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October 2017

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The firm estimates as much as 31% near-term upside for the oil and gas giant

Royal Dutch Shell plc (NYSE:RDS.A) has been upgraded at Goldman Sachs from Buy to Conviction Buy. Henry Tarr, analyst at the firm, believes the stock has 31% near-term upside potential, given the improvement in the company’s expenditure.

Shell’s dividend yield is believed to be the highest among all the stocks covered at Goldman Sachs, however, Mr. Tarr expects the figure to drop in the near term owing to profitability growth. The company is currently undergoing a short scale transition. The impact will likely improve cost management and cut expenditures, provide better directions in capital usage, and management policies for BP acquisition would be properly synergized and disposal management. The expected improvement in oil and gas prices over the next few months would also be helpful in deriving further growth. The additional profitability will expand the dividend cash coverage multiplier, leading to a fall in dividend yield percentage over the next year. The acquisition of BP plc, owner of Castrol, will likely provide an incremental volume growth in Brazil and South America. The capital efficiency is likely to be more disciplined and properly managed as far as project selection is concerned, and will reduce the capital expenditure significantly in over the next two years.

The management received quite a dose of criticism over the BP merger, but nevertheless decided to go through with it. As far as analysts are concerned, they view the deal as constructive on grounds that the quality of BP assets is second to none and Shell management possesses the ability to use them to their full potential, while BP management could not have done that.

The analyst believes that Mylan might be indulging in similar kind of malpractice as Valeant

Well Fargo has raised several questions in its latest report regarding Mylan NV (NASDAQ:MYL) and its latest Epipen4Schools program. Analyst David Maris studied the program in detail and has published a report regarding his findings, which sound very similar to that of Valeant-Philidor controversy. The analyst, however, refrained from making any hasty assumptions but has slung a horde of questions towards Mylan’s management.

The analyst’s hypothesis regarding possible illegal activity is derived from the following points:

The webpage dedicated to Epipen4Schools display a logo not only of Mylan but also some entity called BioRidge Pharma. By the looks of it, BioRidge is a Specialty Distributor that is running the Epipen4Schools campaign, but the domain Epipen4Schools.com is the property of Mylan itself. The analyst suspects that Mylan is the only customer, if not, it at least accounts for more than 90% of the activities, of the said Specialty Distributor. Upon further probing the analyst discovered a third name, Asembia, which arises further suspicion given the fact that the office address provided is the exact same to that of BioRidge.  The recent SEC filings by Mylan do not have any mention of the two above mentioned entities Lastly, EpiPens shipments are being done via two separately designation pharmacies and have no ties with Mylan, BioRidge or Asembia.

Despite his recent findings the analyst refrained from making any assumptions regarding Mylan indulging in illegal activities and believes that it is the job of authorities to investigate these claims. This, however, did not stop the analyst from posing a long list of questions. Mylan is yet to respond to the said claims, however, it would need to swiftly respond to the questions presented by Mr. Maris in order to maintain market sentiment and not lose valuable investor trust.

The analyst reaffirmed the Market Perform rating and a price target range of $43-$45. The analyst ratings for Mylan consist of 8 Buy, 4 Outperform and 8 Hold ratings. The stock currently trades at a price of $42.75 and has lost on 0.56%.

The news is a big positive for Mylan and is sure to hurt competition

Mylan NV (NASDAQ:MYL) has launched the generic version of Concerta (methylphenidate extended release). Stifel analyst Randall Stanicky, who reaffirmed Mylan’s rating following the news, sees the launch of the drug as a major positive for the company. The drug was originally slated to launch a lot earlier following FDA’s approval but owing to certain terms of agreement between Mylan and Johnson and Johnson, the launch of the drug was delayed.

The settlement terms were never disclosed by the company but were agreed upon between Mylan and Johnson and Johnson during October last year. Based on the approval date, the analyst believes that the settlement date has now arrived and the company is now ready to launch Concerta in the generic segment.

In a commentary published by the analyst on October 25, he speculated that if Mylan could capture 25% of market share with Concerta during the year 2017 with stable pricing, then the drug could contribute around 20 cents to total EPS. This will also help strengthen the company’s profit and loss statement ahead of the initial guidance announcement for the year 2017.

While this news is a major positive for Mylan, it is a major setback at the same time for the competitors in the generic segment. The analyst expects some downside for Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), Impax Laboratories Inc (NASDAQ:IPXL), and other competitors following the launch of Generic Concerta by Mylan.

The analyst further said that Concerta contributes to around 25 cents to Teva’s EPS and quite critical to company’s profitability, but it cannot be seen as a growth driver assuming the recent developments.

