Stock Market Roundup & Ratings for December 1st

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Top Stock News

Bank of Montreal: Bank of Montreal (BMO) reported a decline in fourth-quarter profit due to higher provisions for potential credit defaults, driven by cautious measures amid gloomy economic conditions. Provisions for credit losses (PCLs) surged to C$446 million, compared to C$226 million a year earlier. The bank’s quarterly net income was C$1.62 billion, or C$2.06 per share, down from C$4.48 billion, or C$6.51 per share, a year ago. Despite the decline, net interest income rose by 31% to C$4.94 billion, reflecting gains from increased interest income.

National Bank of Canada: National Bank of Canada (NBC) reported a rise in fourth-quarter profit, attributed to a strong performance in its capital markets unit, which helped offset the impact of larger provisions. Provisions for credit losses increased to C$115 million from C$87 million a year earlier. The bank’s adjusted net interest income declined by about 35.1% to C$825 million, while adjusted net income rose to C$867 million, or C$2.44 per share, compared to C$738 million, or C$2.08 per share, in the same period last year.

Brookfield Asset Management Ltd: Brookfield Asset Management announced its consideration of Australia’s new green energy policy’s implications on Origin Energy, as it contemplates a new offer following the potential rejection of its $10.6 billion bid by shareholders. The company expressed interest in assessing the government’s proposed expansion to the Capacity Investment Scheme (CIS) and National Energy Transformation Partnership (NETP). Brookfield Asset Management also noted raising $28 billion towards its largest-ever fund for global infrastructure investments.

Canadian Energy Partners Inc, Canadian Natural Resources Ltd, Parkland Corp, & Suncor Energy Inc: Committed shippers on the Trans Mountain pipeline expansion (TMX) voiced concerns to the Canada Energy Regulator (CER) regarding the project’s request for a variance in a section of the pipeline in British Columbia. Trans Mountain sought approval to install smaller diameter pipe due to challenging construction conditions. Separately, the CER approved preliminary interim tolls for the expanded Trans Mountain pipeline system, allowing the project to charge for shipping services once operations commence.

First Quantum Minerals Ltd: First Quantum Minerals announced the suspension of its current-year production outlook for the Cobre mine in Panama. The company initiated international arbitration over a contested contract with the Panamanian government. The contract, agreed in October, granted First Quantum a 20-year mining right with an option to extend for another 20 years in exchange for $375 million in annual revenue to Panama. The company initiated arbitration to protect its rights under the 2023 concession agreement with the Panamanian government.

Did pandemic central banking work? Fed review to eye inflation, jobs tradeoffs: The U.S. Federal Reserve’s commitment in 2020 to support “broad-based and inclusive” employment through loose monetary policy is under scrutiny as part of a review. This move was considered a robust response to the challenges posed by the pandemic, aligning with the belief that maintaining both low unemployment and low inflation simultaneously is feasible. The review aims to assess the effectiveness of the Fed’s strategies in navigating the economic impacts of the pandemic and whether the tradeoffs between inflation and jobs were successfully managed.

Tesla’s Cybertruck Pricing: Tesla’s highly anticipated Cybertruck is set to be priced starting at $60,990, which is more than 50% higher than CEO Elon Musk’s initial estimate in 2019. Despite the increased cost, analysts anticipate that the Cybertruck will attract a niche market of affluent buyers. The pricing decision reflects Tesla’s positioning of the Cybertruck as a premium electric pickup truck with innovative features, albeit at a higher price point than initially communicated.

Google’s Antitrust Concerns Against Microsoft: Google is urging Britain’s antitrust regulator to take action against Microsoft, alleging that Microsoft’s business practices have placed competitors at a significant disadvantage. The details are outlined in a letter seen by Reuters. Google’s call for antitrust action emphasizes the competitive dynamics in the UK cloud market and highlights concerns over fair business practices and market access within the technology sector.

