Simon Property Tops Earnings and Revenue Estimates; Target Price $137 in Best Case

Simon Property Group, a self-administered and self-managed real estate investment trust, reported better-than-expected earnings in the first quarter and lifted full-year 2021 guidance, sending its stock to a 14-month high in intra-day trading on Monday.

The company, which owns, develops, and manages retail real estate properties, reported earnings per share of $1.36 on revenue of $1.24 billion, beating the Wall Street consensus estimates of $1.03 per share on revenue of $1.11 billion.

Simon Property lifted its full-year 2021 guidance for funds from operations to $9.70 to $9.80 per share, up from the previous projection of $9.50 to $9.75 per share.

Following this, Simon Property shares hit a 14-month high of $128.23 but lost 1.27% in after-hours trading on Monday. The stock rose over 48% so far this year.

Analyst Comments

“FFO beat cons by $0.21, benefitting from $0.10 of lease term. income. Guide raised by $0.13 to $9.75. Domestic NOI improved to -8.4% and total portfolio NOI increased to +4% but includes Taubman. Base min rent PSF increased, but leasing spreads decelerated and occupancy declined,” noted Richard Hill, equity analyst at Morgan Stanley.

Simon Property Stock Price Forecast

Nine analysts who offered stock ratings for Simon Property in the last three months forecast the average price in 12 months of $124.11 with a high forecast of $137.00 and a low forecast of $102.00.

The average price target represents a -2.08% decrease from the last price of $126.75. Of those nine analysts, six rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $135 with a high of $200 under a bull scenario and $60 under the worst-case scenario. The firm gave an “Overweight” rating on the real estate investment trust’s stock.

“We expect SPG to prove to be a long-term winner from the shake-up in retail given its strong balance sheet and ability to self-fund (re)development costs with FCF generation. Three factors differentiate their portfolio: 1) malls contributed only ~55% of total NOI, 2) after a 35% rationalization in the mall landscape, we estimate a ~5% hit to total NOI and 3) greater negotiating leverage with tenants post the acquisition of TCOs higher-quality malls,” Morgan Stanley’s Hill added.

“We expect the stock to re-rate to an FFO multiple of ~14x that’s in line with the 5yr historical average as conviction in the recovery grows.”

Several other analysts have also updated their stock outlook. Evercore ISI raised to outperform from in line and upped the target price to $128 from $112. Simon Property Group had its target price raised by BMO Capital Markets to $125 from $120.

The brokerage currently has a market performance rating on the real estate investment trust’s stock. Piper Sandler boosted their price target on shares of Simon Property Group from $115.00 to $130.00 and gave the stock an overweight rating.

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European Equities: Economic Data from the Eurozone and the U.S in Focus

Economic Calendar:

Tuesday, 11th May 2021

German ZEW Current Conditions (May)

German ZEW Economic Sentiment (May)

Eurozone ZEW Economic Sentiment (May)

Wednesday, 12th May 2021

German CPI (MoM) (Apr) Final

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Eurozone Industrial Production (MoM) (Mar)

Friday, 14th May 2021

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

The Majors

It was a mixed start to the week for the European majors on Monday following gains from the previous week.

The EuroStoxx600 rose by 0.10% to a new record high, with the CAC40 ekeing out a 0.01% gain, while the DAX30 ended the day flat.

Economic data from the Eurozone were limited to Eurozone investor sentiment figures, which provide some early support.

The lack of stats left the majors in the hands of market sentiment towards the economic outlook.

Government plans to ease further containment measures and reopen borders for tourism continued to deliver support.

The Stats

Investor confidence figures were in focus in the early part of the European session.

In May, the Sentix Investor Confidence Index surged from 13.1 to 21.0. Economists had forecast a modest increase to 14.0.

From the U.S

There were no material stats from the U.S to provide the majors with direction late in the session.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. BMW led the way, rising by 1.07%, with Daimler ending the day up by 0.11%. Continental and Volkswagen fell by 0.73% and by 0.09% respectively, however.

It was also a mixed day for the banks. Deutsche Bank fell by 1.11%, while Commerzbank rallied by 2.97%.

From the CAC, it was a bullish day for the banks. Credit Agricole and Soc Gen rallied by 3.93% and by 2.91% respectively, with BNP Paribas rising by 1.90%.

It was also a bullish day for the French auto sector. Stellantis NV rose by 0.17%, with Renault rallying by 3.50%.

Air France-KLM ended the day flat, while Airbus SE slipped by 0.01%.

On the VIX Index

It was back into the green for the VIX on Monday, bringing a run of 3 consecutive days in the red to an end.

Reversing a 9.24% slide from Friday, the VIX jumped by 17.80% to end the day at 19.66.

The NASDAQ slid by 2.55%, with the S&P500 ending the day down by 1.04%. For the Dow, it was a more modest 0.10% loss on the day.

VIX 110521 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the European economic data front. ZEW Economic Sentiment figures for Germany and the Eurozone are due out later this morning.

With sensitivity to the numbers having picked up of late, expect the numbers to influence.

From the U.S, JOLTs job openings will also draw interest late in the European session following disappointing NFP numbers from last week.

Following the pullback in U.S stocks on Monday, the European majors could come under pressure going into the session.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 48 points.

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

DraftKings Posts Better-Than-Feared Quarterly Loss; Lifts Full-Year Revenue Outlook

The U.S.-focused gambling operator DraftKings reported better-than-feared loss and higher revenue in the first quarter and raised the 2021 revenue outlook but the strong results failed to lift stocks which have lost over 18% so far this month.

Boston-based sports betting platform said its revenue increased 253% to $312 million from $89 million seen during the same period a year ago. That was above Wall Street’s consensus estimates of $236.2 million. The company reported a loss per share of $0.36, better compared to analysts’ expectations for a loss of $0.42.

DraftKings raised their forecasts for its fiscal year 2021 revenue guidance to $1.05 billion to $1.15 billion, up from a range of $900 million to $1 billion, which equates to year-over-year growth of 63% to 79% and a 16% increase compared to the midpoint of our previous guidance.

The increase reflects solid performance in the first quarter of 2021, continued strong user activation due to the effectiveness of our marketing spend, well-executed launches of mobile sports betting and iGaming in Michigan and mobile sports betting in Virginia, and a modest contribution from our recently completed acquisitions, the company said in the statement.

At the time of writing, DraftKings shares traded about 5% lower at $46.06 on Monday.

Analyst Comments

“1Q revs and updated ’21 rev guidance meaningfully beat, showing how strong the US sports betting / iGaming mkt is and DKNG’s dominant position. However, DKNG suggested higher EBITDA losses and is issuing materially more stock comp than expected. Our price target drops $3 to $63, still attractive, Overweight,” noted Thomas Allen, equity analyst at Morgan Stanley.

DraftKings Stock Price Forecast

Twenty-three analysts who offered stock ratings for DraftKings in the last three months forecast the average price in 12 months of $70.86 with a high forecast of $105.00 and a low forecast of $50.00.

The average price target represents a 53.78% increase from the last price of $46.08. Of those 23 analysts, 17 rated “Buy”, six rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $63 with a high of $182 under a bull scenario and $11 under the worst-case scenario. The firm gave an “Overweight” rating on the gambling operator’s stock.

Several other analysts have also updated their stock outlook. Craig-Hallum slashed the target price to $60 from $70. Needham lowered the stock price forecast to $73 from $81. Benchmark trimmed the price objective to $64. JP Morgan cut the target price to $54 from $58. Truist Securities slashed the target price to $54 from $65.

“The continued progression of beat and raise quarters, coupled with strategic substantiveness should draw a positive reaction in the shares and supports our bullish stance on the name. The degree of stock reaction should also lie in commentary from Mgt regarding more recent complex state legalizations and the roll-out of its tech platform through the remainder for the year. Execution and estimate progression are central to our call, rather than valuation,” noted David Katz, equity analyst at Jefferies.

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Roku Shares Surge on Earnings, Guidance Beat

Roku shares jumped over 11% on Friday after the San Jose, California-based video-streaming device maker reported better-than-expected earnings in the first quarter and delivered strong guidance for the second quarter.