The analyst reaffirmed his ratings and price target on all the involved stocks. The ratings for Mylan are 9 Buy, 6 Outperform, and 7 Hold. The stock currently trades at a price of $38.56 and has gained 3.16% since the open.

Tesla Motors Inc reportedly plans to build 10 “self-operated retail stores” in China this year, with first store opening on April 19

Tesla Motors Inc (NASDAQ:TSLA) has been aggressively spending in the world’s largest automobile industry, China, since 2013 when it initially started rolling out its premium sedan, the Model S. Despite having 16 Stores & Galleries in the country already, Elon Musk has faced a hard time selling the highly expensive sedan (after hefty import duties) to the Chinese consumers.

Jinghua Times News (JTN) reported earlier this week that the automaker has opened a new store in Beijing, which will officially premiere on April 19. The facility will be the 5th store in the capital city, and 17th in the world’s most populous country.

Additionally, Tesla China Sales Director, Wang Hao, reportedly said that the company will launch 10 new stores during 2016 to cater to the growing EVs demand. While JTN makes no such claims, another Chinese publication, DigiTimes, claims that they will be “self-operated retail stores.”

Self-operated store may imply that the company’s stores will have autonomous features like its cars. We have never heard of any such technology from the company, its executives or any other publication.

Additionally, the executive claimed that the automaker has a direct-sales model and it does not believe in third-party operated dealerships or service centers. Customers are only required to reserve their Model S/Model X/Model 3 through Tesla’s website and take deliveries from a nearby store. Although all of the Tesla stores will be company operated in China, there are some US states that forbid the direct sales model.

The JTN report also stated that the new retail stores will be opened in four major cities, including Guangzhou and Shenzhen, where customers can test drive and purchase the Model S.

Mr. Hao reportedly also said that Tesla has not yet decided where it would establish its manufacturing facility in the country. Last month, several local publications stated that Tesla is considering setting up its factory for large-scale production in Shenzhen.

Elon Musk has struggled to deliver in China. After setting a goal of 10,000 deliveries, the company delivered just 3,025 units last year. For 2016, Tesla slashed its delivery target to 5,000.

 

Apple has incorporated a host of important upgrades in its new flagship notebook device

Although Apple Inc. (NASDAQ:AAPL) has introduced numerous upgrades in its new MacBook Pro models, many users are yet to be convinced by the Cupertino-based tech giant’s new flagship notebook offering. This dilemma is mainly created due to the limitations still present in the device. If you are currently contemplating purchasing the new MacBook Pro, then you need to go through this honest review regarding the 15-inch model of the notebook device.

Innovative Touch Bar:

Apple has recently received a lot of stick for its failure to innovate and think outside the box when it comes to its leading devices. However, this is not the case with the new MacBook Pro, as the notebook device comes with an innovative touch-sensitive OLED Touch Bar which replaces the functional keys present on its predecessor model.

It must be noted that this OLED Touch Bar comes as a standard feature in the 15-inch model of the new MacBook Pro, whereas this feature is optional for the 13-inch model of the notebook device. This OLED panel goes a long way in bringing ease and convenience to users through its context-sensitive controls for individual applications. Interestingly, Apple has designed its Touch Bar to function accordingly for different applications, which is why users will absolutely love this new feature of their MacBook Pro.

Top-Notch Retina Display:

Although the 15.4-inch display on the new MacBook Pro retains a 2,880 x 1,800 resolution, which was incorporated in the previous-generation MacBook Pro, the Retina display in the former is around 67% brighter compared to the Retina display sported on the latter. Also, Apple has confirmed that it has incorporated DCI-P3 Color space support in its new MacBook Pro, which will allow for professional-level video-editing. Hence, if you are require a notebook for running high-end applications, then the new MacBook Pro can provide you with a quick fix.

Elegance and Portability:

If you have been using the previous-generation MacBook Pro, then you will instantly notice how much thinner and lighter its successor is. The new MacBook Pro weighs only 1.83 kg which is a significant drop from the 2.04 kg that its predecessor weighs.  Also, the latest model of the notebook measure in at 349.3mm wide by 15.5mm, thick by 241mm deep compared to 359mm x 18mm x 247.1mm (MacBook Pro 2015).

Hence, it is clear for all to see that the new MacBook Pro is one of the slimmest and lightest notebook offering currently available in the market. The new MacBook Pro is designed to be the center of attention, no matter where you take it!

