Morgan Stanley Lifts Parsons’ Base Price Target to $40, Bull Case Forecast to $51

Morgan Stanley raised their base stock price forecast on Parsons to $40 from $38 and a bull case scenario projection of $51.

Last month, the Centreville, Virginia-based company said quarterly earnings came in at $0.34 per share, beating consensus estimates of $0.28 per share. But Parsons’ revenues fell to $874.7 million, down from $970.99 million seen in that same quarter a year ago.

Parsons has signed an deal to acquire digital security firm BlackHorse Solutions in an ‘accretive deal’ worth $203 million.

“Incorporation of 1Q FY21 earnings and consideration of updated guidance in our forecast. We are modeling revenue of ~$3.95bn (~$3.96bn prior and $3.85 – 4.05bn guidance), ~$368mn adjusted EBITDA ($366mn prior and $350 – 375mn guidance), and cash flow from operations of ~$296mn ($300mn prior and $280 – 310mn guidance). We have not factored in the acquisition of BlackHorse Solutions,” noted Matthew Sharpe, equity analyst at Morgan Stanley.

“We are raising our PT to $40 (from $38) on a ~12.5x CY21 EV/EBITDA multiple (from ~11.25x) and ~$348mn of adjusted EBITDA (from ~$346mn).”

Parsons shares rose over 9% so far this year.

Fifteen analysts who offered stock ratings for Parsons in the last three months forecast the average price in 12 months at $188.93 with a high forecast of $225.00 and a low forecast of $163.00.

The average price target represents a -2.94% from the last price of $194.65. Of those 15 equity analysts, six rated “Buy”, seven rated “Hold” while two rated “Sell”, according to Tipranks.

“We see a number of offsetting aspects to the PSN narrative leading us to an EW stance. The strategy to pivot toward the FS business is compelling, on robust topline growth from acquisition synergies. Additionally, we believe PSN will be a healthy cash generator which should allow for an acceleration in the pivot through M&A,” Morgan Stanley’s Sharpe added.

“However, offsetting this are a management team that somewhat lacks a public track record and a Critical Infrastructure segment that will experience headwinds as it winds down some lesser attractive businesses.”

Other equity analysts also recently updated their stock outlook. Jefferies raised the target price to $49 from $46. Truist Securities lifted the target price to $48 from $44.

Stifel increased the target price to $70 from $45. Cowen and company lowered the target price to $33 from $40.

European Equities: The G7 Summit and U.S Economic Data in Focus

Economic Calendar

Friday, 11th June

Spanish CPI (YoY) (May) Final

Spanish HICP (YoY) (May) Final

The Majors

It was another mixed day for the European majors on Thursday.

The CAC40 and the DAX30 fell by 0.26% and by 0.06% respectively, while the EuroStoxx600 eked out a 0.09% gain.

Disappointing economic data from France weighed on the CAC40. The main event of the day, however, was the ECB monetary policy decision and press conference, however.

A more optimistic ECB weighed on the broader markets, with upward revisions to growth and inflation forecasts raising the prospects of a nearer-term move.

The mixed session came in spite of the U.S majors finding support off the back of a further decline in jobless claim figures. Inflationary pressures were also on the rise once more but failed to spook the markets and force a sell-off.

The Stats

It’s was quieter day on the economic data front this morning. Ahead of the European open, French nonfarm payrolls for the 1st quarter were in focus along with French and Italian industrial production figures.

The French Economy

In the 1st quarter, nonfarm payrolls increased by 0.3% following a 0.3% rise from the previous quarter. With COVID-19 lockdown measures in place, the numbers had a muted impact on the EUR.

Industrial production figures for April disappointed, however.

In April, industrial production fell by 0.1% versus a forecasted 0.5% increase. Production had risen by 1.0% in March.

The Italian Economy

In Italy, industrial production rose by 1.8%, following a 0.3% increase in March. Economists had forecast a 0.3% increase.

Year-on-year, production was up by 79.5% versus a forecasted 72.2% rise. In March, production had been up by 38.4% year-on-year.

Monetary Policy

In line with market expectations, the ECB left monetary policy unchanged, leaving the press conference as the key driver.

ECB President Lagarde delivered what the markets were looking for. A more optimistic economic outlook, a lack of concern over near-term inflationary pressures, and no plans to shift on monetary policy.

While avoiding any talk of tapering was key on the day, the upward revisions to both growth and inflation did raise the prospects of a move sooner rather than later.

The ECB revised growth for 2021 up from 4.0% to 4.6%, with inflation up from 1.2% to 1.9%.

Inflation is expected to fall back in 2022 (1.5%) and 2023 (1.4%), however.

In 2022, the Eurozone economy is expected to grow by 4.7% before slowing to 2.1% in 2023. While growth the forecast for 2023 was unchanged from March, growth for 2022 was revised up from 4.1%.

From the U.S

Jobless claims and inflation figures were in focus late in the European session.

In the week ending 4th June, jobless claims fell from a revised 405k to 376k. Economists had forecast a fall to 370k.

On the inflation front, there was a marked pickup in inflationary pressures mid-way through the 2nd quarter.

The core annual rate of inflation accelerated from 3.0% to 3.8% versus a forecasted 3.4%.

Month-on-month, core consumer prices rose by a further 0.7% following a 0.9% increase in April. Consumer prices rose by 0.6% following a 0.8% increase in April.

Economists had forecast for both consumer and core consumer prices to each rise by 0.4%.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. BMW slid by 1.83%, with. Continental and Volkswagen ending the day down by 0.88% and by 0.43% respectively. Daimler avoided the red, however, rising by 0.08%.

It was also a mixed day for the banks. Deutsche Bank fell by 1.67%, while Commerzbank ended the day up by 0.27%.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.25%, while Credit Agricole and Soc Gen rose by 2.40% and by 0.86% respectively.

It was a bearish day for the French auto sector, however. Stellantis NV slid by 2.12%, with Renault falling by 0.42%.

Air France-KLM also struggled, falling by 2.13, with Airbus SE ending the day with a 0.07% loss.

On the VIX Index

It was back into the red for the VIX on Thursday, marking just the 2nd decline in 6 sessions.

Reversing a 4.80% gain from Wednesday, the VIX fell by 10.01% to end the day at 16.10.

The NASDAQ rose by 0.78%, with the Dow and the S&P500 ending the day up by 0.06% and by 0.47% respectively.

VIX 110621 Daily Chart

The Day Ahead

It’s a quieter day ahead on the European economic data front.

Finalized inflation figures for Spain are due out early in the European session. The numbers are unlikely to have a material impact on the European majors, however.

With little else for the markets to consider, further reaction to the ECB press conference is likely ahead of stats from the U.S.

From the U.S, prelim consumer sentiment figures for June will be in focus late in the European session.

A pickup in consumer confidence would support the majors late in the day. Whether the markets can remain calm over yesterday’s stats from the U.s remains to be seen, however.

On the geopolitical risk front, updates from the G7 Summit will also draw interest.

The Futures

In the futures markets, at the time of writing, the Dow Mini was flat.

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

Morgan Stanley Lifts First Republic Bank’s Price Target to $180, 2021 EPS Estimates to $7.33

Morgan Stanley raised their stock price forecast on First Republic Bank to $180 from $175 and raised its earnings per share estimates to $7.33 on stronger deposit growth and faster security purchases.

In April, the bank’s first-quarter earnings came in at $1.79 per share, beating the Wall Street consensus estimates of $1.55 per share. The First Republic Bank posted revenues of $1.13 billion, up from $916.18 million seen in the same period a year ago.

First Republic appears on track to continue its 20% annual loan growth and pristine credit quality for years to come. Raising our EPS estimates on stronger deposit growth and faster security purchases. We remain Equal-weight, however, given its lofty valuation multiple of 23.9x our 2022e EPS,” noted Ken Zerbe, equity analyst at Morgan Stanley.

“We are increasing our EPS estimates for First Republic by 1.9% in 2021 (from $7.19 to $7.33) and by 2.5% in 2022 (from $7.96 to $8.16). The main driver is stronger-than-expected other earning asset growth. Management noted that deposit growth remains quite strong in 2Q21, which could imply growth in excess of the $4.7 bil of loan growth that we expect in the quarter. For reference, core deposits were up $13 bil last quarter.”

First Republic Bank shares rose over 30% so far this year.

Fifteen analysts who offered stock ratings for First Republic Bank in the last three months forecast the average price in 12 months at $188.93 with a high forecast of $225.00 and a low forecast of $163.00.

The average price target represents a -2.94% from the last price of $194.65. Of those 15 equity analysts, six rated “Buy”, seven rated “Hold” while two rated “Sell”, according to Tipranks.

Morgan Stanley gave the bull-case scenario target price of $215 and the worst-case scenario forecast of $136.

