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REFINITIV™
 
 
 
USA EDITION
 
TUESDAY, AUGUST 18, 2020


TOP NEWS
• Walmart beats profit estimates as online sales hit record on pandemic boost
Walmart posted its biggest-ever growth in online sales as shoppers placed orders for everything from electronics and toys to groceries from the safety of their homes amid the COVID-19 pandemic.
• Home Depot sales top estimates as consumers shop more DIY products
Home Depot beat market expectations for quarterly same-store sales as consumers bought more paint, tools and other home improvement products to do minor repair works while remaining indoors due to the COVID-19 pandemic.
• New U.S. curbs to slam Huawei, hurt suppliers in short term
Ramped-up U.S. restrictions on Huawei are likely to choke the Chinese company's access to even off-the-shelf chips, threaten its crown as the world's largest smartphone maker and disrupt global tech supply, executives and experts warned.
• Oracle enters race to buy TikTok's U.S. operations -FT
Oracle has held preliminary talks with TikTok's Chinese owner, ByteDance, and was seriously considering buying the app's operations in the United States, Canada, Australia and New Zealand, the Financial Times newspaper reported on Monday.
ANALYSIS-Wall Street holds the cards as Main Street chases blank-check deal frenzy
Josh Black was looking for the next lucrative deal after scoring a 500% profit in a few weeks by investing in electric truck maker Nikola following the announcement of its merger with a blank-check acquisition company.



BEFORE THE BELL
U.S. stock index futures edged up, extending gains from the previous session, helped by a tech-fuelled rally, with Walmart's and Home Depot's better-than-expected earnings setting an optimistic tone for other retailers. European shares rose, helped by gains in travel and leisure stocks, while Japanese shares dropped as political uncertainties around the world sapped investors' risk appetite. Gold prices surpassed the $2,000-mark, while the dollar weakened on concerns over a deadlock on further U.S. fiscal stimulus. Oil prices edged down.


STOCKS TO WATCH
Results

• Home Depot Inc (HD). The company beat market expectations for quarterly same-store sales as consumers bought more paint, tools and other home improvement products to do minor repair works while remaining indoors due to the COVID-19 pandemic. Shares of the Dow component rose in premarket trading after Home Depot said its same-store sales jumped 23.4% in the second quarter, surging past the analysts' average estimate of a 10.5% rise. Net income rose 24.5% to $4.33 billion, or $4.02 per share, despite the company spending $480 million in additional benefits to compensate employees required to work in stores and warehouses amid the health crisis. Analysts had expected a profit of $3.71 per share, according to IBES data from Refinitiv. Overall net sales also rose over 23.4% to $38.1 billion, beating analysts' estimates of $34.53 billion.
• Kohl's Corp (KSS). Kohl's posted a smaller-than-expected quarterly loss, as the department-store chain reopened most of its stores that were shuttered for weeks to curb the spread of the novel coronavirus. Wall Street expects Kohl's to outperform its peers, as only about 5% of the company's stores are located in malls, which have seen traffic plummet much more due to the pandemic compared to strip-malls, where most of the chain's stores are located. Kohl's net income narrowed to $47 million, or 30 cents per share, from $241 million, or $1.51 per share, a year earlier. Excluding one-time items, Kohl's earned 25 cents per share, compared with Wall Street estimates of a loss of 83 cents per share. Net sales fell to $3.21 billion from $4.17 billion in the second quarter, beating market expectations of $3.09 billion, according to IBES data from Refinitiv.
• Walmart Inc (WMT). Walmart posted its biggest-ever growth in online sales as shoppers placed orders for everything from electronics and toys to groceries from the safety of their homes amid the COVID-19 pandemic. Shares of the company rose as the near-doubling of online sales in the second quarter helped it trounce Wall Street expectations for quarterly profit and same-store sales. Walmart's U.S. ecommerce sales rose 97% in the quarter. Sales at U.S. stores open at least a year rose 9.3%, excluding fuel, in the quarter ended July 31. Analysts had estimated a gain of 5.73%, according to IBES data from Refinitiv. Operating income rose 8.5% to $6.1 billion in the quarter, while adjusted earnings per share of $1.56 also topped the average estimate of $1.25. Total revenue rose about 5.6% to $137.74 billion.