Conclusion:

The incorporation of a new OLED Touch Bar proves that Apple has not lost its mojo when it comes to innovation and thinking outside the box. Also, a slimmer and lighter design will go a long way in improving the portability of the device. However, the entry-level variant of the new MacBook Pro come at a hefty price, which will put off many customers.

The company has not refreshed its MacBook Air, which leaves users with little choice but to splash their cash on Apple’s new and shiny line of MacBook Pro. Furthermore, the lack of upgradability linked with the new MacBook Pro proves to be another significant weakness of the device, especially considering this notebook is also being aimed at professional users. Hence, Apple has done very little to justify this ridiculous price attached to its new notebook offering.

Qualcomm signs 3G/4G patent license agreement with Gionee in China

QUALCOMM, Inc. (QCOM) has another patent license agreement in China of 3G/4G networks with Gionee Communication Equipment Co. Ltd. – Chinese smartphone maker. China has managed to become one of the major markets for the tech industry regardless of its strict rules. The patent license will enable Gionee to manufacture and sell LTE, 3G WCDMA and CDMA20000 products in China. The royalties by Gionee will be according to the terms and conditions of the license by the chipmaker and National Development and Reform Commission.

The group president of Gionee, Liu Li Rong said, “Gionee defines itself as a global provider of mobile and internet technology that strives to help consumers make their lives better. Access to the latest technologies from Qualcomm, through this license agreement, will allow us to continue to design innovative and powerful devices for consumers across all demographics.”

Qualcomm has managed to give chance to other companies to excel and build more innovative products. The executive vice president of Qualcomm, Alex Rogers said, “We are pleased to see these technologies helping to enhance Gionee’s portfolio of products and generate growth for the company both in China and globally.”

In the past, the chipmaker signed a patent deals with Oppo and Vivo in the beginning of 2016. Both companies are renowned Chinese smartphone manufacturers. Now Gionee has managed to score the necessary license from Qulacomm. The company was established in 2002 and has sold millions of phones around the globe so far.

Qualcomm faced issues for patent infringement in China a few months ago and even filed complaints against Meizu. The complaint consisted of 3G and 4G networks; the company attempted to negotiate to which some companies agreed, while others did not. Thus, the chipmaker had to face some setback in China, but that has not discouraged it from signing patent deals with other Chinese companies, such as Oppo and Gionee.

The company saw shares plunge 28% in pre-market hours today

Electronic payments solutions provider VeriFone Systems Inc. (NYSE:PAY) posted disappointing second quarter of fiscal year 2016 earnings yesterday. Not only did the $3.19 billion company miss the Street on its bottom line, it also posted worse-than-expected third quarter guidance. As a result, shares plunged 28.37% to $20.22 as of 8:27 AM ET today.

The San Jose-based company posted earnings per share of $0.47, missing the Street’s estimate of $0.52 by five cents. Its revenue landed at $532 million, beating the consensus of $530 million. Operating cash flow came in at $51 million.

VeriFone also posted revenue guidance of $515 million for the third quarter, below the Street’s $552 million estimate, and EPS guidance of $0.40, behind a consensus of $0.59. Full year guidance also remained behind the Street; VeriFone gave an outlook of $2.10 billion, versus the Street’s $2.16 billion, while earnings per share came in at $1.85, while the Street’s estimate stands at $2.23.

CEO Paul Galant said: “We are aggressively executing mitigating actions including a headcount restructuring and a review of underperforming businesses. At the same time, we remain committed to executing our strategy in a disciplined manner, and continue to make progress in bringing our next generation devices to market and launching our services platform.” The company also said it will conduct a strategic review in order to cut its expenses and realign underperforming businesses.

Founded in 1981 and headquartered in San Jose, California, VeriFone is a company which provides value added services and e-payment solutions. These solutions include credit cards, debit cards, and smart cards.

The Street currently has eight Strong Buy, eight Buy, and five Hold ratings on the stock, as per the data on Thomson Reuters. The 12-month mean consensus price target stands at $36.32, reflecting 28.66% upside potential over the last close of $28.23.

General Motors decides to lay off 2,000 employees, as a third shift at two car plants in the US is suspended

General Motors Company (NYSE:GM) yesterday announced that it will suspend a third shift at its two plants in the US, resulting in 2,000 workers being laid off. The execution of the plan is expected to be made in early 2017.

The car maker’s two factories in Lordstown, Ohio and Lansing, Michigan manufacture slow-selling vehicles which are sold by the company’s Chevrolet and Cadillac brands. The former produces the Chevrolet Cruze, a compact car, whose sales in the US slid 20% in October. Additionally, the Michigan plant manufactures Cadillac ATS and CTS, whose sales shrank 17% last month.

