revenue benefit. Tariff hikes offset supply chain optimization.

Check out FX Empire’s earnings calendar

European Equities: Futures Point Northwards with no Economic Data to Influence

Economic Calendar:

Wednesday, 13th January

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Nov)

Thursday, 14th January

ECB Monetary Policy Meeting Minutes

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was a bearish start to the week for the European majors, with the DAX30 falling by 0.80% to lead the way down. The CAC40 and EuroStoxx600 weren’t far behind, with losses of 0.78% and 0.67% respectively.

A lack of economic data left COVID-19 in focus.

Across the EU, low vaccination rates and a spike in new COVID-19 cases, in spite of containment measures, weighed.

In China, reports of a spike in new COVID-19 cases added to the market angst on the day.

The Stats

It was a particularly quiet day on the economic calendar. There were no material stats to provide the majors with direction at the start of the week.

From the U.S

It was also a particularly quiet day on the economic calendar, with no material stats to influence following last week’s data dump.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. BMW and Continental slid by 2.06% and by 2.64% respectively. Daimler and Volkswagen saw more modest losses of 0.95% and 1.10% respectively.

It was a bullish day for the banks, however. Deutsche Bank rose by 0.42%, with Commerzbank rallying by 2.12%.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 0.67%, with Credit Agricole and Soc Gen declining by 1.36% and by 1.35% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault ended the day with losses of 1.59% and 1.02% respectively.

Air France-KLM fell by 1.52%, with Airbus SE ending the day down by 0.36%.

On the VIX Index

A run of 4 consecutive days in the red came to an end for the VIX on Monday, marking just a 2nd day in the green from 8 sessions. Reversing a 3.62% fall from Friday, the VIX rose by 11.69% to end the day at 24.08.

Market reaction to the continued rise in COVID-19 cases and low vaccination rates weighed on riskier assets at the start of the week.

The NASDAQ slid by 1.25%, with the Dow and the S&P500 falling by 0.29% and by 0.66% respectively.

VIX 120121 Daily Chart

The Day Ahead

It’s another quiet busy day ahead on the economic calendar, with no material stats due out of the Eurozone to provide direction.

From the U.S, JOLTs job openings are due out. Barring particularly dire numbers, however, the numbers will likely have a muted impact on the European majors.

The markets are in forgiving mood on the data front, with COVID-19 vaccines and fiscal stimulus expected to reboot the economy.

The lack of stats will, therefore, leave the majors in the hands of Capitol Hill and COVID-19 vaccine news.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 43 points, with the DAX up by 51 points.

For a look at all of today’s economic events, check out our economic calendar.

Gilead Sciences Upgrades 2020 Earnings Forecast on Strong Demand for Remdesivir

The U.S. drugmaker Gilead Sciences revised its full-year 2020 profit guidance as the second wave of coronavirus infections boosted the demand of Remdesivir, an antiviral agent that scientists initially designed to treat Ebola, also, beneficial for COVID-19 treatment.

The California-based biopharmaceutical company said it has upgraded their total product sales guidance range to the range $24.30 billion to $24.35 billion, reflecting increased remdesivir sales as hospitalization and treatment rates were higher than expected given the most recent COVID-19 surge.

The commercial-stage biotechnology company forecasts adjusted earnings to $6.98-$7.08 per share, up from a previous forecast of $6.25- $6.60 per share.

At the time of writing, Gilead Sciences shares traded 0.66% lower at $62.62 on Monday; the stock fell 10% in 2020.

Analyst Comments

Gilead Sciences (GILD) pre-announced a positive Q4 driven mostly by Remdesivir (RemD) as the value remains high. Bottom line is based on our conversations w/ mgmt, the co is confident about growth in 2021 and beyond. ’21 Guidance should be OK (or conservative) and separating out RemD will also show growth of underlying biz. GILD should generally move back up in 2021 on improving sentiment and also on new data this year,” said Michael J. Yee, equity analyst at Jefferies.

“For 2021, we could see GILD guide EPS $6.00-7.00 vs cons $6.57, with RemD and expenses as key swing factors – with the key issue that RemD is a wide range. We raised our H1:21 RemD estimates by $1 billion, which brings total 2021 RemD to $2.5 billion, given Q4:20 sales were strong and COVID-19 vaccines are just being rolled out. We raised our EPS from $5.74 to $6.15 but acknowledge RemD could be a wide range. Overall, the key message is 2021 should be fine and defined as a success if numbers are in-line but NEW clinical datasets read out positive from IMMU, RCUS, and FTSV (filing to FDA already in 2021 on MDS with CD47 drug),” J. Yee added.

Gilead Sciences Stock Price Forecast

Twenty-three analysts who offered stock ratings for Gilead Sciences in the last three months forecast the average price in 12 months at $73.94 with a high forecast of $100.00 and a low forecast of $61.00.

The average price target represents a 17.44% increase from the last price of $62.96. From those 23 analysts, ten rated “Buy, twelve rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $67 with a high of $88 under a bull scenario and $35 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the biotechnology company’s stock.