“We expect mid-to-high teens loan growth at FRC, given its niche focus on high-net worth clients, and for it to deliver this strong growth while maintaining pristine credit quality, given its peer-leading through-the-cycle average NCO ratio of just one basis point,” Morgan Stanley’s Zerbe added.

“Its wealth management growth paired with significant investments in digital offerings to target “next gen” clients for long-term growth, could result in a stable if not slightly increasing efficiency ratio, which pressures profitability. While FRC deserves to trade at a premium valuation, we believe the shares are fully valued and see limited upside. We would wait for a relative pullback before getting more positive on the shares.”

Other equity analysts also recently updated their stock outlook. Compass point raised the target price to $223 from $215. First Republic Bank had its target price boosted by JPMorgan Chase & Co. to $225 from $210. The brokerage currently has an overweight rating on the bank’s stock.

Jefferies Financial Group reiterated an underperform rating and set a $163 price objective. Maxim Group lifted their price objective to $210 from $200 and gave the stock a buy rating.

Check out FX Empire’s earnings calendar

European Equities: ECB Press Conference and U.S Stats to Provide Direction

Economic Calendar

Thursday, 10th June

French Non-Farm Payrolls (QoQ) (Q1)

ECB Interest Rate Decision / Press Conference

Friday, 11th June

Spanish CPI (YoY) (May) Final

Spanish HICP (YoY) (May) Final

The Majors

It was another mixed day for the European majors on Wednesday.

The CAC40 and the EuroStoxx600 rose by 0.19% and by 0.11% respectively, while the DAX30 fell by 0.38%.

Economic data from Germany disappointed once more, with Germany’s trade data falling short of forecasts.

News from the U.S of plans to ease travel restrictions supported airline stocks, however, while autos struggled.

Hopes of a continued hold on policy by the ECB delivered further support, though uncertainty over inflation limited the upside.

The Stats

It was a quieter day on the economic data front. German trade data for April was in focus going into the European open.

In April, Germany’s trade surplus widened from €14.3bn to €15.9bn. Economists had forecast a widening to €16.3bn.

According to Destatis,

  • Exports increased 0.3%, month-on-month, following a 1.2% rise in March.
  • Year-on-year, exports were up 47.7%.
  • Import slipped by 1.7%, month-on-month, partially reversing a 6.5% increase in March.
  • Year-on-year, imports were up by 33.2%.

The details:

  • Compared with April 2020, goods exports to EU countries rose by 58.6%, with imports up by 44.8%.
  • Goods exports to the Eurozone increased by 59.8%, with imports rising by 40.5%.
  • To EU countries outside of the Eurozone, goods exports increased by 55.9%, with imports up 55.1%.
  • To non-EU countries, exports rose by 36.5%, with imports up by 22.3%.
  • Exports to the UK surged by 64.1%, while imports from the UK slipped by 0.6%.
  • To China, exports rose by 16.0%, year-on-year, while exports to the U.S increased by 59.9%.

From the U.S

There were no major stats to provide the European majors with direction later in the session.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. Daimler and Continental fell by 1.42% and by 1.25% respectively, with BMW and Volkswagen ending the day down by 1.00% and by 0.96% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 2.12% and 1.49% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen fell by 0.79% and by 0.51% respectively, with Credit Agricole declining by 1.29%.

It was a mixed day for the French auto sector, however. Stellantis NV fell by 1.59%, while Renault rose by 0.41%.

Air France-KLM rallied by 3.27%, with Airbus SE eking out a 0.09% gain.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Wednesday.

Following a 3.96% gain from Tuesday, the VIX rose by 4.80% to end the day at 17.89.

The Dow fell by 0.44%, with the NASDAQ and the S&P500 ending the day down by 0.09% and by 0.18% respectively.

VIX 100621 Daily Chart

The Day Ahead

It’s a quieter day ahead on the European economic calendar.

French nonfarm payroll figures for the 1st quarter are due out ahead of the European open.

We don’t expect the numbers to influence, however, with the ECB delivering its June monetary policy decision later in the day.

With the markets expecting the ECB to stand pat on policy, expect the ECB President Lagarde press conference to be the key driver.

The focus will be on any tapering talk and the ECB’s outlook on inflation and the economic recovery.

From the U.S, inflation and jobless claims figures will also influence though any impact may be delayed as the stats coincide with the timing of the ECB press conference.

A marked fall in jobless claims and a sharp pickup in inflationary pressures would reignite fears of a near-term move by the FED…

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 41 points.

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

Campbell Soup Shares Slump After Q3 Earnings Miss, Weak Outlook

Campbell Soup shares slumped as much as 9% on Wednesday after the Camden County, New Jersey-based soups and snacks maker reported lower-than-expected earnings and revenue in the fiscal third quarter.

The processed food and snack company reported earnings per share (EPS) of $0.57 on revenue of $1.98 billion, missing the Wall Street consensus estimates of $0.66 per share on revenue of $2 billion. Net sales declined 11% as a result of lapping the demand surge at the onset of the pandemic in the prior year.

For the full year 2021, Campbell Soup slashed its net sales forecasts to -3.5% to -3.0% decline from the previous projection of -3.5% to -2.5%. Adjusted EPS is predicted to be between $2.90 to $2.93 per share, down from the previous forecasts of $3.03 to $3.11.

The company expects continued margin pressure related to its transition out of the COVID-19 environment, and more pronounced inflation while pricing actions take hold in the beginning of fiscal 2022.

Campbell Soup shares slumped as much as 9% to $44.73 on Wednesday. The stock plunged over 3% so far this year.

Analyst Comments

“We are Equal-weight Campbell Soup (CPB) we are cautious on CPB’s long-term growth prospects due to its exposure to structurally challenged categories, partly offset by stronger LT growth in Snacks,” noted Pamela Kaufman, equity analyst at Morgan Stanley.

CPB reported 3Q21 EPS of $0.57, below consensus $0.67, driven by a topline miss and operating deleverage. CPB reduced FY21 guidance due to the Q3 miss, the post-COVID environment, and rising inflation. CPB expects sustained margin pressure driven by a return to a normalizing post COVID environment and higher inflation. Guidance also reflects the impact from the Plum baby food divestiture in May 2021. CPB announced a $250 MM share repurchase program (1.7% of its market cap).”

Campbell Soup Stock Price Forecast

Five analysts who offered stock ratings for Campbell Soup in the last three months forecast the average price in 12 months of $54.00 with a high forecast of $59.00 and a low forecast of $50.00.

The average price target represents 16.78% from the last price of $46.24. Of those five analysts, two rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $50 with a high of $71 under a bull scenario and $31 under the worst-case scenario. The firm gave an “Equal-weight” rating on the packaged food company’s stock.

Several other analysts have also updated their stock outlook. Credit Suisse Group decreased their target price to $49 from $55 and set a “neutral” rating. Jefferies Financial Group decreased their price objective to $54 from $58 and set a “buy” rating. Deutsche Bank decreased their price objective to $50 from $52 and set a “hold” rating.

“While CPB’s Q3 results were only 1% light vs. cons. on the top line, EBIT missed by~12%, driven by GM pressure off rising inflation and supply-chain headwinds, combined with delayed pricing until FY’22,” noted Rob Dickerson, equity analyst at Jefferies.

“While FY’21 net sales guidance was bumped by 50 bps on the low end, EBIT and EPS growth was lowered by 4.5% and 5%, respectively, mainly driven by the delta b/t costs, pricing, and other offset.”

Check out FX Empire’s earnings calendar

European Equities: German Trade Data in Focus Following Weak Stats From Early in the Week

Economic Calendar

Wednesday, 9th June

German Trade Balance (Apr)

Thursday, 10th June

French Non-Farm Payrolls (QoQ) (Q1)

ECB Interest Rate Decision / Press Conference

Friday, 11th June

Spanish CPI (YoY) (May) Final

Spanish HICP (YoY) (May) Final

The Majors

It was a mixed day for the European majors on Tuesday.

The CAC40 and the EuroStoxx600 rose by 0.11% and by 0.10% respectively, while the DAX30 fell by 0.23%.

Economic data from Germany weighed on the DAX30, while market optimism and expectations of unwavering ECB support continued to provide support.

The Stats

It was a busier day on the economic data front. German industrial production figures along with ZEW Economic Sentiment figures for the Eurozone and Germany were also in focus.

In April, production fell by 1.0% partially reversing a 2.2% increase in March. Economists had forecast a modest 0.5% rise.

According to Destatis,

  • Production in industry excluding energy and construction was down by 0.7%.
  • Within industry, the production of consumer goods slid 3.3%, while the production of intermediate goods fell by 0.2%.
  • The production of capital goods fell by a modest 0.1%.
  • Outside industry, energy production was up by 6.0% in the month, while production in construction declined by 4.3%.
  • While down in the month, production was up 26.4% on the same month a year earlier.
  • Compared with February 2020, however, production in April 2021 was 5.6% lower.

