Stock News & Ratings Roundup for December 22nd

Top Stock News

Fed Rate Cuts in 2024 Despite Shift in Rate-Setter Composition: The annual rotation of members on the U.S. Federal Reserve’s interest-rate-setting committee for 2024 indicates a slightly more hawkish tilt compared to the outgoing 2023 group. Despite this shift, the overall outlook remains unchanged, with expectations for a pivot to interest-rate cuts in the coming year.

Market Impact of Regulatory News on Chinese Internet Stocks: Chinese internet stocks experienced a significant decline in response to regulatory developments, contributing to a broader negative trend in Asian stocks during the final full trading week of the year. The regulatory news concerning Chinese internet companies added to existing concerns, leading to a sell-off in the stock market. Investors reacted to uncertainties related to regulatory changes, and the market sentiment was reflected in the performance of Asian stocks. The impact extended beyond the Chinese market, causing a wobbling effect on the U.S. dollar.

Oil Prices Rise Amid Middle East Tensions: Oil prices saw an increase as geopolitical tensions persisted in the Middle East. The ongoing geopolitical uncertainties in the region contributed to concerns about potential disruptions in oil supply, leading to a rise in oil prices. Tensions in the Middle East have historically influenced oil markets, as the region is a major oil-producing and exporting area. Investors closely monitor geopolitical developments, as they can have a direct impact on the global oil market dynamics. The fluctuation in oil prices is often driven by geopolitical events, supply disruptions, and changes in demand outlook, making it a key focus for energy market participants.

Nike Shares Decline After Annual Revenue Forecast Cut: Nike faced a dip in its stock value following a decision to lower its annual revenue forecast. The sportswear giant also unveiled a $2 billion cost-saving plan, signaling a strategic shift toward prioritizing profit growth over sales. This move reflects concerns about weak consumer spending impacting the company’s financial outlook.

Bristol Myers Acquires Karuna Therapeutics for $14 Billion: Bristol Myers Squib has reached an agreement to acquire Karuna Therapeutics for $14 billion. This strategic move allows Bristol Myers to obtain a promising experimental drug for treating schizophrenia, providing a valuable addition to its portfolio and helping counter the impact of patent expirations on older treatments.

Boeing Delivers First Dreamliner to China Since 2019: Boeing successfully delivered its first 787 Dreamliner directly to China since 2019, marking a significant development that could expedite the end of China’s extended freeze on deliveries of Boeing’s profitable 737 MAX. This positive development follows more than four years of suspension.

Tesla Recalls Over 120,000 Vehicles in the U.S.: Tesla is recalling 120,423 vehicles in the U.S. due to concerns about cabin doors being unlocked during a crash. This decision comes shortly after Tesla announced another recall, underscoring the company’s commitment to addressing safety issues promptly and meeting regulatory standards set by the National Highway Traffic Safety Administration (NHTSA).

Nike Inc’s Trimmed Sales Forecast and Cost-Saving Plan: Nike Inc, a global sportswear giant, announced a reduction in its annual sales forecast, attributing the adjustment to cautious consumer spending, a weaker online business, and increased promotional activities. In response to these challenges, the company revealed plans to implement a $2 billion cost-saving initiative over the next three years. The strategy includes measures such as tightening the supply of certain products, enhancing the supply chain, reducing management layers, and increasing automation. Nike’s full fiscal-year revenue projection has been adjusted to approximately 1%, a downgrade from the earlier forecast of mid-single-digit growth, with analysts anticipating a 3.8% increase. In the fiscal second quarter, ending Nov. 30, Nike reported total revenue of $13.39 billion, slightly below the estimated $13.43 billion. Despite these challenges, Nike’s per-share earnings of $1.03 exceeded expectations of 85 cents, benefiting from lower freight costs and inventories.

Bristol Myers Squibb’s $14 Billion Acquisition of Karuna Therapeutics: Bristol Myers Squibb has entered into an agreement to acquire Karuna Therapeutics for $14 billion. The deal, as reported by the Wall Street Journal, outlines that Bristol Myers Squibb will pay $330 per share in cash for Karuna, securing the rights to its experimental schizophrenia drug, currently awaiting U.S. government approval. The acquisition marks a significant move for Bristol Myers Squibb, providing access to a promising therapy and strengthening its pharmaceutical portfolio. The offer price represents a substantial 53.4% premium over Karuna’s last closing price of $215.19.