Several other analysts have also recently commented on the stock. Redburn Partners assumed coverage on Gilead Sciences and issued a “neutral” rating on the stock. Credit Suisse Group reduced their target price to $65 from $70 and set a “neutral” rating on the stock.

In addition, SVB Leerink reduced their target price to $79 from $88 and set an “outperform” rating on the stock. Truist Financial cut their price target to $62 from $67. At last, UBS Group assumed coverage and set a “neutral” rating and a $61 price target on the stock.

Upside and Downside Risks

Risks to Upside: Better than expected pipeline success on key late-stage drugs – highlighted by Morgan Stanley.

Risks to Downside: Failure of Trodelvy to achieve significant market penetration & failure to meaningfully expand label. Unexpected competition in HIV. Failure of CAR-T to achieve significant market penetration & failure to meaningfully expand CAR-T label. Significant delays with regulatory progress for JAK inhibitor filgotinib.

Check out FX Empire’s earnings calendar

Morgan Stanley Raises BlackRock’s Target Price to $890 Ahead of Earnings; Forecasts Q4 EPS of $8.89

Morgan Stanley raised their stock price forecast of the world’s largest asset manager BlackRock to $890 from $750 and said supportive financial market backdrop and improving flows trajectory lift fund NAVs and should continue to lead broad-based upward estimate revisions.

BlackRock to report its fourth-quarter 2020 earnings on Thursday, January 14, where the global investment manager is expected to report a profit of $8.66 per share, which represents a year-over-year change of more than +3%, with revenues forecast to grow over 7% year-over-year to $4.27 billion. Morgan Stanley gave a forecast of $8.89 per share.

“For BlackRock (BLK), our estimates are +3% above cons EPS / +2% above cons operating income for the quarter, and see prospects for BLK to surprise on better flows and particularly, flows into higher fee categories that should support organic base fee growth and overall fee rate leading to prospects for upward estimate revisions,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“We’re looking for +6.8% organic growth in 4Q, which is +200bps above consensus of +4.8% org growth. A resurgence in equity ETFs inflows, continued strength in active equities and momentum of ESG flows could be supportive to both flows and fee rate.”

Morgan Stanley gave a base target price of $890 with a high of $1,338 under a bull scenario and $413 under the worst-case scenario. The firm currently has an “Overweight” rating on the asset manager’s stock.

Other equity analysts also recently updated their stock outlook. Jefferies raised the target price to $868 from $816. JP Morgan upped their stock price forecast to $793 from $707. Deutsche bank increased price objective to $835 from $802.

In addition, Citigroup raised their target price on shares of BlackRock to $800 from $690 and gave the company a “buy” rating. Wells Fargo raised their target price to $805 from $700 and gave the company an “overweight” rating.

Nine analysts who offered stock ratings for BlackRock in the last three months forecast the average price in 12 months at $755.00 with a high forecast of $835.00 and a low forecast of $602.00. The average price target represents a -0.19% decrease from the last price of $756.45. From those nine equity analysts, eight rated “Buy”, one rated “Hold” and none rated “Sell”, according to Tipranks.

BlackRock’s shares closed about 1% higher at $756.45 on Friday; however, the stock rose more than 40% in 2020.

“We believe BlackRock is best positioned on the asset management barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive 10% EPS CAGR (2020-22e) via 5% average long-term organic growth & continued op margin expansion. We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US,” Morgan Stanley’s Cyprys added.

“We expect the premium to widen as BlackRock takes share in the midst of market dislocation and executes on improving organic revenue growth trajectory.”

Check out FX Empire’s earnings calendar

European Equities: Capitol Hill and U.S Stimulus and COVID-19 in Focus

Economic Calendar:

Monday, 11th January

ECB President Lagarde Speaks

Wednesday, 13th January

ECB President Lagarde Speaks

Eurozone Industrial Production (MoM) (Nov)

Thursday, 14th January

ECB Monetary Policy Meeting Minutes

Friday, 15th January

French CPI (MoM) (Dec) Final

French HICP (MoM) (Dec) Final

Spanish CPI (YoY) (Dec) Final

Spanish HICP (YoY) (Dec) Final

Eurozone Trade Balance (Nov)

The Majors

It was a bullish end to the week for the European majors on Friday. The CAC40 and EuroStoxx600 rose by 0.66% and by 0.65% respectively, with the DAX30 gaining 0.58%.

Economic data from Germany coupled with hopes of further U.S stimulus supported demand for riskier assets.

While Germany’s trade surplus narrowed, both imports and exports rose by more than expected in November.

Coupled with a rise in factory orders and industrial production and a pickup in manufacturing sector activity, the stats painted a positive outlook.

From the U.S, disappointing economic data had a muted impact on the majors.

The Stats

It was a relatively busy day on the economic calendar. German industrial production and trade figures, together with French consumer spending were in focus.

In November, industrial production rose by 0.9%, following a 3.4% jump in October. Economists had forecast a 0.7% increase.