Pfizer Abandons Twice-Daily Obesity Pill Study: Pfizer has decided not to advance a twice-daily version of the oral weight-loss drug danuglipron into late-stage studies. This decision comes after a mid-stage trial revealed high rates of side effects, including nausea and vomiting, leading to most patients dropping out. The move reflects Pfizer’s commitment to prioritizing safety and efficacy in drug development, as well as a recognition of the challenges associated with the potential twice-daily dosing regimen.

Dell Technologies Inc: Dell reported third-quarter revenue below estimates due to a slower-than-expected recovery in the hardware and software market. The servers and networking business revenue saw a 9% increase from the second quarter, driven by customer interest in generative artificial intelligence. Despite this, third-quarter revenue came in at $22.25 billion, missing estimates of $23 billion. Dell raised its full-year earnings per share expectations to $6.63, plus or minus 10 cents, compared to the previous forecast of $6.30, plus or minus 20 cents.

Marvell Technology Inc: Marvell Technology expects its data center business to continue growing next year, even as roughly half its revenue is anticipated to decline in the first quarter due to challenging conditions faced by its customers. For the current quarter, Marvell expects revenue of $1.42 billion plus or minus 5%, slightly below estimates of $1.46 billion. Marvell posted net revenue of $1.42 billion for the quarter ended Oct. 28, beating analysts’ estimates. The company’s adjusted income of 41 cents per share also marginally surpassed estimates of 40 cents per share.

Ulta Beauty Inc: Ulta Beauty raised the lower end of its full-year profit and sales forecasts due to strong demand for luxury skincare and fragrances. The company adjusted its annual profit forecast to $25.20-$25.60 per share, up from the previous range of $25.10-$25.60 per share. Ulta also raised the lower end of its annual net sales forecast to $11.10 billion-$11.15 billion, compared to the previous forecast of $11.05 billion-$11.15 billion. Quarterly net sales rose 6.4% to $2.49 billion, and the company earned $5.07 per share, exceeding Wall Street’s expectations of $4.95.

Alphabet Inc, Amazon.com Inc & Microsoft Corp: Google called on Britain’s antitrust regulator to take action against Microsoft, alleging its business practices have disadvantaged rivals. The complaint focuses on Microsoft’s dominance in the cloud computing industry. The Competition and Markets Authority (CMA) launched an investigation into Britain’s cloud computing industry in October, following a referral from media regulator Ofcom. Amazon and Microsoft’s combined share of Britain’s public cloud infrastructure services market was estimated to be between 70-80% in 2022.

AstraZeneca PLC: AstraZeneca is discontinuing two late-stage trials into the potential benefits of its potassium-reduction drug Lokelma in treating hyperkalemia in people with various heart and kidney diseases. The decision is not due to safety concerns, and Lokelma’s positive benefit-risk profile remains unchanged in the approved indication. Lokelma, approved for the treatment of hyperkalemia, brought in sales of $300 million in the first nine months of 2023.

Banco Bilbao Vizcaya Argentaria S.A: BBVA, the euro zone’s third-largest bank, stated that the European Central Bank had set a minimum threshold for its Common Equity Tier 1 (CET1) capital of 9.09% for 2024, an increase from the previous year. The higher requirement is mostly due to a buffer for Other Systemic Important Institutions (O-SII) and reflects a cautious approach amid economic uncertainties. The new requirement takes effect on Jan. 1, 2024.

Bank of Montreal: The Canadian bank reported a fall in fourth-quarter profit due to higher provisions for potential credit defaults, offsetting gains from increased interest income. Bank of Montreal’s quarterly net income was C$1.62 billion ($1.20 billion), down from C$4.48 billion a year earlier. Net interest income rose 31% to C$4.94 billion. The bank increased provisions for credit losses (PCLs) to C$446 million, reflecting caution amid challenging economic conditions.

Berkshire Hathaway Inc: Berkshire Hathaway is awaiting a decision by a Delaware judge on whether to set a January trial date over a dispute regarding the valuation of truck stop operator Pilot Travel Centers. The disagreement concerns the amount Berkshire would owe if the Haslam family, including Cleveland Browns owner Jimmy Haslam, exercised their option to sell the remaining 20% of Pilot in early 2024. The lawsuit centers on accusations of manipulating Pilot’s earnings.

