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February 2018

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Airbus Group Gets Flaynas Order for 80 A320neos, Valued at $8.6 Billion

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Coming up to competition, Airbus gets Flaynas order for 80 A320neo commercial jets

In the latest attempt to expand its aircraft fleet, Saudi Arabia based carrier, Flynas, announced yesterday that it is in a deal with Airbus Group SE (EPA:AIR) to acquire 80 single aisle commercial jets, valued at around $8.6 billion, upgrading its previously placed order. The current announcement would be a good news for the aircraft manufacturer, as it has received tough competition from the market during fiscal year 2016.

As part of the current announcement, the airline plans to acquire 60 Airbus’ A320neo along with upgrading its previous order for 20 current versions of A320 to A320neos. Furthermore, the airline would also have an option to acquire another 40 A320neos in future.

According to Flynas chairman, Ayed Al Jeaid, the current deal with Airbus is approximately valued at $8.6 billion which is expected to contain discounts, according to the analysts related to the industry. As part of the current deal, Airbus is expected to make deliveries of these commercial jets over time span of 8 years, beginning from fiscal year 2018.

It was also reported that Airbus was competing with its biggest rival Boeing Co. (NYSE:BA) to take Flynas commercial aircraft orders and by getting these orders. The company has already beaten its rival in the race to book most commercial aircraft orders. Boeing, on the other hand, is reportedly in talks with various airlines to finalize commercial aircraft orders through which it would be able to come up to competition with the European aircraft manufacturer.

Comparison of recently updated full year 2016 order book reveals that Boeing lost its lead in booking most commercial aircraft orders, compared to Airbus, which booked multiple orders during the month of December. Till November-end, Boeing had Airbus’s lead and was confident that it would keep its lead till the end of the year.

Analysts related to the industry believe that Boeing has not included some of its huge orders it received during 2016. If the airline adds those orders in its 2016 order book, it might be able to take Airbus’ lead in booking most commercial aircraft orders.

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Consumer discretionary

Tesla Motors Inc (TSLA) Autopilot Director Shares New Fleet Learning Data

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Tesla Director of Autopilot Program Sterling Anderson reveals that owners have travelled 100 million miles on the self-driving mode

Tesla Motors Inc (NADSAQ:TSLA) autonomous car driving program the Autopilot not only includes self-driving features, like auto-steering, auto-lane changing, parking, and ‘Summon;’ it also continuously learns from Tesla drivers around the world to improve its performance.  

Electrek reported Sterling Anderson, director of Autopilot program at Tesla, shared some new data regarding the fleet learning at MIT’s Cruise Digital conference yesterday.  He also revealed how the company handles this sensitive self-driving technology, which will eventually achieve full autonomy

The executive said while the fleet of vehicles with the Autopilot hardware (produced after October 2014) has altogether driven 780 million miles, Tesla owners have driven about 100 million miles on the Autopilot mode.

The difference of miles driven with and without the Autopilot mode is essential to the automaker’s development process.

Anderson said in a statement, “We first install (the Autopilot system) in a logging fashion across 70,000 vehicles. We watch over 10’s of millions of miles with the new (Autopilot) features not turned on. We only turn it on when we know it is empirically safer.”

Mr. Anderson also disclosed a key real-life example of system’s efficiency based on the data:

The electric vehicle (EV) maker‘s data collection from the Autopilot per day is more than the data collected by Google’s self-driving car program since its introduction in 2009. Since Google’s data includes city driving and Autopilot data consists of highway miles, Tesla has an edge over the tech giant in terms of racking up more data.

Data collected by Tesla while the Autopilot is not activated is also very useful and includes a wider range of road types. Additionally, Google does not have a large fleet like Tesla to collect such an enormous quantity of data; thus, it collects merely 3 million miles per day without leaving the lab.

Autonomous driving data will be crucial in the race to full autonomy, as CEO Elon Musk has said that the data will be likely sufficient to get the regulatory approval. The automaker plans that the possibility of an accident reduces while a Model S or Model X is driving on the Autopilot mode.

