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Romain Fournier

Chief Editor
Having worked in the British, French and Swiss financial press, Romain is able to report on local and international issues, as comfortable in French as in the language of Shakespeare, Romain Fournier leads the editorial team at Marketscreener. Fine connoisseur of the English-speaking markets, Romain delivers an editorial every day on US and UK markets.

Today on Wall Street: TRUTH will prevail

10/21/2021 | 09:42am EST
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While corporate results are mostly good, the impact of supply chains disruptions and the higher costs for companies is dampening the mood. Tesla posted strong earnings reports, but the automaker fell 1% in premarket trading after warning that its German and Texan factories and supply-chain headwinds would put pressure on its margins. Meanwhile, IBM dipped almost 5% after it missed estimates for quarterly revenues.

A flurry of corporate earnings releases is coming out today on both sides of the Atlantic, with some headliners like L'Oreal, Intel and PayPal. So far, earnings season helped stock markets to get back on track after a difficult period. And if some have been less successful than other in Q3, like IBM, the edifice looks pretty sound.

The previous day's session was still a bullish one, even if the US technology sector weighed on performance at the end of the day on Wall Street. A sector that could record a new major consolidation operation, since it is rumored, that PayPal is eyeing Pinterest. Some already see it as an odd coupling - a $45 billion merger anyway - because the buyer is a payment system and the target is a social network focused on images. We already know pretty much what the market thinks: -5% or so for PayPal and almost +13% for Pinterest. Even if the activities of the two companies are not openly complementary, it is clear that the stakes of such a transaction are to be found on the side of user data and in "social commerce", which is becoming increasingly important. Whatever the outcome of the project, it is clear that a major fintech player is willing to pay a lot of money to diversify: Pinterest, whose first earnings are expected this year, is trading at 135 times the year's earnings and 76.5 times 2022 earnings. There are worse things to do, of course, but the social network remains a second-knife in the sector with a number of users that has decreased for the first time in three years in Q2 2021. If PayPal goes through with its project, it will have to be convincing to take the market with it.

To finish with social networks, you're probably wondering how Donald Trump, so addicted to Twitter, has managed to remain silent since his banishment from major platforms. It's because he was working on his own network, called TRUTH Social (with capital letters, since the former American president liked to use them). TRUTH will be owned by Trump Media & Technology Group, which will be merged with SPAC Digital World Acquisition for a quick IPO. The network was created to "oppose the tyranny of Big Tech", said Trump, before adding "We live in a world where the Taliban are very present on Twitter, while your favorite American president has been silenced. This is unacceptable. We'll probably have to wait until early next year to see Donald's inaugural message on TRUTH, a platform that is likely to make some noise.

 

Today's economic highlights:

In the US, three indicators today with the October Philly Fed Index, followed by the housing data and the September leading indicators.

The euro is still nibbling away at the dollar at USD 1.16646. The ounce of gold is up to USD 1785. On the oil market, a slight lull after yesterday's rebound with Brent at USD 85.66 and WTI at USD 83.42. Government bond yields continue to rise to 1.67% (+3 points) for the 10-year US bond, but fall to -0.13% for the German bond (-2 points). Bitcoin is moving just below USD 65,000 after its previous day's highs.

 

On markets:

* Tesla reported July-September sales that beat Wall Street expectations and a record number of vehicle deliveries in the quarter. However, the automaker said supply chain disruptions and new plant openings could put pressure on its margins. The stock is down 1.3% in pre-market trading.

* IBM reported third-quarter sales below market expectations, sending the stock down 4% in after-hours trading on Wall Street. The company's sales were hurt by a decline in orders from its enterprise IT infrastructure management division, which is to be spun off from IBM.

* AT&T reported better-than-expected mobile revenue and subscribers on Thursday on the back of increased demand for 5G and its HBO Max video streaming service. The stock is up 1% in pre-market trading.

* Dow reported better-than-expected quarterly profit on Thursday thanks to higher rates following a rebound in economic activity and tight supplies after Hurricane Ida.

* Southwest Airlines reported a smaller net loss in the third quarter compared to the same period a year ago as the COVID-19 vaccination campaign helped boost demand for air travel.

* The U.S. Food and Drug Administration on Wednesday approved the use of the COVID-19 vaccines developed by Moderna and Johnson & Johnson for the booster dose, indicating that Americans could choose a different vaccine than the one they received initially.

* Pfizer BioNTech announced Thursday that data from a Phase 3 clinical trial showed high efficacy, 95.6%, of their COVID-19 vaccine, including the Delta variant, in a booster shot in people 16 years and older. Pfizer shares rise 1% in pre-market trading.

* Shares of Chinese VTC giant Didi Global are up 4.4% in premarket trading after a report that Beijing has directed the group to consider a listing in Hong Kong.

 

Analyst recommendations:

  • Apollo Global Management: BMO Capital adjusts price target to $93 from $80, keeps outperform rating
  • Canadian National Railway: BMO Capital adjusts price target to ca$160 from ca$155, keeps market perform rating
  • Carnival: Berenberg upgrades to hold from sell. PT inches up 0.3% to $22.50
  • Cognizant Technology: Morgan Stanley adjusts price target on cognizant technology solutions to $90 from $93, maintains overweight rating
  • EasyJet: Goldman Sachs advises its customers to buy the stock. The target price is decreased from GBp 963 to GBp 855.
  • Fifth Third Bancorp: Barclays adjusts price target on fifth third bancorp to $51 from $44, maintains overweight rating
  • Ford: Tigress Financial Partners initiated coverage of Ford Motor Co. with a recommendation of buy. PT set to $20
  • Getty Realty: Baird initiated coverage with a recommendation of outperform. PT up 6.2% from last price to $34
  • Hilton Worldwide: Morgan Stanley adjusts price target to $121 from $118, maintains equal-weight rating
  • International Business Machines: Spin-Off Research starts international business machines at hold with $148 price target
  • Johnson & Johnson: Raymond James adjusts price target to $178 from $183, keeps outperform rating
  • Legal & General: Jefferies upgrades from hold to buy, targeting GBp 340
  • Netflix : Barclays adjusts price target to $675 from $625, keeps overweight rating
  • Rio Tinto: Berenberg's research confirms his advice and maintains his neutral opinion on the stock. Previously set at GBp 5400, the target price is lowered to GBp 5000.
  • Signature Bank: Maxim adjusts price target on signature bank to $375 from $330, maintains buy rating
  • Ulta Beauty: BofA Securities adjusts ulta beauty's price target to $400 from $430, keeps neutral rating

ę MarketScreener.com 2021
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Stocks mentioned in the article
ChangeLast1st jan.
AT&T INC. -4.40% 22.84 Delayed Quote.-16.93%
DIDI GLOBAL INC. -1.15% 7.72 Delayed Quote.0.00%
DIGITAL WORLD ACQUISITION CORP. -3.16% 41.39 Delayed Quote.0.00%
DOW INC. -3.39% 54.93 Delayed Quote.2.45%
JOHNSON & JOHNSON -2.39% 155.93 Delayed Quote.1.16%
MODERNA, INC. -4.36% 352.43 Delayed Quote.252.74%
SOUTHWEST AIRLINES CO. -0.31% 44.4 Delayed Quote.-4.44%
TESLA, INC. 0.68% 1144.76 Delayed Quote.61.12%