Corporate profits

Corporate profits rise at an unprecedented level since 2009

Almost 60% of the companies in the large Wall Street S & P500 index have published their half-year results, with a confirmed trend: they largely exceed expectations, with an average second quarter profit growth rate of 85.1%, unheard of since the fourth quarter of 2009. We can imagine that we owe these figures to a very favorable base effect, but overall, business activity is back to its pre-pandemic level. Another highlight is that analyst firms continue to raise their Q3 GNP estimates, but at a slower pace than in Q2.

On the oil markets, geological tensions are increasing. Iran has a new president, Ebrahim Raissi, who must solve a complex equation, namely to get his country out of an economic and health crisis. But the recent deadly attack on an oil tanker off the coast of Oman complicates matters, as the US and UK believe Iran is behind it all. Needless to say, this further isolates Tehran and delays the return of its oil to global markets, exacerbating buying pressure on oil, which is one of the strongest rising commodities in 2021.

In fact, it’s not just oil that is on the rise in the fossil fuel family, as natural gas and coal prices are literally skyrocketing this year. Gas prices hit record highs this summer, due to a drop in stocks following a cold winter, which are struggling to recover due to the buying frenzy in Asia and production disruptions in the North Sea. As a result, as demand for electricity increases as economies recover from containment, natural gas supplies are becoming scarce, contributing to higher US, European and Asian benchmarks. This effect extends to charcoal. As the world goes green, booming demand for electricity and soaring gas prices are making coal more competitive for power generation. Coal is gaining ground in the United States, Asia and Europe. According to the International Energy Agency, electricity production from coal is expected to increase by 5% in 2021 and will increase by another 3% next year, possibly reaching unprecedented levels.

Economic highlights of the day:

European producer prices are released today with orders from US factories.

The dollar is trading at 0.8415 EUR. Gold is gaining ground at $ 1,809 per ounce. Oil fell to $ 71.80 a barrel for Brent and $ 70.1 a barrel for WTI. US debt yields are down again to 1.17% over 10 years. Bitcoin is still below the $ 40,000 line.

On the stairs :

* Alibaba reported weaker than expected first quarter sales on Tuesday as its e-commerce business suffered from growing competition from JD.Com and Pinduoduo.

* Eli Lilly on Tuesday announced a 2% drop in quarterly profits, penalized by slowing demand for its COVID-19 treatments with vaccination in the United States. The action loses 2% in pre-market trade.

* Interactive software and Zynga lost 1.1% to 4.5%. Take-Two Interactive Software also reported lower-than-expected second-quarter adjusted sales on Monday night and postponed the release of two video games.

* Dupont – The industrial group has again raised its annual forecast and reported second quarter profit growth, as rising demand offsets rising raw material and logistics costs.

* Translate Bio, specialist in messenger RNA-based therapies and vaccines, will be acquired by Sanofi for $ 3.2 billion, announced the French group. Shares of Translate Bio rose 29% in pre-market trading.

* Pepsico announced on Tuesday it had sold a controlling stake in North American fruit juice brands Tropicana and Naked to private equity firm PAI Partners for $ 3.3 billion (€ 2.8 billion), confirming a report from the Wall Street Journal.

* KKR – The US private equity firm said its profit more than doubled in the second quarter, thanks to a sharp increase in income from transaction commissions and asset sales.

* Discovery reported higher than expected revenue in the second quarter thanks to an increase in the number of subscribers to its video-on-demand service.

* ConocoPhillips nearly doubled second quarter profit on higher oil and gas prices and production.

* Under Armor gained nearly 5% in pre-market trading after raising its annual sales target and reporting better-than-expected quarterly results as demand for sporting goods increased as gyms reopened.

* Phillips 66 reported adjusted quarterly profit, the first in a year, as demand rebounded with the easing of travel restrictions.

* Marriott International – The hotel group announced a quarterly profit on Tuesday against a loss a year earlier.

* Micron announced Monday night that it will pay a quarterly dividend for the first time, at $ 0.10 per share.

Analyst recommendations:

  • Industrial applied: Loop Capital Markets initiated a hedge with a buy recommendation. TP up 26%
  • Epam Systems: Jefferies recommended Epam Systems Inc. to buy on hold. PT up to 20% fixed at $ 670
  • Fixation : Loop Capital Markets launched a hedge with a recommendation to suspend. PT down 5% to $ 52
  • Krispy kreme : HSBC launches Krispy Kreme for buy with price target of $ 25
  • Magenta Therapeutics: JP Morgan lowered the recommendation to neutral due to overweighting. PT down 1.5% to $ 7
  • MSC Industrial: Loop Capital Markets initiated a hedge with a recommendation to suspend. PT up 5.5% to $ 92
  • Meggit: Berenberg cut the recommendation to suspend the purchase. PT up to 2% at 750 pence
  • Old Dominion: Goldman Sachs goes neutral from buying. PT up 5.3% to $ 281
  • On Semi: Morgan Stanley raised the recommendation to equalize versus underweight. PT down 3.8% to $ 42
  • Planet Fitness: Stifel raised the recommendation to buy pending. PT up 14% to $ 85
  • Playtech: Morgan Stanley raised the recommendation to equalize versus underweight. PT up 13% to 420 pence
  • XPO Logistics: Goldman Sachs issued the recommendation to buy neutral. PT up 23% to $ 103
  • Watsco: Loop Capital Markets launched a hedge with a custody recommendation. PT up 6.7% set at $ 300
  • Wesco: Loop Capital Markets launched the Wesco International Inc. cover with a buy recommendation. PT set at $ 125, implies a 19% increase over the last price. Wesco’s average PT is $ 123.82.
  • WW Grainger: Loop Capital Markets initiated a hedge with a buy recommendation. PT up 19% to $ 525

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