According to Destatis,

  • Production in industry excluding energy and construction rose by 1.2%.
  • Within industry, the production of intermediate goods increased by 2.4%, with the production of capital goods up by 1.3%.
  • The production of consumer goods fell by 1.7%.
  • Outside of industry, energy production was down by 3.9%, while the production in construction increased by 1.4%.
  • Compared with February 2020, production in November was 3.8% lower.

Germany’s trade surplus narrowed from €18.2bn to €16.4bn in November.

According to Destatis,

  • Exports were up 2.2%, and imports 4.7% on October 2020.
  • Germany exported goods to the value of €111.7bn and imported goods to the value of €94.6bn compared with Nov-19.
  • Compared with Nov-19, exports declined by 1.3%, and imports by 0.1%.
  • Exports to EU countries fell by 1.7%, while imports grew by 2.6%, compared with Nov-19.
  • To Euro area countries, exports fell by 2.2%, while imports from Euro countries rose by 0.5%.
  • Exports to non-EU countries fell by 0.9% compared with Nov-19, with imports sliding by 3.2%.
  • Compared with Nov-19, exports to the UK increased by 6.6%, while imports from the UK slid by 9.7%.

From France, consumer spending disappointed, with spending tumbling by 18.9%. In October, spending had risen by 3.9%.

According to Insee.fr,

  • Purchases of manufactured goods slumped by 30.1%.
  • Spending on textile-clothing more than halved. A 53% fall was attributed to a slump in spending on clothing & footwear.
  • Energy expenditure slid by 19.2%, with food consumption falling by a more modest 5.8%.
  • Compared with November 2019, household consumption expenditure on goods was 17.1% lower.

From the Eurozone, unemployment figures for the Eurozone provided support, with the unemployment rate falling from 8.4% to 8.3%.

According to Eurostat, the Eurozone’s unemployment rate had stood at 7.4% in November 2019.

From the U.S

It was a busy day on the economic calendar, with nonfarm payrolls in focus.

In December, nonfarm payrolls fell by 140K in December, partially reversing a 336k rise from November.

In spite of the decline, the unemployment rate held steady at 6.7%, with the participation rate holding steady at 61.5%.

A sharp pickup in hourly earnings was of little comfort at the end of the year. In December, average hourly earnings rose by 0.8%, following a 0.3% increase in November.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. BMW and Volkswagen fell by 1.11% and by 1.28% respectively, with Daimler declining by 0.31%. Continental bucked the trend, however, rising by 0.93%.

It was also a mixed day for the banks. Deutsche Bank rose by 0.17%, while Commerzbank slid by 4.24%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen slid by 2.21% and by 2.01% respectively, with Credit Agricole declining by 0.74%.

It was also a bearish day for the French auto sector. Peugeot fell by 2.17%, with Renault sliding by 4.00%.

Air France-KLM fell by 1.0%, while Airbus SE bucked the trend, rising by 0.54%.

On the VIX Index

It was a 4th consecutive day in the red the VIX on Friday, marking a 6th day in the red from 7 sessions. Following on from a 10.77% slide on Thursday, the VIX fell by 3.62% to end the day at 21.56.

The NASDAQ rallied by 1.03%, with the Dow and the S&P500 rising by 0.18% and by 0.55% respectively.

VIX 110121 Daily Chart

The Day Ahead

It’s a quiet busy day ahead on the economic calendar, with no material stats due out of the Eurozone to provide direction.

There are also no material stats due out of the U.S to provide the majors with direction late in the session.

The lack of stats will leave the majors in the hands of COVID-19 news and updates from Capitol Hill.

While the Democrats look to oust President Trump, any chatter on further stimulus would support the majors.

On the monetary policy front, ECB President Lagarde is also scheduled to speak. Expect any forward guidance ahead of the monetary policy meeting minutes on Thursday to also influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 113 points, while the DAX was up by 11 points.

For a look at all of today’s economic events, check out our economic calendar.

Earnings to Watch Next Week: Delta Airlines, BlackRock, Citigroup and Wells Fargo in Focus

Earnings Calendar For The Week Of January 11

Monday (January 11)

IN THE SPOTLIGHT: SYNNEX, CARNIVAL

SYNNEX: California-based business process services company’s earnings to decline to $2.89​ per share the fourth quarter, down from $4.26 per share reported the same quarter last year. The leading provider of business-to-business information technology services’ quarterly revenue will fall more than 5% to just over $6 billion from $ 6.58 billion a year ago.

“For the fourth quarter of fiscal 2020, revenues are expected between $6.45 billion and $6.65 billion. Non-GAAP net income is estimated in the range of $190.5 to $203.5 million. Moreover, the company projects non-GAAP earnings between $3.68 and $3.93 per share,” noted analysts at ZACKS Research.

CARNIVAL: The world’s largest cruise ship operator is expected to report a loss for the third consecutive time in the fourth quarter. The Miami, Florida-based company’s revenue will plunge ​nearly 100% to $142.09 million from $4.78 billion posted in the same period a year ago. Carnival is expected to report a loss of $1.83 per share, worse compared to a profit of 62 cents per share registered in the same quarter last year.