ZEW Economic Sentiment figures showed a marginal decline in optimism.

Germany’s ZEW Economic Sentiment Indicator fell from 84.4 to 79.8. Economists had forecast a rise to 86.0.

For the Eurozone, the Economic Sentiment Indicator fell from 84.0 to 81.3.

Finalized 1st quarter GDP numbers for the Eurozone were also out. Upward revisions provided support to the broader market on the day.

In the 1st quarter, the Eurozone economy contracted by 0.3%, revised up from a 0.6% contraction. Year-on-year, the economy contacted by 1.3%, revised up from a 1.8% contraction.

From the U.S

It was a relatively quiet day on the economic calendar.

JOLT’s job openings and trade data provided the majors with direction later in the day. Openings increased from 8.288m to 9.286m in April.

In April, the U.S trade deficit narrowed from $75.00bn to $68.90bn. Economists had forecast a narrowing to $69.0bn.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Volkswagen slid by 2.24% to lead the way down, with Continental and Daimler and ending the day down by 0.55% and by 0.92% respectively. BMW fell by a more modest 0.22%.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 0.78% and 1.32% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen fell by 1.55% and by 1.59% respectively, with Credit Agricole declining by 1.84%.

It was a mixed day for the French auto sector, however. Stellantis NV rose by 0.13%, while Renault fell by 0.10%.

Air France-KLM and Airbus SE both ended the day down by 0.74%.

On the VIX Index

It was back into the green for the VIX on Tuesday.

After ending the day flat on Monday, the VIX rose by 3.96% to end the day at $17.07

The Dow fell by 0.09%, while the NASDAQ and the S&P500 ended the day up by 0.31% and by 0.02% respectively.

VIX 090621 Daily Chart

The Day Ahead

It’s a quieter day ahead on the European economic calendar.

German trade data is due out later this morning. With little else for the majors to focus on, we can expect plenty of interest in the numbers.

Expect any weak export figures to test support for the majors and the DAX in particular after weaker stats from early in the week.

From the U.S, there are no material stats to influence late in the session, leaving chatter from Capitol Hill in focus.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 2 points, while the DAX was up by 4 points.

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

Coupa Software Post Deeper Loss in Q1, Shares Slump

Coupa Software shares slumped as much as 9% on Tuesday after the San Mateo, California-based company’s first-quarter earnings declined from a year ago, prompting several analysts to lower their one-year price targets.

The company, which provides a cloud-based expense management platform, said its total revenues were $166.9 million in the first fiscal quarter ended April 30, 2021, an increase of 40% compared to the same period last year. Subscription revenues were $140.1 million, an increase of 33% compared to the same period last year.

The software maker said its GAAP operating loss was $73.9 million, compared to a GAAP operating loss of $5.6 million for the same period last year. Second-quarter of fiscal 2022, total revenues are expected to be $162.0 to $163.0 million and between $681.0 to $684.0 million for full-year fiscal 2022.

Coupa Software shares slumped as much as 9% to $215.31 on Tuesday. The stock plunged about 34% so far this year.

Analyst Comments

Coupa’s Q1 billings came in well ahead of guidance. However, organic growth disappointed due to the weaker base of renewal billings from pandemic-impacted 1Q21. We are highly encouraged by the pace of total bookings and Coupa Pay traction, keeping OW. But as we trim gross margins we take price target to $381,” noted Stan Zlotsky, equity analyst at Morgan Stanley.

“In an uncertain macro environment, we expect relative outperformance in COUP due to  1) defensive nature of Coupa’s core business spend management (BSM) offering, 2) expanding TAM from entry into B2B payments (Coupa Pay) and 3) rapidly improving profitability – all of which drive durable LT growth, in our view. Our $381 price target is based on combining our $226 base case value for the core BSM business and our conservative Coupa Pay estimates, which imply $155 of incremental value. Our PT implies 30X CY22 EV/Sales and 0.79x growth adjusted vs. SaaS peers at 0.57x, a premium we think is appropriate given model conservatism, higher contribution margins from Coupa Pay and sustainability of LT growth.”

Coupa Software Stock Price Forecast

Eighteen analysts who offered stock ratings for Coupa Software in the last three months forecast the average price in 12 months of $301.50 with a high forecast of $413.00 and a low forecast of $250.00.

The average price target represents a 34.57% increase from the last price of $224.04. Of those 18 analysts, 13 rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley slashed the stock price forecast to $381 from $395 with a high of $521 under a bull scenario and $162 under the worst-case scenario. The firm gave an “Overweight” rating on the software company’s stock.

Several other analysts have also updated their stock outlook. Wells Fargo lowered the price target to $255 from $305. Canaccord Genuity cut the target price to $325 from $375. Truist Securities slashed the target price to $326 from $386. Raymond James lowered the price target to $300 from $365. Mizuho cut the target price to $250 from $320.

Citigroup cut the price target to $254 from $272. Needham lowered the target price to $280 from $385. Oppenheimer slashed the target price to $260 from $320. Barclays cut the target price to $250 from $292. Piper Sandler lowered the target price to $300 from $315. Raymond James cut the target price to $300 from $365.

Check out FX Empire’s earnings calendar

Biogen Shares Soar to All-Time High On Alzheimer’s Drug Approval

Biogen shares soared as much as 64% to a record high on the news that the Cambridge, Massachusetts-based biotechnology company receives approval from the U.S. Food and Drug Administration for Alzheimer’s treatment ADUHELM (Aducanumab).

The U.S. Food and Drug Administration’s decision to approve this treatment will be the first in almost two decades. The food and drugs regulator press release did not talk about any major safety issues, which could help grant ADUHELM a clean label in the future.

Biogen shares surged as much as 64% on the news and finished the day up 38% at a new record high of $395.85 on Monday.

Analyst Comments

“We update our model for Aduhelm approval. We see the investor debate moving to launch speed (including how payers will respond), availability of infusion sites, and post-approval regulatory requirements. Given the limited competition and broad patient need, we expect a robust launch with limited access issues,” noted Matthew Harrison, equity analyst at Morgan Stanley.

“Price target to $455 on approval: We now reflect 100% of our expected revenues (versus 65% prior). We have slightly lowered our penetration as we assume more abandonment/payer pushback given the higher-than-expected price. The lower penetration is more than offset by increasing our assumed net price from $20,000 to $35,000 (the wholesale price is $56,000). We await further details from mgt. on their call tomorrow morning.”

Biogen Stock Price Forecast

Twenty-two analysts who offered stock ratings for Biogen in the last three months forecast the average price in 12 months of $359.06 with a high forecast of $458.00 and a low forecast of $244.00.

The average price target represents a -9.29% decrease from the last price of $395.85. Of those 22 analysts, 11 rated “Buy”, 11 rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the stock price forecast to $455 from $343 with a high of $694 under a bull scenario and $196 under the worst-case scenario. The firm gave an “Overweight” rating on the biotechnology company’s stock.

Several other analysts have also updated their stock outlook. Jefferies raised the target price to $500 from $450. Piper Sandler lifted the target price to $384 from $260. Oppenheimer upped the target price to $450 from $325.

“Today we are upgrading shares to Outperform, and increasing our price target from $225 to $450,” noted Phil Nadeau, equity analyst at Cowen.

“We assume penetration of the 1.5MM mild Alzheimer’s patients will grow to 8% by 2025, yielding $7B in revenue. Our 2025 Non-GAAP EPS estimate has increased from $21.40 to $37.05. We expect revenue to grow to $7B by 2025. We expect Aduhelm’s launch to drive a 13% revenue CAGR for Biogen for the period of 2021-25, among the highest in large-cap biotech.”

Check out FX Empire’s earnings calendar

European Equities: Economic Data from Germany in Focus Once More

Economic Calendar

Tuesday, 8th June

German Industrial Production (MoM) (Apr)

German ZEW Current Conditions (Jun)

German ZEW Economic Sentiment (Jun)

Eurozone GDP (QoQ) (Q1) Final

Eurozone GDP (YoY) (Q1) Final

Eurozone ZEW Economic Sentiment (Jun)

Wednesday, 9th June

German Trade Balance (Apr)

Thursday, 10th June

French Non-Farm Payrolls (QoQ) (Q1)

ECB Interest Rate Decision / Press Conference

Friday, 11th June

Spanish CPI (YoY) (May) Final

Spanish HICP (YoY) (May) Final

The Majors

It was a mixed start to the week for the European majors on Monday.

The DAX slipped by 0.10%, while the CAC40 and the EuroStoxx600 rose by 0.43% and by 0.22% respectively.