Braskem SA: Braskem, the Brazilian petrochemical producer, faces a new 1 billion real lawsuit over damages caused by its salt mines, leading to sinking ground in the city of Maceio. The lawsuit, filed by state and federal prosecutors, seeks compensation for more families and addresses expanded risk areas related to ground subsidence. This comes after warnings that one of Braskem’s salt mines in Maceio was at imminent risk of collapse.

Broadcom Inc & VMWare LLC: Broadcom will reportedly lay off about 1,300 VMware employees in California following its acquisition of the cloud-computing firm. The chipmaker is also said to be reviewing strategic options for two business units of VMware. Broadcom recently closed its $69 billion acquisition of VMware after receiving regulatory approval from China.

Brookfield Asset Management Ltd: Brookfield Asset Management stated that it would consider the implications of Australia’s new green energy policy on Origin Energy before making a new offer if its $10.6 billion bid for the firm is voted down. Origin’s shareholders are set to vote on the bid, and Brookfield will examine the government’s proposed expansion to the Capacity Investment Scheme and National Energy Transformation Partnership if the vote fails.

Canadian Natural Resources Ltd & Suncor Energy Inc: Committed shippers on the Trans Mountain pipeline expansion (TMX) expressed concerns about the project’s request for a variance on a section of the pipeline in British Columbia. Trans Mountain sought permission to install smaller diameter pipe in a challenging construction area. Separately, the Canada Energy Regulator approved preliminary interim tolls for the expanded Trans Mountain pipeline system, allowing charges for shipping services once operations start.

Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase & Co & Morgan Stanley: More banks will need to report and reduce the carbon emissions linked to their capital markets deals following the launch of the Partnership for Carbon Accounting Financials (PCAF) methodology. This standard will help banks address facilitated emissions from activities like underwriting. Banks, including Citi and Morgan Stanley, have been awaiting PCAF’s methodology to incorporate facilitated emissions into their reduction targets.

Delta Air Lines Inc: The Teamsters have formed a coalition to unionize over 45,000 workers at Delta Airlines. The coalition includes members of the Association of Flight Attendants and the International Association of Machinists and Aerospace Workers. The unions are organizing Delta technicians, flight attendants, and ramp, cargo, and tower workers to form a union, reflecting a growing push for workers’ rights in the airline industry.

Ecopetrol SA: Colombia’s state-run oil company, Ecopetrol, plans to invest between $5.7 billion and $6.7 billion and produce up to 730,000 barrels per day equivalent (boepd) in 2024. A significant portion of the spending, about $4.8 billion, will focus on maintaining production, refining, and energy transition initiatives. Approximately 42% of the spending plan will be allocated to energy transition projects, including low emissions, decarbonization, electrical transmission, and natural gas supplies.

Eli Lilly and Co & Novo Nordisk A/S: Leading U.S. obesity specialists expect Eli Lilly’s weight-loss drug Zepbound to produce similar heart benefits as Novo Nordisk’s Wegovy, as both drugs belong to the same class. Zepbound’s cardiovascular data is anticipated in the coming years, but experts suggest that it is unlikely to significantly differ from Wegovy’s heart benefits. Analysts forecast substantial sales for both drugs, with Lilly expected to reap about $2 billion from Zepbound in 2024.

General Motors Co: The U.S. National Highway Traffic Safety Administration is opening an investigation into 73,000 Chevrolet Volt plug-in hybrid cars due to reports of loss of power, failures to restart, and other issues. The preliminary evaluation focuses on the Battery Energy Control Module (BECM), and complaints indicate little to no warning before power loss or reduced power mode.

Nomura Holdings Inc: Nomura Holdings has appointed former UK treasury official Tom Scholar as non-executive chair of its European division. Scholar will succeed David Godfrey, and the change is set to take effect on April 10, 2024. Nomura aims to leverage Scholar’s expertise to strengthen its presence in the European market.