“We think the cruise industry will be one of the slowest sub-sectors to recover from the COVID-19. Cruising needs just not international travel to return, but ports to reopen, authorities to permit cruising, and the return of customer confidence,” said Jamie Rollo, equity analyst at Morgan Stanley.

“We expect cruising to resume in January 2021, and only expect FY19 EBITDA to return in FY24 given historically CCL has lacked pricing power, and EPS to take even longer given dilution of share issues and higher interest expense. We see debt doubling in FY21 vs FY19 due to operating losses and high capex commitments, and leverage looks high at 4-5x even in FY23-24e, so we see risk more equity might need to be raised,” Rollo added.

According to the mean Refinitiv estimate from eleven analysts, Carnival Corp is expected to show a decrease in its fourth-quarter earnings to -186 cents per share. Wall Street expects results to range from a loss of $-2.10 to ​a loss of $-1.64 per share, Reuters reported.

Tuesday (January 12)

No major earnings scheduled for release.

Wednesday (January 13)

Ticker Company EPS Forecast
INFY Infosys $0.16
WIT Wipro $0.06
SJR Shaw Communications USA $0.24
INFO IHS Markit Ltd $0.67
AONNY Aeon ADR -$0.11

 

Thursday (January 14)

IN THE SPOTLIGHT: DELTA AIRLINES, BLACKROCK

DELTA AIRLINES: The Airline company which provides scheduled air transportation for passengers and cargo throughout the United States and across the world is expected to report a loss for the fourth consecutive time of -$2.47 in last quarter of 2020 as the airlines continue to be negatively impacted by the ongoing COVID-19 pandemic. According to Ticket Report, analysts expect Delta Airlines to post $-11 EPS for the current fiscal year and $0 EPS for the next fiscal year.

“Delta is the airline most exposed to corporate travel, which was positive pre-pandemic. Corporate travel remains down 85% and the only corporate traveller flying now appears to be those at small and medium-sized businesses. Delta had hoped for a recovery in business travel in 2H21, but it is becoming increasingly clear that business travel will not be a meaningful contributor to revenue in 2021 as vaccination timelines continue to shift out,” said Helane Becker, equity analyst at Cowen and company.

BLACKROCK: The world’s largest asset manager is expected to report a profit of $8.66 in the fourth quarter, which represents a year-over-year change of more than +3%, with revenues forecast to grow over 7% year-over-year to $4.27 billion.

“We believe BlackRock is best positioned on the asset management barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive 10% EPS CAGR (2020-22e) via 5% average long-term organic growth & continued op margin expansion. We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US,” said Michael Cyprys, equity analyst at Morgan Stanley.

“We expect the premium to widen as BlackRock takes share in the midst of market dislocation and executes on improving organic revenue growth trajectory.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 14

Ticker Company EPS Forecast
DAL Delta Air Lines -$2.47
BLK BlackRock $8.66
TSM Taiwan Semiconductor Mfg $0.94
FRC First Republic Bank $1.52
PRGS Progress Software $0.78

 

Friday (January 15)

IN THE SPOTLIGHT: CITIGROUP, WELLS FARGO

CITIGROUP: New York-based diversified financial services holding company is expected to report a profit of $1.30 in the fourth quarter, which represents a year-over-year slump of more than 30%, with revenues forecast to decline about 10% year-over-year to $16.5 billion.

Citi is trading at just 0.7x NTM BVPS implying a through the cycle ROE of just 7%, well below our 9% estimate for 2023. While there is uncertainty around how much Citi needs to invest in technology to address the Fed and OCC consent orders around risk management, data governance and controls, we believe the stock is cheap even if expenses remain elevated. We have modelled in expenses rising to $44B for 2021 and 2022 well above $42B in 2019,” noted Betsy Graseck, equity analyst at Morgan Stanley.

“Moreover, Citi is not getting credit for its diversification (only 40% of total loans are consumer and only half of those are credit card). Citi also has a more resilient wholesale business, skewed to FX, EM and cash management.”

WELLS FARGO: The multinational financial services company is expected to report a profit of $0.58 in the fourth quarter, which represents a year-over-year slump of more than 30%, with revenues forecast to decline about 9% year-over-year to $18 billion. Seaport Global Securities also issued estimates for Wells Fargo & Company’s Q2 2021 earnings at $0.60 EPS and FY2022 earnings at $3.10 EPS.

“Net interest income is anticipated to be $40 billion for 2020, lower than the previous guidance due to lower commercial loan balances and higher MBS premium amortization. Management expects fourth-quarter origination volume to be similar to third-quarter levels despite typical seasonal declines and fourth-quarter production margins should remain strong,” noted analysts at ZACKS Research.

“The company expects internal loan portfolio credit ratings, which were also contemplated in the development of allowance, will result in higher risk-weighted assets under the advanced approach and under the standardized approach in the coming quarters, which would reduce CET1 ratio and other RWA-based capital ratios.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 15

Ticker Company EPS Forecast
VFC VF $0.90
JPM JPMorgan Chase $2.56
C Citigroup $1.30
WFC Wells Fargo $0.58
PNC PNC $2.59
HDB Hdfc Bank $0.54

 

European Equities: A Week in Review – 08/01/21

The Majors

It was a bullish start to the year for the European majors. In the week ending 8th January, the EuroStoxx600 rallied by 3.04%. The CAC40 and the DAX30 weren’t far behind, with gains of 2.80% and 2.41% respectively.

