Top US stocks: Micron, Ford and Tesla

Micron releases earnings after the closing bell, Ford steps up investment in electric cars, analysts set the bar high for Tesla, reports suggest Merck could buy Acceleron, Alibaba opens up to rival payments, Mastercard enters BNPL, and Netflix denies it wants to buy a cinema chain.

USA (1)

Micron Technology

Micron releases fourth quarter earnings after the closing bell today, with investors hoping the firm can build on its record-breaking performance in the last quarter as demand for its memory chips continues to strengthen. 

Prices have skyrocketed amid a supply shortage twinned with increased demand for tech and this is expected to remain the case until at least the end of the year. This makes Micron an attractive play in the market considering the wider supply shortages in semiconductor chips hitting industries around the world, with the company aiming to outperform the wider market when it comes to revenue growth. 

Analysts are expecting Micron to report fourth quarter revenue of $8.22 billion compared to $6.05 billion the year before, while GAAP EPS is expected to soar to $2.24 from just $0.87 last year. Notably, Micron has beaten earnings estimates for at least the last eight consecutive quarters, according to data from Refinitiv.

Ford

Carmaker Ford and its South Korean partner SK Innovation have announced they are investing $11.4 billion to build new complexes to build its next-generation electric F-Series pickups and a number of new battery parks across the US.

Two new campuses will be built, one in Tennessee and the other in Kentucky, to build the F-Series trucks and the batteries to power the future electric versions of the Ford and Lincoln vehicles. The new sites will create 11,000 new jobs. Three further battery plants will be built in the two cities.

Ford said the decision marks its single largest manufacturing investment to be made in its history and said it is also the ‘largest ever US investment in electric vehicles at any one time by any automotive manufacturer’.

Tesla

A number of analysts posted buoyant estimates for Tesla’s deliveries in the third quarter today after news surfaced that this was set to be the most intensive week of deliveries on record for the electric carmaker.

Piper Sandler and RBC said they now expect Tesla to deliver around 233,000 vehicles in the three months to the end of September, while Credit Suisse said it should be between 225,000 to 230,000. For context, that would be over 65% higher than what was delivered a year ago. Piper Sandler said the quarter could be Tesla’s strongest on record, while analysts at the Swiss bank said Tesla may have not been as hard hit by the semiconductor shortage as other automakers.

Merck and Acceleron

Merck is in talks about acquiring Acceleron Pharma, according to reports from the Wall Street Journal.

The report follows on from claims by Bloomberg yesterday that Acceleron was in advanced talks about being bought for around $11 billion. Notably, that report suggested Bristol-Myers Squibb, which is already a significant shareholder in Acceleron, was a potential suitor. The WSJ said Merck is interested to help add drugs for rare diseases to its pipeline.

Alibaba

Alibaba has started allowing users to purchase items on its apps using Tencent’s rival payments service named WeChat Pay as the regulatory crackdown in China starts to deliver drastic change in the market.

Alibaba has its own payments platform named Alipay and large tech firms have traditionally shut-out rival services, but that appears to be changing after the Chinese government pushed for firms to stop blocking access to each other’s services.

Alibaba confirmed to CNBC that a number of its services and apps, from food delivery to its video streaming service, are supporting Tencent’s payment service. However, its two main shopping apps – Taobao and Tmall – are not thought to be included at present.  

Mastercard

Payments giant Mastercard said it is launching a new ‘buy now, pay later’ service across the US, Australia and the UK as it looks to capture share in a fast-growing market that is seeing competition intensify quickly.

Named Mastercard Instalments, the service will allow users to pay for goods in equal, interest-free instalments and said this has been integrated into its network. This will allow merchants to swiftly introduce BNPL services. It said it is working with Barclays, Fifth Third, FIS, Gailileo, Huntingdon, Marqeta, SoFi and Synchronyin in the US and with Qantas Loyalty and Latitude in Australia.

Netflix

Netflix co-CEO Ted Sarandos said the streaming giant is not planning to buy a cinema chain after speculation became rife it was set to make a big move after buying two theatres.

Netflix owns a theatre in New York and another in Los Angeles, which are used to hold movie premieres to showcase its new films. Having been asked whether Netflix will go for an entire chain at Vox Media’s Code Conference, Sarandos bluntly said ‘no’, adding that he expected cinemas to survive even if people make fewer trips due to the swathe of content available to watch at home.

Goldman Sachs

Goldman Sachs’ Petershill Partners debuted on the London Stock Exchange today, sliding below its IPO price.

The US bank priced the IPO at 350p per share to value the firm at around £4.0 billion, but Petershill Partners share slid closer to 340p in initial trading today. The company holds 19 investments, primarily in private equity, with $187 billion worth of assets under management. The firm raised around £547 million while existing investors cashed-in on a further £465 million.

Endeavor Group and Scientific Games

Endeavor Group has agreed to buy OpenBet from Scientific Games for $1.2 billion in cash and shares in a deal that should close in the second quarter of 2022.

Endeavor, which is known for owning the UFC, said it will pay $1 billion in cash and $200 million in shares for OpenBet, which provides content, platform and services to the sports betting industry. OpenBet focuses exclusively on licensed operators and serves the likes of DraftKings, FanDuel, Ladbrokes and William Hill. OpenBet will be combined with Endeavor’s IMG Arena, the firm that provides streaming services and data feeds to over 470 sportsbook brands.

‘This transformational announcement combines OpenBet’s market-leading sports betting ecosystem with unparalleled access to sports rights, content and data across the Endeavor portfolio,’ said Jordan Levin, the CEO of Scientific Games’ digital business. ‘Together, we are uniquely positioned to define the future of sports betting entertainment.’

Analyst recommendations: Travel + Leisure, Vail Resorts and Applied Materials

Travel + Leisure Co was cut to Hold from Buy by Jefferies, which tweaked its earnings expectations to take financing costs and Covid-hit sales into account.

Vail Resorts was cut to Hold from Buy by CFRA on concerns over the near-term recovery prospects from the pandemic.

Applied Materials was downgraded to Neutral from Buy by New Street, which said its record valuation meant there was limited upside left for the semiconductor firm.

Morgan Stanley had its price target raised to $95 from $91 by Berenberg after bumping up its revenue estimates, primarily to reflect a stronger performance from its wealth and investment management division.

Franklin Resources had its price target raised to $35 from $32 by Jefferies, citing strong prospects from the likes of fixed income and wealth management can offset near-term headwinds to equity flows.

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