Top US stocks: Alphabet, Best Buy and Medtronic

South Korea looks to rein in Alphabet and Apple, Best Buy and Medtronic both beat expectations, JD.com adds record number of new users, Didi halts plans to expand into Europe, Walmart launches a new local delivery service, and McDonalds takes milkshakes off the menu.

USA (1)

Alphabet and Apple

Alphabet and Apple are in focus ahead of a key vote in South Korea this week that could pave the way for tougher legislation being introduced that would curb the ability of big tech firms from charging commissions on in-app purchases.

The country’s parliament and judiciary committee is expected to approve the amendment to the Telecommunications Business Act later today, which will lead to a final vote being cast on Wednesday.

Currently, the likes of Google and Apple both force app developers to use their respective payment systems but the new law, if passed, would allow developers to use other independent payment systems. Both firms have been criticised globally for charging up to 30% commission on in-app purchases.  

Best Buy

Best Buy reported record quarterly results this morning and raised its outlook for the rest of the year as customers flocked back to stores flush with cash thanks to government stimulus cheques and savings tidied away during lockdown.

Revenue rose to $11.84 billion from $9.91 billion the year before. Comparable sales in the US rose 20.8%, coming in well ahead of the 17.2% expected by analysts. That, twinned with better margins, saw EPS jump to $2.90 from $1.65, comping in well ahead of the $1.89 forecast by Wall Street. Notably, results were flattered by store closures in the year-ago period, but revenue was still 24% higher than before the pandemic hit.  

Best Buy said it now expects to deliver annual comparable sales growth of 9% to 11% compared to its previous outlook for just 3% to 6%. That is largely down to the better-than-expected performance in the first half, with second half sales to be flat to 3% higher. Revenue should be in the range of $51.0 to $52.0 billion, which would be up from the $47.26 billion delivered in the last financial year.

Medtronic

Medtronic posted strong growth in revenue and profits in the first quarter of its financial year as elective surgeries pick up once again after being postponed or cancelled whilst hospitals dealt with the pandemic.

Revenue rose 23% to $7.99 billion in the first quarter covering the three months to the end of July. Adjusted diluted EPS more than doubled to $1.41 and came in ahead of the $1.32 expected by Wall Street. It said ‘most of our businesses [are] at or above pre-COVID levels’ and said numerous businesses gained market share.

Medtronic reiterated it is targeting 9% organic revenue growth this year and said it is now expecting adjusted EPS to be between $5.65 to $5.75, a slight improvement from the original range of $5.60 to $5.75.

JD.com

JD.com released second quarter results after the markets closed yesterday, revealing it added a record number of users as it shrugged off any fears that the regulatory clampdown in China could impact its business.

The company added a record 32 million users in the quarter, ending June with almost 532 million of them. Revenue rose 26% to RMB253.8 billion and adjusted net income per ADS dropped to RMB2.90 from RMB3.51. Still, that was ahead of the RMB249.27 billion in revenue and earnings of RMB2.35 per ADS forecast by Wall Street.

Management allayed fears over the regulatory crackdown in China, stating it has continued to add new merchants since the introduction of new rules that bans companies from forcing merchants to only operate on one platform and said it was complying with new laws for data and drivers.

Palo Alto Networks

Palo Alto Networks released fourth quarter earnings late yesterday, beating expectations and posting an upbeat outlook to deliver further growth in the new financial year.

Revenue rose 28% in the final quarter to $1.2 billion and adjusted EPS rose to $1.60 from $1.48. That was ahead of the $1.17 billion in revenue and EPS of $1.44 expected by Wall Street. Billings were up 34% and were up 27% for the year as a whole. Palo Alto flagged the strength of business in large customer transactions across its Strata, Prisma and Cortex platforms.

The company said it is targeting 21% to 22% annual growth in billings in the new financial year and for revenue to follow 24% to 25% higher to a range of $5.27 to $5.32 billion. Adjusted EPS should be between $7.15 to $7.25.

Didi

Ride-hailing firm Didi has halted plans to expand its service into the UK and continental Europe, according to the Daily Telegraph.

Didi responded to the news by stating it continues to explore new markets and ‘being thoughtful about when to introduce our services’.

The company has recently expanded into the likes of South Africa and Kazakhstan but is thought to have delayed entering some major markets as regulatory pressure builds at home in China, and as some Western countries continue to be sceptical about Chinese firms following the ban of Huawei from some 5G systems.

Pfizer

Pfizer’s coronavirus vaccine developed with European partner BioNTech has become the first to be given full approval in the US, which is expected to help spur-on vaccination rates and cement the position of the jab as one of the leading vaccines around the world.

Jabs that have been used so far have been done so under emergency authorisation, but the full approval confirms that regulators deem it safe and effective, which should help install confidence amongst sceptics and provide greater firepower for businesses and organisations that want their staff to get vaccinated. For example, the approval is expected to pave the way for the Pentagon to insist all military personnel get jabbed.

Over 204 million people have had the Pfizer jab in the US so far and the approval also means doses can be stored for nine months rather than six.

Walmart

Walmart announced this morning that it will launch a delivery service named GoLocal by the end of the year that will shift goods from other local retailers to the door of the consumer.

It will be run as a white label service, which means deliveries will not be made in Walmart vehicles, and will offer two-hour shipping and a two-day delivery option. Deliveries will be made through associates, gig workers and by partnering with other delivery firms, according to CNBC.

The unit is expected to be forward-thinking and utilise the likes of self-driving cars and drones when they are available, with Walmart eyeing up disruptive technologies to allow it to scale quickly.

McDonalds

McDonalds has been forced to take milkshakes and bottled drinks off the menu at sites across the UK as it suffers from supply chain issues and a shortage of drivers.

‘Like most retailers, we are currently experiencing some supply chain issues, impacting the availability of a small number of products,’ a spokesperson for the UK and Ireland unit said.

It comes after a number of other food chains were forced to take action due to the same issues, with chicken outlet Nando’s closing over 40 stores last week, while KFC has also struggled to obtain some of its usual stock.

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