Early in the week, the EU’s approval of the Moderna Inc. vaccine delivered support to the European majors.

Adding to the upside in the week was expectations of more U.S fiscal stimulus to support the U.S economic recovery.

A “Blue Wave” will now allow Joe Biden and the incoming U.S administration to deliver stimulus unhindered. The Democrats won the Georgia run offs, taking control of the Senate.

The upside in the week came in spite of Germany extending its lockdown period and France considering a reintroduction of containment measures.

For the markets, the combination of COVID-19 vaccinations and U.S stimulus expectations was good enough.

The Stats

It was a busy week on the economic calendar.

The private sector, French consumer spending, and the German economy were in the spotlight in the week.

The Private sector

In December, the manufacturing sector saw a pickup in activity, driven by Germany that saw its PMI hit a 34-month high 58.3. The Eurozone’s manufacturing PMI increased from 53.8 to 55.2 in December, down marginally from a prelim 55.5.

New export sales saw a marked increase at the end of the year. painting a rosier picture for 2021.

While the service sector continued to contract, the rate of contraction eased. The Eurozone’s services PMI rose from 41.7 to 46.4 in December, down from a prelim 47.3.

At composite level, the Eurozone’s PMI increased from 45.3 to 49.1, which was also down from a prelim 49.8.

Containment measures across the Eurozone continued to pin back service sector activity at the end of the year.

The German Economy

From Germany, trade. retail sales, unemployment, and factory order figures were also upbeat, supporting the majors.

In November, retail sales saw an unexpected 1.9% rise, following a 2.6% increase in October.

Unemployment figures also impressed, with unemployment falling by 37K in December, following a 40K slide in November.

Economists had forecasted retail sales to fall by 2% and for unemployment to rise by 10K.

Late in the week, factory orders jumped by 2.3% in November, versus a forecasted 1.2% decline. The upside came off the back of a 3.3% increase in October.

Industrial production figures also came in ahead of forecasts, with production up by 0.9%, following a 3.4% jump in October. Economists had forecast a 0.7% rise.

On the negative, however, was a narrowing in Germany’s trade surplus from €18.2bn to €16.4bn in November.

The narrowing resulted from a larger increase in imports than exports, rather than a slide in exports, however, suggesting strong demand.

Exports rose by 2.2%, with imports jumping by 4.7%.

The Rest

Also on the negative was French consumer spending figures. As a result of lockdown measures, spending tumbled by 18.9% in November. In the month prior, spending had risen by 3.9%.

Other stats in the week included December prelim inflation figures and retail sales and unemployment figures for the Eurozone.

These stats had a muted impact on the majors, however, as did the ECB’s Economic Bulletin.

From the U.S

Economic data was also on the busier side.

Private sector PMI and labor market numbers were the key drivers in the week.

In December, the ISM Manufacturing PMI rose from 57.6 to 60.7, with the Services PMI climbing from 55.9 to 57.2.

A 123k fall in nonfarm payrolls in December, according to the ADP failed to spook the markets ahead of the official government figures.

Jobless claims figures eased any major concerns over a further deterioration in labor market conditions. In the week ending 1st January, initial jobless claims slipped from 790k to 787k.

At the end of the week, nonfarm payrolls fell by 140K in December, partially reversing a 336k increase in November.

In spite of the fall, the unemployment rate held steady at 6.7%, with the participation rate holding steady at 61.5%.

Optimism towards the economic outlook, stemming from fiscal stimulus expectations and COVID-19 vaccinations muted the effects of the NFP figures.

On the monetary policy front, the FOMC meeting minutes had a muted impact on the majors, with U.S politics in the spotlight.

The Market Movers

From the DAX, it was a bearish week for the auto sector. Volkswagen slid by 3.63%, with BMW and Continental falling by 2.45% and by 1.77% respectively. Daimler saw a more modest 0.22% loss in the week.

It was a particularly bullish week for the banking sector, however. Deutsche Bank rallied by 6.48%, with Commerzbank gaining 3.80%.

From the CAC, it was a bullish week for the banks. BNP Paribas rallied by 5.06%, with Credit Agricole and Soc Gen rising by 3.39% and by 4.47% respectively.

It was a mixed week for the French auto sector, however. Peugeot fell by 1.30%, while Renault ended the week up by 2.46%.

Air France-KLM reversed a 5.28% gain with a 5.02% slide, while Airbus ended the week up by 0.36%

On the VIX Index

It was a 3rd week in the red from 4 for the VIX. In the week ending 8th January, the VIX fell by 5.23%. Reversing a 5.67% gain from the previous week, the VIX ended the week at 21.56.

For the week, NASDAQ rallied by 2.43%, with the Dow and S&P500 gaining 1.61% and 1.83% respectively.