Pfizer Inc: Pfizer has decided not to advance a twice-daily version of its oral weight-loss drug danuglipron into late-stage studies after a mid-stage trial showed high rates of side effects, including nausea and vomiting. Pfizer will instead focus on a once-daily, modified release version of danuglipron. In a separate development, Texas Attorney General Ken Paxton sued Pfizer, accusing the company of misrepresenting the efficacy of its widely-used COVID-19 vaccine.

Tesla Inc: Tesla’s long-delayed Cybertruck will be priced starting at $60,990, over 50% more than Elon Musk’s 2019 estimate. The pricing reflects the complexities and added costs associated with the new body material and unconventional styling of the Cybertruck. The entry-level rear-wheel-drive version, with an estimated starting price of about $61,000, will be available in 2025.

Toyota Motor Corp: Toyota is partially suspending production at its plant in Tianjin, China, as part of a major production adjustment due to weak sales of gasoline-engine cars. The cut, initially planned for October and November, will now be extended by three months. China accounted for nearly a fifth of Toyota’s worldwide sales, and the suspension reflects the challenges faced by global automakers in the highly competitive Chinese market.

VF Corp: VF Corp, the owner of Vans, has laid off about 500 employees as part of a restructuring effort to improve operations globally. The company has been facing challenges in the U.S. retail environment, with sales at its Vans brand dropping for several quarters. The job cuts affected all brands, corporate functions, and geographies, and VF Corp had about 33,000 employees as of April 1.

Wells Fargo & Co: Wells Fargo is facing a lawsuit filed by an employee accusing the bank of depriving hundreds of U.S. branch workers of overtime pay. The proposed class action claims Wells Fargo improperly classified “senior premier bankers” as exempt from overtime pay under federal and state laws. The lawsuit seeks unspecified damages, penalties, and legal costs. This comes as Wells Fargo encounters an unprecedented campaign to unionize its workforce, with a recent petition filed for a union election in Albuquerque, New Mexico.

Top Analyst Ratings

Chewy Inc (CHWY): Piper Sandler has revised down the target price for Chewy Inc from $29 to $21. The adjustment is attributed to several challenges faced by the company in achieving sales growth. Piper Sandler identifies two main factors contributing to these challenges. Firstly, the analyst mentions the possibility of flat to declining pet ownership, which could limit the potential customer base for Chewy. Secondly, the note points to disinflation in pet food, indicating a scenario where prices for pet food products might be stabilizing or decreasing, potentially affecting Chewy’s revenue growth.

Chipotle Mexican Grill Inc (CMG): RBC has increased the target price for Chipotle Mexican Grill Inc from $2,185 to $2,425. The upward revision is based on the growth observed in the company’s restaurant traffic. Increased footfall in Chipotle’s restaurants suggests a positive trend in customer engagement, potentially leading to higher sales. Additionally, RBC factors in the long-term opportunities that Chipotle has to enhance margins and returns. This could include initiatives related to menu innovation, marketing strategies, or operational efficiencies that contribute to sustained growth.

Dell Technologies Inc (DELL): JPMorgan has raised the target price for Dell Technologies Inc from $76 to $77. The decision to revise the target price follows Dell’s better-than-expected third-quarter earnings. The positive financial performance likely signals favorable business conditions, operational efficiency, or strategic initiatives that have contributed to the company’s improved financial outlook. JPMorgan’s increased target price reflects optimism about Dell’s future prospects and the potential for further positive developments that could drive the stock price higher.

General Motors Co (GM): RBC has increased the target price for General Motors Co from $48 to $54. The decision to raise the target price is based on General Motors’ updated growth outlook and guidance. Positive revisions to the company’s forecasts and guidance suggest improved confidence in its ability to capitalize on market opportunities, navigate industry challenges, or execute strategic initiatives effectively. The higher target price reflects RBC’s expectation of increased shareholder value and the potential for General Motors’ stock to perform well in the future.

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