>>> US Research Calls I

Research Calls I
  • Upgrades:
    • Aegon N.V. (AEG) upgraded to Buy from Neutral at UBS
    • First Solar (FSLR) upgraded to Buy from Neutral at Citigroup; tgt raised to $254
    • Fluor (FLR) upgraded to Buy from Neutral at Citigroup; tgt raised to $65
    • Paylocity (PCTY) upgraded to Buy from Hold at Jefferies; tgt raised to $200
  • Downgrades:
    • Canadian Solar (CSIQ) downgraded to Sell from Neutral at Citigroup; tgt lowered to $11
    • Coherent (COHR) downgraded to Neutral from Buy at Rosenblatt; tgt $105
    • Duke Energy (DUK) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
    • Gatos Silver (GATO) downgraded to Hold from Buy at Canaccord Genuity
    • Global Payments (GPN) downgraded to Mkt Perform from Outperform at Bernstein; tgt lowered to $112
    • Tecnoglass (TGLS) downgraded to Mkt Perform from Strong Buy at Raymond James
  • Others:
    • Applied Industrial (AIT) initiated with an Outperform at Mizuho; tgt $285
    • AppLovin (APP) initiated with a Buy at Loop Capital; tgt $181
    • Braze (BRZE) initiated with a Buy at Stifel; tgt $37
    • Cadence Design (CDNS) initiated with an Outperform at Mizuho; tgt $325
    • California Resources Corp (CRC) initiated with an Overweight at Stephens; tgt $73
    • Contineum Therapeutics (CTNM) initiated with an Outperform at Robert W. Baird; tgt $32
    • Costco (COST) initiated with an Outperform at Bernstein; tgt $1016
    • Dollar General (DG) initiated with an Outperform at Bernstein; tgt $98
    • Dollar Tree (DLTR) initiated with a Mkt Perform at Bernstein; tgt $76
    • Flex (FLEX) initiated with an Overweight at KeyBanc Capital Markets; tgt $41
    • Hershey Foods (HSY) initiated with a Sell at Redburn Atlantic; tgt $165
    • Home Depot (HD) initiated with a Mkt Perform at Bernstein; tgt $451
    • Insperity (NSP) initiated with an Underweight at JP Morgan; tgt $90
    • Klaviyo (KVYO) initiated with a Buy at Stifel; tgt $45
    • Lowe's (LOW) initiated with an Outperform at Bernstein; tgt $323
    • Mondelez Int'l (MDLZ) initiated with a Buy at Redburn Atlantic; tgt $82
    • Plexus (PLXS) initiated with a Sector Weight at KeyBanc Capital Markets
    • Synopsys (SNPS) initiated with an Outperform at Mizuho; tgt $650
    • Target (TGT) initiated with a Mkt Perform at Bernstein; tgt $168
    • Walmart (WMT) initiated with an Outperform at Bernstein; tgt $95
    • Zeta Global (ZETA) initiated with an Overweight at KeyBanc Capital Markets; tgt $40

>>> US Early premarket gappers

Early premarket gappers
  • Gapping up:
    • IRTC +18.6%, FLXS +9.2%, MOLN +8.1%, RYAM +5.7%, FUFU +5.4%, CAKE +4.8%, SAP +3%, DHR +2.9%, RLI +2.8%, ANNX +2.5%, NRIX +2%, HSTM +1.9%, OMC +1.8%, IPAR +1.8%, ZION +1.8%, CADE +1.7%, EDIT +1.6%, DAR +1.6%, CRC +1.5%, CLLS +1.4%, ESEA +1.1%, WTFC +1.1%, BOKF +1%, IHG +1%, BLND +0.9%, CATY +0.9%, ARE +0.8%, PEBO +0.8%
  • Gapping down:
    • BOOM -17.4%, MEDP -11.4%, LOGI -8.2%, PII -7.2%, NNE -6.5%, BOW -4.8%, SSL -4.8%, MRX -4.6%, IIIN -4.5%, SSD -4.5%, ASPN -3.4%, NUE -3.3%, HXL -2%, COHR -1.9%, SIGI -1.2%, KREF -1.1%

FT : Walmart and Amazon take on US pharmacies in prescription delivery

Walmart and Amazon take on US pharmacies in prescription delivery
Launch of same-day services puts new pressure on struggling drugstore chains such as CVS and Walgreens

Walmart and Amazon are promising same-day deliveries in the $600bn US prescription medicines market, putting new pressure on drugstores and supermarkets that compete against the nation’s two largest retailers.