The company that manufactures a variety of digital media players for video streaming reported earnings per share in the first quarter of $0.54, beating the Wall Street consensus estimates of a loss of $0.12 per share.

The digital media hardware company said its revenue jumped 79% year-on-year to $574.18 million, coming in well above analysts’ expectations of $490.56 million. Roku forecasts revenue between $610 million to $620 million in the second quarter, beating the market consensus of $549.5 million.

Following the upbeat results, Roku shares jumped 11.5% to $317.0 on Friday. The stock fell over 4% so far this year.

Analyst Comments

Roku kicked off 2021 with a strong first quarter as revenue and operating income both handily beat FactSet consensus projections based on strong ad revenue growth. The firm only added 2.4 million accounts in the quarter, reaching 53.6 million, as the pandemic may have pulled forward some demand in 2020,” noted Neil Macker, senior equity analyst at Morningstar.

“However, streaming hours continued to expand to 18.3 billion, up another 1.4 billion hours sequentially and 6 billion versus the first quarter last year. We expect that the continued secular trend towards streaming will help drive growth in both streaming hours and revenue per user over the near term. We are maintaining our no-moat rating and our $170 fair value.”

Roku Stock Price Forecast

Twenty-three analysts who offered stock ratings for Roku in the last three months forecast the average price in 12 months of $457.64 with a high forecast of $560.00 and a low forecast of $300.00.

The average price target represents a 44.37% increase from the last price of $317.00. Of those 23 analysts, 19 rated “Buy”, three rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $300 with a high of $400 under a bull scenario and $150 under the worst-case scenario. The firm gave an “Underweight” rating on the video-streaming device maker’s stock.

“We believe the market is underestimating the competition on Platform active accounts in the US, as well as the time it takes for international expansion to scale. Active account growth has benefited strongly in the US from share gains at TCL, and sustained growth will require additional share gains or major new smart TV partners,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“We believe the market may be underestimating the ability to monetize strong streaming hours growth long term. Not all hours are equally valuable to Roku, and impressive hours growth reported by Roku is at least in part driven by ‘cable’ TV viewing benefit from MVPDs that are likely structurally less valuable to Roku than hours of long-tail publishers.”

Several other analysts have also updated their stock outlook. Keybanc lowered the target price to $460 from $518. Oppenheimer cut the price objective to $400 from $500. Benchmark slashed the stock price forecast to $550 from $600.

JPMorgan trimmed the target price to $500 from $525. Evercore ISI raised the price objective to $430 from $400. Pivotal Research slashed the target price to $350 from $400.

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European Equities: Futures Point Northwards with No Major Stats to Provide Direction

Economic Calendar:

Monday, 10th May 2021

Eurozone Sentix Investor Confidence (May)

Tuesday, 11th May 2021

German ZEW Current Conditions (May)

German ZEW Economic Sentiment (May)

Eurozone ZEW Economic Sentiment (May)

Wednesday, 12th May 2021

German CPI (MoM) (Apr) Final

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Eurozone Industrial Production (MoM) (Mar)

Friday, 14th May 2021

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

The Majors

It was a bullish end to the week for the European majors on Friday following a mixed session on Thursday.

The EuroStoxx600 rose by 0.99% to close out the week at a record high, with the CAC40 gaining 0.45%. Leading the way, however, was the DAX30, which ended the day up by 1.34%.

Economic data and corporate earnings from Germany delivered the upside for the DAX30 on the day.

Hopes of a swifter economic recovery amidst pickup in vaccination rates across the EU also supported the broader market.

The Stats

It was a relatively busy day on the Eurozone economic calendar on Friday.

German industrial production and trade data for March were the key stats from the Eurozone.

German Industrial Production

Industrial production increased by 2.5% in March, reversing a revised 1.9% decline from February. Economists had forecast a 2.3% rise.

According to Destatis,

  • Production in industry excl. energy and construction increased by 0.7%.
  • Within industry, the production of intermediate goods was up by 1.2%.
  • More significantly, the production of consumer goods jumped by 2.9%, while the production of capital goods slipped by 0.4%.
  • Outside industry, energy production was up by 2.4%, with the production in construction surging by 10.8%.
  • Compared with March 2020, industrial production was up 5.1%.

German Trade

In March, Germany’s trade surplus narrowed from €18.9bn to €14.3bn. Economists had forecast a widening to €19.5bn.

According to Destatis,

  • In March 2021, exports were up 1.2% and imports 6.5% compared with February 2021.
  • German exports increased by 16.1% compared with March 2020, with imports up by 15.5%.

Trade with EU countries:

  • Germany exported good to the value of €67.5bn to EU member states (+21.2%), with imports from EU member states of €57.7bn (+18.4%).
  • Exports to euro area countries increased by 22.6%, with imports up by 16.2%.

Trade with non-EU countries:

  • Compared with March 2020, exports to third countries increased by 10.8%, with imports rising by 12.2%.

Trade with the UK:

  • Exports to the UK fell by 13.2% when compared with March 2020, while imports rose by 1.6%.

Others:

  • German exports to China jumped by 37.9% when compared with March 2020.
  • Exports to the U.S rose by 8.8%.

From the U.S

Labor market numbers were back in focus on Friday.

In April, nonfarm payrolls rose by just 266K, falling well short of a forecasted 978k rise. The participation rate ticked up from 61.5% to 61.7%, contributing to a rise in the unemployment rate from 6.0% to 6.1%.

The only positive was a pickup in wage growth at the turn of the quarter. In the April month, average hourly earnings jumped by 0.7%, reversing a 0.1% decline from March.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental rose by 1.91%, with Daimler and BMW gaining 0.61% and 0.02% respectively. Volkswagen fell by 0.94%, however, to buck the trend.

It was also a mixed day for the banks. Deutsche Bank rose by 1.07%, while Commerzbank ended the day down by 0.43%.

Leading the way on the day was Adidas AG, which jumped by 7.99% following an upward revision to its current year outlook.

From the CAC, it was a relatively bearish day for the banks. Credit Agricole fell by 1.67%, with BNP Paribas and Soc Gen seeing losses of 0.24% and 0.06% respectively.

It was a mixed day for the French auto sector. Stellantis NV rose by 0.19%, while Renault ended the day down by 0.70%.

Air France-KLM founded much-needed support, rallying by 4.14%, with Airbus SE rising by 1.67%.

On the VIX Index

It was a third consecutive day in the red for the VIX on Friday, marking a 4th day in the red from 7 sessions.

Following on from a 3.97% fall on Thursday, the VIX slid by 9.24% to end the day at 16.69.

The NASDAQ rose by 0.88%, with the Dow and the S&P500 gaining 0.66% and 0.74% respectively.

VIX 100521 Daily Chart

The Day Ahead

It’s a particularly quiet day ahead on the European economic calendar. There are no material stats from the Eurozone or the U.S to provide the European majors with direction.

The lack of stats will leave the European majors in the hands of corporate earnings and COVID-19 news from the weekend in focus.

Expect the European majors to take their cues from the U.S markets late in the session.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 29 points.

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

Earnings to Watch Next Week: Marriott, Electronic Arts, Alibaba and Walt Disney in Focus

Earnings Calendar For The Week Of May 10

Monday (May 10)

IN THE SPOTLIGHT: MARRIOTT

Marriott International, an American multinational diversified hospitality company, is expected to report its first-quarter earnings of $0.03 per share, which represents a year-over-year decline of over 88% from $0.26 per share seen in the same quarter a year ago.

The U.S. hotel operator’s revenue would slump about 50% to $2.36 billion. However, in the last quarter, the company has delivered an earnings surprise of over 20%.

“Largest hotel brand company globally creates economies of scale, but the spread of COVID-19 will pressure unit growth. With the stock trading near its historical average multiple, we see too wide a risk-reward to justify recommending, with upside/downside driven by how severe and quick business trends return to normal post-COVID-19,” noted Thomas Allen, equity analyst at Morgan Stanley.

Tuesday (May 11)

IN THE SPOTLIGHT: ELECTRONIC ARTS

Electronic Arts, one of the world’s largest video game publishers, is expected to report its fiscal fourth-quarter earnings of $1.04 per share, which represents a year-over-year decline of over 3% from $1.08 per share seen in the same quarter a year ago.