The U.S majors hit record highs in the week, supported by expectations of substantial fiscal stimulus to support an economic recovery.

Mid-week, the Democrats won the Senate race, giving them control of both houses.

Following chaos on Capitol Hill on Wednesday, Biden was certified as the U.S President, with Trump stating that there would be an orderly handover on Inauguration Day.

VIX 080121 Weekly Chart

The Week Ahead

It’s a particularly quiet week ahead on the economic calendar. Key stats include November industrial production and trade data for the Eurozone.

Barring particularly dire trade figures, expect the industrial production figures to have the greatest influence.

Finalized December inflation figures for France and Spain are also due out but should have a muted impact on the majors.

From the U.S, inflation, the weekly jobless claims figures, retail sales and consumer sentiment figures will influence in the week.

Out of China, expect trade data to also provide direction.

Away from the economic calendar, COVID-19 news and chatter from Capitol Hill will continue to remain in focus.

Neurocrine Biosciences Shares Rise Despite Disappointing Q4 Earnings; Target Price $121

California-based biopharmaceutical company Neurocrine Biosciences reported worse-than-expected earnings in the fourth quarter as sales disappointed on anticipated inventory destocking; however, the shares rose over 7% on Friday.

The biotech company reported Q4 sales of $240 million and reported wholesaler total prescriptions for the year of 175,200. However, according to the company they sold $18 million less to wholesalers in Q4 which impacted Ingrezza sales.

The company reported a loss of 62 cents loss per share, worse than the market expectations of 3 cents loss.

At the time of writing, Neurocrine Biosciences shares traded 7.4% higher at $110.23 Friday. However, the stock fell about 11% in 2020.

Analyst Comments

“This morning, Neurocrine Biosciences (NBIX) pre-reported preliminary Q4 sales for Ingrezza, and reported a lighter quarter impacted by inventory destocking according to the company. Q4 Ingrezza sales were $240M, and down sequentially by 6% vs Q3 ’20, and lower than consensus estimates of $251.9M and our estimate of $251.6M. Adjusting for inventory, the co-states Ingrezza sales would have grown to $258M.  The co also reiterated pipeline commitments that were previously disclosed,” said Biren Amin, equity analyst at Jefferies.

“NBIX also provided an update on pipeline milestones for 2021, and expects readout from the Phase III trial testing Ingrezza in Huntington’s disease in Q4. We think Huntington’s indication, while niche, could be lucrative from an operating margin view given NBIX is unlikely to incur any add’l major costs once approved. The co also expects to report Phase II from NBI-‘5844s trial in patients with negative symptoms in schizophrenia patients in 1H ’21. Recall, this program was in-licensed from the Takeda collaboration. The Phase II enrolled 234 patients with negative symptoms, and is evaluating three doses: 50, 125, and 500 mg once daily to placebo. The co hopes to see an effect size of 0.3 in the trial. The current valuation attributes little/no value for this program, and therefore a positive outcome could serve as a catalyst.”

Neurocrine Biosciences Stock Price Forecast

Fifteen analysts who offered stock ratings for Neurocrine Biosciences in the last three months forecast the average price in 12 months at $121.00 with a high forecast of $145.00 and a low forecast of $90.00.

The average price target represents a 17.68% increase from the last price of $102.82. From those 15 analysts, nine rated “Buy, six rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $121 with a high of $143 under a bull scenario and $70 under the worst-case scenario. The firm currently has an “Overweight” rating on the biopharmaceutical company’s stock.

Several other analysts have also recently commented on the stock. Canaccord Genuity cut their price target on shares of Neurocrine Biosciences to $122 from $145 and set a “buy” rating on the stock. Benchmark initiated coverage and issued a “hold” rating for the company.

In addition, Zacks Investment Research cut shares from a “hold” rating to a “sell” rating. BidaskClub raised shares from a “sell” rating to a “hold” rating. At last, Credit Suisse Group dropped their target price to $90 from $105 and set a “neutral” rating.

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Corona Beer Maker Constellation’s Shares Hit Record High on Strong Earnings; More Upside Likely

New York-based Fortune 500 international beverage alcohol company Constellation Brands’ shares hit a record high on Thursday after the company reported better-than-expected earnings in the fiscal third quarter of 2021.

The corona beer marker reported a profit of $3.09 per share in the third quarter ended November 30, 2020, beating the Wall Street estimate of $2.40 per share, up from $2.14 per share profit seen in the same period a year ago. Constellation Brands posted revenues rose 22% to $2.44 billion, beating the market expectations by over 7%.

Constellation Brands (STZ) delivered strong 44% EPS growth driven by robust beer shipments (+27%) as manufacturing supply comes online and the company works to address inventory out of stocks at retail. Underlying consumer demand also improved, with depletions up 12% in the quarter. Guidance comes up, while the company also introduced a new $2 billion share buyback authorization,” said Vivien Azer, equity analyst at Cowen and company.