Retail giant Walmart on Tuesday said it would launch same-day delivery nationwide by the end of January, sending out prescription drugs from its almost 4,600 outlets containing pharmacies. The company says 90 per cent of the US population lives within 10 miles of its stores. 

The move follows almost two weeks after Amazon announced it would expand same-day medications delivery to 45 per cent of US customers by the end of 2025 as it adds pharmacy service sites in 20 more cities in the US, including Philadelphia, Dallas and San Diego. 

Their initiatives come amid upheaval in the US pharmacy industry, where revenues from dispensing prescriptions totalled $621bn in 2023, excluding Covid-19 vaccines, according to the Drug Channels Institute. 

CVS, the owner of the largest US drugstore chain, replaced chief executive Karen Lynch with David Joyner last week as it struggles with challenges, including retail competition. Its shares have fallen 28 per cent this year.

Walgreens Boots Alliance, the second-largest pharmacy operator, plans to close 1,200 stores over the next few years as it battles ballooning losses and a 60 per cent fall in its stock this year. The Rite Aid chain went through bankruptcy reorganisation last year. 

Meanwhile, the Federal Trade Commission has sued to block what would be the nation’s largest supermarket merger, Kroger’s $24.6bn takeover of Albertsons, arguing in part that it would diminish customer service at their in-house pharmacies. 

There is also mounting concern about “pharmacy deserts”, or areas without a conveniently located drugstore. Even as it competes with brick-and-mortar pharmacies, Amazon has said its “digital-first” pharmacies would help fill such gaps. 

Many independent pharmacies have long delivered medicines, sending drivers out to local customers, and both CVS and Walgreens offer same-day delivery with certain restrictions. Mail-order pharmacy is a growing industry, but deliveries take days and are typically reserved for recurring prescriptions. 

Amazon opened its online pharmacy service in 2020. The ecommerce company began offering same-day delivery last year in several US cities, including its home base of Seattle, and moved into New York and Los Angeles earlier this year. 

Hannah McClellan, vice-president of operations, product and technology at Amazon Pharmacy, told a press event earlier this month that the company’s pharmacies would be integrated into the same-day delivery network used for other Amazon products. 

“Amazon Pharmacy is not a faster mail-order pharmacy that you have today. It’s not the online version of your neighbourhood drugstore,” she said. 

Amazon says most of its pharmacy customers currently receive their medications in two days or less. Same-day deliveries in most cases would mean an order received by 4pm would arrive by 10pm. 

Walmart said its same-day prescription drugs delivery will begin in six states immediately and reach 49 by the end of January, with delivery times as short as half an hour.

>>> Makor Oscar Gruss & ACG Analytics: U.S. Elections Update with PDF

Good Morning,

We are hosting a US election call with ACG analytics (they will be live from the IMF conference in Washington)

Thursday 24th of October at 5pm London time / 12pm NY

(See attached)

Laurent Chekroun​​​​
Equity Sales
Makor Securities London Ltd. | Makor Group
E: LCHEKROUN@makor-cm.com
M: +41 79 350 71 09
O: +33 1 42 33 02 05
W: www.makor-group.com
6th Floor, 30 Panton Street, London, SW1Y 4AJ
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The Information : How Stripe’s $1.1 Billion Crypto Bet Could Pay Off

How Stripe’s $1.1 Billion Crypto Bet Could Pay Off

The Takeaway
• Bridge customers include Scale AI processor Airtm
• Payments giants are embracing stablecoins for moving money globally
• Bridge was valued at $100 million in a late 2023 funding round

Crypto fans have argued for years that blockchain technology could speed up global payments and make them cheaper. Now payments giant Stripe is making a more than $1 billion bet on that finally becoming a reality—and the crypto industry is rejoicing.

Stripe announced on Monday that it had agreed to acquire Bridge, a two-and-a-half-year-old San Francisco–based startup focused on payments using stablecoins, a type of crypto pegged to a traditional currency. With estimated annual revenue of around $12 million, based on its transaction volume and people with knowledge of its fee structure, Bridge is fetching an eye-popping multiple of around 90 times revenue.