FDA Approval for AstraZeneca and Ionis Pharmaceuticals’ Drug: The U.S. Food and Drug Administration (FDA) granted approval to the drug Wainua, developed by Ionis Pharmaceuticals in collaboration with AstraZeneca. This approval is specifically for the treatment of nerve damage caused by hereditary transthyretin amyloidosis (ATTR-PN). Wainua is designed for patients experiencing polyneuropathy, a condition characterized by nerve damage associated with ATTR-PN, which affects an estimated 40,000 patients globally. The progressive disorder involves the accumulation of abnormal protein deposits in the body’s organs and tissues. Ionis CEO Brett Monia indicated that, currently, only 20% of patients with ATTR-PN are undergoing treatment.

Berkshire Hathaway’s Increased Stake in Occidental Petroleum: Berkshire Hathaway, led by Warren Buffett, has acquired an additional 5.2 million shares of Occidental Petroleum. This move brings Berkshire’s stake in the oil company to nearly 28%, according to a regulatory filing. The shares were purchased for approximately $312.1 million between Dec. 19 and Dec. 21. This investment follows Berkshire Hathaway’s recent acquisition of nearly 10.5 million shares of Occidental for approximately $588.7 million, coinciding with Occidental’s agreement to acquire U.S. shale oil producer CrownRock in a $12 billion deal.

Boeing’s First Direct Delivery of 787 Dreamliner to China: Boeing achieved a milestone with its first direct delivery of a 787 Dreamliner to China since 2019. The aircraft was received by privately owned Chinese carrier Juneyao Airlines. This event is significant as it could contribute to the resolution of China’s suspension of most orders and deliveries of Boeing planes since 2019, following the worldwide grounding of the 737 MAX after two fatal crashes. A resumption of MAX deliveries would not only signify a reset in Boeing’s relationship with China but also presents an opportunity for the company to deliver a backlog of planes and potentially secure new orders.

Canada’s Approval of Royal Bank of Canada’s Acquisition of HSBC’s Domestic Unit: Canada has granted approval for Royal Bank of Canada’s (RBC) $10.2 billion acquisition of HSBC’s domestic unit. However, the approval comes with conditions, including RBC establishing a global banking hub in Vancouver and waiving fees related to the transfer of mortgages from HSBC to RBC. Additional stipulations include RBC’s commitment to increasing its client operations center workforce in Winnipeg, providing financing for affordable housing construction, and maintaining banking services at a minimum number of HSBC branches. The acquisition is expected to be finalized in the first quarter of 2024, with potential consideration for a special dividend from HSBC.

Leadership Changes at Marathon Petroleum: Marathon Petroleum has announced leadership changes, with Maryann Mannen appointed as the new president and John Quaid as the new chief financial officer, effective Jan. 1. Michael Hennigan will continue as the company’s chief executive officer and as president and chief executive of the general partner of MPLX, a company formed by Marathon. Mannen, the first woman president of Marathon, joined the company in 2021 as chief financial officer, having previously worked at TechnipFMC. Quaid, previously the CFO of MPLX, joined Marathon in 2014 from U.S. Steel.

Italian Tax Claim Against Meta Platforms (Facebook): An Italian tax claim against Meta Platforms Inc., the parent company of Facebook, has been escalated to the EU Commission’s VAT committee for evaluation. Italy is pursuing a potential tax bill of around $954 million, based on an audit by Italy’s Guardia di Finanza police. The audit contends that Meta’s user registrations could be considered a taxable transaction, involving the non-monetary exchange of a membership account for user data. While the amount is relatively modest for Meta, the case has broader implications for how the tech sector is taxed.