When the third shift at these plants would be suspended by GM, the company says it would furlough the employees. The Detroit-based automaker’s decision to cut the shift at the car-producing plants is because of the increasing preference of the motorists for Sports Utility Vehicles (SUVs) and trucks in the US.

GM’s Lordstown production facility employs around 4,500 workers and the third shift at the plant would end on January 23, 2017. The cut in shift would impact 1,202 hourly and 43 salaried employees. Moreover, the Lansing factory in Ohio provides employment to 2,700 workers and also produces the Chevrolet Camaro. The suspension in the third shift at the factory is expected to affect around 810 hourly and 29 salaried workers.

Besides laying off employees, the car maker is also keen on investing around $900 million in three facilities in order to prepare for future product programs. Out of the $900 million, $667.6 million would be invested in GM’s Toledo Transmission factory for a new generation of transmissions. Another $211 million is expected to be invested at the Lansing Grand River assembly facility for a “new product program” which was not specified. The remaining $37 million would be injected at the Bedford casting facility in Indiana. The facility produces transmission casings, heads, small gas engine blocks and convertor housings which are used in Chevrolet, Buick, GMC and Cadillac vehicles. General Motors stock closed at $30.96 yesterday, down 2.43% from the previous close.

We take a look at the newest Kindle introduced by Amazon

Amazon.com, Inc. (NASDAQ:AMZN) has given its popular e-reader a design update for the first time in two years, and the new device comes in an all new white color. The new base model Kindle is the cheapest Kindle to-date and is the 8th generation e-reader that has been released by the company. The new reading gadget is also the first device from Amazon to be offered in white, and the company has also added the white color to the Kindle Paperwhite. The new Kindle’s base model costs a measly $79.99.

The new device, even though cheaper than the previous model, has two times more memory than its predecessor which provides a fluid user experience. The device is also thinner and lighter than the previous generation one and has rounded edges, which make it easier to hold and use with one hand. The base model Kindle offers a touch screen display which provides excellent viewing angles.

According to Amazon, the new Kindle’s battery will last at least 2-3 weeks, which is very impressive. It now packs 512MB of RAM as compared to the 256MB found in its predecessor.

The new Kindle does not offer the 300ppi display of the Kindle Paperwhite, though according to reports, the new device will have a 167ppi display. Reports also indicate that the new device will come with Bluetooth support which will allow users to listen to music wirelessly. The Kindle also has a new notes app, that lets users send messages and highlights, and the files can be exported as PDFs or Spreadsheets.

Amazon recently killed the Fire tablet lineup after the company struggled to make an impact in the tablet market. Rumors indicate that Amazon is planning to release a completely redesigned Fire tablet in 2017.

Microsoft is accused of using its market dominance to create a competitive advantage for its own products

Earlier, antivirus developer Kaspersky Labs filed an official complaint regarding Microsoft Corporation (NASDAQ:MSFT) with Federal Antimonopoly Service (FAS) about using its market dominance to attain an unfair advantage for its own products. In a new twist of events, Russian antitrust authorities are reportedly investigating recent accusation involving Microsoft’s abuse of power.

FAS believes that the Redmond-based tech giant is purposely redeveloping its operating system to gain a competitive advantage for its self-developed antivirus products. In a recent blogpost, Kaspersky Labs CEO Eugene Kaspersky stated that Microsoft pressurized antivirus developers to make their current software compatible with the its Windows 10 operating system.

 Also, the tech giant provided antivirus developers only a week to make their software compatible with Windows 10, which was highly-unfair. Furthermore, Mr. Kaspersky confirmed that every compatible antivirus software was recommended to install Windows inbuilt Defender Antivirus, which is designed to instantly disable every third-party security software running on a device. Hence, this shows how the company has used its authority to promote its own anti-virus software products.

Fortunately, antivirus developers’ concern has forced Russian-based Federal Antimonopoly Service to play its hand and investigate the possibility of an abuse of power from Microsoft. Deputy head of FAS Anatoly Golomolzin has stated that the company’s task is to ensure the existence of equality for all participants in the antivirus development market.

In an official statement, Mr. Golomolzin said: “Since Microsoft itself develops antivirus software — Windows Defender that switches on automatically if third-party software fails to adapt to Windows 10 in due time, such actions lead to unreasonable advantages for Microsoft on the software market.” This news represents the latest exchange of blows between the Redmond company and Russian officials.

Recently, Russian authorities promised to cut down dependence on foreign operating system after a critical security flaw in Windows 10 was highlighted by Google. In a direct response, Microsoft accused Russian-based hackers of exploiting such a security flaw present in Windows 10.