Bridge helps companies convert dollars or euros into blockchain-based stablecoins and use those stablecoins to pay their workers or suppliers overseas. It pitches its services as an improvement for companies over traditional forms of international payments, which involve sending money through correspondent banks that communicate via the Swift network.

Its customers include Airtm, a payment processor that works with fast-growing data-labeling startup Scale AI, underlying how some businesses are starting to embrace crypto.

The deal values Bridge at $1.1 billion and if completed would be the largest-ever crypto acquisition. Bridge, which makes money by charging fees based on transaction volumes, said in August its annualized payments volume had reached $5 billion. It charges 0.1% to 0.25%, according to people at firms that have been quoted on prices, which means its revenue at the high end would be about $12.5 million.

The sale is a remarkable outcome for Bridge, which was valued at about $100 million in a late 2023 Series A, according to people familiar with the figure. Bridge has raised a total of around $58 million from investors including Ribbit Capital, Index Ventures and Sequoia Capital, also a major Stripe investor.

The hefty price tag could be worth it for Stripe, which was recently valued at $70 billion in an employee tender. The company has been trying to find more ways to expand its payments business by using crypto to add speedy payments and quickly sign up customers around the globe.

Stablecoins have been a hot area of focus for crypto companies as well as traditional payment firms over the past year. Compared to using bitcoin, which is notoriously volatile in value, stablecoins have a set value, making them easier to use for payments purposes. And business customers may be easier to pitch than consumers—merchants might save money by accepting payments in crypto rather than credit cards, for example.

More acquisitions in the stablecoin sector could be coming. Bhanu Kohli, CEO and co-founder of Layer2 Financial, recently renamed Rail, which provides services similar to Bridge’s, said his firm has received acquisition interests from payment companies and crypto firms, though he has no plan to sell.

Bridge’s roughly 45-person team, including co-founders Zach Abrams and Sean Yu, is expected to join Stripe once the deal is completed, people familiar with the deal said. Abrams was previously chief product officer at small business banking startup Brex and head of consumer product at crypto exchange Coinbase. He and Yu, a former engineer at Coinbase and Airbnb, previously co-founded Evenly, a Venmo competitor, and sold it to Square in 2013.

“This is definitely a premium company in terms of the talent and the growth they are experiencing,” said Haun Ventures partner Chris Ahn.

Still, Bridge relies heavily on the traditional financial system to operate. Bridge receives dollars from the companies it works with via its U.S. bank account, and uses those funds to buy stablecoins from Circle and Tether. Those companies issue the stablecoins and manage the cash and other reserves that back them up.

Bridge then sends the stablecoins to contractors and suppliers on behalf of the companies it works with. But those recipients still need to cash out stablecoins into local currencies, so Bridge partners with a network of local crypto services such as Bitso in Mexico and Yellow Card in Africa.

For example, Scale AI gives overseas contractors workers the option to get paid in stablecoins. Scale AI’s payment processor, Airtm, in turn uses Bridge behind the scenes to enable stablecoin payments. Scale first funds its account with Airtm by wiring U.S. dollars to Bridge’s bank account. From there, Bridge uses the funds to buy stablecoins, and then sends them to contractors’ crypto wallets via Airtm.

While that process might sound convoluted, stablecoin proponents say it is still a cheaper and faster way than traditional payment methods for companies to make cross-border payments. It also allows companies to quickly send payments to users that don’t have their own bank accounts, as well as people in countries such as Pakistan where big payment companies like PayPay don’t operate.

Rubén Galindo Steckel, founder and CEO of Airtm, said AI contractors are the service’s fastest-growing segment. “Airtm can allow someone who works for Scale AI to cash out their money into their local currency in six minutes,” with the recipient paying fees of about 2.5%, he said.

Creators and streamers on social sites who are based overseas and don’t have bank accounts can also use stablecoins to receive payouts, Steckel said.

Crypto U-Turn

The deal to acquire Bridge comes after Stripe made an about-face on using crypto for payments in recent months. Stripe had stopped supporting bitcoin payments in 2018, blaming high costs, slow transaction times and the difficulty of using volatile bitcoin as a payment method.

