Visa and Mastercard Shares Draw Downgrades as BofA Analyst Breaks From the Pack

/ / Industrials / ,

BofA sees a potentially more volatile regulatory landscape as well as limited valuation upside Shares of Visa Inc. and Mastercard Inc. mostly draw buy ratings from Wall Street analysts. But BofA Global Research’s Jason Kupferberg broke from the pack on Wednesday as he downgraded both payment-technology stocks to neutral. He noted an “arguably … more volatile and unpredictable” regulatory landscape in the wake of a judge’s “unexpected” decision to reject the companies’ landmark deal in a long-running merchant suit. “Historically, we (and the investment community in general, based on investors with whom we’ve spoken) have largely treated [Visa and Mastercard] regulatory developments as no more than modest headline risk,” he wrote. But Visa and Mastercard now must contend with dynamics such as revising or going to trial over the merchant agreement and fending off the proposed Credit Card Competition Act with this new, unpredictable backdrop. Additionally, regulatory developments could make […]

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Visa, Mastercard Could Face Elevated Regulatory Activity, BofA Says

/ / Industrials / ,

Visa (V) and Mastercard (MA) could face elevated regulatory activity that could limit multiple expansion, BofA Securities said in a Wednesday note as it downgraded the credit-card companies to neutral from buy. “Historically, we have largely treated [Visa and Mastercard] regulatory developments as no more than modest headline risk,” the firm said. “However, as the recent unexpected rejection of the proposed merchant litigation settlement illustrates, the regulatory environment has arguably become more volatile and unpredictable.” BofA said that some of the regulatory items to monitor include next steps in merchant litigation, the proposed Credit Card Competition Act and the Fed’s final decision on lower regulated debit interchange rates. The firm added that the two companies remain relatively “crowded” longs for long-only and hedge-fund investors. BofA said it continues to have a favorable view on the companies’ “premier business model and competitive moat.” Shares of Visa were down 1.5% and shares

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Apple’s Revenue Growth Could Double. It Isn’t Because of AI.

/ / Technology /

Artificial intelligence may be the phrase of the moment in big tech, but Apple has a giant opportunity in advertising, some analysts say. Needham analysts Laura Martin and Dan Medina raised their price target on Apple stock to $260 from $220, and reiterated a Buy rating on Wednesday. They cited the company’s $110 billion share-repurchase authorization, while peers are devoting dollars to Generative AI instead. “However, over a three-year time frame, Apple’s single-digit revenue-growth rate feels increasingly at risk to us,” analysts wrote. “We believe that Apple should build an advertising business, just as Amazon.com has done.” The team offered a few reasons Apple should jump into advertising. First, total global ad spending this year will be $966 billion, and mobile advertising will be $500 billion, dwarfing the consensus call for Apple’s 2024 revenue of less than $400 billion. Second, ad margins tend to be 70% to 80%, which would

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Boeing Reports June Deliveries Of 44 Commercial Jets Including 34 737 Max, For Highest Monthly Total In 2024

/ / Industrials /

Boeing Reports June Deliveries Of 44 Commercial Jets Including 34 737 Max, For Highest Monthly Total In 2024; June Deliveries Of Five 777 Freighter Jets; Delivered 175 Airplanes During First Half Of 2024; Reports 14 Gross Aircraft Orders In June Including 3 For 737 Max; Had 2 Cancellations In June Including 1 Max And 1 Dreamliner; Reports 11 Orders In June For 777 Freighters; Boeing Reports 142 Gross Aircraft Orders Year To Date; Reports 115 Orders Net Of Cancellations/Conversions Year To Date

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Albemarle Shares Drop After Baird Expects Weak Lithium Pricing to Impact 2Q

/ / Basic Materials /

Albemarle shares touched a three-year low on Tuesday after Baird analyst Ben Kallo noted concerns about weak lithium pricing and the company’s second-quarter earnings. Shares of the lithium miner were recently down 6.5% to $92.64, after falling to $91.21. The stock has fallen about 36% this year. Kallo lowered the price target on the shares to $127 from $170. Kallo said in a research note that he believes the company will have a weak second quarter and revise its estimates downward to reflect a slower recovery in lithium pricing and demand for electric vehicles. The analyst sees second-quarter earnings of zero cents a share, compared with a consensus estimate of 60 cents a share. For 2024, he expects EPS of $1.96, versus a consensus of $3.14. Although the Baird analyst said data on EV deliveries, strong China sales data, and original equipment manufacturers maintaining EV transition targets might represent a

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Nike Needs To Find Its ‘Next Big Thing’ After ‘Highly Disappointing’ Q4 Print, Wedbush Says