Economic data from Germany and China disappointed, ultimately weighing on the DAX and pinning back the CAC40 and EuroStoxx600.

In May, China’s U.S Dollar trade surplus widened from $42.86bn to $45.43bn versus a forecasted widening to $50.50bn. Another sizeable jump in imports driven by strong demand impressed, pointing to strong domestic demand. Imports surged by a further 51.1% in May, following a 43.1% rise in April. Exports were up by 27.9% year-on-year, however, coming up well short of a forecasted 32.1% increase. In April, exports had risen by 32.3%.

The Stats

It was another relatively quiet day on the economic data front. German factory orders for April were in focus.

In April, factory orders slipped by 0.2% following a 3.9% jump in March. Economists had forecast a 1.0% rise.

According to Destatis,

  • Domestic orders declined by 4.3%, while foreign orders rose by 2.7% month-on-month.
  • Intermediate goods orders fell by 1.0%, while capital goods orders rose by a modest 0.2%.
  • The manufacturers of consumer goods reported a 1.4% increase, however.
  • On the same month a year earlier, orders were up 78.9%.
  • When compared with February 2020, which was the month prior to COVID-19 restrictions were imposed, orders were 9.9% higher.

From the U.S

It was a particularly quiet day on the economic calendar.

There were no material stats to provide the European majors with direction later in the day.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Volkswagen fell by 0.44% to buck the trend. Continental rallied by 2.64% to lead the way, however, with BMW and Daimler ending the day up by 1.18% and by 0.59% respectively.

It was also a mixed day for the banks. Deutsche Bank slipped by 0.27%, while Commerzbank rose by 0.44%.

From the CAC, it was a bullish day for the banks. Credit Agricole rose by 0.99%. BNP Paribas and Soc Gen both ended the day up by 0.81%.

It was a bullish day for the French auto sector however. Stellantis NV and Renault saw gains of 1.10% and 0.97% respectively.

Air France-KLM found much-needed support, rising by 0.24%, with Airbus SE gaining 1.27%.

On the VIX Index

Giving up gains from earlier in the day, the VIX ended Monday flat.

Following an 8.98% fall from Friday, the VIX fell back from a day high 17.35 to end the day at 16.42.

The NASDAQ rose by 0.49%, while the Dow and the S&P500 ended the day down by 0.36% and by 0.08% respectively.

VIX 080621 Daily Chart

The Day Ahead

It’s a busier day ahead on the European economic data front.

German industrial production figures for April will provide the European majors with direction early in the session.

ZEW Economic Sentiment figures for Germany and the Eurozone will also influence later in the day.

Barring revision to 2nd estimates, however, finalized 1st quarter GDP numbers for the Eurozone should have a muted impact on the day.

From the U.S, JOLT’s job openings will also draw attention later in the day following last week’s NFP numbers.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 7 points.

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

Morgan Stanley Lifts Dick’s Sporting Goods Price Target to $115

Morgan Stanley raised their stock price forecast on Dick’s Sporting Goods to $115 from $93 and said that it is driven entirely by a 30% increase in ’22 EPS estimate of $7.60.

Late last month, Dick’s said its fiscal first-quarter net income rose to $361.8 million, or $3.41 per share, from a loss of $143.4 million, or $1.71 per share, a year earlier. The company said its adjusted earnings per share (EPS) of $3.79 per share, beating the Wall Street consensus estimates of $1.12 per share.

The Coraopolis, Pennsylvania-based company said its revenue surged 119% to $2.92 billion, beating estimates for $2.18 billion. On a two-year basis, sales were up 52%.

“We are ‘Overweight’ rated. We see Dick’s Sporting Goods (DKS) as a structurally higher-margin business with faster growth post-COVID-19. This warrants a mid to high-teens multiple in our view. Raising price target to $115,” noted Simeon Gutman, equity analyst at Morgan Stanley.

Dick’s Sporting Goods shares rose over 70% so far this year.

Twenty analysts who offered stock ratings for Dick’s Sporting Goods in the last three months forecast the average price in 12 months at $103.22 with a high forecast of $142.00 and a low forecast of $78.00.

The average price target represents a 5.90% increase from the last price of $97.47. Of those 20 equity analysts, 11 rated “Buy”, eight rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the bull-case scenario target price of $150 and the worst-case scenario forecast of $60.

Dick’s Sporting Goods (DKS) is in a favorable position given its category dominance, industry tailwinds, and healthy balance sheet. Its outlook within the category is likely to be even stronger post-COVID-19. We see a positive risk/reward skew based on our view the earnings power of the business is underappreciated. Key drivers include merchandise margin expansion and capital return (buybacks). We think there is upside for the stock without underwriting a higher valuation multiple as a result,” Morgan Stanley’s Gutman added.

“The stock’s multiple has not broken out like it has for other retailers in our space which should emerge stronger post-COVID-19. The potential for multiple expansion adds optionality/upside to the bull case.”

Other equity analysts also recently updated their stock outlook. Stephens raised the target price to $95 from $74. CFRA lifted the price target by $30 to $110. UBS upped the price target to $107 from $90.

Telsey Advisory Group increased the price target to $113 from $98. Wedbush lifted the target price to $110 from $97. Stifel lifted the target price to $98 from $71. Citigroup raised the price target to $128 from $90.

Check out FX Empire’s earnings calendar

European Equities: Economic Data from China and Germany in Focus

Economic Calendar

Monday, 7th June

German Factory Orders (MoM) (Apr)

Tuesday, 8th June

German Industrial Production (MoM) (Apr)

German ZEW Current Conditions (Jun)

German ZEW Economic Sentiment (Jun)

Eurozone GDP (QoQ) (Q1) Final

Eurozone GDP (YoY) (Q1) Final

Eurozone ZEW Economic Sentiment (Jun)

Wednesday, 9th June

German Trade Balance (Apr)

Thursday, 10th June

French Non-Farm Payrolls (QoQ) (Q1)

ECB Interest Rate Decision / Press Conference

Friday, 11th June

Spanish CPI (YoY) (May) Final

Spanish HICP (YoY) (May) Final

The Majors

It was a relatively bullish end to the week for the European majors on Friday.

The DAX and the EuroStoxx600 rose by 0.39% and by 0.37% respectively, with the CAC40 gaining 0.12%.

While disappointing economic data from the Eurozone pegged the majors back, it was stats from the U.S that provided direction.

A pickup in wage growth and rise in nonfarm payrolls delivered support. For the FED, a more modest rise than the ADP numbers from Thursday may have eased pressure for a more immediate move. This was also a positive for riskier assets, with market angst over the need for an immediate move by the FED easing for now.

The Stats

It was a quieter day on the economic data front. Eurozone retail sales figures were in focus.

In April, retail sales fell by 3.1%, month-on-month, reversing most of a 3.3% increase from March. Economists had forecast a more modest 1.2% decline.

According to Eurostat,

  • The volume of retail trade decreased by 5.1% for non-food products and by 2.0% for food, drinks, & tobacco.
  • There was a 0.4% increase in automotive fuel sales, however.
  • Slovenia (-10.4%) and France (-6.0%) logged the largest declines in April.
  • Portugal (+4.3%), Latvia (+3.8%), and Lithuania (+3.7%) recorded the largest increases in April.
  • Compared with April 2020, retail trade had jumped by 23.9%.
  • Year-on-year, automotive fuel sales surged by 65.5%, non-food products by 42.6%, and food, drinks & tobacco by a modest 3.3%.
  • Luxembourg (+46.1%) and France (+42.1%) recorded the highest annual increases in retail trade.

From the U.S

It was a busier day on the economic calendar, however.

Nonfarm payrolls increased by just 559k in May, falling well short of the ADP’s figures. Economists had forecast a 650k increase following April’s modest 278k rise.

A fall in the participation rate and increase in payrolls supported a fall in the unemployment rate.

In May, the U.S unemployment rate fell from 6.1% to 5.8%. This was not enough to continue supporting tapering bets, however.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. BMW rose by 0.96% to buck the trend. Continental slipped by 0.06%, with Daimler and Volkswagen ending the day down by 0.40% and by 0.46% respectively.

It was a bearish day for the banks. Deutsche Bank and Commerzbank ended the day with losses of 0.81% and 1.09% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.57% and by 0.86% respectively, while Credit Agricole rose by 0.32%.

It was a mixed day for the French auto sector. Stellantis NV rallied by 2.80%, while Renault fell by 1.95%.

Air France-KLM followed Thursday’s 4.64% slide with a 2.43% loss, while Airbus SE eked out a 0.13% gain.

On the VIX Index

It was back into the red for the VIX on Friday, marking just a 2nd fall in 5 sessions.

Reversing a 3.20% gain from Thursday, the VIX fell by 8.98% to end the day at 16.42.