In April, Stripe’s co-founder and president, John Collison, unveiled a feature that allows merchants using Stripe-powered checkouts to accept stablecoins. At the time, Stripe had already been working with Paxos, a rival stablecoin startup, to provide stablecoin services, according to a person familiar with the relationship.

Bridge had also been pursuing Stripe as a potential customer in recent months, and those conversations evolved into deal talks, according to one person familiar with the conversation. Bridge provides the same functionality as Paxos. It’s unclear whether Stripe’s work with Paxos, which was valued at $2.4 billion in 2021, will continue once the Bridge deal closes.

Stripe and Paxos declined to comment.

Embracing stablecoins for payments comes with some risks for Stripe. Stablecoins are not yet a legal form of money in the U.S., meaning they are subject to limited federal oversight and consumer protections. And U.S. lawmakers have struggled to make progress on legislation to provide a regulatory framework for stablecoins, creating uncertainty that could give some companies pause about adoption.

Stripe’s crypto initiatives have also made at least one of its major banking partners uneasy in the past. Wells Fargo, which formerly powered Stripe’s credit card payments, raised concerns about Stripe’s efforts to expand crypto payments. Wells Fargo wound up cutting ties with Stripe and other payment firms entirely. It was part of a broader retrenchment of banks from working with payments companies and other fintechs amid mounting regulatory scrutiny.

FT : Japanese property group Tokyo Tatemono targeted by UK activist fund

Japanese property group Tokyo Tatemono targeted by UK activist fund
Stakebuilding by Palliser Capital follows Elliott Management's move on sector peer Mitsui Fudosan

A UK-based activist fund has taken a stake in one of Japan’s biggest property groups and is calling for divestments and a strategy overhaul, as foreign investors continue to pressure the country’s boardrooms.

Palliser Capital has taken a position in Tokyo Tatemono to become a top-15 shareholder, according to people familiar with the fund.

The real estate company, founded in 1896 and owner of some of the country’s most prominent buildings, including Otemachi Tower in the capital’s business district, is the latest in a lengthening line of property groups targeted by activists. Japanese companies have been under growing pressure to improve market valuations, raise corporate governance standards and increase returns on equity.

People familiar with Palliser’s thinking said the fund saw a yawning discount between Tokyo Tatemono’s intrinsic value, which Palliser put at $6.4bn, and its market capitalisation of $3.3bn. It recognises some attempts by the property group to address this discount but aims to press for an acceleration.

Palliser is said to want a clear road map for identifying non-core assets, disposing of unnecessarily held properties and unwinding a significant portfolio of equity stakes in other listed companies. The largest of those cross-shareholdings is a roughly 5.3 per cent stake in Hulic, a Japanese property group with close ties to Tokyo Tatemono.

Palliser is expected to unveil its investment at the 13D Monitor annual activist investor gathering on Tuesday in New York. The fund, said the same people, has compared Tokyo Tatemono’s position to that of Japan’s biggest property group, Mitsui Fudosan, targeted by US activist Elliott Management this year.

Palliser believes the two companies share similarities in terms of asset mix, low asset turnover and potentially unrealised gains, but Mitsui’s valuation has increased since Elliott’s campaign and the company’s decision to launch a new strategic plan and a shareholder capital return programme.

Despite the public pressure being brought to bear, contact between the Palliser and Tokyo Tatemono’s top management has been constructive, said the people familiar with the activist investor.

It is the fund’s second big investment in Japan in the past 12 months, after it targeted Keisei Electric Railway, which runs trains in Tokyo, including one of the main lines from Narita airport into the city centre.

In a recent report on the continuing rise of investor activism in Japan, CLSA’s chief Japan equity strategist Nicholas Smith noted that in the first three months of 2024, the number of activist events was 156 per cent higher than in the same period a year earlier. Crucially, there had been a qualitative change in activism, he said.

“Activism is . . . now about unbundling directionless conglomerates and agitating for mergers in mature sectors with diffuse market share,” said Smith. “Both are critical issues for the Japan turnaround story. Prominent activists have demonstrated leaving companies in better condition than they found them, so have government support.”

Palliser declined to comment on the stakebuilding. Tokyo Tatemono did not immediately respond to a request for comment.

