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January 2018

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Monsanto upgraded to Overweight by JPMorgan

Stock rating for Monsanto Company (NYSE:MON) has been upgraded to Overweight, from its previous rating of Neutral along with an increase in Price Target from $100 to $128 by JPMorgan. The analyst at JPMorgan mentioned that shareholders of Monsanto might receive around $128 per share if Bayer closes on its deal to acquire Monsanto.

However, the price could be expected to erode to $90, the price at which Monsanto’s shares had traded previously when the market was unaware of the bid from Bayer back in May 2016. The analyst noted that the risk reward is of $25 upwards or a decline by $13, a probability of 66% for the deal to frustrate while a chance of 34% that the deal would be closed.

The analyst also mentioned that there is a risk of transaction failure in quite a different manner. The research firm expects Monsanto to report earnings of around $5 per share later in 2018, and hence, should be trading at around $100 per share at a multiple of around 20x of its earnings. The analyst noted that the risk in the stock is at $100, while the reward stands at $128.

A much clearer overlap between the two players can be witnessed in Canola Seeds and Cotton Seeds. It expects Monsanto’s revenues from Cotton business in North America to be at $0.5 billion, along with a market share of about 30%, while that of Bayer’s to be $0.3 billion along with a market foot holding of 35%.

Hence, one can expect divestitures from these players in such segments. The basic premise of the combination between the two players is of increasing the speed at which newer products are brought to the market by a combination of seed technology with crop chemical technology.

Moreover, the Sell-Side trimmed its 2018 EPS forecast from $5.95 to $5.00 for Monsanto. Also, the EPS forecast for 2017 has also been lowered to $4.40 from $4.85. Such lower estimates are on back of expectations of lower seed volumes for global corn globally, and also the prices are expected to be on the lower side. All of the decrease in earnings for 2017 is on back of reduced gross profit assumption in corn segment.

Reuters reports an over 40% decline in the reserves that were held on the shore in early October

As an attempt to benefit from the exemption granted by OPEC, Iran has sold over 13 million barrels of oil, which was held at the ports. Reuters reports an over 40% decline in the reserves that were held on the shore in early October. The Country Caller views the recent development as a positive development, given the fact that sixth largest oil producer in the world experienced oversupply throughout 2016. Considering the objectives set by Iran to revert back to the pre-sanction production levels, the massive selling of the commodity seems justified in a way.

Major countries that imported oil from Iran include China, India, south Korea, and European countries. The fact that the country does not have the kind of infrastructure to store the commodity has increased its reliance on the tanker fleet to store the excess oil. A former official of Iran’s state-owned oil company said, “Iran got its way at OPEC and the Saudis agreed not to limit their capabilities. Iran will go ahead and look to export whatever they can for winter demand (globally),” further to this, he added that storing oil is quite expensive for Iran therefore it is pursuing its commercial policy to get rid of the excess output.

Iran is now utilizing its tankers to carry out deliveries, or make ship to ship transfers rather than deploying them to store the supplies. As mentioned earlier, TCC does not believe it is a very bad sign as OPECs output has dropped from its highest production levels recently. Moreover, US crude inventories also dropped much more than analysts expected

Going forward, we expect the commodity to trade between $53 to $55 as more an d more developments come up. TCC will continue to update on any further developments relating to oil.

Crude oil trades at $53.72, while Brent trades at $56.72 (10:53 AM EDT)

 

A look into what prompted BHP to make such a move and how it will affect the future running of the company

BHP Billiton Limited (ADR) (NYSE:BHP) announced the sale of its Indonesian coal assets to Adaro. This was prompted by a decrease in the prices of metallurgical coal.

As per Adaro, the deal was worth $120 million and will be effective after the necessary approvals from Government of Republic of Indonesia. This will be huge for both the companies as it will allow BHP to have a narrow focus, so it can concentrate on fewer of its important projects.

Moreover, BHP and Glencore International PLC, St. Helier (OTCMKTS:GLCNF) are also among the final bidders for the Anglo American Australian metallurgical coal assets. Anglo wants to raise around $3-4 billion from the sale of coal assets. This will help it reduce its burdening debt and will allow it to focus on some its core assets such as diamonds and copper.

Furthermore, an Iron ore glut is expected to continue, after high exports coming from Iron ore shipments from Australia were recorded last month. In the month of May, exports were recorded at 39.4 million metric tons compared to 37.7 million metric tons in the month of April. 