The world’s largest video game publishers would post revenue growth of about 15% to around $1.39 billion. However, in the last four quarters, the company has delivered an earnings surprise of over 500%.

“For the fourth quarter of fiscal 2021, EA expects GAAP revenues of $1.317 billion, cost of revenues to be $302 million, and operating expenses of $837 million. EA anticipates a loss per share of 7 cents for the fourth quarter. Net bookings are expected to be $1.375 billion, which indicates an increase of $75 million over the prior guidance. For fiscal 2021, EA expects revenues of $5.6 billion, cost of revenues to be $1.477 billion, and earnings per share of $2.54,” noted analysts at ZACKS Research.

Wednesday (May 12)

Ticker Company EPS Forecast
WEN Wendy’s $0.15
WIX WIX -$0.68
DT Dynatrace Holdings $0.14
WWW Wolverine World Wide $0.40
LITE Lumentum Holdings Inc $1.42
DOX Amdocs $1.13
JACK Jack In The Box $1.29
GOCO Gocompare.Com $0.00
SONO Sonos Inc -$0.22
PAAS Pan American Silver USA $0.30
MAURY Marui ADR $0.15
TM Toyota Motor $3.67
AEG Aegon $0.17
BRFS BRF $0.02
EBR Centrais Eletricas Brasileiras $0.27
BAYRY Bayer AG PK $0.73
TCEHY Tencent $0.53
DM Dominion Midstream Partners -$0.13
FLO Flowers Foods $0.37

Thursday (May 13)

IN THE SPOTLIGHT: ALIBABA, WALT DISNEY

ALIBABA: China’s Alibaba Group Holding, the largest online and mobile e-commerce company in the world, is expected to report its fiscal fourth-quarter earnings of $1.82 per share, up over 40% from the same quarter a year ago. China’s biggest online commerce company’s revenue to surge more than 70% to $27.7 billion.

“Heightened investments in Taobao Deal and Grocery for user acquisition in less-affluent regions in China, should support long-term growth in core e-commerce business. Merchants’ marketing budgets will continue to shift online given rising reliance on e-commerce and better conversion. Alibaba’s ad resources remain under-monetized,” noted Gary Yu, equity analyst at Morgan Stanley.

“Digitalization trend in China will also sustain AliCloud’s growth potential. Gradual margin expansion will be a long-term profit driver. We see limited near-term catalysts but F22e P/E valuation remains attractive. We also see further downside support from additional disclosure to separate losses from new investments from profitable core e-commerce businesses.”

WALT DISNEY: The world’s leading producers and providers of entertainment and information is expected to report its fiscal second-quarter earnings of $0.27 per share, which represents a year-over-year decline of over 50%. The Chicago, Illinois-based family entertainment company’s revenue would slump over 10% to $ 16.1 billion.

Disney is building content assets that enable it to take advantage of the significant direct-to-consumer streaming opportunity ahead. Disney’s underlying IP remains best-in-class, supporting long-term content monetization opportunities,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“During this period of FCF pressure from Parks closures, ESPN’s FCF generation is key to driving down leverage. Historical cycles suggest a potential return to above prior peak US Parks revenues in FY23.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 13

Ticker Company EPS Forecast
CELH Celsius $0.00
HAE Haemonetics $0.69
BABA Alibaba $11.80
BAM Brookfield Asset Management USA $0.87
TAC TransAlta USA $0.06
UTZ Utz Brands $0.15
VERX Vertex Inc. Cl A $0.05
FTCH Farfetch -$0.28
DIS Walt Disney $0.27
AMAT Applied Materials $1.50
DDS Dillards $1.20
VNET 21Vianet -$0.02
TEF Telefonica $0.16
PBR Petroleo Brasileiro Petrobras $0.12
NICE Nice Systems $1.50
TYOYY Taiyo Yuden ADR $2.09
IX Orix $1.97
SGAMY Sega Sammy ADR -$0.02
SOMLY Secom ADR $0.27
OJIPY Oji ADR $1.57
SBS Companhia De Saneamento Basico $0.15

Friday (May 14)

Ticker Company EPS Forecast
MFG Mizuho Financial $0.06
CIG Companhia Energetica Minas Gerais $0.08
HMC Honda Motor $0.41
SMFG Sumitomo Mitsui Financial $0.12
RDY Drreddys Laboratories $0.52

 

European Equities: A Week in Review – 07/05/21

The Majors

It was a bullish week for the European majors in the week ending 7th May, with the EuroStoxx600 closing out at a record high on Friday.

The CAC40 rose by 1.85%, with the DAX30 and the EuroStoxx600 ended the week up by 1.74% and by 1.69% respectively.

Corporate earnings and a pickup in the vaccination rate across the EU provided the European majors with support.

Private sector PMIs from member states and the Eurozone and economic data from Germany were also positive, adding to the upside in the week.

The Stats

Through the 1st half of the week, private sector PMI figures for April were in focus.

Manufacturing sector activity continued to lead the way. The Eurozone’s Manufacturing PMI rose from 62.5 to 62.9. Service sector activity across the Eurozone also returned to growth, with the Eurozone services PMI rising from 49.6 to 50.5.

Other stats in the week included German retail sales, industrial production, and trade data.

These stats were also positive for the European majors. While Germany’s trade surplus narrowed, both retail sales and industrial production were on the rise in March.

Even the narrowing of the trade surplus was positive. A larger jump in imports than exports pointed to increased demand.

From the ECB, the Economic Bulletin was also in focus. While talking of uncertainty near-term, there was optimism over the medium term, which was market positive.

From the U.S

It was a mixed set of numbers from the U.S.

Both the manufacturing and services sector saw slower growth in April, according to the market’s preferred ISM surveys.

Ahead of Friday’s nonfarm payroll figures, however, labor market numbers were upbeat.

In April, nonfarm payrolls increased by 742k in April according to the ADP. Payrolls had risen by 565k in March.

The weekly jobless claims figures were also upbeat. In the week ending 30th April, initial jobless claims fell from 590k to 498k.

At the end of the week, market optimism overshadowed disappointing official nonfarm payrolls and unemployment figures.

In April, nonfarm payrolls rose by just 266K, falling well short of a forecasted 978k rise. The participation rate ticked up from 61.5% to 61.7%, contributing to a rise in the unemployment rate from 6.0% to 6.1%.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Volkswagen slid by 2.65%, with Daimler falling by 1.19%. BMW and Continental found support, however, rising by 0.67% and by 1.56% respectively.

It was also a mixed week for the banking sector. Deutsche Bank slipped by 0.43% after the previous week’s 18.43% jump, while Commerzbank rose by 2.19%.

From the CAC, it was a bullish week for the banks. Soc Gen led the way, rallying by 5.24%, with BNP Paribas gaining 2.60%. Credit Agricole ended the week flat, however.

It was another bullish week for the French auto sector. Stellantis NV rallied by 8.18%, with Renault ending the week up by 1.85%.

Air France-KLM slipped by 0.15%, with Airbus falling by 1.57%.

On the VIX Index

It was back into the red for the VIX in the week ending 7th May. Marking a 7th weekly fall in 10-weeks, the VIX fell by 10.32%. Reversing a 7.39% gain from the previous week, the VIX ended the week at 16.69.

4-days in the red from 5 sessions, which included a 9.24% fall on Friday, delivered the downside in the week for the VIX.

For the week, the Dow and the S&P500 ended the week up by 2.67% and by 1.23% respectively, while the NASDAQ fell by 1.51%.

VIX 080521 Weekly Chart

The Week Ahead

It’s a quieter week ahead on the Eurozone economic calendar.

On Tuesday, German and Eurozone ZEW economic sentiment figures for May will provide the EUR with direction.

Expect the numbers to influence.

The focus will then shift to industrial production figures for the Eurozone on Wednesday. With little else for the markets to consider, we can expect some sensitivity to the numbers.

Through the 2nd half of the week, finalized inflation figures from Germany, France, and the Eurozone are also due out. Barring marked revision from prelim numbers, however, we don’t expect too much influence on the majors.

From the U.S, inflation figures for April should have a muted impact on the majors following the FED’s latest reassurances.