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Consumer discretionary

Dear Tesla Motors, Inc. (NASDAQ:TSLA): An Auto-Pilot Update Won’t Please Investors, Numbers Would!

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The financial picture of the company continues to worsen, which raises our concern on its future

It seems that Tesla Motors Inc. (NASDAQ:TSLA) CEO Elon Musk regards innovation higher than the financial aspect of his company. Perhaps this is why he keeps on bringing newer products and updates to portray a rapid progress towards its goals, however, the financial picture of the company continues to worsen. That being said, such an update might just win on Tesla fans, but it is not well enough to win investors for the Palo-Alto based automaker.

The market’s response to developments within the company is quite misleading. Investors pay more attention to Mr. Musk’s tweets than the financial aspect of his company. Having said that, the recent developments within the company hint that a bearish response should be in sight. However, investors believe it is one of the best picks in the automobile sector. While Tesla may be having a competitive edge over its competitors in areas such as innovation, brand loyalty, and marketing, it is indeed one of the riskiest stocks to invest in the auto sector.

Then comes the decision to acquire SolarCity Corp., a decision that has been criticized much since it was first announced. The energy storage company has started to pose problems for the twelve-year-old auto-maker, as lenders have refused to extend credit facilities to SolarCity, despite whatever guarantee’s may be offered. Tesla itself has been going through the same problems, and its liquid resources are depleting higher than expected.

There was a decrease in short interest for Tesla, as per the recent data obtained. However, it seems that the bearish side of the coin would indeed get a rise following the recent developments. The Street is yet to update their views after the recent developments. The last coverage was Robert W. Baird’s bullish price target of $338. Let’s see if we get to see any updated coverages on the electric car makers stock.

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FINANCIALS

Wells Fargo & Co (WFC) Misses Street Estimates But Bullish Sentiments Prevail

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TheCountryCaller takes a close look at the activities of the firm in detail

Wells Fargo & Co (NYSE:WFC) released its earnings for Q4FY16, as the 165-year-old institution ends one of the most difficult fiscal years in history. The $271 billion old firm missed both topline and bottom-line estimates of the Street, but no changes were seen in the bullish sentiment, as shares continue to trade higher at $55.83 as at 10:42 AM EDT. TheCountryCaller takes a close look at the activities of the firm in detail.

The third largest financial institution in the US reported revenues of $21.58 billion versus the Street estimate of $22.45 billion. The EPS for the quarter stood at 96 cents versus the Street estimate of $1. CEO Tim Sloan expressed his gratitude on the numbers and said, “We continued to make progress in the fourth quarter in rebuilding the trust of our customers, team members and other key stakeholders.”

That being said, the weaker-than-expected numbers are attributed to the fake account scandal, which dented the bank’s credibility in the industry. It has been a lot difficult for the institution to regain customers’ trust. Apart from the liabilities side, it has been facing difficulties on the asset side too, as credit card applications were down 43% YoY.

Market experts have not given up hope on the San Francisco based bank, and they re-affirmed their faith in the institution. Billionaire Warren Buffett, one of the world’s most astute investors and major shareholder of the bank, said that he is not giving up on Wells Fargo despite the “Terrible Mistake” it made in the fake accounts scandal.

Mixed views can be witnessed in the Street, as research firms Oppenheimer and Piper Jaffray hold bearish views, while Jefferies Group and Morgan Stanley hope for gains. The consensus PT of $50.40 implies a downside of over 7% from the current trading levels.

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Technology

Advanced Micro Devices, Inc. (NASDAQ:AMD) RX 480 Runs at Under 60 Degrees, Uses 100 Watts at Full Load

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Days ahead of its official launch, leaks suggest the RX 480 is an impressively cool and power-efficient chip

Advanced Micro Devices, Inc. (NASDAQ:AMD) is on a roll thanks to its RX480 chip hitting the perfect price point in a market where NVIDIA Corporation (NASDAQ:NVDA) has no significant answer when it comes to an equivalent price, i.e. performance GPU. There are, however, a slew of details including various benchmarks where it allegedly takes on Nvidia’s GTX 980 and essentially beats it conclusively in various leaked benchmarks and screenshots available at Chinese forums.