/ / Consumer Discretionary /

Nike (NKE) needs to find its “next big thing” following the “highly disappointing” Q4 results as investors are focused on what it will take to boost the stock price, Wedbush Securities said in a note Wednesday. Analysts, including Tom Nikic, said that previously, products like the Air Vapormax and Air Max 270 helped Nike out of a rut in 2017. Introducing a new retro trend, like revitalizing the Dunk franchise in 2019, could also prove beneficial, following Adidas’s success with models like the Samba and Gazelle, analysts said. The company also needs to restore the exclusivity of the Jordan brand and the Dunk franchise, which have lost appeal due to oversaturation in the market. Nike must rebuild its relationship with wholesale partners to boost demand, according to the note. In June, there were only 16 “high heat” sneaker launches, a significant drop from 31 a year earlier. Among these, only

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Nike Confronts Market And Product Transition Risks, Analyst Warns

/ / Consumer Discretionary /

RBC Capital analyst Piral Dadhania maintained Nike Inc (NYSE:NKE) with a Sector Perform and lowered the price target from $100 to $75. Dadhania noted some complacency in assessing Nike’s equity story in recent months. A combination of the Fragmentation Hypothesis, turning the fashion cycle away from Nike’s core competency, and tougher comparatives than peers has created a perfect storm. Dadhania had been cautious about Nike, noting that the product transition would be a multi-quarter process with guidance risk, confirmed by material earnings dilution post fiscal 2025 guidance. Nike should emerge as a stronger company pursuing a more radical overhaul, which is necessary, as per the analyst. Nike has some heavy lifting to right-size key product franchises that are in decline and replace them with new styles, including refreshing entry-level ranges. Nike requires better product visibility for the analyst to turn positive. The analyst also noted potential 2025 second-half earnings risk.

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Visa, Mastercard Extend Non-EU Swipe Fee Caps Until 2029

/ / Industrials / ,

Visa (V) and Mastercard (MA) voluntarily agreed to extend maximum swipe fees on non-EU credit and debit card transactions in Europe until 2029, the European Union’s main antitrust regulator said Friday. Visa and Mastercard opted to continue to maintain a 0.2% fee cap on non-EU debit card payments and 0.3% on credit card payments within the 27-member states of the European Union, the European Commission said. For online or telephone transactions, the caps will remain at 1.15% for debit cards and 1.5% for credit cards, the European Commission

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Starbucks’ Traffic Headwinds Still in ‘Early Innings,’ Oppenheimer Says

/ / Consumer Discretionary /

Starbucks’ (SBUX) recent stock underperformance comes as it faces traffic challenges that appear to be in early stages, Oppenheimer said in a note emailed Tuesday. After attempting to identify an upgrade thesis with shares of the coffee chain down 13% since May versus a 9% improvement for the S&P 500, the brokerage said it decided to remain sidelined with a perform rating. An upgrade would require “uncovering a reversal in earnings revisions that is primarily traffic driven,” analysts Brian Bittner and Michael Tamas wrote. Starbucks’ traffic headwinds “appear in early innings and more related to price/value concerns, competition, and operations than perceived,” they said. Oppenheimer lowered its 2024 earnings per share estimate to $3.56 from $3.60 and its 2025 target to $3.99 from $4.12. Those reductions put the analysts’ forecast below the Street’s view of $3.58 and $4.04, respectively, the report showed. The brokerage said Wall Street’s 13% EPS growth

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Tesla Set to Report Second Consecutive Quarterly Delivery Decline

/ / Consumer Discretionary /

Tesla (TSLA) is expected to report a 3.7% decline in deliveries for the June quarter, marking its second consecutive quarterly drop amid tough competition in China and sluggish demand for new affordable models, Reuters reported on Monday. Tesla will deliver 438,019 vehicles from April to June, according to the report, citing an average estimate from 12 analysts polled by LSEG, with Barclays predicting an 11% decline in second-quarter deliveries. Barclays analyst Dan Levy told Reuters “a soft delivery result could turn attention back to the currently challenging fundamental environment for Tesla”. The EV maker, which is expected to announce the results on Tuesday, lost a quarter of its stock value this year, making it one of the worst performers on the S&P 500, Reuters said.

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Nike Entering a ‘Transitional’ Year as It Wrestles Consumer Demand Challenges, Say Analysts

/ / Consumer Discretionary /

Nike reported fourth-quarter results after market close Thursday Nike Inc. is entering a transitional year, say analysts, after the athletic-wear giant tempered its outlook amid wobbling consumer demand. Speaking on a conference call to discuss Nike’s (NKE) fourth-quarter results Thursday, CEO John Donahoe said said the company saw strong gains in performance products, although this was more than offset by declines in Nike’s lifestyle segment. These declines, he added, had “a pronounced impact” on Nike’s digital results. “These factors when combined with increased macro uncertainty and worsening foreign exchange have caused us to reduce our guidance for FY2025,” he added. “NKE’s 4Q24 print was very choppy, and the challenges facing the company are clearly more impactful than we (or management) expected,” wrote Wedbush analyst Tom Nikic, in a note released Friday. “After the company missed Q4 sales and meaningfully cut FY25 guidance, shares are likely to open meaningfully lower on

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