The NASDAQ rallied by 1.47%, with the Dow and the S&P500 ending the day up by 0.52% and by 0.88% respectively.

VIX 070621 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the European economic data front.

German factory orders for April will provide the European majors with direction early in the session.

Solid manufacturing PMI figures suggest a continued pickup in factory orders. An unexpected fall would, therefore, test market optimism on the day. Economists have forecast a 1.0% rise.

From the U.S, there are no material stats to provide the European majors with direction later in the day.

The lack of stats will leave FOMC chatter and updates on Biden’s infrastructure spending plan in focus.

From earlier in the day, trade data from China will set the tone.

The Futures

In the futures markets, at the time of writing, the Dow Mini 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: Vail Resorts, GameStop, Restoration Hardware and Chewy in Focus

Earnings Calendar For The Week Of June 7

Monday (June 7)

IN THE SPOTLIGHT: VAIL RESORTS

Vail Resorts, which owns and operates several premier mountain resorts in Colorado and California, is expected to report its fiscal third-quarter earnings of $6.54 per share, which represents year-over-year growth of about 75% from $3.74 per share seen in the same period a year ago.

The premier mountain resort company would post revenue growth of 27% to $880.8 million. In the last four quarters, on average, Vail has beaten earnings estimates over 21%.

“Shares of Vail Resorts have outperformed the industry in the past three months. Notably, the company has been benefiting from its offerings such as Epic Pass, Epic Local Pass, Epic Day Pass and Epic Coverage products. This along with focus on digital marketing and media advertising bode well. Going forward, the company expects the season pass program to be a key growth driver as it relates to the growing number of people associated with the program,” noted analysts at ZACKS Research.

“Meanwhile, the company continues to reinvest in its resorts to boost customer traffic. Also, it is focussing on technological enhancements to support its data driven approach, guest experience and corporate infrastructure. Nonetheless, earnings estimates for 2021 have moved up over the past 60 days, depicting analysts optimism regarding the stock growth potential.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 7

Ticker Company EPS Forecast
MTN Vail Resorts $6.54
MRVL Marvell Technology $0.27

Tuesday (June 8)

Ticker Company EPS Forecast
NAV Navistar International $0.50
THO Thor Industries $2.28
ASO Avesoro Resources $0.83
CASY Casey’s General Stores $0.86
ABM ABM Industries $0.71
MIK Michaels Companies $0.30

Wednesday (June 9)

IN THE SPOTLIGHT: GAMESTOP, RESTORATION HARDWARE

GAMESTOP: The world’s largest multichannel video game retailer is expected to report its first-quarter loss of -$0.68 per share, an improvement from a loss of -$1.61 per share seen in the same period a year ago.

“Shares of GameStop have risen and outpaced the industry over the past three months. The company has been undertaking prudent efforts to fast-track growth. It is particularly focusing on expanding in the digital arena. To accelerate transformation, the company has resorted to board restructuring. It has also undertaken capital restructuring to support growth. In this context, it has completed the redemption of $216.4 million worth senior notes,” noted analysts at ZACKS Research.

“Also, it has completed selling 3.5 million shares, thereby aiding it to cash-in on the massive price surge witnessed since January, due to potential short-squeeze events. Apart from this, GameStop issued encouraging preliminary sales numbers for the nine-weeks ended Apr 3, 2021, wherein total global sales grew 11%. The company has been able to achieve sales growth despite challenges related to the pandemic.”

RESTORATION HARDWARE: The Corte Madera, California-based home-furnishings company is expected to report its first-quarter earnings of $3.99 per share, which represents year-over-year growth of over 214% from $1.27 per share seen in the same period a year ago.

A retailer in the home furnishings marketplace would post revenue growth of 56% to $752.1 million. In the last four quarters, on average, Restoration has beaten earnings estimates over 60%.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 9

Ticker Company EPS Forecast
GME GameStop -$0.68
RH Restoration Hardware $3.99
VRNT Verint Systems $0.36
GEF Greif $1.03
CPB Campbell Soup $0.66
UNFI United Natural Foods $0.88

Thursday (June 10)

IN THE SPOTLIGHT: CHEWY

The Dania Beach, Florida-based online pet store is expected to report its first-quarter earnings of $0.03 per share, which represents year-over-year growth of over 125%.

The retailer would post year-over-year revenue growth of over 30% to $2.12 billion.

“We see CHWY as one of the best-positioned Internet SMID-cap names given 1) the “staple-like” ~$100B US pet products and services industry CHWY addresses and secular pet ownership growth, 2) its leading online position and expected further brick & mortar share losses, and 3) ability to reach profitability due to strong marketing efficiency,” noted Lauren Schenk, equity analyst at Morgan Stanley.

“However, with the COVID-19 acceleration and long-term opportunity of the model well understood by the market, incremental data points from here could be less bullish. Thus, tactically, we see a more balanced risk-reward near term; however, long term we continue to be bullish and could look to re-upgrade the stock on a pullback.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 10

Ticker Company EPS Forecast
SIG Signet Jewelers $1.23
HLMA Halma £30.51
CMD Cantel Medical Corp $0.63

Friday (June 11)

There are no major earnings scheduled

European Equities: A Week in Review – 04/06/21

The Majors

It was a relatively bullish week for the majors in the week ending 4th June.

The DAX30 rose by 1.11% to lead the way, with the CAC40 and the EuroStoxx600 ending the week up by 0.49% and by 0.78% respectively.

Economic data from the Eurozone continued to support the market’s optimistic economic outlook in the week.

The Eurozone’s composite PMI hit a record high in May, driving the DAX30 and the EuroStoxx600 to record highs in the week.

Through the week, economic data from the U.S had also been positive. Impressive labor market data ahead of Friday’s non-farms had raised the prospects of a near-term move by the FED.

Friday’s weaker than expected non-farm payrolls may have eased immediate pressure on the FED to act, however, providing riskier assets with further support.

Key to the upside for the European majors continued to be the unwavering support of the ECB ahead of next week’s policy decision.

The Stats

Private sector PMIs, and German and Eurozone unemployment and retail sales figures were in focus.

Early in the week, manufacturing sector PMI numbers for May impressed. The Eurozone’s PMI hit a new record high. The Netherlands, Italy, Ireland, and Austria also recorded record highs in the month.

Unemployment figures were also positive. In April, the Eurozone’s unemployment rate fell from 8.1% to 8.0%. In Germany, unemployment fell by a larger than expected 15k to leave the unemployment rate unchanged at 6.0% in May.

Mid-week, retail sales figures from Germany did disappoint, however, with sales down 5.5% in April. In March, retail sales had risen by 7.7%.

In the 2nd half of the week, service sector activity and retail sales figures for the Eurozone were in focus.

For May, the Eurozone’s Composite PMI came in at 57.1. This was up from an April 53.8 and a prelim 56.9.

At the end of the week, Eurozone retail sales figures had a muted impact on the EUR following weak numbers from France and Germany.

From the U.S

On Tuesday, the ISM Manufacturing PMI rose from 60.7 to 61.2, supporting the market optimism towards the economic outlook.

The markets then needed to wait until Thursday and Friday for the key stats of the week.

ADP nonfarm employment change and weekly jobless claims were in focus along with the market’s favored ISM Non-Manufacturing PMI figures for May.

In May, nonfarm payrolls jumped by 978k according to the ADP, coming in ahead of a forecasted 650k increase. In April, nonfarm payrolls had risen by 654k.

Initial jobless claim figures also impressed. In the week ending 28th May, initial jobless claims fell from 405k to 385k. Economists had forecast a decline to 390k.

Service sector PMI numbers were also positive, with the ISM Non-Manufacturing PMI climbing from 62.7 to 64.0. Economists had forecast an increase to 63.0.

At the end of the week, it was another story, however, delivering further support to the majors.

Nonfarm payrolls increased by just 559k in May, falling well short of the ADP’s figures. Economists had forecast a 650k increase following April’s 278k rise.

A fall in the participation rate and increase in payrolls did support a fall in the unemployment rate, however.

In May, the U.S unemployment rate fell from 6.1% to 5.8%.

The Market Movers

From the DAX, it was another bullish week for the auto sector. BMW rallied by 8.53% to lead the way, with Continental and Volkswagen gaining 5.50% and 6.04% respectively. Daimler ended the week up by a more modest 3.73%.

It was a relatively bullish week for the banking sector. Deutsche Bank rose by 0.32%, with Commerzbank ending the week the week up by 2.42%.

From the CAC, it was a relatively bullish week for the banks. Credit Agricole rose by 0.57%, with BNP Paribas and Soc Gen seeing gains of 1.12% and 1.03% respectively.

It was a bullish week for the French auto sector. Stellantis NV rallied by 6.73%, with Renault rising by 0.18%.

Air France-KLM ended the week down by 1.19%, while Airbus rose by 1.78%.