The producer and marketer of beer, wine, and spirits forecast 2021 EPS on a comparable basis of between $9.8 and $10.05 per share. That was higher than the market expectations of $9.44. The company expects fiscal 2021 net beer sales growth as much as 9% but forecasts net sales of wine and spirits to decline by 9% to 11%.

Following the earnings result, Constellation Brands shares soared as much as 7.6% to record high of $240.76 on Thursday. However, the stock rose 15.4% in 2020.

“We plan to raise our $226 fair value estimate by a mid-single-digit percentage to reflect time value and stronger near-term beer shipments as the firm continues to rebuild the inventory deficit caused by the production shutdown in Mexico last March. The shares now appear fairly valued to us, but the quality in the business remains as clear as ever and we’d be happy long-term holders,” said Nicholas Johnson, equity analyst at Morningstar.

Constellation Brands Stock Price Forecast

Morgan Stanley gave a base target price of $260 with a high of $302 under a bull scenario and $154 under the worst-case scenario. The firm currently has an “Overweight” rating on the beverage alcohol company’s stock.

Several other analysts have also recently upgraded their outlook. Citigroup raised the price target to $244 from $220. Cowen and company upped the price objective to $275 from $240. Jefferies increased the stock price forecast to $276 from $273. Evercore ISI raised the target price to $275 from $270. RBC upped the price objective to $262 from $243.

Thirteen analysts who offered stock ratings for Constellation Brands in the last three months forecast the average price in 12 months at $228.17 with a high forecast of $273.00 and a low forecast of $154.00.

The average price target represents a -0.31% decrease from the last price of $228.87. From those 13 equity analysts, nine rated “Buy, three rated “Hold” and one rated “Sell”, according to Tipranks.

Analyst Comments

“We expect a re-acceleration to +HSD% beer depletions growth in 2H21 after COVID-related impacts drove a slowdown to +MSD% in 1H21. Our expected improvement is driven by the resolution of beer out-of-stocks, improving shelf-space and market share trends for Constellation Brands (STZ) high-velocity products, as well as innovation contribution (Corona Hard Seltzer),” said Ricky Goldwasser, equity analyst at Morgan Stanley.

“Our robust +HSD% LT beer topline CAGR is driven by favourable sub-category positioning (high-end beer), advantageous demographics (skew to Hispanics), solid pricing, and innovation. Our ~6% 3-year STZ corporate organic sales forecast is above the ~4% growth at beverage peers.”

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European Equities: Futures Point Northwards Ahead of U.S Nonfarms

Economic Calendar:

Friday, 8th January

German Industrial Production (MoM) (Nov)

German Trade Balance (Nov)

French Consumer Spending (MoM) (Nov)

Eurozone Unemployment Rate (Nov)

The Majors

It was another bullish day for the European majors on Thursday, following Wednesday’s broad-based market rally.

The CAC40 rose by 0.70% to lead the way, with the DAX30 and EuroStoxx600 gaining 0.55 % and 0.51% respectively.

Following Wednesday’s chaos on Capitol Hill, news of Trump stating that there would be an orderly transition on 20th January delivered support.

With the blue wave now affirmed, hopes of substantial stimulus to support the U.S economic recovery added to the upside on the day.

The Stats

It was a relatively busy day on the economic calendar. German factory orders and construction PMI and Eurozone retail sales figures were in focus along with prelim December inflation figures.

From the ECB, the Economic Bulletin and monetary policy meeting minutes had a muted impact on the majors.

Germany

In November, factory orders increased by 2.3%, following a 3.3% rise in October. Economists had forecast a 1.2% decline.

According to Destatis,

  • Domestic orders increased by 1.6% and foreign orders by 2.9% in November, month-on-month.
  • New orders from the euro area rose by 6.1% and by 0.9% from other countries.
  • The manufacturers of intermediate goods saw new orders increased by 4.9%, with capital goods manufacturers reporting a 1.1% rise.
  • Consumer goods manufacturers saw a more modest 0.5% increase in new orders, however.
  • Compared with Feb-2020, new orders in November 2020 were 4.0% higher.

In December, the IHS Markit Construction PMI rose from 45.6 to 47.1.

The Eurozone

From the Eurozone, retail sales slid by 6.1% in November, month-on-month, reversing a 1.4% rise in October. Economists had forecast a 3.4% decline.

Inflation figures provided little support, as deflationary pressures persisted at the end of the year.

For the Eurozone, core consumer price rose by 0.2% in December, following a 0.2% increase in November. Consumer prices continued to decline, however, with the consumer price index falling by 0.3%. In November, consumer prices had also fallen by 0.3%, year-on-year. Economists had forecast a 0.2% decline.

From the U.S

It was a relatively busy day on the economic calendar, with the weekly jobless claims and the market’s preferred ISM Services PMI in focus.

In the week ending 1st January, initial jobless claims stood at 787K, which was down from 790K from the previous week. Economists had forecast an increased to 800k.

In December, the ISM Services PMI increased from 55.9 to 57.2, coming in ahead of a forecasted 54.6.

Trade data for November had a muted impact on the European majors.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Continental and Daimler rallied by 2.12% and by 2.83 % respectively, while BMW and Volkswagen saw more modest gains of 0.71% and 1.06% respectively.

