Google Grapples With Search Concerns, Possible Loss of Apple Exclusivity, Oppenheimer Says

/ / Technology /

Alphabet’s (GOOG) Google faces uncertainty around its search business, with investors now factoring in a possible loss of exclusivity with Apple (AAPL), Oppenheimer said in a note emailed Wednesday. “Google generates 31% of gross search revenue ($61B) via Apple devices and pays 36% to Apple for exclusivity, resulting in 19% of net ad exposure,” Oppenheimer said. However, Google would need to retain only 65% of Apple search activity if there were no traffic acquisition cost payment, or 75% if the TAC decreases to 15%, it added. This could cap price-to-equity ration at 20, the brokerage said in the note. However, a survey showed that 75% users would go for Google if they had to pick a default search, and if Apple removed Google from default search, 78% would download Chrome, Oppenheimer said. The US Department of Justice’s case against Google’s Adtech unit is also a headwind which could translate to […]

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Costco Made These Subtle Changes, Adding Enough ‘Friction’ to Prompt a Downgrade

/ / Consumer Discretionary /

While business remains strong, the fact that Costco’s stock is trading near a record high leaves very little room for error . Shares of Costco Wholesale Corp. pulled back Tuesday, after Truist analyst Scot Ciccarelli recommended investors stop buying due to concerns that historically rich valuations increase the risk of a selloff. Ciccarelli noted that the membership-based warehouse retailer’s business remains strong, it is gaining market share versus virtually all retail classes and likely has the highest barriers to entry in all of retail. But with the stock’s (COST) recent outperformance, it is trading at a multiple of forward earnings estimates at “a multi-decade high,” he cut his rating to hold from buy until he sees a more attractive re-entry price. Ciccarelli kept his stock price target at $873, which, prior to the downgrade, was the lowest of the 23 analysts surveyed by FactSet who were bullish. The stock fell

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Tesla’s Q3 Deliveries Expected to Rise 8% Year-Over-Year, UBS Says

/ / Consumer Discretionary /

Tesla’s (TSLA) Q3 deliveries are expected to increase by 8% year-over-year, UBS said in a note emailed Tuesday. The company is expected to report Q3 deliveries on Oct. 2, UBS said, adding that it has not yet received the company’s consensus, but based on investor discussions, it estimates the buyside expectation to be around 465,000 to 480,000, placing itself towards the lower end of the range. While the focus is typically on vehicle deliveries, Tesla now also reports energy storage deployments in gigawatt-hours. The Visible Alpha consensus for Q3 is 9 GWh, slightly below the 9.4 GWh recorded in Q2 of 2024, UBS said. “We believe consensus expectations look elevated as we remind investors energy storage deployments are lumpy and 2Q24 was by far a record quarter,” UBS said, adding that it can’t accurately verify storage deployments, especially due to accounting methods, but its estimates are just below 8 GWh.

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Tesla Third-Quarter Delivery Estimates Showing Upside, Tudor Pickering Holt Says

/ / Consumer Discretionary /

Tesla’s (TSLA) third-quarter deliveries are expected to come in ahead of initial expectations amid stronger incentives in China that have helped boost sales, Tudor Pickering Holt said in a Monday note. The brokerage now expects deliveries of 475,000 units, above the consensus estimate of 461,000 units. Shares of Tesla advanced 4.9% at market close on Monday. TPH is modeling China deliveries of 178,000 units in the third quarter, jumping from 146,000 units the quarter prior. The growth reflects Tesla’s “zero percent interest offerings” that helped spur demand, according to analyst Matt Portillo. European sales are expected to slightly decline quarter over quarter to 76,000 units due to overall lackluster demand for electric vehicles while Model 3 and Model Y sales in the US and Canada are estimated to be relatively flat, according to TPH. Cybertruck sales are forecast at 18,000 units for the third quarter, which Portillo called “relatively muted.”

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Meta Ads Should Lift Earnings, Citi Says. The Stock Could Jump 15%. — Barrons.com

/ / Technology /

Citi is more bullish than the rest of Wall Street about Meta Platforms. It all comes down to ads. Analyst Ronald Josey is upping his estimates for Meta’s third-quarter earnings based on new internal Citi data for Reels, the company’s short-video service. The company is expected to report results on Oct. 23. Josey predicts Meta will deliver $5.48 per share in earnings on $40.7 billion in sales. Both numbers indicate year over year growth will be a percentage point higher than his earlier estimates. The consensus is $5.19 per share in earnings on $40.1 billion in sales, FactSet data show. The new data show that the number of ad loads — the percentage of ads encountered while watching Reels — has reached 22.2% to date in the third quarter, up 70 basis points from the previous quarter. More than 75% of Meta’s advertisers use Reels, Josey said. “Given our view

Meta Ads Should Lift Earnings, Citi Says. The Stock Could Jump 15%. — Barrons.com Read Post »

Qualcomm Acquiring Intel Seen As ‘Logically Unlikely’

/ / Technology /

Qualcomm has approached Intel about an acquisition, according to a report from The Wall Street Journal on Friday, but the sale looks “logically unlikely” to Benchmark analyst Cody Acree. He says in a research note that Qualcomm has no experience in operating leading-edge chip manufacturing facilities, so any acquisition would be instantly paired with a disposition of Intel’s entire manufacturing operation, which many have called for Intel to do on its own. An Intel offer would probably have to offer at least a 40% to 50% premium to its current trading price to be taken seriously, and given Qualcomm’s market cap and cash balance, any transaction would have to include heavy debt and stock components, the analyst says.