On the VIX Index

It was a 2nd consecutive week in the red for the VIX in the week ending 4th June. Following a 16.82% slide from the week prior, the VIX fell by 2.03% to end the week at 16.42.

2-days in the red from 4 sessions, which included an 8.48% fall on Friday delivered the downside in the week.

For the week, the NASDAQ rose by 0.48%, with the Dow and the S&P500 ending the week up by 0.66% and by 0.61% respectively.

VIX 050621 Weekly Chart

The Week Ahead

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

Through the 1st half of the week, the German economy will be back in focus.

Factory orders, industrial production, and trade data for April will provide the majors with direction Monday through Wednesday.

Expect plenty of interest in the numbers following April and May’s private sector PMIs.

ZEW Economic Sentiment figures for Germany and the Eurozone will also influence on Tuesday.

Finalized 1st quarter GDP numbers for the Eurozone and finalized inflation figures from Spain should have a muted impact on the majors in the week, however.

On the monetary policy front, the ECB monetary policy decision and press conference will be the key driver. While the markets are expecting the ECB to stand pat on policy, assurances of a hold on policy will be needed to support the majors. Any talk of a tapering to the asset purchasing program would weigh…

From the U.S, inflation and jobless claims due out on Thursday will also provide the majors with direction.

Trade data (Mon) and inflation figures (May) from China will also influence in the week.

Lululemon Tops Q1 Earnings and Revenue Estimates; Target Price $396

The Vancouver-based retailer healthy lifestyle-inspired athletic retailer Lululemon reported better-than-expected earnings and revenue in the first quarter of the fiscal year 2021 and expects full-year net revenue and profit higher than the analysts’ expectations.

The apparel retailer’s net revenue jumped 88% year on year to $1.23 billion, beating the Wall Street consensus estimates of $1.13 billion. Excluding items, Lululemon’s earnings per share came in at $1.16, higher than the market expectations of $0.91 per share.

Lululemon forecasts net revenue in the range of $1.300 billion to $1.330 billion for the second quarter of 2021. Diluted earnings per share are expected to be in the range of $1.05 to $1.10 for the quarter and adjusted diluted earnings per share are expected to be in the range of $1.10 to $1.15.

For full-year 2021, Lululemon forecasts net revenue in the range of $5.825 billion to $5.905 billion. Diluted earnings per share are expected to be in the range of $6.52 to $6.65 for the year and adjusted diluted earnings per share are expected to be in the range of $6.73 to $6.86.

Lululemon shares fell 1.07% to $317.36 on Thursday. The stock slumped about 9% so far this year.

Analyst Comments

“1Q results up big against easy compares. Stores are open again, int’l up >100% and ecom up 50%. These are great trends and should continue. However, we believe the strength in results is baked into valuation at this point,” noted Randal J. Konik, equity analyst at Jefferies.

“Moreover, we continue to believe Mirror and ’22 footwear launch will be dilutive to the P&L which could present issues if the core apparel biz slows. As a result, we believe LULU shares will stay flat, and prefer to buy NKE and UAA shares.”

Lululemon Stock Price Forecast

Fifteen analysts who offered stock ratings for Lululemon in the last three months forecast the average price in 12 months of $396.67 with a high forecast of $465.00 and a low forecast of $330.00.

The average price target represents a 24.99% increase from the last price of $317.36. Of those 15 analysts, 12 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $278 with a high of $476 under a bull scenario and $138 under the worst-case scenario. The firm gave an “Equal-weight” rating on the athletic apparel company’s stock.

Lululemon (LULU) delivered another quarter of revenue & EPS results above Street expectations, with some items accelerating from pre-COVID-19 levels. We view raised guidance as conservative, but suspect Street estimates only climb to the high end of the new EPS range. Leave 1Q21 positive; estimates under review,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. B. Riley slashed the target price to $370 from $374. Cowen raised the target price to $405 from $392. JP Morgan cut the target price to $80 from $90.

“Expanded eComm capabilities, improved supply chain, better inventory management, & product initiatives led to enviable ’18-’19 performance & a robust return to pre-COVID-19 performance levels in 2H20, making high-teens-low-20s % comps seem normal. Still, current valuation appears extreme & positive EPS revisions appear minimal, so we stay EW,” Morgan Stanley’s Greenberger added.

“Compelling LT & post-COVID-19 growth opportunity driven by three factors: 1) international expansion, 2) digital growth, & 3) product innovation. LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products, & its athleisure focus is further advantaged in a COVID-impacted world.”

Check out FX Empire’s earnings calendar

Chipmaker Broadcom Tops Q1 Earnings Estimates; Target Price $525

Chipmaker and software infrastructure supplier Broadcom reported better-than-expected earnings and revenue in the fiscal second quarter and expects revenue above analysts’ expectations for the current quarter.

The semiconductor manufacturer said its revenue climbed to $6.61 billion during the quarter ended May 2, 2021, up from $5.74 billion seen in the same period a year ago. That was above the Wall Street consensus estimates of $6.51 billion.

On an adjusted basis, the global semiconductor leader earned $6.62 per share, higher than the market expectations of $6.43 per share.

Broadcom forecasts its third quarter of the fiscal year 2021, ending August 1, 2021, revenue at nearly $6.75 billion and adjusted EBITDA at about 60%. That was higher than the Wall Street consensus estimates of $6.6 billion.

But the upbeat results did not help stocks, which fell about 2% to $464.8 on Thursday. The stock rose over 6% so far this year.

Analyst Comments

“Upside on broadband and wireless drove a beat in the quarter. Broadcom expects strength in semiconductors to continue into the July quarter, led by strength in broadband, hyperscale and an improvement in enterprise. Remain Overweight and increase price target to $555,” noted Craig Hettenbach, equity analyst at Morgan Stanley.

Broadcom (AVGO) is a compelling franchise in semis with diversified end market exposure, product cycle momentum in wireless and networking, and market leadership. Furthermore, we take a more constructive view than investors on the company’s software strategy, particularly its purchase of Symantec. While sentiment has gradually improved, AVGO is still trading 7X turns below the SOX on a P/E basis despite superior margins and FCF. We see an increase in 5G $ content, a rebound in enterprise, and reacceleration of cloud as tailwinds heading into 2021. And with the company’s net leverage reduced meaningfully it should be in the position to execute on tuck-in deals in software.”

Broadcom Stock Price Forecast

Seventeen analysts who offered stock ratings for Broadcom in the last three months forecast the average price in 12 months of $525.75 with a high forecast of $575.00 and a low forecast of $440.00.

The average price target represents a 13.11% increase from the last price of $464.80. Of those 17 analysts, 15 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the stock price forecast to $555 from $538 with a high of $657 under a bull scenario and $404 under the worst-case scenario. The firm gave an “Overweight” rating on the semiconductor manufacturer’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $585 from $570. Cowen lifted the target price to $478 from $470. Piper Sandler increased the target price to $525 from $500. UBS upped the target price to $530 from $510. Citigroup raised the price target to $500 from $470.

“A very clean F2Q beat on broad-based robust demand with an above consensus F3Q outlook on continuation of existing trends. Cloud/networking spending remains resilient with surprisingly resurgent Broadband trends offsetting continued soft but set to improve Enterprise spending,” noted Matthew D. Ramsay, equity analyst at Cowen.

“As expected, Wireless was down on seasonally with consistent contributions via Software. PT to $478, reit Market Perform,”

Check out FX Empire’s earnings calendar

European Equities: Economic Data and Central Bank Chatter in Focus

Economic Calendar

Friday, 4th June

German IHS Markit Construction PMI (May)

Eurozone Retail Sales (MoM) (Apr)

ECB President Lagarde Speaks

The Majors

It was mixed day for the European majors on Thursday.

The DAX rose by 0.19%, while the CAC40 and the EuroStoxx600 fell by 0.21% and by 0.12% respectively.

Positive economic data from both the Eurozone and the U.S provided the markets with support on the day.

Particularly impressive ADP nonfarm employment change figures from the U.S and a further decline in jobless claims did weigh, however.

Surging inflation and a marked improvement in labor market conditions in the U.S raises the prospect of a sooner, rather than later, move by the FED.

The Stats

It was a busy day on the economic data front. Service sector PMI figures for Italy and Spain were in focus this morning.

Finalized service and composite PMIs for France, Germany, and the Eurozone also drew interest.

In May, Spain’s services PMI rose from 54.6 to 59.4, with Italy’s services PMI increasing from 47.3 to 53.1.

Economists had forecast PMIs of 58.0 and 52.5 respectively.

For France, the services PMI rose from 50.3 to 56.6, which was in line with prelim figures.

Germany’s services PMI was also in line with prelims, increasing from 49.9 to 52.8 in the month.