Outgoing CEO of Morgan Stanley’s Views on Financial Markets: James Gorman, the outgoing CEO of Morgan Stanley, expressed his perspective on financial markets, stating that markets would “take off” once investors are certain the Federal Reserve has completed its interest rate hikes. Gorman highlighted the recent uncertainty caused by the rate increase, affecting banking and capital markets deals. He emphasized that clarity on the Fed’s rate policy would boost market activity. Gorman is set to step down as CEO on Jan. 1, with Ted Pick succeeding him. He also acknowledged that post-2008 financial crisis regulations have made the banking system safer.

FDA Warning on Counterfeit Versions of Novo Nordisk’s Diabetes Drug: The U.S. Food and Drug Administration (FDA) issued a warning regarding counterfeit versions of Novo Nordisk’s diabetes drug, Ozempic, detected in the country’s drug supply chain. The FDA is actively investigating these counterfeit Ozempic 1 milligram injections and has seized thousands of units. The agency cautioned that some counterfeit products may still be available for purchase. Novo Nordisk and the FDA are conducting tests on the seized products to assess their identity, quality, and safety. Novo Nordisk clarified that the seizures occurred outside the company’s authorized supply chain.

Shell and Trinidad and Tobago’s National Gas Company (NGC) Awarded License for Dragon Gas Field: Shell and Trinidad and Tobago’s National Gas Company (NGC) have been awarded a license by Venezuela to develop the Dragon gas field, estimated to hold 4.2 trillion cubic feet (TCF) of natural gas. This marks Venezuela’s entry into gas production and export, with scant details provided about the agreement. The Dragon project involves collaboration between NGC, Shell, and the Venezuelan government.

Royal Bank of Canada’s Acquisition of HSBC’s Domestic Unit Approved: Canada has granted approval for Royal Bank of Canada’s (RBC) acquisition of HSBC’s domestic unit for C$13.5 billion (approximately $10.2 billion). The approval comes with specific conditions, including RBC establishing a global banking hub in Vancouver, waiving fees associated with the transfer of mortgages from HSBC to RBC, and ensuring the protection of HSBC’s Canadian workforce. Additionally, RBC is required to increase its client operations center workforce in Winnipeg by 10%, provide $7 billion in financing for affordable housing construction across Canada, and maintain banking services at a minimum of 33 HSBC branches. The acquisition is expected to further solidify the position of Canada’s leading lenders in the market.

First Quantum Minerals Ltd Seeks Talks Over Mine’s Legal Status in Panama: First Quantum Minerals Ltd’s Panama unit has expressed its intention to engage in formal talks with the government of Panama regarding the legal status and future of its mine. This move follows the government’s attempt to shut down the copper-producing mine, a key asset for the Canadian mining company. First Quantum Minerals emphasized the need for clear access to the mine, which has been obstructed by protesters opposing its operation. The company highlighted that unimpeded access is crucial for securing necessary supplies and preventing potential environmental damages. The outcome of these talks will significantly impact the future operations and status of First Quantum Minerals’ mining activities in Panama.

CarMax Inc:

RBC has increased the target price for CarMax from $80 to $83.The rationale behind the target price adjustment is attributed to CarMax’s effective cost management and its perceived ability to continue expanding market share in the highly fragmented used car market in the long term.

Carnival Corp:

JPMorgan has raised the target price for Carnival Corp from $21 to $22.  The target price revision is linked to Carnival Corp’s fourth-quarter performance, which exceeded expectations.

Cintas Corp:

RBC has raised the target price for Cintas Corp from $525 to $645. The decision is based on Cintas Corp’s strong financial results, including revenue and profit figures that surpassed estimates.

Tesla Inc:

Wedbush has increased the target price for Tesla Inc from $310 to $350.

The upward adjustment is grounded in Wedbush’s positive outlook for Tesla, anticipating further gains in electric vehicle market share and expecting margin stabilization in 2024.

Crescent Point Energy:

ATB Capital Markets has reinstated coverage for Crescent Point Energy Corp with a positive outlook, assigning an “Outperform” rating. Alongside the rating, ATB Capital Markets has set a target price of C$13. This reinstatement suggests that ATB Capital Markets views Crescent Point Energy Corp favorably and anticipates positive performance from the company.

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