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.
1452 ET - It is hard to tell if Dye & Durham is confident its nominees can maintain control of the board but it's likely any strategic sale or equity issuance would have resulted in further litigation, Raymond James' Stephen Boland says. The software company has paused its strategic review until after the annual meeting, and a faceoff with a activist investor that put forward its own slate of fresh board directors. Dye & Durham says it still believes the activist slate of directors is deficient, but will allow the names to go to a vote. "It is an interesting move by DND, with the hope that the individuals who comprise their slate can keep control of the board," Boland says. (robb.stewart@wsj.com)
1324 ET - Microsoft says subscribers to the priciest tier of its Xbox Game Pass service can now stream select games they already own outright from the cloud, including ones not in the service's library. The move reflects the company's focus on driving recurring revenue in videogaming through subscription sales and by appealing to consumers who want to play console-quality games without investing in consoles, which typically retail for several hundred dollars apiece. Through Game Pass, subscribers can stream games from the kind of internet-connected devices that many consumers already have, such as smart TVs, mobile phones and computers. (sarah.needleman@wsj.com)
1320 ET - Comcast's move to spin off its NBCUniversal cable TV networks is a positive strategic step for the company, Bank of America analysts say in a research note. The new company, could be used as a consolidation vehicle for cable networks across the industry, the analysts note. At the same time, the separation indicates the company's willingness to part with slower-growing assets. Moving forward, the new company should offer dividends to shareholders, be accretive to its parent company's growth and may reduce regulatory hurdles enough for Comcast to potentially attempt another large cable merger, analysts say. (connor.hart@wsj.com)
1220 ET - Wait times for Apple's latest iPhone haven't shown any changes despite the release of Apple Intelligence in U.S. English, holiday shopping activity in China last week, and next week's Black Friday season, UBS analysts say in a research note. "We think that there is limited upside to our 78 million sell-in unit estimate in the December 2024 quarter even as consumers familiarize themselves with Apple Intelligence," the analysts say. In the U.S., wait times stay at one day, essentially consistent with last year. Meanwhile, wait times in China are basically nonexistent across models, according to UBS Evidence Lab data. This shows the release of an iPhone SE 4 in the Mar-25 quarter or early in the Jun-25 quarter is likely, the analysts add. Shares fall 0.6% to $226.98. (sabela.ojea@wsj.com; @sabelaojeaguix)
1026 ET - A bid from QXO for Beacon Roofing Supply would need to come in with at least a low double-digit multiple to get serious consideration, says Jefferies' Philip Ng in a research note. WSJ earlier this week reported that QXO, a new player in building-products distribution, made an offer to acquire Beacon and that a deal could be clinched before the end of the year. Ng notes that Home Depot acquired SRS Distribution, a private competitor to Beacon, earlier this year at about a multiple of around 16 based on its enterprise value to Ebitda ratio. He adds that Beacon overlaps with about two-thirds of SRS's business and that the previous management team at Beacon made M&A deals in recent years for about a mid-teens multiple. (denny.jacob@wsj.com; @pennedbyden)
1012 ET - Deutsche Telekom's euro- and sterling-denominated corporate bonds have limited capacity to gain any further as their spreads are already tight and good news is already priced in, CreditSights analysts say in a note. The company is in the market Wednesday, offering a 10.5-year euro benchmark bond. "With Deutsche Telekom's leverage within its target, we see relatively limited positive catalysts for creditors," the analsyts say. The company's dollar-denominated bonds look more attractive relative to its euro and sterling denominated debt, however, the analysts say. "While tight spreads limit scope for outperformance in euros and sterling, we see Deutsche Telekom dollar debt as attractive." CreditSights has a marketperform recommendation on the telecom company's corporate bonds. (miriam.mukuru@wsj.com)
0837 ET - Sage's strong performance reflects greater uptake of its cloud-based products, AJ Bell's Russ Mould writes in a note. "Inevitably AI comes into the conversation too--with its artificial intelligence assistant Sage Copilot rolled out to a greater proportion of its customer base." The uncertain environment may hit small and medium-sized businesses, Mould says. However, the accounting-software specialist says they remain resilient, he adds. Shares are up 18.9% at 1,280.50 pence. (najat.kantouar@wsj.com)
0454 ET - Singapore stocks closed lower, with declines led by index heavyweight Singtel and bank stocks. Investors braced for Nvidia's 3Q results later in the day, which is expected to be a key catalyst for broader markets. Morgan Stanley expects 2025 to be another fruitful year for Singapore against a relatively challenging regional market backdrop. Singtel fell 3.1% while DBS and United Overseas Bank declined 0.85% and 0.55%, respectively. Shipbuilding stocks broadly rose, with Yangzijiang Shipbuilding gaining 1.5% and Seatrium advancing 1.05%. Singapore's benchmark FTSE Straits Times Index ended 0.4% lower at 3743.64. (sherry.qin@wsj.com)
0406 ET - Sage Group's ability to buildup deeper customer relationships and higher lifetime values drives the company's growth, Shore Capital's Martin O'Sullivan writes in a note. The accounting-software specialist looks confident after delivering recent annualized recurring revenue progress and high-single-digit organic revenue growth amid a challenging environment. Additionally, Sage's investment in new technology to help small and medium companies streamline operational processes and address skills shortages reinforces confidence in the long term, the analyst says. Shares are up 16.1% at 1,250 pence. (najat.kantouar@wsj.com)
0350 ET - XPeng is not likely to reach full-year profitability by 2026, Bernstein analysts write in a note. The company's strong 3Q earnings beat expectations, thanks to robust sales and record margins, but its 4Q gross margin could be challenged by a weaker product mix from a strong Mona M03 delivery, they say. Bernstein now forecasts XPeng's 4Q gross margin at 14.5% and full-year gross margin at 14.8%. The EV maker's two new models were priced very competitively and have strong order backlogs, but analysts have concerns over margin dilution, especially from Mona. Challenges related to execution and supply chains may also pose risks for fulfilling orders, they add. Bernstein maintains a market-perform rating for the stock, while upgrading its target price for ADRs to $14.00 from $9.00 and its Hong Kong-listed shares to HK$54.00 from HK$35.00, respectively. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
0345 ET - STMicroelectronics might find it difficult to hit its new sales and gross margin targets, Jefferies analysts write in a note to clients. The European chip maker expects sales of roughly $18 billion and a gross margin of about 44% to 46% in 2027 and 2028. The sales target is likely to prove challenging in 2027, the analysts say, but could be possible by 2028 if there is a healthy recovery in the semiconductor market. The analysts also say a gross margin of more than 45% could be difficult to achieve amid growing competition and price pressure. STMicroelectronics shares trade 0.9% lower at 23.03 euros. (mauro.orru@wsj.com)
0218 ET - STMicroelectronics set new mid-term goals that are ahead of consensus despite delaying some targets by a few years to 2030, Citi analysts write in a research note. The European chip maker is forecasting sales of roughly $18 billion in 2027 and 2028, above Visible Alpha consensus of nearly $16.39 billion, the analysts say. The company also expects a gross margin of about 44% to 46% in 2027 and 2028, with the upper end of the range above consensus of 44.9%, the analysts point out. The group is guiding for an adjusted operating margin of about 22% to 24% in the same period, above consensus of 21.8%. (mauro.orru@wsj.com)
(END) Dow Jones Newswires
November 20, 2024 16:50 ET (21:50 GMT)
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