The Eurozone Composite

For the Eurozone, the services PMI jumped from 50.5 to 55.2 in May, which was up from a prelim 55.1.

For May, the Composite PMI came in at 57.1. This was up from an April 53.8 and a prelim 56.9.

According to the finalized Markit Survey,

  • A marked increase in service sector activity supported the increase in the composite PMI.
  • The easing of lockdown measures supported the pickup in service sector activity.
  • New business increased for the first time since last July, leading to an increase in backlogs.
  • Employment rose across the services sector at the strongest pace since Feb-2020.
  • Vaccine optimism also drove sentiment to its highest level in over 17-years.
  • In spite of the rebound in service sector activity, the manufacturing sector remained the key driver.
  • At country level, Ireland’s private sector led the way, with Spain also performing strongly.
  • While France also saw a strong pickup, Germany only recorded a modest improvement.
  • Italy recorded the weakest net rise in private sector output.

From the U.S

It was also a busy day on the economic calendar.

ADP nonfarm employment change and weekly jobless claims were in focus along with the market’s favored ISM Non-Manufacturing PMI figures for May.

In May, nonfarm payrolls increased by 978k according to the ADP, coming in ahead of a forecasted 650k increase. In April, nonfarm payrolls had risen by 654k.

Initial jobless claim figures also impressed. In the week ending 28th May, initial jobless claims fell from 405k to 385k. Economists had forecast a decline to 390k.

Service sector PMI numbers were also positive, with the ISM Non-Manufacturing PMI climbing from 62.7 to 64.0. Economists had forecast an increase to 63.0.

Other stats included nonfarm productivity and until labor costs for the 1st quarter and finalized Markit service PMI numbers.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. BMW rallied by 3.83% to lead the way, with Continental and Daimler ending the day up by 1.65% and by 1.89% respectively. Volkswagen rose by a more modest 0.42% on the day.

It was a relatively bullish day for the banks. Deutsche Bank and Commerzbank ended the day with gains of 0.82% and 0.59% respectively.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen rose by 0.77% and by 0.49% respectively, while Credit Agricole fell by 0.42%.

It was a bullish day for the French auto sector. Stellantis NV rose by 1.14%, with Renault ending the day up by 0.81%.

Air France-KLM slid by 4.64%, however, with Airbus SE falling by 0.83%.

On the VIX Index

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

Reversing a 2.35% fall from Wednesday, the VIX rose by 3.20% to end the day at 18.04.

The NASDAQ slid by 1.03, with the Dow and the S&P500 ending the day down by 0.07% and by 0.36% respectively.

VIX 040621 Daily Chart

The Day Ahead

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

Eurozone retail sales for April are due out later this morning along with HIS Markit Construction PMI figures from Germany.

Following disappointing retail sales figures from Germany and France, the markets will be expecting a Eurozone-wide decline.

From the U.S, labor market figures for May will be the key stats of the day, however. Following disappointing April nonfarm payroll numbers, the markets will be looking for a marked increase in May.

On the monetary policy front, ECB President Lagarde and FED Chair Powell are also scheduled to speak. Expect any chatter on monetary policy to influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 26 points.

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

Ramping Sales of Medical Cannabis Critical for Long-Term Growth of Khiron, Says ATB Capital

ATB Capital said in its latest report that Khiron’s strategy of vertical integration supports sales growth at attractive margins and as medical cannabis revenue increases, they expect Khiron’s sales growth and gross margin expansion to be meaningful over the long term, supporting a constructive outlook.

Last week, the vertically integrated cannabis leader with core operations in Latin America and Europe recorded revenues of $2.8 million in Q1 2021, a 49% increase from the prior year and 13% increase from Q4 2020. The company said its medical cannabis sales reach 20% of revenues, contributing over 45% of gross profits.

“We reduce our revenue estimates due to depreciating domestic currency and impact of COVID-19 on CPG sales. However, we increased our gross margin estimates to factor the increasing medical cannabis sales. Our target price remains unchanged as lower revenue estimates are offset by higher margin estimates,” noted David M. Kideckel, PhD Analyst, Managing Director at ATB Capital.

“Maintain Speculative Buy with an Unchanged Price Target of $1.00: Our price target is based on our DCF projected through 2030e using a 17% discount rate and a 3% terminal growth rate, both unchanged. The terminal value accounts for 39% of our fair value estimate. Our rating reflects the regulatory uncertainty for cannabis use across LATAM.”

The U.S.-listed Khiron Life Sciences shares rose over 24% so far this year.

ATB Capital has performed a scenario analysis and gave revenue estimates for end-2021 of $11.8 million in the bear case scenario, $15.2 million under a base case scenario and $28.2 million in a bull case scenario.

Bear Case: We assume lower sales throughout 2021e due to the impact of the COVID-19 pandemic on Khiron’s medical cannabis and health services sales.

Base Case: We expect sales to ramp up in 2021e as Khiron increases sales from medical cannabis products in Colombia, with moderate impact from COVID-19. We assume Khiron starts generating meaningful medical cannabis sales from international markets (e.g. UK, Peru, Brazil) from H2/21e onwards. We also assume that Khiron’s revenue from the CPG segment may restart once COVID-19 eases in 2022e.

Bull Case: We assume COVID-19 will not materially impact Khiron’s sales, and that the Company will be able to rapidly ramp up medical cannabis sales in Colombia, export to European markets, and expand its clinic model across LATAM.

Cannabis is an emerging industry and is subject to regulatory headwinds. Although the industry is still emerging, legal cannabis has gone through multiple iterations. The business started as a flower-based market aimed at catering to the needs of stoners and thereafter, blossomed to a more retail-centric market that experimented with multiple edibles, beverages and concentrates.

Most recently, the cannabis industry has further widened its reach to target a broad base of the audience whose main aim is not to get intoxicated but rather to be cured of some form of the disease.

While over half of the population is in favor of new legalization, only a few states have thus far legalized cannabis for recreational use and the product remains illegal at the federal level. Much work and changes are still required to occur for this industry to realize its full potential.

FedEx Could Hit New All-Time High on Strong Q4 Earnings

The Memphis, Tennessee-based multinational delivery services company FedEx is expected to report its fiscal fourth-quarter earnings of $4.91 per share, which represents year-over-year growth of about 95% from $2.53 per share seen in the same period a year ago.

The delivery firm would post revenue growth of over 20% to $21.47 billion. In the last four quarters, on average, FedEx has beaten earnings estimates over 41%.

The company’s next earnings report is expected to be released on June 24, 2021. FedEx shares rose over 18% so far this year. The stock fell about 1.4% on Wednesday.

Analyst Comments

“We expect a beat for F4Q21 as many of the LTM trends we have seen will continue. However, more than ever, 4Q results are likely not as important as the FY22 guide, which will be the critical test of how much of the pandemic tailwinds mgmt. believes are sustainable (and deserves to be priced in),” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We see EBIT growth through YE of FY21 driven by both margin improvement and vol. driven rev. growth which is helped by limited Airfreight capacity and an eCommerce surge, though yields are mixed. We continue to see secular threats to Parcel and remain skeptical that these trends will be sustainable but believe that until there is evidence of a reversal in earnings momentum, the stock can trade at its historical multiple (14-15x PE) on current EPS.”

FedEx Stock Price Forecast

Eighteen analysts who offered stock ratings for FedEx in the last three months forecast the average price in 12 months of $336.80 with a high forecast of $383.00 and a low forecast of $250.00.

The average price target represents a 9.86% increase from the last price of $306.57. Of those 18 analysts, 15 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the stock price forecast to $265 from $250 with a high of $400 under a bull scenario and $100 under the worst-case scenario. The firm gave an “Equal-weigh” rating on the health care company’s stock.

Several other analysts have also updated their stock outlook. FedEx has been assigned a $350 price objective by analysts at Berenberg Bank. The firm presently has a “buy” rating on the shipping service provider’s stock. Robert W. Baird reaffirmed a “buy” rating on shares.

Credit Suisse Group slashed their price target to $350 from $368 and set an “outperform” rating. KeyCorp raised their price target to $370 from $350 and gave the stock an “overweight” rating. JPMorgan raised the target price to $366 from $340.

Check out FX Empire’s earnings calendar

European Equities: Service Sector PMIs and U.S Labor Market Data in Focus

Economic Calendar

Thursday, 3rd June

Spanish Services PMI (May)

Italian Services PMI (May)

French Services PMI (May) Final

German Services PMI (May) Final

Eurozone Markit Composite PMI (May) Final

Eurozone Services PMI (May) Final

Friday, 4th June

German IHS Markit Construction PMI (May)

Eurozone Retail Sales (MoM) (Apr)

ECB President Lagarde Speaks

The Majors

It was another bullish day for the European majors on Wednesday.

