The latest Market Talks covering Technology, Media and Telecom. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
1149 ET - Cisco's revenue and profit in its fiscal 1Q, though lower year-over-year, beat analyst estimates, and continued AI investments resulted in a slight increase to its fiscal outlook. But "while Cisco is clearly benefiting from an improving demand environment for networking, incremental AI tailwinds, and strong growth at Splunk, we remain concerned about Cisco's competitive positioning across all of its major product families," William Blair analysts say in a research note. In addition to facing heavy competition in the AI-space, the company's future performance could be hurt by weaker-than-anticipated global economic growth and market share losses, they note. Its acquisition of Splunk, while currently accretive, adds integration risk, analysts say. Shares fall 1.8%. (connor.hart@wsj.com)
1035 ET - Six Flags' plan to pour cash into its parks looks like a heavier lift than much larger rival Disney's investment announced last year. Six Flags will spend $1 billion on new rides, dining upgrades and new tech in the next two years. Disney, over a year ago, outlined a $60 billion investment in its parks, cruises and resorts over the next 10 years. The former's investment, though, represents a larger share of annual operating income. Disney's experiences unit rakes in about $9B in operating income per fiscal year, while Six Flags is on track for less than $500 million this year, according to analyst estimates. (ben.glickman@wsj.com; @benglickman)
1027 ET - Deals are expected to pick up now that Republicans will have full control of Washington next year, but activity may not be even across all sectors, says BofA Securities' Jill Carey Hall in a research note. One reason for a potential uptick in M&A is that President-elect Trump could replace FTC Chair Lina Khan. The analyst notes that deals in the banking sector may increase as they've historically been higher under Republican administrations than Democrats. Companies under the staples sector could also face fewer regulatory challenges post-election. The software sector may see some deals among larger players, but deals have slowed down because of a shift to focus on data and AI. While indicators point to a pickup in deals, others including slowing GDP next year and interest rate uncertainty could suggest a risk of cooling M&A, the analyst says. (denny.jacob@wsj.com; @pennedbyden)
0933 ET - Disney's theme-park profits are slipping, but results still point to an American parkgoer eager to spend. Domestic parks and experiences operating income rose in F4Q for Disney, largely driven by spending per guest at parks. International parks for Disney offset that, with lower volumes and weaker per-guest spending. The results line up with a positive report last week from Six Flags. While the amusement-park operator reported an overall drop in per capita spending in its 3Q due to lower season pass pricing, Six Flags also saw an increase in guest spending on food and add-ons like fast-lane passes. (ben.glickman@wsj.com; @benglickman)
0835 ET - Three companies ailing from cord-cutting consumers have now posted two consecutive quarters of streaming profits. Disney reports its second-straight adjusted profit in its direct-to-consumer business, following up similar profitable quarters for Warner Bros. Discovery's Max and Paramount's Paramount+. Customers cancelling their cable-TV subscriptions have dented what has for years been a profit center for entertainment conglomerates. Comcast-owned Peacock is still yet to turn an adjusted profit. Netflix, meanwhile, has been notching billions in earnings for years. (ben.glickman@wsj.com; @benglickman)
0452 ET - Just Eat Takeaway's sale of its U.S. subsidiary Grubhub improves the group's growth profile, Bryan Garnier analyst Clement Genelot writes in a research note. However, its profile remains lower than those of European peers, Genelot says. Additionally, the low acquisition price fades away hopes that large proceeds will be immediately returned to shareholders in the form of a large share buyback. "With investors now demanding modest top-line growth alongside free cash flow generation, Just Eat needs to further refocus on its strongholds to improve its growth profile and entirely close the valuation gap with peers," he adds. Shares are up 2.3% at 13.38 euros. ( najat.kantouar@wsj.com)
0440 ET - ASML Holding investors should feel reassured after the Dutch semiconductor-equipment maker kept its 2030 targets unchanged, Barclays Capital analysts write in a research note. The analysts say there were concerns the midpoint of guidance could be cut. ASML last month lowered its sales forecasts for 2025, saying some areas of the semiconductor industry aside from AI were taking longer than expected to recover. The company continues to expect sales of roughly 44 billion euros to 60 billion euros in 2030 and a gross margin of about 56% to 60%. ASML shares trade 5.2% higher at 660.30 euros. (mauro.orru@wsj.com)
0407 ET - ASML Holding's decision to confirm its 2030 sales and margin targets is reassuring for investors, ING's Jan Frederik Slijkerman writes in a research note. The Dutch semiconductor-equipment maker said it would continue to return significant amounts of cash to shareholders through growing dividends and share buybacks. ASML anticipates sales of roughly 44 billion euros to 60 billion euros in 2030 and a gross margin of about 56% to 60%. These will be driven by expected growth in semiconductor end-markets and AI. ASML shares trade 5% higher at 658.80 euros. (mauro.orru@wsj.com)
0344 ET - ASML Holding made no changes to its 2030 sales and margin targets in a good development for the stock, J.P. Morgan analysts write in a note to clients. The Dutch semiconductor-equipment maker is still expecting sales of roughly 44 billion to 60 billion euros in 2030 and a gross margin of about 56% to 60%. The analysts say they weren't expecting a guidance upgrade since ASML cut its 2025 forecasts only last month. The lack of surprises is good for the company, they add. ASML shares trade 4% higher at 652.80 euros. (mauro.orru@wsj.com)
2310 ET - Tencent's gaming outlook stays solid, according to HSBC analysts in a research note. The social media and gaming giant has strengthened its game portfolio, with gross billings for its popular titles, such as Honor of Kings, continuing healthy growth, HSBC notes. However, the company missed 3Q international games growth consensus expectations. This was mainly due to a higher retention rate for selected titles, which could lead to slower revenue recognition, HSBC notes. The analysts keep a buy rating, and a target price at HK$570.00 on the stock, which is up 1.6% at HK$410.40. (tracy.qu@wsj.com)
2247 ET - Tencent may need a fully developed e-commerce ecosystem to unleash its advertising potential, Nomura analysts Jialong Shi and Rachel Guo say in a research note. Tencent's video accounts ads surged over 60% on year in 3Q, likely accounting for 17% of the company's total market services revenue, they say. Tencent has also relaunched Mini Shops for merchants to build their WeChat-based stores, through which the merchandise can be shared to and accessed by WeChat users across most app properties including video accounts. However, "it remains to be seen whether the WeChat team can implement it well" given Tencent's relatively poor track record with the e-commerce business, the analysts say. Nomura maintains its buy rating on Tencent and keeps its target at HK$500.00. Shares last at HK$410.20. (sherry.qin@wsj.com)
2202 ET - Tencent's games revenue could sustain its double-digit growth into 4Q and 2025 thanks to solid gross receipts growth for both domestic and international titles, Citi analysts say in a research note. Citi expects Tencent's domestic games revenue to grow 16% on year and international games sales to rise 14%. Tencent's ad revenue could continue to outgrow industry peers given its relatively lower ad load while leveraging the WeChat platform's large user base, they say. "While it takes time for recent stimulus policies to take effect, management sounded constructive on longer-term economic outlook and will remain focus on delivering result it could control," they add. Citi maintains a buy call on Tencent and keep its target price at HK$573.00. Shares are last 1.4% higher at HK$409.40. (sherry.qin@wsj.com)
(END) Dow Jones Newswires
November 14, 2024 12:20 ET (17:20 GMT)
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