Wholesale inflation and jobless claims figures will be in focus on Thursday.

While wholesale inflation figures will draw interest, the markets will be looking for another fall in jobless claims. Avoiding a return to 500k levels should support riskier assets.

At the end of the week, retail sales, industrial production, and prelim consumer sentiment figures wrap things up.

Expect the retail sales and consumer sentiment figures to be the key drivers.

Lear Tops Q1 Earnings Estimates; Target Price $214 in Best Case

Lear Corporation, an American company that manufactures automotive seating and automotive electrical systems, reported better-than-expected earnings and sales in the first quarter and lifted its 2021 financial outlook.

Sales increased 20% to $5.4 billion, compared to $4.5 billion in the first quarter of 2020. That was higher than the market expectations of $4.89 billion. That growth continued to outpace the market in both segments; E-Systems growth over the market of 10 percentage points and Seating growth over the market of 9 percentage points.

Lear reported a net income of $204 million and adjusted net income of $226 million, compared to $76 million and $124 million, respectively, in the first quarter of 2020. The company reported earnings per share of $3.36 and adjusted earnings per share of $3.73, compared to $1.26 and $2.05, respectively, in the first quarter of 2020. That was higher than the Wall Street consensus estimates of $2.95 per share.

U.S. auto parts maker upped its full-year 2021 net sales forecasts in the range of $20.35 billion – $21.15 billion and adjusted EBITDA between $1.70 billion – $1.87 billion, up from $19.8 billion to $20.8 billion and $1.69 billion to $1.86 billion, respectively.

However, Lear shares traded 0.8% lower at $190.51 on Friday. The stock rose over 20% so far this year.

Lear Stock Price Forecast

Twelve analysts who offered stock ratings for Lear in the last three months forecast the average price in 12 months of $195.60 with a high forecast of $214.00 and a low forecast of $181.00.

The average price target represents a 2.16% increase from the last price of $191.46. Of those 12 analysts, seven rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $185 with a high of $270 under a bull scenario and $75 under the worst-case scenario. The firm gave an “Overweight” rating on the insurance company’s stock.

Several other analysts have also updated their stock outlook. Lear had its price target lifted by KeyCorp to $200 from $195. KeyCorp currently has an overweight rating on the auto parts company’s stock. Deutsche Bank lifted their target price to $165 from $150 and gave the stock a hold rating.

Analyst Comments

“We have an OW rating on LEA. The company’s ability to get additional CPV in both the Seating and E-Systems segments, for both ICE and BEV, should propel the stock in the coming years. Potential for investors to benefit from share appreciation, as well as the possible reinstatement of a dividend and share buybacks in 2021,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Strong management team, a clean balance sheet, and strong FCF generation. LEA is well-positioned to be a secular beneficiary as they are powertrain agnostic in the Seating division and levered to EVs in E-Systems.”

Check out FX Empire’s earnings calendar

Cigna Shares Hit New Record High After Q1 Earnings; Target Price $300 in Best Case

Cigna, a global health service company, reported better-than-expected earnings in the first quarter and lifted its full-year 2021 profit and revenue outlook, sending shares to a record high on Friday.

The Bloomfield, Connecticut-based company said its total revenues in the first quarter were $41.0 billion, and adjusted revenues were $41.0 billion. Adjusted income from operations for the first quarter was $1.7 billion, or $4.73 per share, beating the Wall Street consensus estimates of $4.37 per share.

The U.S. health insurer raised full-year 2021 adjusted revenue to at least $166 billion, up from the previous projection of at least $165 billion. Cigna expects consolidated adjusted income from operations at least $7.0 billion, or at least $20.20 per share.

Following the upbeat results, Cigna shares hit an all-time of $263.38 on Friday. The stock rose over 26% so far this year.

Cigna Stock Price Forecast

Eleven analysts who offered stock ratings for Cigna in the last three months forecast the average price in 12 months of $275.90 with a high forecast of $300.00 and a low forecast of $254.00.

The average price target represents a 7.38% increase from the last price of $256.93. Of those 11 analysts, ten rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $254 with a high of $343 under a bull scenario and $143 under the worst-case scenario. The firm gave an “Overweight” rating on the insurance company’s stock.

Several other analysts have also updated their stock outlook. Truist Securities raised the price target to $300 from $280. Jefferies lifted the price objective to $295 from $268. CFRA upped the target price by $25 to $260. Bernstein increased the target price to $263 from $242. BMO lifted the target price to $290 from $270.

Analyst Comments

Cigna is the fourth largest commercial (8% share) and exchange (3% share) player. Acquisition of ESRX creates vertically integrated player with better ability to manage medical and pharmacy spend to drive significant savings for members,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

“Flexible balance sheet to deploy into M&A. Opportunity to upsell dental and vision ancillary services can help drive accelerated commercial penetration longer-term. Opportunity for further MA penetration remains as co. can cross-sell in areas it has a strong commercial presence.”

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European Equities: Economic Data from Germany and the U.S in Focus Once More

Economic Calendar:

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a mixed day for the European majors on Thursday following Wednesday’s rebound. The CAC40 and the DAX30 ended the day with gains of 0.28% and 0.17% respectively. The EuroStoxx600 bucked the trend, however, with a 0.22% loss.

Economic data from the Eurozone and the U.S provided the European majors with support on Thursday.

Ahead of today’s nonfarm payrolls, the weekly jobless claims and factory orders from Germany impressed. Corporate earnings results added further support on the day.

Both France’s Soc Gen and Italy’s UniCredit delivered better than expected earnings results, supporting bank stocks.

Tech stocks were a drag once more, as were pharma stocks that struggled following U.S President Biden’s call for pharmas to waive COVID-19 patents. From the EU, a push back by German Chancellor Merkel and EU drug companies limited the damage, however.

The Stats

It was a busy day on the Eurozone economic calendar on Thursday. Key stats included German factory orders and Eurozone retail sales figures.

In March, factory orders rose by 3.0%, month-on-month, following a 1.2% increase in February. Economists had forecast a 1.7% rise.

According to Destatis,

  • Domestic orders increased by 4.9% and foreign orders by 1.6% month-on-month.
  • New orders from the euro area increased 0.7% and by 2.2% from other countries.
  • Manufacturers of intermediate goods saw new orders increase by 2.8%.
  • Consumer goods manufacturers saw new orders jump by 8.5%, with orders for capital goods up 2.5%.
  • When compared with February 2020, which was the month before restrictions were imposed, turnover was 3.4% lower.
  • Compared on the same month a year earlier, new orders were up 27.8%.

The Eurozone

In March, retail sales rose by 2.7% month-on-month following a 4.2% increase in February. Economists had forecast a 1.5% rise.

According to Eurostat,

  • Retail sales for non-food products increased by 4.6% and by 1.0% for food, drinks, & tobacco.
  • Automotive fuel sales fell by 2.9% in the month.
  • By member state, The Netherlands (+8.4%) and Germany and Lithuania (both 7.7%) registered the largest monthly increases.
  • Austria (-1.9%) registered the largest monthly decline, however.
  • Compared with March 2020, retail sales was up by 12.0%.
  • The volume of retail trade increased by 25.0% for non-food products and by 17.1% for automotive fuels.
  • Sales of food, drinks, & tobacco fell by 1.1%, however.

The ECB Economic Bulletin

From the ECB, the Economic Bulletin was also in focus early in the European session.

Salient points from the summary section included:

  • The near-term economic outlook remains clouded by uncertainty about the resurgence of the pandemic and the roll-out of vaccine campaigns.
  • Persistently high rates of infection and the resultant extension and tightening of containment measures continue to constrain economic activity in the short-term.
  • Looking ahead, progress on the vaccination front and the envisaged gradual relaxation of containment measures reinforce the expected firm economic rebound in 2021.
  • While inflation has picked up, underlying price pressures remained subdued in the context of significant economic slack and still weak demand.
  • Global economic activity remained on a solid recovery path at the turn of the year, despite the resurgence of the pandemic.
  • While incoming economic data, surveys, and high-frequency indicators suggest a contraction in Q1, these point to a resumption of growth in the 2nd
  • Restrictions on mobility and social interaction still limit activity in the services sector. There are signs, however, of a bottoming-out.
  • Consumers remain cautious in view of the pandemic and its impact on employment and earnings.
  • Over the medium term, the recovery of the euro area economy is expected to be driven by a recovery in domestic and global demand, supported by favorable financing conditions and fiscal stimulus.

