Monday – November 21, 2022
TOP NEWS
• Disney brings back Bob Iger as CEO in bid to boost growth
Bob Iger is returning to Walt Disney as chief executive less than a year after he retired, a surprise comeback that coincides with the entertainment company’s attempt to boost investor confidence and profits at its streaming media unit.
• JPMorgan remains world’s biggest systemically important bank
JP Morgan remains the world’s most systemically important bank according to the latest rankings from the G20’s Financial Stability Board published.
• Broadcom’s $61 billion deal for VMware on UK regulator’s radar
Britain’s competition regulator said it was looking into whether U.S. chipmaker Broadcom’s $61 billion acquisition of cloud computing company VMware may substantially lessen competition.
• PREVIEW-Strong demand, robust pricing to boost Deere’s sales
Industrial bellwether Deere is expected to post double-digit growth in quarterly sales and profit on Wednesday, fueled by higher crop prices and pent-up demand for its larger equipment.
• Two largest U.S. rail unions to report contract vote Monday
The two largest U.S. rail unions representing conductors and engineers are set to announce results of votes on a tentative contract deal reached in September amid growing concerns a possible work stoppage could cause significant damage to the U.S. economy and strand vital shipments of food and fuel.
BEFORE THE BELL
U.S. stock index futures declined as COVID-19 flare ups in China added to concerns about slowing growth, while Disney shares jumped as investors cheered Bob Iger’s surprise comeback as chief executive. European shares slipped, with economically sensitive sectors like mining and industrials leading the losses. Japan’s stock markets edged up as traders awaited more clarity on the outlook for interest rates. Oil dropped as concerns over fuel demand from China and dollar strength weighed on prices, while gold prices fell.
STOCKS TO WATCH
Deals of the Day
• Imago Biosciences Inc & Merck & Co Inc: The drugmaker said it would acquire cancer drug developer Imago BioSciences for a total equity value of $1.35 billion. Merck’s offer of $36 per share in cash for Imago represents nearly a 107% premium to the company’s last closing price. The deal for the clinical-stage biopharmaceutical company that is developing drugs for the treatment of bone marrow-related diseases is expected to close in the first quarter of 2023, Merck said.
Moves
• Walt Disney Co: Bob Iger is returning to the media company as chief executive less than a year after he retired, a surprise comeback that coincides with the entertainment company’s attempt to boost investor confidence and profits at its streaming media unit. Iger, who retired last year after 15 years as chief executive, has agreed to serve as CEO for two more years effective immediately, Disney said in a statement late on Sunday. He will replace Bob Chapek. Disney shares were up in premarket U.S. trading, while the Frankfurt-listed stock was set for its best day in almost two years.
In Other News
• Alphabet Inc: Google this week introduced rules for inviting guest speakers to its offices, days after it canceled a talk by an Indian historian who has disparaged marginalized groups and their concerns, according to company emails seen by Reuters. The policy released Thursday is Google’s latest effort to preserve an open culture while addressing divisions that have emerged as its workforce has grown. “We’ve always been proud to host external speakers at Google, as they provide great opportunities for learning and connection for our employees,” Google spokesman Ryan Lamont told Reuters. The updated process will “ensure these events are useful and contribute to a productive work environment.”
• American Airlines Group & JetBlue Airways Corp: Lawyers for the U.S. Justice Department said American Airlines’ alliance with JetBlue Airways would harm travelers while the airlines pushed back during closing arguments on Friday in the government’s bid to dissolve the partnership. U.S. District Judge Leo Sorokin in Boston plans to hold another hearing before he issues a decision in the case. Justice Department lawyer Bill Jones argued the alliance gives the airlines incentives to raise prices and that they are no longer competing. “This is a bad deal for travelers,” Jones said, saying it was important because of the impact on families that travel and who want affordable tickets and good service. Lawyers for JetBlue and American argued the alliance has not raised air fares or resulted in flight cuts.
