David Fuller and Eoin Treacy's Comment of the Day
Category - Autonomies

    GE "Tough to Argue With" Results Win Over Wall Street Critics

    This article by Esha Dey for Bloomberg may be of interest to subscribers. Here is a section:

    General Electric shares jumped as much as 10% on Wednesday after the company’s third-quarter results
    topped projections, earning the company plaudits from even the most bearish Wall Street analysts.

    * Gordon Haskett analyst John Inch (hold) said GE’s EPS beat follows the pattern of mostly all other industrial companies that have beat bottom-line forecasts this earnings season

    ** Said overall, stronger healthcare and better free cash flow, despite still tough aviation business, “are likely to reinforce the messaging that GE has fundamentally bottomed – although the company will likely continue to face years ahead of difficult climb-back,” while Covid resurgence could arrest aviation fundamentals and future improvement in healthcare business

    * JPMorgan analyst Stephen Tusa (neutral) said the across-the-board nature of the beat “is what it is, positive”

    ** The 4Q guide for free cash flow of over $2.5 billion suggests cash will be well ahead of JPM’s below-consensus expectations, and a “headline like that is tough to argue with”

    * RBC analyst Deane Dray (outperform) said GE is still battling through a multiyear turnaround, worsened by the Covid-pandemic, but “there were encouraging signs” in the company’s EPS beat

    ** As is typical with a GE earnings, there are a number of moving parts involving charges/reserves, the analyst noted

    ** Said the most notable of those is the $100 million reserve taken for a potential settlement with the SEC for legacy accounting issues; however, since these issues date back to two CEOs ago, Dray expects investors would view it as a positive to see this issue resolved via a settlement

    * GE 14 buys, 8 holds, 1 sell; avg PT $8.07: Bloomberg data

    * NOTE: Earlier, GE Jumps on Surprise Profit as Culp Sees Faster Turnaround

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    Rolls-Royce Gets Investor Nod for $2.6 Billion Equity Sale

    This article by Charlotte Ryan for Bloomberg may be of interest to subscribers. Here is a section:
     

    The package is aimed at seeing Rolls-Royce through to 2022, when the company expects to resume sufficient cash generation alongside a gradual recovery in demand for air travel. Chief Executive Officer Warren East has also said the company could sell assets as it repositions for the future.

    “We didn’t want to put the business and our shareholders’ interests at risk by gambling on the situation next year so that’s why we chose to go with this package now,” the CEO said at an investor meeting.

    Even with funding secured, Rolls-Royce still faces an uphill road to recovery. The twin-aisle planes the company supplies are predicted to take until at least 2025 to recover to pre-pandemic levels and the group has announced plans to cut 9,000 jobs.

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    Jack Ma's Ant Seeks to Raise $35 Billion in Biggest-Ever IPO

    This article by Lulu Yilun Chen for Bloomberg may be of interest to subscribers. Here is a section:

    The company will issue no more than 1.67 billion shares in China, equivalent to 5.5% of the total outstanding before the greenshoe, according to its prospectus on the Shanghai stock exchange. It will issue the same amount for the Hong Kong offering, or about 3.3 billion shares in total.

    Alibaba Group Holding Ltd., which was co-founded by Ma and currently owns about a third of Ant, has agreed to subscribe for 730 million of the Shanghai shares, which will be listed in Shanghai under the ticker “688688,” according to the prospectus. Alibaba will hold about 32% of Ant shares after the IPO.

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    Netflix 3Q Streaming Paid Net Change Misses Est

    This article by Cara Moffat for Bloomberg may be of interest to subscribers. Here is a section:

    Sees growth reverting back to levels similar to pre-COVID as the world recovers, and sees paid net adds likely to be down year over year in 1h 2021 as compared to the big spike in paid net adds in 1h 2020
    Sees 2021 free cash flow be -$1 billion to break-even
    As productions increasingly restart, we expect Q4’20 FCF to be slightly negative and therefore, for the full year 2020, we forecast FCF to be approximately $2 billion, up from our prior expectation of break-even to positive
    With $8.4 billion in cash on our balance sheet at the end of the quarter plus our $750m credit facility which is undrawn, our need for external financing is diminishing

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    Email of the day on outperformance following the US election:

    As per JPM and Nomura   the mkt is pricing a Biden win, caution that a blue wave is necessary, otherwise will get gridlock.

    Even if it happens probably get turmoil specially if we do not get clean sweep. Otherwise legal problems will be forthcoming. The groups would be HC, alternative energies, cyclical, education, infrastructure. Also China as frictions will be reduced

    Can you identify possible winners, using the charts and share them?

    Trust you and your family are well. Stay safe.

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    Email of the day on short covering

    I hope you and the family are well. well done on your XXX trade. What would you do now if you are not in the shares? and why are the shares up 25 per cent today? Is that shorts closing out their positions, realisation that the company will not go bust or just volatility associated with the rights issue? Many thanks

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    High Conviction Calls Amid Cross Currents

    Thanks to a subscriber for this report from UBS which may be of interest. Here is a section on Amazon:

    Email of the day on my investments

    Hi Eoin, could you please state what your APPROXIMATE price objective is for XXX to know whether you see this more as an opportunistic trade or more of fundamental return to e.g., the 200dma? Thank you

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    Email of the day on Switzerland and cosmetic surgery

    Hello Eoin 1.) domiciled in Switzerland I wonder what is your opinion on the SMI? 2.) watching the presidential debate, I am impressed by Biden’s face lifting - would you know or could you find out which doctor did this great job?

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    Email of the day on industrials potential for outperformance.

    Thanks for another good Friday’s audio and comment. I too have been watching XXX. But did not buy yet. Your purchase will be an incentive for me. I am also watching Airbus. Considering their main rival Boeing is in bigger trouble, I thought it would be a good company to own for the post pandemic era. I would love to read any reasons for not investing in Airbus and your/collective’s view on Airbus. Thanks in advance. And THANK YOU for the excellent service.

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