The CAC40 rose by 0.49%, with the DAX30 and the EuroStoxx600 seeing gains of 0.23% and 0.22% respectively.

Disappointing economic data from Germany failed to pull the majors into the red mid-week. Market optimism, following Tuesday’s manufacturing PMIs and unemployment numbers from Germany and the Eurozone, continued to deliver support.

The upside was modest, however, ahead of a busy Thursday and Friday on the economic data front.

The Stats

It was a quieter day on the economic data front. From the Eurozone, German retail sales figures were in focus.

In April, retail sales fell by 5.5%, month-on-month, partially reversing a 7.7% jump from March. Economists had forecast a more modest 2.0% decline.

According to Destatis,

  • The decline in April was attributed to the federal emergency brake in the 2nd half of April and the Easter business in March.
  • Compared with the same month a year earlier, retail sales were up by 4.4%, coming up short of a forecasted 10.1% increase. In March, retail sales had been up by 11.0%, year-on-year.

From the U.S

It was a quiet day on the economic calendar, with no major stats to provide the European markets with direction late in the session.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. Volkswagen rose by 1.93% to lead the way, with BMW and Continental ending the day up by 0.97% and by 0.90% respectively. Daimler saw a more modest 0.41% gain on the day.

It was a mixed day for the banks, however. Deutsche Bank slipped by 0.03%, while Commerzbank gained 1.75%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen rose by 0.51% and by 0.34% respectively, while Credit Agricole fell by 0.59%.

It was a bullish day for the French auto sector, however. Stellantis NV rose by 0.61%, with Renault ending the day up by 1.65%.

Air France-KLM rallied by 3.45%, with Airbus SE gaining 1.78%.

On the VIX Index

Following two consecutive days in the green, it was back into the red for the VIX on Wednesday.

Partially reversing a 6.80% fall from Tuesday, the VIX fell by 2.35% to end the day at 17.48.

The Dow rose by 0.07%, with the NASDAQ and the S&P500 both ending the day up by 0.14% respectively.

VIX 030621 Monthly Chart

The Day Ahead

It’s a busy day ahead on the European economic data front.

Service sector PMIs for Italy and Spain are due out along with finalized PMI numbers from France, Germany, and the Eurozone.

Barring a marked revision to prelim figures expect Italy, Spain and the Eurozone’s PMIs to draw the greatest interest.

The markets will be looking for Italy’s services sector to return to growth at a minimum…

From the U.S, it’s also a busy day ahead on the economic data front.

Key stats include ADP nonfarm employment change figures, the weekly jobless claims, and market’s favored ISM non-manufacturing PMI.

Other stats include nonfarm productivity and unit labor cost and finalized Markit service PMI numbers. These should have a muted impact on the European majors, however.

Ahead of the European open, Caixin service sector PMI numbers from China will set the tone.

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.

European Equities: Economic Data from Germany and Central Bank Chatter in Focus

Economic Calendar

Wednesday, 2nd June

German Retail Sales (MoM) (Apr)

Thursday, 3rd June

Spanish Services PMI (May)

Italian Services PMI (May)

French Services PMI (May) Final

German Services PMI (May) Final

Eurozone Markit Composite PMI (May) Final

Eurozone Services PMI (May) Final

Friday, 4th June

German IHS Markit Construction PMI (May)

Eurozone Retail Sales (MoM) (Apr)

ECB President Lagarde Speaks

The Majors

It was bullish day for the European majors on Tuesday, with economic data from the Eurozone delivering support.

The DAX rose by 0.95%, with the CAC40 and the EuroStoxx600 seeing gains of 0.66% and 0.75% respectively.

Economic data from early in the session continued to fuel market optimism over the economic outlook.

Manufacturing sector PMIs from China and the Eurozone and unemployment figures from Germany and the Eurozone were all skewed to the positive.

The ECB’s assurances of unwavering support also limited the impact of a further pickup in inflationary pressure.

The Stats

It was a particularly busy start to the day on the economic data front. From the Eurozone, manufacturing sector PMIs and German unemployment figures influenced.

Unemployment and inflation figures for the Eurozone were also in focus.

Manufacturing Sector PMIs

Member States

In May, Spain’s manufacturing PMI increased from 57.7 to 59.4, with Italy’s PMI rising from 60.7 to 62.3.

Economists had forecast PMIs of 59.5 and 62.0 respectively.

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

Germany’s PMI fell from 66.2 to 64.4, which was up from a prelim 64.0.

France’s manufacturing PMI increased from 58.9 to 59.4, up from a prelim 59.2.

A pickup in manufacturing sector activity in Italy and Spain and upward revisions to French and German PMIs led to an upward revision to the Eurozone’s manufacturing PMI.

The Eurozone

In May, the Eurozone’s manufacturing PMI increased from 62.9 to a new record high 63.1, which was up from a prelim 62.8.

According to the Eurozone’s Markit Survey,

  • All three market groups recorded strong improvements in operating conditions.
  • Investment goods producers were the best performing in May, reporting marked increases in output and new orders.
  • Intermediate goods and consumer goods categories both saw stronger growth.
  • New orders surged off the back of demand across the bloc and from overseas.
  • Sourcing inputs from vendors constrained production activity.
  • Deliveries from suppliers deteriorated at a severe and unprecedented rate in the month.
  • As a result, input costs jumped again, with output prices rising at the fastest pace on record.
  • Firms increased payrolls, with the rate of hiring the most marked since January 2018.
  • Sector optimism remained high, while easing to its lowest level in the last 4-months.

By Country:

  • The Netherlands (69.4) and Austria (66.4) hit new record highs to rank 1st and 2nd.
  • Germany came in 3rd in spite of a 3-month low PMI of 64.4.
  • Ireland (64.1) and Italy (62.3%) also hit record highs to rank 4th and 5th
  • France (248-month high), Spain (276-month high), and Greece (253-month high) sat at the bottom of the rankings.

German Unemployment

Employment figures from Germany were also skewed to the positive.

In May, unemployment fell by 15k, reversing an 8k rise from April. As a result of the fall, the unemployment rate held steady at 6.0%, which was in line with forecasts. Economists had forecast a more modest 9k fall in unemployment, however.

Eurozone Unemployment

In April, the Eurozone’s unemployment rate fell from 8.1% to 8.0%. Economists had forecast the unemployment rate to hold steady at 8.1%.

According to Eurostat,

  • In April 2020, the unemployment rate had stood at 7.3%.
  • In April, 2021, the number of unemployed was up by 1.275m, when compared with April 2020.
  • Compared with March 2021, the number of persons unemployed decreased by 134,000.

Eurozone Inflation

The Eurozone annual rate of inflation is expected to be 2.0% in May 2021, up from 1.6% in April, based on prelim figures.

According to Eurostat,

  • Energy is expected to have the highest annual rate in May, 13.1% compared with 10.4% in April.
  • Services inflation is expected to pick up from 0.9% in April to 1.1% in May.
  • Non-energy industrial goods 0.7% compared with 0.4%.
  • Food, alcohol, & tobacco prices are expected to rise by 0.6% year-on-year, which is stable when compared with April 2021.

From the U.S

It was a relatively quiet day on the economic calendar following Monday’s holiday.

The manufacturing sector was also in focus, with the market’s preferred ISM Manufacturing PMI drawing attention.

In May, the ISM Manufacturing PMI increased from 60.7 to 61.2. Economists had forecast a modest rise to 60.8.

The market survey finalized manufacturing PMI was also out but had a muted impact on the broader markets.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Continental rallied by 4.03% to lead the way, with Volkswagen rising by 3.13%. BMW and Daimler ended the day up by 2.82% and by 2.62% respectively.

It was also a bullish day for the banks. Deutsche Bank rose by 2.51%, with Commerzbank gaining 1.52% on the day.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rose by 1.54% and by 1.24% respectively, with Credit Agricole gaining 2.07%.

It was a relatively bullish day for the French auto sector, however. Stellantis NV and Renault ended the day with modest gains of 0.54% and 0.55% respectively.

Air France-KLM and Airbus SE found strong support, however, rising by 2.75% and by 1.97% respectively.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Tuesday.

Following a 0.12% gain on Friday and Monday’s holiday, the VIX rose by 6.80% to end the day at 17.90.

The Dow eked out a 0.13% gain, while the NASDAQ and the S&P500 ended the day down by 0.09% and by 0.05% respectively.

VIX 020621 Monthly Chart

The Day Ahead

It’s a quieter day ahead on the European economic data front, following Tuesday’s data dump.

The German economy is back in focus, with retail sales for April due out. The markets will be looking for a further pickup in spending to support the optimistic economic outlook.

From the U.S, there are no material stats to provide direction later in the day.

The lack of stats will likely leave the European majors in the hands of central bank chatter late in the day.

The Futures

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

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