• Berkshire Hathaway Inc: The company, run by billionaire Warren Buffett, has raised its stakes in each of Japan’s five biggest trading houses by at least 1 percentage point to more than 6%, regulatory filings showed, sending shares higher. Berkshire’s stakes have increased to 6.59% from 5.04% in Mitsubishi Corp, to 6.62% from 5.03% in Mitsui & Co Ltd, to 6.21% from 5.02% in Itochu Corp, to 6.75% from 5.06% in Marubeni Corp and to 6.57% from 5.04% in Sumitomo Corp.
• Boeing Co: Relatives of passengers killed in two Boeing 737 MAX crashes pressed U.S. Justice Department lawyers on Friday to unwind a 2021 deal that allowed the U.S. planemaker to escape criminal prosecution. Families and their lawyers met for about five hours with government lawyers on Friday with some participating virtually from around the world. The families argued the U.S. government “lied and violated their rights through a secret process,” and asked U.S. District Judge Reed O’Connor to rescind Boeing’s immunity from criminal prosecution.
• BP Plc: Workers at the oil major’s Rotterdam refinery, which is currently offline, will not help restart operations unless their wage demands are met, union leaders said. Union leader Jaap Bosma of the CNV union identified the problem that impacted the refinery as a loss of steam. He said that workers would help fix the resulting problems, but they would not assist to resume refining operations unless a new Wednesday noon ultimatum is not met. “We will help resolve the problems until the facilities are ready to be restarted, and then we’ll stop, that’s our intention,” he said.
• Broadcom Inc & VMware Inc: Britain’s competition regulator said it was looking into whether U.S. chipmaker Broadcom’s $61 billion acquisition of cloud computing company VMware may substantially lessen competition. The Competition and Markets Authority (CMA) is inviting comments from interested parties by Dec. 6 to help it with an assessment on whether to formally launch an investigation into the Broadcom-VMware deal.
• Honeywell International Inc: The company will pay $1.3 billion to end asbestos-related claims stemming from its former unit, the industrial giant said on Friday, helping it reduce its environmental liabilities. The settlement, as part of a deal with North American Refractories Asbestos Personal Injury Settlement Trust, will help the aerospace manufacturer eliminate its funding obligations to the trust, the company said in a regulatory filing. Honeywell said the one-time, lump sum payment will have ‘limited obligations’ to the trust following the completion of the deal.
• JPMorgan Chase & Co: The bank remains the world’s most systemically important bank according to the latest rankings from the G20’s Financial Stability Board published. JPMorgan remains in bucket 2 – there is still nobody in the top category with most capital requirements. “The 30 banks on the list remain the same as the 2021 list. Within the list, one bank has moved to a higher bucket, Bank of America has moved from bucket 2 to bucket 3,” the FSB said in a statement. Bank of America joins Citigroup and HSBC in bucket 3.
• Krispy Kreme Inc: Russians craving a doughnut fix can now visit ‘Krunchy Dream’, a string of new cafes opening where U.S. chain shops once stood, as the latest imitation Western brand hits Russian streets. A company owned by restaurateur Arkady Novikov, Krispy Kreme’s former franchise partner, applied to register the Krunchy Dream trademark in late September, the RBC daily reported.
• Manulife Financial Corp: The company has become the first foreign financial firm to receive regulatory approval in China to take full control of a funds joint venture, paving the way for it to expand its presence in the country’s $3.8 trillion fund market. Manulife, Canada’s largest life insurer, secured approval to take full control of its joint venture Manulife Teda Fund Management by buying 51% from state-owned Tianjin TEDA International Holding, it said in a statement. The 51% stake in the joint venture is worth at least 1.75 billion yuan, which was the asking price when Tianjin Teda moved to offload the share by inviting bids, auction filing shows.
• Paramount Global: Book-publishing powerhouse Simon & Schuster’s owner will let its $2.2 billion sale to Penguin Random House collapse on Monday, opening the door for a new suitor to try to clinch a deal, according to people familiar with the matter. The acquisition was blocked on Nov. 1 by a federal judge on antitrust grounds. German media group Bertelsmann SE & Co, which owns Penguin, was unable to convince Paramount Global, Simon & Schuster’s current owner, to help launch an appeal and extend the deal contract before it expires on Monday, the sources said.