From the U.S

Weekly jobless claims were in focus later in the European session. In the week ending 30th April, initial jobless claims fell from a revised 590k to 498k. Economists had forecast a decline to 540k.

Other stats included prelim unit labor costs and nonfarm productivity figures for the 1st quarter. The stats had a muted impact on the European majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. BMW and Daimler rose by 0.77% and by 0.79% respectively, with Continental gaining 0.68%. Volkswagen slid by 1.71%, however, to buck the trend.

It was also a mixed day for the banks. Deutsche Bank rose by 1.13%, while Commerzbank ended the day down by 0.56%.

From the CAC, it was a relatively bullish day for the banks. Soc Gen jumped by 5.46% following its better than expected earnings results. BNP Paribas and Credit Agricole saw modest gains of 0.02% and 0.69% respectively, however.

It was a mixed day for the French auto sector. Stellantis NV rose by 0.45%, while Renault ended the day down by 0.25%.

Air France-KLM fell by 2.61%, while Airbus SE rose by 0.19%.

On the VIX Index

It was a second consecutive day in the red for the VIX on Thursday, marking a 3rd day in the red from 6 sessions.

Following on from a 1.69% fall on Wednesday, the VIX declined by 3.97% to end the day at 18.39.

The Dow and the S&P500 rose by 0.93% and by 0.82% respectively, with the NASDAQ ending the day up by 0.37%.

VIX 070521 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Euro area economic calendar. Key stats include German industrial production and trade data for March. On the monetary policy front, ECB President Lagarde is also scheduled to speak later today. Any comments on the economy or monetary policy will influence.

Ahead of the European open, trade data and private sector PMI figures from China will set the tone.

From the U.S, nonfarm payrolls and unemployment figures will also provide direction late in the European session.

Away from the economic calendar, expect further discussion on Biden’s COVID-19 patent waiver plans to also draw interest.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 16 points.

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

Kellogg Shares Soar on Q1 Earnings Beat and Raised Outlook

Kellogg shares rose over 8% on Thursday after the leading worldwide manufacturer and marketer of ready-to-eat cereals, reported better-than-expected earnings and revenue in the first quarter and lifted the fiscal year 2021 guidance.

The U.S. second-largest biscuit maker reported net sales rose over 5% to $3.58 billion in the quarter ended April 3, up from $3.41 billion seen in the same period a year ago. That was higher than the Wall Street consensus estimates of $3.38 billion.

The Battle Creek, Michigan-based company said its diluted earnings per share rose over 12% to $1.11, beating analysts’ expectations of $0.95 per share.

Kellogg forecasts sales growth to finish 2021 nearly flat year-on-year, an improvement from the previous expectations of about a 1% decline. Adjusted earnings per share is expected to increase by nearly 1% to 2%, up from the previous forecast of a 1% rise.

Following the upbeat results, Kellogg shares rose as high as 8% to $68.14 on Thursday. The stock rose over 8% so far this year.

Analyst Comments

“We expect a positive stock reaction to Kellogg’s large Q1 topline/profit/EPS beat, despite the cycling of solid topline growth in 1Q20, along with slightly raised FY21 guidance. While the magnitude of the FY21 raise was small (organic sales +100 bps, OP/EPS growth +50 bps), it was unexpected as there were concerns about lower or lower-quality FY guidance with commodity pressure,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

Kellogg Stock Price Forecast

Five analysts who offered stock ratings for Kellogg in the last three months forecast the average price in 12 months of $66.00 with a high forecast of $72.00 and a low forecast of $60.00.

The average price target represents a -2.73% decrease from the last price of $67.85. Of those five analysts, two rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $60 with a high of $71 under a bull scenario and $43 under the worst-case scenario. The firm gave an “Equal-weight” rating on the food manufacturing company’s stock.

Several other analysts have also updated their stock outlook. Kellogg had its price target cut by Deutsche Bank to $70 from $75. They currently have a buy rating on the stock. Citigroup reduced their price objective to $72 from $75. Jefferies Financial Group dropped their target price to $65 from $69 and set a hold rating. Piper Sandler lowered Kellogg from an overweight rating to a neutral rating and dropped their target price to $66 from $76.

Upside and Downside Risks

Risks to Upside: Higher US snacks growth on reinvestment/innovation, stabilized US cereal business with innovation and higher ad spend, higher-margin expansion on greater cost savings and moderate commodities – highlighted by Morgan Stanley.

Risks to Downside: Pricing pressure in the US (65% of sales) with retailer friction, COVID-related supply chain disruptions in 2020, lower operating profit growth on higher reinvestment needs and cost pressure.

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MetLife Shares Hit New Record High After Strong Q1 Earnings; Target Price $72 in Best Case

MetLife, one of the largest life insurers in the world, reported better-than-expected earnings in the first quarter of 2021 and said the worst impact of the COVID-19 pandemic was behind, sending shares to a record high on Wednesday.

The New York-based insurer reported net income of $290 million, or $0.33 per share, compared to net income of $4.4 billion, or $4.75 per share, in the first quarter of 2020. Adjusted earnings rose to $2.0 billion, or $2.20 per share, up from adjusted earnings of $1.4 billion, or $1.58 per share, seen in the same period a year ago. That beat the Wall Street consensus estimates of $1.48 per share.

“In the quarter, we were very pleased to return approximately $1.4 billion to shareholders through share repurchases and common stock dividends. We believe the worst impact of the pandemic on our business performance is behind us, and we are well-positioned to create additional value for our stakeholders in the future,” said MetLife President and CEO Michel Khalaf.

The leader of life insurance company said its net investment income rose 74% to $5.3 billion, largely driven by increases in the estimated fair value of certain securities that do not qualify as separate accounts under GAAP and higher variable investment income primarily due to higher private equity returns.

Following the upbeat results, MetLife shares hit an all-time of $65.905 on Wednesday. The stock rose over 39% so far this year.

Analyst Comments

“This quarter’s results clearly received an outsized benefit from strong alternative results, but what impresses us more is the stability and growth in underlying earnings, which should help in our view to drive further upside in the stock,” noted Nigel Dally, equity analyst at Morgan Stanley.

“Operating EPS was $2.20, considerably above both our estimate and the consensus of $1.53. Favorable marks on alternative investments provided more of a boost than expected, contributing over $1 billion to pre-tax earnings above a normal level. Conversely, pandemic-related claims weighed on some divisions, most notably its domestic group insurance operations. Excluding these items, we view the core earnings run-rate potential of the company as being largely in-line with prior expectations.”

MetLife Stock Price Forecast

Nine analysts who offered stock ratings for MetLife in the last three months forecast the average price in 12 months of $66.11 with a high forecast of $72.00 and a low forecast of $54.00.

The average price target represents a 1.07% increase from the last price of $65.41. Of those nine analysts, eight rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the base target price to $72 from $70 with a high of $83 under a bull scenario and $48 under the worst-case scenario. The firm gave an “Overweight” rating on the life insurer’s stock.

“Following its retail separation, the company is committed to profitable growth while also simplify its operations to reduce earnings volatility. The company also de-risked its investment portfolio somewhat. Given these moves, the investment thesis for MetLife now revolves around capital management and free cash flow generation, growth in international operations, and expense reduction initiatives,” Morgan Stanley’s Dally added.

“We believe MetLife has the ability to continue its solid execution in its various businesses. More importantly, the solid results over the past several quarters were not driven by a single division, with all segments contributing to earnings growth to a certain extent.”

Several other analysts have also updated their stock outlook. JP Morgan raised the stock price forecast to $66 from $64. UBS initiated with a buy rating and a $72 target price. KBW upped the price target to $68 from $64. Piper Sandler lifted the price objective to $68 from $58. Evercore ISI increased the price target to $65 from $52. RBC raised the target price to $66 from $57.