In Other News
• Alibaba Group Holding Ltd (BABA). Ant Group, Alibaba's fintech arm and China's dominant mobile payments company, plans to set up a consumer finance firm in the southwestern city of Chongqing, expanding its presence in the fast-growing domestic business, two sources told Reuters. Ant plans to team up with Nanyang Commercial Bank and Alibaba-backed intelligent transport services firm China TransInfo Technology for the consumer finance business, said the sources, who have direct knowledge of the matter but declined to be named as the information was private. Ant will hold about a 50% stake, while Nanyang Commercial and TransInfo will own 15% and 10%, respectively, of the new firm. Other co-founders include battery maker Contemporary Amperex Technology Co Ltd (CATL), they added.
• Apple Inc (AAPL). Epic Games said on Monday it was seeking to block Apple's removal of "Fortnite" from its app store and has asked a judge to prevent any retaliatory action against its other games in the store. In its filing, Epic Chief Executive Timothy Sweeney said "Fortnite" had 350 million registered users as of June 2020, but that Apple's move will stop them from getting the updates needed to play the game's most popular mode - a "Battle Royale" match of up 100 players where the last survivor wins. "Apple's actions will 'break' Fortnite for millions of existing players," Sweeney wrote, saying Epic updates the game every few weeks. "Because iOS users can no longer update the game, they will be unable to play Fortnite with most other players, who will have the then-current version available on other platforms" such as PCs. The videogame maker also said Apple will terminate all of Epic Games' developer accounts and cut it off from its development tools starting Aug. 28.
• Boeing Co (BA). Boeing said on Monday it would offer employees a voluntary layoff package with pay and benefits for the second time this year, as the planemaker battles a coronavirus-induced slowdown in global air travel. It will be offered to employees in the commercial airplanes and services businesses as well as corporate functions, Chief Executive Officer Dave Calhoun wrote in a note to employees, a copy of which was seen by Reuters. "Unfortunately, layoffs are a hard but necessary step to align to our new reality, preserve liquidity and position ourselves for the eventual return to growth," Calhoun said in the note. "We anticipate seeing a significantly smaller marketplace over the next three years."
• Carnival Corp (CCL). The cruise operator said on Monday it launched an investigation into a ransomware attack on one of its brand's information technology systems. Carnival, which operates AIDA, Carnival and Princess cruises among others, in a regulatory filing said the attack included unauthorized access to personal data of guests and employees. The company did not identify the brand that was affected and declined to provide more details, as the investigation process was at an early stage. Certain data files were downloaded during the attack, Carnival said, and added that there was no assurance that information technology systems of its other brands will not be adversely affected.
• Citigroup Inc (C). Citigroup filed a lawsuit on Monday against Revlon lender Brigade Capital Management, asking the hedge fund to return its portion of the $900 million that was mistakenly sent out by the bank to the cosmetic company's lenders. Last week, Citi repaid a nearly $900 million loan made to Revlon, a day after lenders sued the cosmetic company over its restructuring tactics, according to reports, but the repayment was made in error. "When Citibank discovered the mistake, it promptly asked the recipients to return its money," the bank said in a Southern District of New York Court filing. Citi said Brigade refused to return its share and instead converted about $175 million for its own use.
• Delta Air Lines Inc (DAL) & CVS Health Corp (CVS). Delta Air Lines said it has partnered with CVS Health to use its rapid-response nasal-swab test to detect the novel coronavirus among its flight crew. The airline said the CVS Health Return Ready tests, used for workplaces and college campuses, are being overseen by a CVS clinician at Delta hub crew lounges and take less than 15 minutes to diagnose.
• Johnson & Johnson (JNJ), McKesson Corp (MCK), Amerisourcebergen Corp (ABC) & Cardinal Health Inc (CAH). U.S. states are seeking a combined $26.4 billion from three major drug distributors and Johnson & Johnson to settle opioid litigation against the companies, the Wall Street Journal reported, citing people familiar with the matter. About a dozen attorneys general are seeking a collective $21.14 billion from the distributors, which include McKesson, Amerisourcebergen and Cardinal Health, and $5.28 billion from J&J, the WSJ reported. The companies did not immediately respond to Reuters' requests for comment. The lawsuits accuse drugmakers of overstating the benefits of opioids while downplaying the risks and allege distributors failed to flag and halt a rising tide of suspicious orders.

• JPMorgan Chase & Co (JPM). Wall Street giant JPMorgan has hired Britain's former finance minister Sajid Javid as a senior adviser, the bank said on Monday, a move that sees the politician resume his career in investment banking. "We are delighted to welcome Sajid back to JPMorgan as a senior adviser, and we look forward to drawing upon his in-depth understanding of the business and economic environment to help shape our client strategy across Europe," a spokesman for the bank said in a statement.
• Oracle Corp (ORCL). Oracle has held preliminary talks with TikTok's Chinese owner, ByteDance, and was seriously considering buying the app's operations in the United States, Canada, Australia and New Zealand, the Financial Times newspaper reported on Monday. Oracle was working with some U.S. investors that already have a stake in ByteDance, including General Atlantic and Sequoia Capital, the newspaper reported, citing people briefed about the matter. ByteDance and TikTok did not have a comment on the FT report, while Oracle declined to comment.
• Starbucks Corp (SBUX). Starbucks' South Korean unit is scrambling to curb the spread of coronavirus, cutting seating capacity in its cafes and delaying a promotional campaign after 50 cases were linked to one of its stores outside of Seoul. South Korean health authorities are investigating how the virus spread at a Starbucks outlet in the border city of Paju, and have said infected people were not wearing masks and fresh air may not have been properly circulated. "What happened at the Starbucks store in Paju was much expected," said Yang Sae-rom, a 30-year-old office worker outside a busy Starbucks in Seoul. "They should have advised customers to wear masks and drawn fresh air in more often."
• Uber Technologies Inc (UBER). The company on Monday said it would continue operating its revenue-generating food delivery business Uber Eats even if its ride-hail business should be forced shut in California at the end of this week following a court order. A company spokesman said Uber's food delivery unit did not appear to be impacted by a lawsuit filed by California's attorney general and a subsequent court order that would force Uber to treat its ride-hail drivers as employees. Uber and smaller rival Lyft said they would be forced to shut their ride-hailing operations in California if the court ruling goes into effect on Friday morning.
• Zoom Video Communications Inc (ZM). Zoom has opened a new data centre in Singapore, its first in Southeast Asia, it said. Use of Zoom's video conferencing services has surged as huge numbers of people across the world work from home because of coronavirus curbs, but the company has also come under fire over privacy and security issues. The Singapore data centre, through which the company's users in Southeast Asia can connect, brings its total to 18 sites globally. The company also plans to hire more Singapore employees, including engineers and sales staff, said Abe Smith, Head of International at Zoom.