• Suncor Energy Inc: The company extinguished a small pump fire at its 103,000 barrel-per-day Commerce City refinery in Colorado on Saturday afternoon, Suncor said in a community alert notification. “All workers are accounted for and there are no reported injuries. After determining everything was safe, the all-clear was given and the refinery continues to operate safely,” the alert said.
• Taiwan Semiconductor Manufacturing Co Ltd: The Taiwanese chipmaker is planning to produce chips with advanced 3-nanometre technology at its new factory in the U.S. state of Arizona but the plans are not completely finalised yet, the company’s founder Morris Chang said. The company is holding a “tool-in” ceremony in Arizona on Dec. 6. Chang said he would be attending, along with TSMC customers and suppliers and U.S. Commerce Secretary Gina Raimondo.
• Tesla Inc: The electric vehicle manufacturer is recalling more than 321,000 vehicles in the United States because tail lights may intermittently fail to illuminate, the company said in a filing made public Saturday. In the filing published Saturday to the National Highway Traffic Safety Administration (NHTSA), Tesla said the tail light-related recall covers some 2023 Model 3 and 2020-2023 Model Y vehicles. Texas-based Tesla said it will deploy an over-the-air update to correct the rear light issue and said it has no reports of any crashes or injuries related to the recall. Separately, after five days of testimony, including three hours from Elon Musk, a Delaware judge will now decide whether Musk’s $56 billion pay package from Tesla was justified by the company’s explosive growth or undermined by a flawed process.
FOCUS
Chinese carmakers target more European sales with five-star EVs
Chinese electric vehicle (EV) makers have set their sights on winning over European drivers and large corporate customers with more affordable cars that come with top safety ratings and lots of high-tech features
ANALYSTS’ RECOMMENDATION
• Provention Bio Inc: SVB Securities raises target price to $19 from $16, following the FDA’s approval of Tzield to delay the onset of type 1 diabetes in at-risk patients.
• Silvergate Capital Corporation: Wells Fargo raises target price to $30 from $25, saying the company has ample cash, securities, and FHLB borrowing capacity, to fund deposit outflows following recent events in crypto.
• Targa Resources Corp: JPMorgan raises target price to $111 from $108, citing bright outlook for 2023.
• Twist Bioscience Corp: JPMorgan cuts target price to $24 from $30, citing performance is contingent on sustained momentum in two key medicines despite increasing pressures from competition as well as macroeconomic uncertainty.
ECONOMIC EVENTS (All timings in U.S. Eastern Time)
0830 National Activity Index for Oct: Prior 0.1
COMPANIES REPORTING RESULTS
Agilent Technologies Inc: Expected Q4 earnings of $1.39 per share
CORPORATE EVENTS (All timings in U.S. Eastern Time)
0900 J M Smucker Co: Q2 earnings conference call
1000 Jacobs Solutions Inc: Q4 earnings conference call
1000 Farfetch Ltd: Annual Shareholders Meeting
1630 Agilent Technologies Inc: Q4 earnings conference call
1630 Central Garden & Pet Co: Q4 earnings conference call
1630 Dell Technologies Inc: Q3 earnings conference call
1630 Enanta Pharmaceuticals Inc: Q4 earnings conference call
1700 Afya Ltd: Q3 earnings conference call
1700 Zoom Video Communications Inc: Q3 earnings conference call
1715 Urban Outfitters Inc: Q3 earnings conference call
EX-DIVIDENDS
ADTRAN Holdings Inc: Amount $0.09
Aramark: Amount $0.11
Arko Corp.: Amount $0.03
Barnes Group Inc: Amount $0.16
BGC Partners Inc: Amount $0.01
Excelerate Energy Inc: Amount $0.02
HanesBrands Inc: Amount $0.15
Hawaiian Electric Industries Inc: Amount $0.35
Johnson & Johnson: Amount $1.13
LTC Properties Inc: Amount $0.19
Microchip Technology Inc: Amount $0.32
Primerica Inc: Amount $0.55
Prudential Financial Inc: Amount $1.20
Skyworks Solutions Inc: Amount $0.62
Steris plc: Amount $0.47
Warner Music Group Corp: Amount $0.16
Xylem Inc: Amount $0.30