With production line photos and FireStrike scores readily available at various forums, the RX 480 can essentially push well above 1.6 GHZ, possibly contributing to far faster real world performance for its consumers than when it runs at stock on about 1.2 GHZ. More importantly, the RX 480 is an impressive performer at a fraction of the cost one would expect it to be at $199. It is, by far, one of the most power-efficient chips in the market available to users with a raw power draw of about 100W and remains generally cool at under 60 degrees mostly.

Based on the fact that it could essentially pull as much as 150 watts if required and remains generally stable at thermals remaining under 60, it could very well become an overclocker’s heaven. Also, given that it can do as much as 1.6 GHZ already and could potentially even push non-reference designs makes it a large issue for Nvidia’s GTX 1070, which is priced at $379, much higher for the reference design.

Nvidia’s push for the top-end via its Pascal lineup, which saw it enter the market with the GTX 1070 and the GTX 1080, priced at $379 and $599, respectively, left a massive gap at the mid-tier for consumers unwilling to splurge such a massive amount of cash as an investment into better visuals for gaming, rendering or otherwise. It went a step further, however, pushing into the market via its Founder’s edition GPUs of the same variants. To date, AMD does not have a suitable market contender for Nvidia’s top-line GPUs and it aims to hit the mainstream market higher in a bid to capture the bulk of the virtual reality market.

With idle temperatures of about 37.5 degrees and the GPU pushing just north of 62.7 degrees at full load while running stress tests, AMD has a winner at its hands which is going to be thermally stable, extremely power efficient, and would offer the best performance in several price ranges once it launches a week from today. The 4GB base model is expected to retail at about $199. The 8GB variant is expected to push to $229 as per confirmation by AMD Poland. AIB partners are expected to have custom cooler versions within a price range of $199-299 with various modifications, cooling solutions, and overclocking potential available across the board. If executed right, the RX 480 could very well stop the Nvidia hype train in its tracks, even triggering a premature price cut to gain traction for the GTX 1070 which, for now, remains out of stock at most retail outlets and ecommerce vendors.

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Technology

Alphabet Inc (GOOGL) to Add a Kill Switch to its AI System to Always Stay in Control

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Google wants to ensure it has a Plan B in case its AI system functions out of control

Alphabet Inc (NASDAQ:GOOGL) is in a process of developing and perfecting its own artificial intelligence system and does not want any unwanted setbacks in future operations. For this reason, the company has decided to add a kill switch to any artificial intelligence system developed in the future, which will ensure that the system can be shut down if it decides to act out or function completely independently. Here is the Country Caller’s take on how Google is ensuring that its artificial intelligent system always functions the way it is supposed to.

With rapid progress and development in the field of artificial intelligence, Google knows it has to keep innovating and searching for methods to perfect its AI systems. As rivals like Facebook, Microsoft and Amazon aggressively invest in their respective artificial intelligent systems to make them significantly smarter, Google is not holding back either.

However, the tech giant does not want to empower its artificial intelligent system beyond the point where it functions out of control, malfunctions or poses any sort of threat.

The rapid growth of artificial intelligence has been encouraged and actively participated by majority of the leading technological companies in the world. However, there are a few prominent figures that have warned the industry about the dangers of the unknown associated with creating a self-aware and self-functioning artificial intelligent system.  Prominent thinkers like Stephen Hawking and Elon Musk have made their intentions clear regarding the development of artificial intelligent systems and warned respective developers about the consequences that come with it. They have repeatedly stressed that artificial intelligence cannot be trusted and to openly develop such systems is like summoning a force that might pose a threat to the existence of mankind itself.