BHP’s stock traded at $28.76 as at the closing bell on Tuesday. The stock trades in the 52-week range of $28.62-29.17. The company has a market cap of $75.08 billion.

Here’s why you should install the latest iOS update right now

Apple Inc. (NASDAQ:AAPL) has released an unexpected update for iOS today, which is for a zero day exploit that lets hackers remotely jailbreak an iPhone and run malicious code on the device. The new 9.3.5 update fixes three critical exploits, which, when used together, allow an iOS device to be exposed to hackers. The exploit was first discovered by human rights activist Ahmed Mansoor who worked with The Citizen Lab to bring the issue to light.

According to the report, Ahmed Mansoor had received some text messages from hackers that claimed to provide new information about inmates being unlawfully detained and tortured in UAE jails. Rather than clicking on the malicious link, Mansoor forwarded the email to the citizens lab to look in to thr matter.

The citizens lab then pointed out that the exploit was originated from an Israel based NSO firm which sells government exclusive sypware products such as Pegasus. The NSO group has ties with American venture capital firm Francisco partnere management.

This led to The Citizens Lab partnering with security firm Lookout Secuirty to work on identifying the issue and how the code infects user devices. The report also mentioned that the code would have installed a complex spyware on the victim’s iPhone which would have given hackers to all data on the device. The Citizens Lab is calling the new exploit Trident.

CVE-2016-4655, CVE-2016-4656 and CVE-2016-4657 are the three flaws that have been patched by Apple in the new 9.3.5 update. Apple has always been up to speed at sending out updates for security fixes as one of the main selling points of iOS devices is their up to date security features.

This is where Apple has outdone Alphabet Inc.’s (NASDAQ:GOOG) Android OS, as it usually takes weeks for Google to send out the latest security fixes which leaves millions of devices exposed to hackers. Apple also recommends that users install the new update as soon as possible to protect their devices from being exposed to the malware.

Mobileye is scheduled to report Q3 earnings tomorrow, here’s what to look for

Mobileye NV (NYSE:MBLY) will be publishing earnings for the third quarter of this year tomorrow, before the market opens. The stock closed at $38.96 on Friday, up about 3.92% against the previous day’s close.

Ahead of the earning print, The Country Caller shares the consensus expectations of the analysts at the Wall Street, providing a foresight for the investors into the company’s financial position.

As per the projections of Street analysts, the Israel-based manufacturer of driver assistance systems is expected to post revenue of $89.47 million for 3QFY16, this would translate into a rise of 27% as compared to the revenue reported in the same period of 2015. Over the past nine quarters, Mobileye has surpassed the consensus expectations for top-line in each quarter. During 2Q, the company posted revenue of $83.49 million, beating the estimate of $77.10 million by 8.27%.

For the third quarter, the analysts forecast the bottom-line to grow by 83%, as Mobileye’s Earnings per Share (EPS) is expected to clock in at 18 cents. Similar to revenue, the technology company has an impressive record in being ahead of consensus estimates. It has beaten the estimates in all past nine quarters.

During the second quarter of this year, Mobileye’s EPS stood at $17 cents, nearly 13% ahead of the expectations. However, despite a revenue and earnings beat during 2QFY16, the stock tanked about 8% the day following the earnings release.

On Friday, investment firm CLSA’s analyst Emmanuel Rosner released a research note, reiterating a Buy rating along with a price target of $58 on the stock. Mr. Rosner believes Mobileye may report a solid quarterly performance and simultaneously announce a potential REM deal with Volkswagen AG (OTCMKTS:VLKAY). He said: “A deal could confirm REM’s value as a moat and help quantify the material revenue streams it creates.”

In addition to this, the global leader in Advanced Driver Assistance Systems and autonomous driving technologies will also be representing at the Automotive Conference conducted by Barclays Global on Thursday, November 17, 2016.  The company’s Chief Communications Officer (CCO), Dan Galves is expected to be present at the event.

While Microsoft’s recent run has been good for investors, the stock is still a bit shy of its 52-week high

Microsoft Corporation (NASDAQ:MSFT) reported its fourth quarter results on Tuesday, July 19. Earnings topped consensus expectations as the company continues its shift to cloud-based services from software. The company reported $22.6 billion in revenues for the quarter ended June 30, 2016, whereas the earnings turned out to be $0.69 per share. Both the earnings and revenues were noted to be ahead of the consensus.