It was also a bullish day for the banks. Deutsche Bank rallied by 2.12%, with Commerzbank gaining 0.81%

From the CAC, it was a bullish day for the banks. BNP Paribas rallied by 2.25%, with Credit Agricole and Soc Gen rising by 0.75% and 1.04% respectively.

It was also a bullish day for the French auto sector. Peugeot rose by 1.99%, with Renault rallying by 4.16%.

Air France-KLM and Airbus SE bucked the trend, however, with losses of 1.62% and 0.61% respectively.

On the VIX Index

It was a 3rd consecutive day in the red the VIX on Thursday, marking a 5th day in the red from 6 sessions. Following on from a 1.07% fall on Wednesday, the VIX slid by 10.77% to end the day at 22.37.

Supported by Biden’s certification and the “Blue Wave”, the U.S majors hit record highs on Thursday.

The NASDAQ rallied by 2.56%, with the Dow and the S&P500 rising by 0.69% and by 1.48% respectively.

Following Wednesday’s protests, hopes of substantial fiscal stimulus to support the economy drove demand for riskier assets.

VIX 080121 Daily Chart

The Day Ahead

It’s another relatively busy day ahead on the economic calendar.

Key stats include German industrial production and trade data along with unemployment figures for the Eurozone. French consumer spending figures are also due out.

Germany’s industrial production and trade figures and French consumer spending figures will likely have the greatest influence on the European majors.

From the U.S, nonfarm payrolls and the unemployment rate for December will also influence late in the session.

Chatter from Capitol Hill will also need monitoring along with COVID-19 news updates.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 76 points, with the DAX up by 66 points.

For a look at all of today’s economic events, check out our economic calendar.

Drugstore Chain Walgreens Shares Soar Over 8% After Q1 Earnings Top Estimates

The largest U.S. drugstore chain Walgreens Boots Alliance reported better-than-expected earnings in the fiscal first quarter and remained broadly consistent in its full-year forecast for earnings growth, sending its shares up over 8% on Thursday.

Walgreens Boots Alliance said its sales increased 5.7% to $36.3 billion in fiscal first quarter ended November 2020, up 5.2% on a constant currency basis. Loss per share was $0.36, compared to EPS of $0.95 in the year-ago quarter, including a $1.73 per share charge from the company’s equity earnings in AmerisourceBergen.

Adjusted EPS decreased by 11.2% to $1.22, down 11.6% on a constant currency basis, reflecting an estimated adverse COVID-19 impact of $0.26 to $0.30 per share. But it beat analysts’ expectations of $1.03 per share.

“Walgreens Boots Alliance (WBA) reported adj. EPS of $1.22, vs. consensus of $1.03. We look for details around the better than expected results in Retail Pharmacy USA and Retail Pharmacy Int’l. FY21guidance was maintained but now skewed positively. Mgmt now expects to see a greater impact from COVID-19 in F2Q, and we look for an update to mgmt’s COVID-19 recovery assumptions,” said Charles Rhyee, equity analyst at Cowen and company.

Drugstore chain maintained its fiscal year 2021 guidance, but with the profile skewed positively. The company continues to forecast expects adj. EPS of low single-digit growth, roughly in-line with consensus of $4.81, which implies growth of +1.5% y/y.

Walgreens forecasts to see a higher adverse impact from COVID-19 in the fiscal second quarter but continues to expect F1H21 adj. EPS to decline 17%-23%, broadly consistent with prior expectations. On a full-year basis, the impact of COVID-19 vaccines is likely offset by COVID-19 related lockdowns and increased growth investments.

Walgreens Boots Alliance shares soared over 8% to $46.48 on Thursday. However, the stock fell over 30% in 2020.

Walgreens Boots Alliance Stock Price Forecast

Seven analysts who offered stock ratings for Tiffany & Co in the last three months forecast the average price in 12 months at $41.20 with a high forecast of $44.00 and a low forecast of $40.00. The average price target represents a -10.47% decrease from the last price of $46.02. All those seven equity analysts, none rated “Buy, six rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $40 with a high of $46 under a bull scenario and $27 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the pharmacy provider’s stock.

Several other analysts have also recently commented on the stock. Truist Securities raised the price target to $44 from $40. Citigroup upped their price objective to $45 from $40. Cowen and company lowered the stock price forecast to $41 from $46. Deutsche Bank raised the price target to $41 from $40. UBS lowered the target price to $41 from $42.

Analyst Comments

“Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy and Alliance drug distribution in Europe. With COVID-19 disruption likely to weigh on results for the first part of FY21, at the least, along with ongoing structural reimbursement pressure, EBIT and EPS growth will likely be constrained for the foreseeable future, said Ricky Goldwasser, equity analyst at Morgan Stanley.

“Walgreens has the balance sheet to deploy capital into M&A, as well as the strategic optionality to potentially reposition its portfolio of assets in a changing healthcare marketplace. Unveiling a new strategy under a new CEO that provides a roadmap to future growth is a potential catalyst for shares.”

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