Nevertheless, it’s clear that artificial intelligence is the way forward in the technological world. No matter how serious of a threat self-aware and self-functioning robotics might pose, leading tech giants have no intentions to stop researching and making their AI systems smarter and efficient. At least Google has taken a precautionary step in case its artificial intelligence system decides to act out and pose a threat to mankind in any way. Fingers crossed.

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Technology

Public Sector Adoption for Amazon.com, Inc. (AMZN) Web Services Picking Up: Pacific Crest

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Pacific Crest stated that Public Sector Adoption for Amazon Web Services is picking pace

Sell-Side Firm Pacific Crest in its report on Amazon.com, Inc. (NASDAQ:AMZN) mentioned that Public-Sector adoption of Amazon Web Services (AWS) is gradually picking up. Last week in Washington D.C., Amazon hosted an event for public sector, which had around 7,500 attendees. The company provided sufficient evidence to the public sector that adoption of AWS is on the rise. Moreover, the company also demonstrated the strong uptake of its higher value AWS branded application services.

These services included Lamba (serverless) and Aurora (database.) Considering the robust and aggressive momentum building up for Amazon Web Services, Pacific Crest has presented its bullish stance for Amazon. The Sell-Side further mentioned that Aurora’s cloud database is also growing steadily with a fast and energetic pace, though it is still quite small. Also, it noted that AWS is adding up around $1 billion in incremental cloud revenue on quarterly basis.

In addition, it stated that CSRA Inc is planning to shift 65% of its work-loads on public cloud latest by 2021. Pacific Crest has presented Overweight rating for the stock, along with a Price Target of $820.00, representing an upside potential of 18.4% from its current price of $692.83.

The average Price Target for the stock by analysts at Street is of $802.17. The most bullish and bearish PT by analysts is of $1,000.00 and $463.00, respectively. Out of 45 analysts covering the stock at Street, 28 have presented Buy rating for the stock while 13 have rated the stock as Strong Buy. Only 4 analysts have rated the stock as Hold.

Amazon’s stock performance has been mouthwatering, as the stock has appreciated by 2.73%. However, in past month of trading, stock has lost around 4.02%. The recent news of Brexit would also impact the stock.

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FINANCIALS

Facebook Inc (FB) Q2 Earnings: What To Expect

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Facebook to remain bullish ahead of earnings release, analyst said

Facebook Inc (NASDAQ:FB) will post its financial results for the second quarter of fiscal year 2016 after market closes on Wednesday, July 27. Raymond James analyst, Aaron Kessler, maintained Outperforming ratings on the shares of the company ahead of the earnings release later today. Facebook has been a success in its mobile audience through Instagram, Messenger, and Oculus VR. However, analysts worry that a huge chunk of its consumer base is transitioning to Snapchat or other social networks.

The Street expects the company to post $0.81 in earnings per share this season. On the other hand, estimize.com has issued an estimate of $0.84, which means the social network giant is likely to beat the Street on its bottom line. Furthermore, Facebook posted $0.50 in EPS in the same quarter, year-ago which means the Street expects the company to post 62% year-over-year increase in its EPS. Also, the company posts $0.77 in EPS in the last quarter, which means that it has 5.19% sequential increase factored in its earnings.

According to the consensus, Facebook is also likely to post $6.01 billion in revenues, which is 57 million less than the estimate issued by estimize.com, calling for a topline beat this season. The company announced $5.38 billion in revenues in the last quarter, which marks over 11.71% sequential increase in its topline. Last year, it reported $4.04 billion in revenues, leading to 48.7% YoY increase in its revenues.

Based on these figures, Mr. Aaron is comfortable with Facebook’s advertising growth of approximately 55% compared to last year. He expects that the stock has a modest upside potential relative to the consensus estimates. He did not changed the price target of $140.

Based on these figures, Facebook is expected to post strong quarter results. Many believe that there is an increasing demand for the company. The analysts expect an increase of 4% in its monthly active users from the last quarter.