FT : UK public borrowing exceeds official forecast in September

UK public borrowing exceeds official forecast in September
Data comes as Rachel Reeves prepares to raise taxes in next week’s Budget

UK public sector borrowing increased in September and was higher than official forecasts, underlining the scale of the challenges facing chancellor Rachel Reeves as she prepares to raise taxes in next week’s Budget.

Borrowing — the difference between public sector spending and income — was £16.6bn in September, £2.1bn more than in the same month last year and the third-highest September figure since monthly records began in January 1993, the Office for National Statistics said on Tuesday.

The figure was lower than the £17.5bn expected by economists polled by Reuters but above the £15.1bn forecast by the Office for Budget Responsibility, the UK watchdog.

In the first six months of the fiscal year to September, borrowing was £79.6bn, which was £1.2bn more than in the same period in the last financial year and higher than the £73bn forecast in March by the OBR, highlighting the challenging fiscal position ahead of the Budget on October 30.

ONS deputy director for public sector finances Jessica Barnaby said: “Borrowing this month was about £2bn up on last year, making this the third-highest September figure on record. While tax revenue increased, this was outweighed by increased spending, partly due to higher debt interest and public sector pay rises.”

Public sector net debt, or borrowing accumulated over time, was 98.5 per cent of GDP at the end of September, the highest level seen since the early 1960s, the ONS said.


Reeves has identified a £40bn funding gap, most of which is likely to be filled by tax rises. She has ruled out increases to income tax, VAT and national insurance for employees, but she is expected to increase capital gains and inheritance taxes as well as extend the income tax threshold freeze beyond 2028.

Not adjusting the tax thresholds for the impact of inflation pushes people into higher tax brackets as they receive pay increases — a phenomenon known as “fiscal drag” — and increases government revenues.

The chancellor has also signalled higher capital spending aimed at boosting economic growth. This could be aided by tweaks to one of the government’s fiscal rules, which pledges to reduce public debt as a share of GDP between the fourth and fifth years of the forecast.

The other self-imposed fiscal rule involves balancing the current budget, which excludes investment, during the forecast period, which will end in 2029-30.

>>> Europe : Brokers Upgrades & Downgrades - 22nd of October 2024 V2(+)

>>> Up
* Azelis Raised to Buy at HSBC; PT 23 euros
* Booking PT Raised to $5,045 from $4,000 at Argus
* Canatu Raised to Accumulate at Inderes; PT 13 euros
* Gulf Keystone Raised to Buy at Peel Hunt; PT 187 pence
* Prodways Raised to Hold at Portzamparc; PT 58 euro cents (+)
* Raisio Cut to Accumulate at OP Corporate Bank; PT 2.50 euros (+)
* Saipem Raised to Buy at Stifel; PT 2.50 euros
* SpareBank 1 SMN Raised to Buy at Pareto Securities
* T-Mobile PT Raised to $254 from $210 at Citi

>>> Down
* Alimak Cut to Neutral at BNPP Exane; PT 125 kronor (+)
* Basler Cut to Hold at Jefferies; PT 7 euros
* Boohoo Cut to Hold at HSBC; PT 30.40 pence
* Cint Cut to Hold at ABG; PT 12 kronor
* Greatland Gold Cut to Hold at Berenberg
* ING Cut to Equal-Weight at Barclays; PT 19.20 euros
* REC Silicon Cut to Hold at Arctic Securities; PT 9 kroner (+)
* SpareBank 1 Ringerike Hadeland Cut to Hold at Pareto Securities
* VAT Cut to Hold at Octavian; PT 400 Swiss francs (+)
* Wulff-Group Cut to Reduce at Inderes; PT 3.10 euros

>>> Initiation
* Cofle Rated New Buy at Intermonte; PT 8.05 euros (yest)
* Demant Reinstated Buy at Goldman; PT 340 kroner
* Eli Lilly Rated New Buy at Mirae Asset Securities; PT $1,170
* GN Store Nord Reinstated Sell at Goldman; PT 135 kroner
* Odfjell Technology Rated New Buy at Pareto Securities
* Sonova Reinstated Neutral at Goldman; PT 340 Swiss francs
* Vontobel Rated New Outperform at Oddo BHF; PT 65 Swiss francs

>>> Call
* Booking Target Raised to Street-High at Argus on Travel Demand