Check out FX Empire’s earnings calendar

European Equities: Economic Data from Germany, the Eurozone, and the U.S in Focus

Economic Calendar:

Thursday, 6th May 2021

German Factory Orders (MoM) (Mar)

IHS Markit Construction PMI (Apr)

Eurozone Retail Sales (MoM) (Mar)

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a bullish day for the European majors on Wednesday, which were on the rebound from Tuesday’s pullback. The DAX30 rallied by 2.12%, with the CAC40 and the EuroStoxx600 ending the day up by 1.40% and by 1.82% respectively.

Corporate earnings, economic data, and a pickup in vaccination rates across the EU supported the more optimistic economic outlook.

With the EU making progress on the vaccination front, plans across the EU to reopen borders this summer also delivered a boost.

The Stats

It was a particularly busy day on the economic calendar. Service sector PMI figures for Italy and Spain were in focus early in the session.

Finalized services and composite PMIs from France, Germany, and the Eurozone also drew attention.

In April, Spain’s services PMI rose from 48.1 to 54.6, while Italy’s services PMI slipped from 48.6 to 47.3.

Economists had forecast PMIs of 50.0 and 49.8 respectively.

From France, the services PMI rose from 47.9 to 50.3, which was down from a prelim 50.4.

Germany’s services PMI fell from 50.8 to 49.9, which was down from a prelim 50.1.

The Eurozone

For the Eurozone, the Services PMI rose from 49.6 to 50.5, which was up from a prelim 50.3. As a result, the composite PMI increased from 53.2 to 53.8, which was up from a prelim 53.7.

According to the finalized Markit Composite Survey,

  • The latest data from the private sector indicated the fastest expansion since July and the second best in over two-and-a-half years.
  • Goods producers continued to lead the way, with output rising at a rate little changed from March’s record.
  • Service sector output returned to growth following 7-months of continuous contraction.
  • Germany led the way again in terms of overall growth, supported by strong manufacturing sector growth.
  • A jump in service sector activity in Spain saw private sector growth at its strongest in over 2-years.
  • Growth in both France and Italy was modest in April, while growth in France was the best in the past 8-months.

The Details

  • New orders across the private sector rose at the most marked pace in over two-and-a-half years.
  • Firms reported higher sales in both domestic and international markets.
  • The rate of backlog growth was the sharpest for 39-months and supported a pickup in hiring.
  • Firms increased staffing levels to the strongest degree for 2-years.
  • Optimism across the private sector reached its highest since composite data were first available in mid-2012.

From the U.S

It was a busy day, with ADP nonfarm employment change and service sector PMIs in focus late in the European session.

In April, nonfarm payrolls increased by 742k according to the ADP, which was up from 517k in March. Economists had forecast a rise of 800k.

From the services sector, the ISM Non-Manufacturing PMI slipped from 63.7 to 62.7, coming up short of a forecasted 64.3.

Finalized Markit survey services and composite PMIs for April were also out but had a muted impact on the majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Daimler rallied by 2.57%, with BMW and Volkswagen gaining 1.25% and 1.55% respectively. Continental bucked the trend, however, falling by 0.20%.

It was a bullish day for the banks. Deutsche Bank rose by 1.89%, with Commerzbank ended the day up by 0.78%.

From the CAC, it was a bullish day for the banks. BNP Paribas rallied by 3.49%, with Credit Agricole and Soc Gen gaining 1.95% and 1.87% respectively.

It was also a bullish day for the French auto sector. Stellantis NV jumped by 7.25% off the back of better-than-expected earnings results. Renault ended the day up by 3.13%.

Air France-KLM fell by 1.72%, with Airbus SE slipping by 0.17%.

On the VIX Index

It was back into the red for the VIX on Wednesday, marking a 2nd daily loss in 5-sessions.

Partially reversing a 6.39% gain from Tuesday, the VIX fell by 1.69% to end the day at 19.15.

The NASDAQ fell by 0.37%, while the Dow and the S&P500 saw gains of 0.29% and 0.07% respectively.

VIX 060521 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the European economic data front. Key stats include German factory orders and Eurozone retail sales figures.

Expect March factory orders from Germany to have a greater impact on the European majors.

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

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 2 points.

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

U.S. Hotel Operator Hilton’s Shares Slump as Q1 Earnings Disappoint

Hilton Worldwide Holdings, one of the largest and fastest-growing hospitality companies in the world, reported lower-than-expected earnings in the first quarter of 2021 as a resurgence in COVID-19 cases and tightening travel restrictions hurt bookings, sending its shares down about 4% on Wednesday.

The company, which has more than 4,000 hotels, resorts and timeshare properties comprising more than 650,000 rooms in 90 countries and territories, reported earnings per share, on an adjusted basis, of $0.02, missing the Wall Street’s consensus estimates of $0.05 per share.

Hilton said its net loss was $109 million for the first quarter and adjusted EBITDA was $198 million for the first quarter. System-wide comparable RevPAR fell 38.4% on a currency-neutral basis for the first quarter from the same period in 2020.

Following the disappointing results, Hilton shares fell about 4% to $124.54 on Wednesday. The stock rose over 12% so far this year.

Hilton Stock Price Forecast

Eight analysts who offered stock ratings for Hilton in the last three months forecast the average price in 12 months of $120.75 with a high forecast of $145.00 and a low forecast of $104.00.

The average price target represents a -3.18% decrease from the last price of $124.71. Of those eight analysts, three rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $101 with a high of $141 under a bull scenario and $56 under the worst-case scenario. The firm gave an “Equal-weight” rating on the hospitality company’s stock.

Several other analysts have also updated their stock outlook. Hilton Worldwide had its price objective hoisted by Truist Securities to $114 from $106. Truist Securities currently has a hold rating on the stock. Raymond James raised their target price to $125 from $105 and gave the stock an outperform rating. Gordon Haskett upped their price target to $114 from $97 and gave the company a hold rating.

Analyst Comments

“The spread of coronavirus will pressure RevPAR growth, unit growth, and non-room fee growth. Strong mgmt team with a track record of creating value for owners. We see a wide risk-reward that will depend on the severity and speed of recovery from COVID-19,” noted Thomas Allen, equity analyst at Morgan Stanley.

“We think HLT is well placed from a liquidity standpoint, but its ability to repurchase stock medium-term may be impaired.”

Check out FX Empire’s earnings calendar

Hyatt Hotels Post Deeper Loss in Q1, Shares Fall

Hyatt Hotels Corporation, a leading global hospitality company, reported a bigger-than-expected loss for the fifth consecutive time in the first quarter of this year, reflecting the impact of the COVID-19 pandemic and worldwide travel restrictions.

The U.S. hotel operator said its net loss attributable was $304 million, or $2.99 per diluted share, in the quarter ended March 31, 2021, compared to a net loss attributable to Hyatt of $103 million, or $1.02 per diluted share, in the first quarter of 2020.

Adjusted net loss attributable was $363 million, or $3.57 per diluted share, in the first quarter of 2021, compared to Adjusted net loss attributable to Hyatt of $35 million, or $0.35 per diluted share, in the first quarter of 2020. That was worse than Wall Street’s consensus estimates of -$1.33 per share.

The Chicago-based company said its comparable owned and leased hotels RevPAR decreased 64.4% compared to the first quarter of 2020.

Following the disappointing results, Hyatt shares fell 1.56% to $80.68 on Tuesday. The stock rose over 8% so far this year.

Analyst Comments

“Expect a positive reaction to Hyatt’s (H) 1Q21 beat. Rising trends in the United States and the greater China region, which drove outperformance, are likely to accelerate through 2022 while Europe has been a laggard on vaccine distribution. What remains is an acceleration in urban, business transient and group business, which could provide another phase of the recovery,” noted David Katz, equity analyst at Jefferies.

Hyatt Stock Price Forecast

Eleven analysts who offered stock ratings for Hyatt in the last three months forecast the average price in 12 months of $60.00 with a high forecast of $71.00 and a low forecast of $52.00.

The average price target represents a 7.50% increase from the last price of $55.82. Of those 11 analysts, eight rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $61 with a high of $107 under a bull scenario and $31 under the worst-case scenario. The firm gave an “Equal-weight” rating on the hospitality company’s stock.