The social network giant’s advertising revenues have been increasing, but it must keep an eye on the headwinds from Brexit. The revenues are expected to be effected approximately 3-5% by these headwinds. Thus, this is essential to monitor future growth.

The analysts still maintain a bullish stance on Facebook stock. FactSet Fundamentals uphold 39 Buy, 4 Overweight, 5 Hold and 1 Sell ratings on the stock. It maintains a 12-month average target price of $143.80. The stock traded at $121.90, up 0.56% as of 11:50 AM EDT.

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FINANCIALS

Applied Materials, Inc. (NASDAQ:AMAT): Analyst Lifts PT to $34; Sees Q4 Revenues on Peak

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Credit Suisse raised the price target to $34.00 (from $29.00), following the company’s Q3 earnings report

Credit Suisse analyst, F. Ahmed weighed in on Applied Materials, Inc. (NASDAQ:AMAT) following the third quarter earnings report. The analyst maintained an Outperform rating but raised price target from $29 to $34. The price target calls for a 14.70% upside potential over the last close of $24.64, Friday. Applied Materials reported a bottom line beat of 2 cents over the consensus, which was primarily driven by company’s lower taxes. However, the company missed the Street’s top line estimate of $2.87 billion, as the revenue came in at $2.82 billion.

For the quarter ended July, Applied materials reported better than expected earnings and provided better outlook for the next quarter, well above the consensus estimates. According to Mr. Ahmad, the upside is mainly due to stronger orders from Taiwan Semiconductor Manufacturing, one of AMAT’s key customers. “While cyclically OctQ could be a peak for revenues – 3D NAND, China, and OLED represent multi-year investment cycles that can allow AMAT to outgrow peers for next few years,” said Mr. Ahmad. 

The company is executing well and has managed to deliver its long term target of $2 EPS, 2 years in advance. Also, the management has succeeded in building a trustworthy relationship with investors. “We see upcoming analyst day, and improving memory fundamentals as positive catalysts in near term. Increasing TP to $34 (from $29,)” said Mr. Ahmad in his research note.

Following Q3 report, Applied Materials shares rose 7.08% in Friday’s trading session, close to its 52 week high value. The company has a market capitalization of $32.74 billion. It has a price to earnings ratio of 27.30. AMAT stock has a 52 week high of $29.74, and a 52 week low of $14.25. The data on FactSet says, out of the 25 analysts covering AMAT stock, 21 rate it a Buy, while four rate it a Hold.

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Public Chat Rooms Now Available On Facebook Messenger

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Facebook is enhancing it messaging application even more, enabling users to now talk to strangers

Facebook Inc. (NASDAQ:FB) has been adding some very juicy features to its messaging app; now, another addition has been made through users would be able to talk to strangers. Facebook Messenger now has public chat rooms which Yahoo Messenger previously had. Various topics can be discussed on the public groups, making the feature similar to chat groups but the major difference is that users can speak to strangers too.

The social media giant is making its messaging app more attractive and its efforts are clearly working. Facebook Messenger is not a part of the main Facebook app, but users have to download the app separately in order to communicate. This new addition of public chats is available in few markets at the moment, but would soon be given out to the masses. According to the Facebook Messenger product manager Drew Moxon, this feature has been rolled out so that users can chat with others who have the same interests.

The new addition to Facebook Messenger is currently being tested in Canada and Australia. However, the company plans to bring it to everyone very soon. The feature consists of two options: users can either start a public chat or a secret one. The secret chat enables users to start a chat with strangers in the group if they wish to, while the public chat is for all to see who are in the group. Users can choose the topic they wish to discuss.

The room feature can also be used to organize and keep events, which might be ideal for numerous protesters in the US who are experiencing post-election depression. Users would also be able to keep their timeline clear and chat with their friends and family on group chats instead. This social expansion would attract many users who haven’t yet downloaded Messenger to do so.

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