The $444 billion company reported 102% year-over-year growth in Azure, its cloud platform, while revenue grew 7% YoY to $6.7 billion for the segment. The consensus had projected intelligent cloud segment to reach $6.61 billion for the quarter. Following the bright results, Microsoft shares climbed higher. Through yesterday’s trading session, Microsoft stock gained 1.38% to close at $56.57.

However, the technology company still lags behind its 52-week high of $56.85 which it achieved in December 2015. Over the past month, the stock has surged over 16%.

Microsoft’s solid results were mainly driven by strong growth in the cloud business. CEO Satya Nadella commented in a press release: “The Microsoft Cloud is seeing significant customer momentum and we’re well-positioned to reach new opportunities in the year ahead.” Microsoft’s Windows hardware and software sales, however, fell 4% YoY to $8.9 billion.

The consensus 12-month price target for Microsoft stock stands at $59.30, reflecting an upside potential of 4.82% over the last close. Out of the 36 analysts covering Microsoft stock, 18 rate it a Buy, 12 rate it a Hold, three rate it an Overweight, while two rate it a Sell. Microsoft Corporation has a market capital  of $443 billion.

A recent engine issue in Rolls Royce engine powering Airbus’ A380 commercial jets was highlighted by Emirates

The biggest operator of wide body aircraft, Emirates recently announced that it is not satisfied with the performance of the Rolls-Royce Holding PLC (OTCMKTS:RYCEY) engine ordered to be powering 50 Airbus’ A380 commercial aircraft. The airline’s order of the commercial aircraft engines are valued at $6.1 billion, that might increase based on the engine performance shortfalls.

Most recently, a technical issue has been reported in the Trent 900 engines manufactured by Rolls Royce that are slated to be powering the Airbus Group SE’s (EPA:AIR) A380 superjumbo commercial aircraft. The issue is required to be immediately resolved before the delivery of the first commercial aircraft scheduled next month. If the technical issue in the engine is not resolved, it might result to delivery delays that will impact the planned Emirates flight schedules.

Emirates does not look happy with the recent engine issues indicated this close to the delivery timeline as the airline executive reported that they want the engines as promised in the contract. As part of the contract signed last year, Emirates ordered a total of 217 Trent 900 engines that were slated to power around 50 Airbus’ A380 superjumbo commercial jets. Previously, the airline has also been using GP7000 engines manufactured by an alliance of Pratt & Whitney and General Electric Company (NYSE:GE).

Despite the setbacks, Emirates reported that it will take the delivery of the first A380 commercial aircraft scheduled on December 2, 2016. The management further reported that talks are underway with the engine manufacturer to resolve the performance issues.

Along with Emirates, Qatar Airways has also been facing issues in Airbus’ A320 commercial aircraft engines powered by Pratt & Whitney engines. The airline decided not to take deliveries of the problematic engines earlier this year and later on cancelled the order during the third quarter. Considering tough competition in the market, Rolls Royce must resolve the engine issue as early as possible to keep the airline’s confidence.

Analyst at MKM Partners reiterated his Buy ratings on Amazon (AMZN) stock ahead of second quarter results

Amazon.com, Inc (NASDAQ:AMZN) is set to disseminate earnings report for the second quarter of this year on July 21 after the market closes. In this regard, analyst at MKM Partners Rob Sanderson published a research note today, sharing his bullish sentiments on the stock ahead of second quarter earnings. The analyst reaffirmed his Buy rating and a 12-month price target of $850 on the stock.

Although the analyst remains bullish on the Seattle, Washington based e-commerce giant’s overall performance and long-term growth targets, Mr. Sanderson suggested that the expectations are conservative for the second quarter specifically. MKM Partners analyst said: “We think consensus is most likely too low, particularly on international growth and AWS margins.”

In the view of Mr. Sanderson, Amazon’s “Prime Flywheel” appears to be gaining international fame and hold market share on a global level. The second Prime Day is expected on July 12 and is likely to be a source of upside during the third quarter, across the world. Mr. Sanderson added: “We continue to view Amazon as the best long-term growth story available to investors today.”

The stock hit a new all-time high yesterday, with gaining about 10% since the start of this year through July 7. Although the global economic scenario shows sluggish performance, the company has shown commendable performance despite the Brexit (Britain’s exit from European Union) doom and gloom. Earlier this week, Robinson Humphrey, analyst at SunTrust, raised his price target on Amazon stock to $775 from $710 and reiterated his Neutral rating on the stock.