ANALYSIS
Tech fuelled 'everything's awesome' rally looks unstoppable
Today's $72 trillion question for investors: To buy or not to buy into the global equities rally? Notwithstanding inflated share prices, politics and the pandemic, the answer from many is a resounding "yes." That's not just because unprecedented stimulus - $20 trillion and counting - is forcing a structural change in how financial assets are valued. It's also down to years of societal shifts, innovation and now, the pandemic, which could transform forever the way people work, study and shop - playing into the dominant hand of tech stocks.



ANALYSTS' RECOMMENDATION
Calyxt Inc (CLXT). Jefferies raises target price to $6.50 from $4.50, citing the company’s potential in achieving 2020 sales target and steps taken to improve its free cash flow.
Eagle Point Credit Company Inc (ECC). B.Riley FBR raises target price to $10 from $8, reflecting on the company’s higher interest income and recurring positive cash flows.
Luminex Corp (LMNX). Piper Sandler initiates coverage with overweight rating, noting the company’s potential revenue growth and new product launches.
US Foods Holding Corp (USFD). Jefferies raises target price to $34 from $32, citing the company’s progress in rightsizing its cost structure and winning new business.



ECONOMIC EVENTS (All timings in U.S. Eastern Time)
0830 Building permits: number for Jul: Expected 1.320 mln; Prior 1.258 mln
0830 Building permits: change mm for Jul: Prior 3.5%
0830 Housing starts number for Jul: Expected 1.240 mln; Prior 1.186 mln
0830 Housing starts mm: change for Jul: Prior 17.3%



COMPANIES REPORTING RESULTS
Advance Auto Parts Inc (AAP). Expected Q2 earnings of $1.98 per share
Agilent Technologies Inc (A). Expected Q3 earnings of 66 cents per share
Jack Henry & Associates Inc (JKHY). Expected Q4 earnings of 78 cents per share



CORPORATE EVENTS (All timings in U.S. Eastern Time)
0730 Amcor PLC (AMCR). FY earnings conference call
0730 Sea Ltd (SE). Q2 earnings conference call
0800 Advance Auto Parts Inc (AAP). Q2 earnings conference call
0800 Kingsoft Cloud Holdings Ltd (KC). Q2 earnings conference call
0800 Walmart Inc (WMT). Q2 earnings conference call
0900 Home Depot Inc (HD). Q2 earnings conference call
1200 Microchip Technology Inc (MCHP). Annual Shareholders Meeting
1630 Agilent Technologies Inc (A). Q3 earnings conference call
1700 Cree Inc (CREE). Q4 earnings conference call



EX-DIVIDENDS
Aflac Inc (AFL). Amount $0.28
Aramark (ARMK). Amount $0.11
Archer-Daniels-Midland Co (ADM). Amount $0.36
BWX Technologies Inc (BWXT). Amount $0.19
Chevron Corp (CVX). Amount $1.29
Consolidated Edison Inc (ED). Amount $0.76
E*Trade Financial Corp (ETFC). Amount $0.14
Equinix Inc (EQIX). Amount $2.66
Loews Corp (L). Amount $0.06
Marathon Petroleum Corp (MPC). Amount $0.58
Target Corp (TGT). Amount $0.68
Vulcan Materials Co (VMC). Amount $0.34
Walgreens Boots Alliance Inc (WBA). Amount $0.46



(All analysts' estimates are according to I/B/E/S Refinitiv data)


PICTURE OF THE DAY
Democratic U.S. presidential candidate and former Vice President Joe Biden appears by video feed from Delaware to question voters about their situations in this video frame grab from the start of the virtual 2020 Democratic National Convention as participants from across the country are hosted over video links to the originally planned site of the convention in Milwaukee, Wisconsin, U.S., August 17. 2020 Democratic National Convention/POOL via REUTERS
 
 
 
 
 
 
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