“Higher owned exposure suggests risk given the spread of COVID-19 and greater operating leverage. However, Hyatt has lower financial leverage than peers. Higher exposure to increasing new supply and alternative accommodations given more gateway city exposure than peers (e.g., 8% NYC exposure vs. MAR 4% and HLT 3%) puts RevPAR growth at risk,” noted Thomas Allen, equity analyst at Morgan Stanley.

“Potential ability to monetize assets at attractive multiples could create value. Limited float / large insider ownership means constant discount, despite attractive M+F business.”

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $85 from $80. Evercore ISI lifted the target price to $95 from $90. Citigroup increased the price target to $90 from $80. Baird upped the target price to $72 from $63. Jefferies raised the target price to $85 from $75.

Check out FX Empire’s earnings calendar

European Equities: Private Sector PMIs and ADP Nonfarm Figures in Focus

Economic Calendar:

Wednesday, 5th May 2021

Spanish Services PMI (Apr)

Italian Services PMI (Apr)

French Services PMI (Apr) Final

German Services PMI (Apr) Final

Eurozone Markit Composite PMI (Apr) Final

Eurozone Services PMI (Apr) Final

Thursday, 6th May 2021

German Factory Orders (MoM) (Mar)

IHS Markit Construction PMI (Apr)

Eurozone Retail Sales (MoM) (Mar)

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a particularly bearish day for the European majors on Tuesday. The DAX30 slid by 2.49%, with the CAC40 and the EuroStoxx600 ending the day down by 0.89% and by 1.43% respectively.

With no material stats from the Eurozone to provide direction on the day, a tech sector sell-off weighed on the European majors. Following Monday’s pullback, the NASDAQ continued to fall back on Tuesday, dragging tech stocks in Europe into the red.

News of anticipated supply shortages in the auto sector weighed heavily on the DAX30 in particular, with the auto sector joining tech stocks in the deep red.

The Stats

It was a particularly quiet day on the economic calendar, with no material stats from the Eurozone to provide direction.

From the U.S

It was a relatively busy day, with factory orders and trade data for March in focus late in the European session.

Factory orders increased by 1.1%, following a 0.5% decline in February. Economists had forecast a 1.3% rise.

The trade deficit widened from $70.4bn to $74.4bn in March. Economists had forecast a widening to $74.50bn.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Tuesday. Daimler tumbled by 5.20%, with BMW and Volkswagen sliding by 3.08% and by 3.94% respectively. Continental saw a more modest 1.03% loss on the day.

It was another mixed day for the banks. Deutsche Bank slid by a further 2.49%, while Commerzbank ended the day up by 0.52%.

From the CAC, it was a bearish day for the banks. Soc Gen slid by 2.23%, with BNP Paribas and Credit Agricole falling by 0.77% and by 1.15% respectively.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.52% and 2.02% respectively.

Air France-KLM fell by 1.19%, with Airbus SE sliding by 3.18%.

On the VIX Index

It was back into the green for the VIX on Tuesday, marking a 3rd rise in 4-sessions.

Reversing a 1.61% fall from Monday, the VIX rose by 6.39% to end the day at 19.48.

The NASDAQ and the S&P500 fell by 1.88% and by 0.67% respectively, while the Dow eked out a 0.06% gain.

VIX 050521 Monthly Chart

The Day Ahead

It’s a busy day ahead on the European economic calendar. Key stats include service sector PMIs from Italy and Spain. Finalized numbers for Germany, France, and the Eurozone are also due out.

Barring any marked revisions from prelim figures, Italy and the Eurozone’s PMIs will draw the greatest interest.

From the U.S, ADP nonfarm employment change and the market’s favored ISM Non-Manufacturing PMI will also influence later in the day.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 61 points, with the DAX up by 117 points.

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

Investment Firm KKR Tops Earnings Estimates; Target Price $60

U.S.-based investment firm KKR & Co reported better-than-expected earnings in the first quarter of 2021, largely driven by a higher level of carried interest and an increase in transaction and management fees.

The company that manages multiple alternative asset classes said its after-tax distributable earnings rose 63% year-over-year to $660 million, or adjusted $0.75 per share, up from $406.3 million seen in the same period a year ago. That was higher than Wall Street’s expectations of $0.62 per share.

The company, which was formerly known as Kohlberg Kravis Roberts & Co, said its Assets Under Management (AUM) increased to $367 billion, up 77% year-over-year, with $15 billion of organic new capital raised in the quarter and $51 billion for the LTM period. The acquisition of Global Atlantic contributed $98 billion in 1Q’21.

KKR shares surged more than 38% so far this year. At the time of writing, the stock traded nearly flat at $56.09.

Analyst Comments

“Fee-related earnings of $364M compared to 1Q20 of $258M with transaction fees of $166M vs $98M y/y. The performance fee business recorded +$61M net of compensation which compared to +$138M in the prior-year period. Investment income, which reflects the balance sheet activities, totaled $392M vs. $128M in 1Q20. Ultimately, KKR generated +$660M of after-tax distributable earnings ($0.75/share) and declared a $0.145 dividend in the quarter,” noted Gerald E. O’Hara, equity analyst at Jefferies.

KKR Stock Price Forecast

Eleven analysts who offered stock ratings for KKR in the last three months forecast the average price in 12 months of $60.00 with a high forecast of $71.00 and a low forecast of $52.00.

The average price target represents a 7.50% increase from the last price of $55.82. Of those 11 analysts, eight rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $60 with a high of $92 under a bull scenario and $22 under the worst-case scenario. The firm gave an “Equal-weight” rating on the investment firm’s stock.

Several other analysts have also updated their stock outlook. KKR & Co. Inc. had its price objective lifted by Deutsche Bank to $52 from $47. They currently have a hold rating on the asset manager’s stock. BMO Capital Markets boosted their target price to $71 from $69. Credit Suisse Group boosted their target price to $60 from $53 and gave the company a neutral rating.

Analyst Comments

“Strong near-term growth with fundraising supercycle and GA accretion coming into earnings, but we see this reflected in the price at the current valuation for a more capital-intensive business model,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“While strong investment performance could drive upward estimate revisions, we have less visibility on more episodic investment income gains. Mgmt’s increased focus on expanding the platform with adjacent strategies and scaling successor funds should drive higher fee-related earnings (FRE).”

Upside and Downside Risks

Risks to Upside: 1) Faster deployment with greater opportunity set. 2) Accelerated portfolio exit activity. 3) Stronger fundraising boosted by seeding of new strategies. 4) Large Insurance M&A – highlighted by Morgan Stanley.

Risks to Downside: 1) Volatile markets leading to weaker investment returns, balance sheet markdowns and delays harvesting of investments pressuring earnings. 2) Increased political and regulatory scrutiny of PE business model.

Check out FX Empire’s earnings calendar

Diamondback Shares Gain as Q1 Profits Top Estimates; Target Price $96

Diamondback Energy shares rose about 3% on Monday after the oil and natural gas company reported better-than-expected profits in the first quarter of 2021 as the rollout of COVID-19 vaccines fueled hopes of restrictions being eased, boosting fuel demand.

The Midland, Texas-based company said its net income was $220 million, or $1.33 per diluted share. The adjusted net income was $379 million, or $2.30 per diluted share. That was higher than the Wall Street consensus estimates of $1.89 per share.

The company said its first-quarter 2021 consolidated adjusted EBITDA was $845 million. Adjusted EBITDA net of non-controlling interest was $836 million. Diamondback also declared a cash dividend of $0.40 per common share.

Diamondback Energy shares rose about 3% to $83.92 on Monday. The stock surged more than 70% so far this year.

Analyst Comments

Diamondback Energy’s (FANG) 1Q was largely pre-released though 8% lower unit costs drove a 13% EBITDA beat and capex was in line. DCPS missed by -9% due to deriv proceeds that flowed through CFF and merger expenses. Notably, FANG sold QEP’s Bakken for $745m, 20% above our est and will accelerate debt paydown. FY21 production guidance was adjusted for asset sales but otherwise reiterated,” noted David Deckelbaum, equity analyst at Cowen.