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Intel Stock Advances After Report of Apollo Offer

/ / Technology /

Shares of Intel advanced following a Bloomberg report that Apollo Global Management has offered to make a multibillion-dollar investment in the company. The stock was up 2.7% at $22.45 in premarket trading. When the market closed Friday, shares had fallen more than 56% since the start of the year but gained 3% during the trading day after The Wall Street Journal reported that Qualcomm had approached Intel about a takeover. Citing unnamed sources, Bloomberg reported on Sunday that Apollo had indicated interest in investing as much as $5 billion in Intel. Intel executives are weighing Apollo’s proposal, though the size of the potential investment could change and discussions could fall apart, according to the report.

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Apple Off to Strong Start With First Weekend of iPhone 16 Sales, Wedbush Says

/ / Technology /

Apple (AAPL) saw a “strong demand start” for iPhone 16 over the weekend, reinforcing Wedbush Securities’ view that the technology giant will be able to break its historical mark for iPhone units in a year and reach a market capitalization of $4 trillion in 2025. The brokerage estimates iPhone 16 sales to be up high single digits and potentially double digits beginning with the December quarter, it said in a Sunday client note. Wedbush believes Apple’s highly anticipated artificial intelligence features for the new iPhone will be released in phases over the coming months. “This is the beginning of an AI driven iPhone supercycle that should enable Apple to break its historical mark for iPhone units in a year and translate into a $4 trillion market cap for Cupertino in 2025,” Wedbush analysts led by Daniel Ives wrote in the note. Based on the brokerage’s recent Asian supply chain checks,

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ASML Expected to Raise 2030 Targets Over AI Demand

/ / Technology /

ASML Holding is in a position to upgrade its financial targets for the end of the decade when the Dutch semiconductor-equipment maker holds an investor day on Nov. 14, Citi analysts write in a note to clients after hosting ASML CEO Christophe Fouquet at Citi’s Global TMT Conference. “Fouquet explained clearly that the primary driver of their long-term model is the addressable market, where there is clear upside for artificial intelligence relative to the model provided in 2022,” the analysts say. ASML is currently forecasting sales of approximately 44 billion to 60 billion euros in 2030, with a gross margin of roughly 56% to 60%.

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ASML’s Investor Day to Shift Market Focus to Longer Term

/ / Technology /

The market focus on ASML Holding will likely shift away from the short term to 2026 and 2027 when the Dutch semiconductor-equipment maker hosts an investor day on Nov. 14, UBS analysts write in a note to clients. The analysts say ASML’s earnings on Oct. 16 should provide a near-term boost for the stock as they expect to see solid orders from Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, but the market will likely focus more on the investor day the following month. ASML shares trade 3.6% higher at 696.60 euros.

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Walmart and Costco Bought Up Stock at Bargain Prices — Barrons.com

/ / Consumer Discretionary /

Ed Lin Companies can show confidence in their prospects in many ways, but $1 billion of stock repurchases certainly trumps a “cautiously optimistic” outlook. Among retailers, that’s a breathtaking amount of buyback activity. That’s how much Walmart laid out to buy back shares in the fiscal second quarter ended July 26. What’s even more impressive is that the retailer didn’t significantly curb buying as the share price rose. Walmart paid $363 million in May for 5.8 million shares, an average price of $62.19 each, according to a form the company filed with the Securities and Exchange Commission. Then it paid $292 million in June for 4.4 million shares, an average price of $67.12 each, and paid $339 million in July for 4.9 million shares, an average price per share of $69.66. At the end of July, Walmart had $14.5 billion allocated for share repurchases. Walmart stock has only climbed since

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Nike’s leader is stepping down

/ / Consumer Discretionary /

John Donahoe will retire as chief executive next month, capping a tumultuous tenure that caused the sneaker giant to lose ground to competitors. Donahoe will also step down from the board of directors. Company veteran Elliott Hill will succeed Donahoe as president and CEO starting Oct. 14. Hill served as consumer president until Donahoe took over in early 2020 and shuffled Nike’s leadership ranks. During the pandemic, Donahoe sought to focus on selling directly to consumers and Nike cut ties with longtime retail partners. The strategy backfired as the e-commerce boom faded. Nike shares rose 6.8% Friday.

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