Top US Stocks: Levi, NVIDIA and Palantir

Levi Strauss reports after the closing bell, NVIDIA pushes for approval to buy Arm, Palantir wins a major contract, Constellation Brands earnings disappoint, Dow looks to boost earnings, and Norwegian Cruise Line to be fully operational by April.

Levi Strauss

Levi Strauss reports third quarter earnings after the closing bell today, with investors hoping the company can keep up the momentum amid the well-reported supply chain issues hitting several industries, including clothing firms. 

Wall Street is expecting Levi Strauss to report revenue of $1.47 billion, which would mark a 39% rise from the $1.06 billion booked the year before when sales were still being hampered by lockdown restrictions. Notably, the company said it expected third quarter revenue to surpass the $1.44 billion delivered in the third quarter of 2019, before the pandemic hit. Adjusted diluted EPS – its key profit measure – is forecast by analysts to jump to $0.37 from just $0.08 last year. Notably, Levi Strauss has managed to beat earnings expectations for at least eight consecutive quarters, according to data from Refinitiv.

There have been reports that firms such as Gap and Nike have suffered production issues overseas as the Delta variant hampers output in places like Vietnam, and some firms that enjoyed a flurry of traffic when stores reopened earlier this year have started to see footfall hit again amid a resurgence in the Delta variant. The fact Levi Strauss is currently boasting record margins means it has a good cushion that can afford to take a hit, but the main concern will be about its ability to meet demand – especially as it enters the key holiday season.

You can read the full preview ahead of the Levi results here.

 

NVIDIA

NVIDIA has offered early concessions in the hope of gaining EU antitrust approval for its blockbuster $54 billion acquisition of Arm Holdings.

The regulator did not reveal what concessions have been offered but is set to make a decision before October 27. However, some reports suggest it could extend its review by at least another four months – threatening NVIDIA’s hopes of completing the deal by March 2022. Still, any extension could also give NVIDIA the opportunity to offer more complex concessions to be considered.

The deal has been heavily criticised by rivals, with the likes of Qualcomm and Alphabet flagging concerns about how Arm can remain a neutral licenser to the wider industry while under the thumb of NVIDIA. Notably, UK regulators launched an in-depth investigation in August after rejecting concessions aimed at keeping Arm neutral.

 

Palantir

Palantir shares are in play today after announcing it has won a $823 million contract from the US Army.

The data and analytics firm said it was selected to progress to the next phase of the Army’s indefinite delivery, indefinite quantity (IDIQ) contract, which will see it provide its Gotham Platform to support Army Intelligence users worldwide and help integrate, correlate and analyse data so the Army is prepared for the ‘next fight against emerging near peer threats’.

 

Constellation Brands

Constellation Brands shares are in play after the alcohol giant’s earnings disappointed the markets in the second quarter of its financial year.

Net sales grew 5% to $2.37 billion from $2.26 billion the year before and came in above expectations. However, comparable EPS dropped to $2.38 from $2.76 the year before and missed the $2.77 forecast by analysts. The firm said its beer business delivered strong double-digit sales growth, while wine and spirit sales grew strongly thanks to The Prisoner Brand Family, Kim Craford and Meiomi. It continued to incur losses from cannabis firm Canopy.

Constellation Brands said it now expects to deliver comparable EPS of $10.15 to $10.45 over the full year.

 

Dow

Chemicals giant Dow unleashed a flurry of news this morning, stating it is aiming to deliver an additional $3 billion in underlying Ebitda growth through to 2030 as it transitions to a lower-carbon business.

The company said its near-term investments are set to deliver $2 billion of additional Ebitda while a new net-zero ethylene and derivatives complex will add a further $1 billion in Ebitda per year by 2030. The new plant will cost around $1 billion in annual capital expenditure. Digitising the business is set to deliver an extra $300 million Ebitda by the end of 2025, while restructuring will deliver a $300 million boost to annual Ebitda before the end of this year.

It also released a number of other statements today, announcing it is taking action to become a fully circular producer of polymers in 2022 and signed eight new renewable power purchase agreements to reduce emissions from the energy it uses.

 

Norwegian Cruise Line

The CEO of Norwegian Cruise Lines said all 28 of the company’s fleet will be operational by the start of April 2022 and that 75% will be back in service by the end of 2021.

Speaking to CNBC, Frank Del Rio said just eight ships are currently in operation across its three cruise brands, with employees and travellers having to be fully-vaccinated before boarding. He said pent-up demand ‘continues to be very, very strong for the sailings we’ve operated thus far’.

 

Boston Scientific

Boston Scientific has agreed to buy Baylis Medical Co for $1.75 billion in cash in order to expand its electrophysiology and structural heart product portfolios. 

The company, which makes medical devices, said the deal would add Baylis Medical’s radiofrequency NRG and VersaCross Transseptal platforms in addition to guidewires, sheaths and dilators used to support left heart access. Baylis Medical is expected to generate $200 million in revenue in 2022, having delivered double-digit growth in annual sales over the past five years. The deal is expected to close in the first quarter of 2022.

‘The talented and innovative Baylis Medical Company team, combined with these transseptal platforms, will enhance our efforts to improve procedural efficiencies with physician tools designed to make left atrial access safer and more predictable, with a focus on patient outcomes,’ said Boston Scientific CEO and chairman Mike Mahoney.

 

Manchester United

British football club Manchester United announced yesterday that the Glazer family plan to sell 9.5 million shares in the club.

Manchester Utd will not receive any proceeds from the offering. With shares trading at $19.62 before the opening bell today, the sale could be worth around $186.4 million for the Glazers.

 

Analyst Recommendations

Seagate Technology was downgraded to Equal Weight from Overweight by Morgan Stanley over fears that industry spending is slowing down.

Devon Energy had its price target raised to $42 from $39 by Wells Fargo on expectations earnings in the third quarter will be boosted by rising commodity prices.

Monday.com had its price target bumped up to $350 from $330 by Cannacord Genuity after becoming more bullish after management confirmed it expects to keep gaining market share at a recent virtual customer conference.

 

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