Diamondback Stock Price Forecast

Eighteen analysts who offered stock ratings for Diamondback in the last three months forecast the average price in 12 months of $96.47 with a high forecast of $115.00 and a low forecast of $82.00.

The average price target represents an 18.03% increase from the last price of $81.73. Of those 18 analysts, 14 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $107 with a high of $141 under a bull scenario and $61 under the worst-case scenario. The firm gave an “Overweight” rating on the oil and natural gas company’s stock.

“Low cost of supply relative to peers. Pre-dividend breakeven of $23/bbl WTI (pro-forma) is among the lowest in our coverage after 2020 well cost reductions of >20% with peer-leading operating costs. In a higher price environment FANG can deliver outsized cash returns, while at low oil prices downside is tempered by low breakevens,” noted Devin McDermott, equity analyst at Morgan Stanley.

“Line of sight to leverage reduction. We project net debt/EBITDA decreasing from 2.5x at the end of 2020 to 2.2x by the end of 2021 and 1.9x in 2022.  Recent acquisitions and reduced growth rate should address investors’ inventory concerns. Concerns around inventory should begin to subside after recent acquisitions assuming low single digits long-term growth rate.”

Several other analysts have also updated their stock outlook. Diamondback Energy had its price target upped by research analysts at Roth Capital to $115 from $84. The brokerage currently has a “buy” rating on the oil and natural gas company’s stock. Mizuho lifted their price target to $101 from $92 and gave the company a “buy” rating. Siebert Williams Shank reaffirmed a “buy” rating and issued an $89 price target.

Check out FX Empire’s earnings calendar

European Equities: Futures Point to the Red with No Major Stats from the Eurozone to Consider

Economic Calendar:

Wednesday, 5th May 2021

Spanish Services PMI (Apr)

Italian Services PMI (Apr)

French Services PMI (Apr) Final

German Services PMI (Apr) Final

Eurozone Markit Composite PMI (Apr) Final

Eurozone Services PMI (Apr) Final

Thursday, 6th May 2021

German Factory Orders (MoM) (Mar)

IHS Markit Construction PMI (Apr)

Eurozone Retail Sales (MoM) (Mar)

Friday, 7th May 2021

German Industrial Production (MoM) (Mar)

German Trade Balance (Mar)

ECB President Lagarde Speech

The Majors

It was a bullish start to the week for the European majors on Monday. The CAC40 and the DAX30 rose by 0.61% and by 0.66% respectively, with EuroStoxx600 ending the day up by 0.58%.

Economic data from the Eurozone delivered the European majors with support through the early part of the session.

From the U.S, stats were market negative, however, limiting the upside on the day.

The Stats

It was a busy day on the economic calendar on Monday. Manufacturing PMI figures for Italy and Spain were in focus along with finalized PMIs for France, Germany, and the Eurozone. German retail sales also drew attention ahead of the European open.

German Retail Sales

In March, retail sales jumped by 7.7% month-on-month, following an upwardly revised 2.7% increase in February.

According to Destatis,

  • Compared to the pre-crisis month of February 2020, retail sales were up by 4.4%.
  • Year-on-year, retail sales was up by 11.0%, which was the strongest year-on-year increase since records began back in 1994.

Member State Manufacturing PMIs

Spain’s Manufacturing PMI rose from 56.9 to 57.7 in April, with Italy’s Manufacturing PMI increasing from 59.8 to 60.7. Economists had forecast PMIs of 59.0 and 61.0 respectively.

From France, the Manufacturing PMI declined from 59.3 to 58.9, which was down from a prelim 59.2.

Germany’s Manufacturing PMI fell from 66.6 to 66.2 which was down from a prelim 66.4.

The Eurozone

The Manufacturing PMI rose from 62.5 to 62.9 in April. This was down from a prelim 63.3.

According to the Markit Survey,

  • Operating conditions improved at a rate that surpassed March’s survey record.
  • Growth was broad-based, with both the investment and intermediate goods categories registering considerable gains.
  • Importantly, manufacturers of investment goods recorded the most marked improvement on record.
  • Consumer goods also saw a marked improvement in operating conditions, while lagging the two other categories.
  • The Netherlands led the way, positing a record high PMI followed by Germany.
  • Growth rates for both output and new orders remained closed to March’s survey records.
  • Firms reported rising market confidence, with new orders rising sharply as a result of signs that both manufacturers and clients are anticipating a sharp increase in activity in the coming months.
  • New export orders also rose at a considerable pace in April.
  • Product growth was limited, however, due to some degree of capacity constraints.
  • As a result of product shortages, input prices rose at the 2nd fastest rate on record.
  • Firms raised their own charges to the strongest degree in over 18-years of available data.
  • Manufacturers increased payrolls for the third consecutive month and by the largest number since Feb-2018.
  • According to the latest data, manufacturers were at their most optimistic in nearly 9-years.

From the U.S

Manufacturing PMI figures were also in focus late in the European session.

In April, the ISM Manufacturing PMI fell from 64.7 to 60.7, falling below a forecasted 65.0.

Also market positive was an increase in the Markit Manufacturing PMI from 59.1 to 60.5. This was down marginally from a prelim 60.6, however.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Monday. Volkswagen rallied by 2.49%, with BMW rising by 1.78%. Continental and Daimler saw more modest gains of 0.21% and 0.22% respectively.

It was a mixed day for the banks. Deutsche Bank slid by 1.99%, while Commerzbank ended the day up by 1.93%.

From the CAC, it was a relatively bullish day for the banks. Credit Agricole and Soc Gen rose by 0.20% and by 0.25% respectively, with BNP Paribas gaining 0.13%.

It was a bullish day for the French auto sector. Stellantis NV and Renault ended the day with gains of 1.43% and 1.77% respectively.

Air France-KLM rose by 1.38%, while Airbus SE slipped by 0.03%.

On the VIX Index

After 2 consecutive days in the green, it was back into the red for the VIX on Monday

Partially reversing a 5.68% gain from Friday, the VIX fell by 1.61% to end the day at 18.31.

The NASDAQ slipped by 0.48%, while the Dow and the S&P500 rose by 0.70% and by 0.27% respectively.

VIX 040521 Monthly Chart

The Day Ahead

It’s a quiet day ahead on the European economic calendar. There are no material stats due out of the Eurozone to provide the European majors with direction.

The lack of stats will leave the majors in the hands of trade data and factory orders from the U.S.

On the day, the markets will also consider corporate earnings and COVID-19 news updates from the EU and around the world.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 59 points, with the DAX down by 21 points.

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

PayPal Stock Sees Big Money Buying

This comes just months after they gave PayPal users crypto trading privileges. Talk about moving into a very hot space. Whether you like it or not, bitcoin and other cryptocurrencies are here to stay.

And I think it’s a great move by PayPal. They are quickly becoming a big player in that landscape.

This sets up well for the stock going forward. But there’s another story going on that points to more upside. The Big Money has been crazy about the shares…for years.

You see, smart money managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all of the big money signals PYPL has made the last year.

Up until February, each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com, End of day data sourced by Tiingo.com

In 2021 alone, PYPL made 8 of these rare signals. Generally speaking, that means more upside is ahead.

Now, let’s check out a few technicals grabbing my attention:

  • 1 year outperformance vs. market (+67.26% vs. SPY)
  • 1 year outperformance vs. Financials ETF (+50.63% vs. XLF)

Outperformance is huge for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, PayPal has been growing sales and earnings at a breakneck pace. Take a look:

  • 3-year revenue growth rate (+17.96%)
  • 3-year earnings growth rate (+36.06%)

Source: FactSet

Those are killer growth rates. Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, PayPal has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has buy pressure, strong technicals, and awesome fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

Since 2016, PYPL has been a constant Big Money favorite. And since its first appearance on this report, it’s up +560%!

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Let’s tie this all together.

PayPal continues to fire on all cylinders technically and fundamentally. The latest news of allowing Venmo users to transact in crypto is encouraging to their growth story. I like the long-term story of the stock.

The Bottom Line

The PayPal rally likely has further upside. Big money buying in the shares is signaling to take notice. Shares could be positioned for a bounce soon. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds a long position in PYPL in personal and managed accounts at the time of publication.

Learn more about the MAPsignals process here.