Amazon stock is covered by 47 analysts at the Wall Street and out of these a substantial majority of 42 analysts believe that the stock should be added in the investment portfolios, while the remaining analysts suggest a Hold. Furthermore, none of the analysts rate the stock as a Sell. As of 12:07 PM EDT, the stock is currently trading at $743.92, up about 1% against today’s opening price.

Speculations suggest that Microsoft is working on its future “HomeHub” feature for Windows 10 users, a software that would work as a direct competitor of voice-controlled speakers like the Amazon Echo

As the practice of using smart-home controllers continues to increase with each passing year, it seems that Microsoft Corporation’s (NASDAQ:MSFT) Windows platform is trying its level best to join the race. Speculations by Engadget revealed that the tech giant is currently working on a “HomeHub” feature for its Windows 10 platform; a medium that will directly compete with smart-speakers rolled out by Amazon and Google in the past.

With plans to launch the update for Windows 10 in three stages of 2017 and 2018, Microsoft’s feature will enable supporting PCs to work as smart-home controllers for connected devices. Since many users have gotten accustomed to using a separate speaker device integrated with voice-recognition technology to control their smart-appliances, it appears that HomeHub has the potential to turn any PC into a controller with help from the company’s Cortana voice-assistant.

We believe that the debut of Amazon’s Echo speaker in 2014 has been a vital asset to trigger growth for the smart-home industry. Thanks to the retail giant’s voice-controlled speaker, many users have gotten used to controlling their smart-home devices by simple voice-commands, helping Amazon’s “pillar” grow fervently in competitive markets.

Subsequently, Echo’s presence in markets has led to the launch of Google’s recent Google Home speaker, which also works in a manner similar to the Echo. Considering that tech giants have started to diversify upon their line-up of hardware devices and focus more on developing smart-speakers, it is evident that the HomeHub hopes to offer something new to customers with their PCs. Since users connected to the PCs can make use of the feature, it is highly probable that the feature’s roll out will be a hit among existing Windows 10 users.

Users will be able to perform a range of tasks including sharing apps, calendar appointments, and other data without requiring a log-in ID. According to the tech giant, its upcoming feature will help “crush” competition triggered from Amazon and Google’s speaker devices, and help initiate a new trend altogether.

Even though former speculations suggested at the potential release of the HomeHub at Microsoft’s Surface hardware event in October, it seems that the company hopes to take some more time to perfect its future update. With these updates, dubbed as Redstone 2, 3 and 4, there is a chance that the company hopes to offer distinctive features in three different phases. Currently, Microsoft is still in the planning stage for the features.

According to the country’s latest policy, Telecom giants would be able to offer multiple services simultaneously

Most recently, Argentina’s government changed its policies according to which foreign telecommunication services can now start their operations in the country. As part of the current news, the move is expected to increase competition in the country’s Telecom sector and bring in multi-billion dollar investment; however, industry analysts remain skeptical whether AT&T Inc. (NYSE:T) and Verizon would enter the market.

According to the latest policy, Telecom giants would be able to offer fixed line, wireless, Internet, and cable TV services simultaneously. The aforesaid services are offered by both, AT&T and Verizon Communications Inc. (NYSE:VZ) simultaneously in the US that compete neck to neck in the country.

Analysts related to the industry are of the opinion that as part of the regulatory changes, AT&T would be able to offer its telecom services along with DirecTV in Argentina. The other companies including Cablevision SA—cable network provider—would be able to offer the 4G wireless services.

Furthermore, in order to benefit the local Telco, only Telefonica, Claro, and Telecom Argentina have been permitted to offer paid television starting from January 2018. This would allow the local companies to have an edge over other foreign new competitors; however, they would have to compete hard to retain their market share once giants such as AT&T and Verizon enter the border.

In related news, as expected, local Argentina telecom companies are not pleased with the decision; Telefonica is reportedly evaluating judicial action against the government. As per analysts’ common opinion, local phone companies would be at disadvantage compared to cable operators amid increased competition; the former would need to make investments to improve their network spread.

All in all, the announcement has come as a major opportunity for Telecom companies to invest in an untapped market. However, it is yet to see if AT&T and Verizon will make a move in South American region.