Research Calls
- Upgrades:
- APi Group (APG) upgraded to Buy from Neutral at BofA Securities; tgt $23
- Axos Financial (AX) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt raised to $56
- Bank of America (BAC) upgraded to Buy from Hold at Societe Generale; tgt $37.50
- Element Solutions (ESI) upgraded to Overweight from Equal Weight at Barclays; tgt lowered to $22
- Flowserve (FLS) upgraded to Neutral from Underperform at BofA Securities; tgt $31
- Hilton (HLT) upgraded to Outperform from In-line at Evercore ISI; tgt lowered to $150
- Honeywell (HON) upgraded to Buy from Neutral at BofA Securities; tgt $210
- Mattel (MAT) upgraded to Buy from Neutral at Goldman; tgt raised to $31
- Range Resources (RRC) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $49
- REA Group (RPGRF) upgraded to Conviction Buy from Buy at Goldman
- Southwestern Energy (SWN) upgraded to Equal Weight from Underweight at Wells Fargo; tgt raised to $12
- Taylor Morrison Home (TMHC) upgraded to Outperform from Neutral at Credit Suisse; tgt $33
- Downgrades:
- 1Life Healthcare (ONEM) downgraded to In-line from Outperform at Evercore ISI; tgt raised to $12
- ABB Ltd (ABB) downgraded to Neutral from Buy at Citigroup
- Allegion (ALLE) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $110
- AmerisourceBergen (ABC) downgraded to In-line from Outperform at Evercore ISI; tgt $150
- Ametek (AME) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $122
- Atos SE (AEXAY) downgraded to Hold from Buy at Kepler
- Becton Dickinson (BDX) downgraded to Sell from Neutral at Citigroup; tgt lowered to $235
- Civitas Resources (CIVI) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $67
- CNX Resources (CNX) downgraded to Equal Weight from Overweight at Wells Fargo; tgt raised to $27
- DigitalOcean (DOCN) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt $45
- Duolingo (DUOL) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
- Dutch Bros (BROS) downgraded to Neutral from Outperform at Robert W. Baird
- Fastly (FSLY) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $12
- Fidus Investment (FDUS) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $19.50
- Insulet (PODD) downgraded to Neutral from Buy at Citigroup; tgt lowered to $250
- ITT (ITT) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $74
- KB Home (KBH) downgraded to Neutral from Outperform at Credit Suisse; tgt lowered to $35
- Kura Sushi (KRUS) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt $80
- lululemon athletica (LULU) downgraded to Underperform from Hold at Jefferies; tgt lowered to $200
- Manpower (MAN) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $78
- Meta Platforms (META) downgraded to Underperform from Hold at Needham
- Moelis (MC) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $42
- New Relic (NEWR) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt $64
- O-I Glass (OI) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $13
- Occidental Petro (OXY) downgraded to Neutral from Buy at Goldman; tgt $70
- Pinnacle Finl (PNFP) downgraded to Underperform from Hold at Jefferies; tgt lowered to $66
- Piper Sandler (PIPR) downgraded to Peer Perform from Outperform at Wolfe Research; tgt $132
- Pulmonx (LUNG) downgraded to Neutral from Buy at Citigroup; tgt lowered to $19
- Qorvo (QRVO) downgraded to Market Perform from Outperform at Cowen; tgt lowered to $108
- Silk Road Medical (SILK) downgraded to Sell from Neutral at Citigroup; tgt $33
- SLR Capital Partners (SLRC) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $16.50
- Stryker (SYK) downgraded to Neutral from Buy at BofA Securities; tgt $215
- T. Rowe Price (TROW) downgraded to Sell from Neutral at UBS; tgt lowered to $88
- Under Armour (UAA) downgraded to Hold from Buy at Jefferies; tgt lowered to $10
- Upstart (UPST) downgraded to Sell from Neutral at Goldman; tgt lowered to $14
- Others:
- Affirm (AFRM) initiated with a Neutral at Goldman; tgt $22
- Blucora (BCOR) initiated with an Overweight at Cantor Fitzgerald; tgt $22
- Boyd Gaming (BYD) initiated with a Buy at Loop Capital; tgt $86
- G-III Apparel (GIII) initiated with an Equal Weight at Wells Fargo; tgt $20
- Kontoor Brands (KTB) initiated with an Overweight at Wells Fargo; tgt $40
- Red Rock Resorts (RRR) initiated with a Hold at Loop Capital; tgt $36
- SAP SE (SAP) assumed with an Outperform at Credit Suisse
- System1 (SST) initiated with a Buy at BofA Securities; tgt $12
Gapping up
In reaction to earnings/guidance:
- CAMT +5.3%, AZZ +4.3%, GOL +0.9%
Other news:
- GNS +16.5% (acquires California based University of Antelope Valley)
- DWAC +16.2% (moves +11% higher after hours after Elon Musk backs out of Twitter deal)
- HITI +5.9% (High Tide's Blessed CBD has begun sales of its premium hemp-derived CBD products on Amazon in the United Kingdom)
- TKR +5% (selected as exclusive provider of advanced precision drives for the Redstone Solar Thermal Power project in Northern Cape, South Africa)
- EURN +2.5% (Frontline considers takeover bid on Euronav NV (EURN))
- IONS +2.3% (licenses rare kidney disease treatment and will advance into Phase 3 clinical study)
- PRGO +2.1% (submitted its application to the FDA for the first-ever over-the-counter (OTC) birth control pill in the United States)
- PODD +1.9% (entered into a settlement and license agreement with Roche (RHHBY) Diabetes Care)
Analyst comments:
- APG +2.5% (upgraded to Buy from Neutral at BofA Securities)
Gapping down
In reaction to earnings/guidance:
- GBX -5%
Select Index ETFs showing early weakness:
- QQQ -0.7%, SPY -0.6%, IWM -0.6%, DIA -0.5%
Other news:
- SWVL -11% (to acquire Mexico-based Urbvan Mobility; acquisition is expected to be completed in Q3 2022)
- MGNX -10% (Announces Closure of CP-MGA271-06 Study Evaluating Enoblituzumab plus Checkpoint Inhibition in Head and Neck Cancer)
- LVS -5.4% (entered into a loan agreement with Sands China)
- TWTR -5.3% (Elon Musk sent a letter to Twitter formally notifying Twitter that Elon Musk is terminating their merger agreement; Twitter Board confident in merger agreement and intends to close transaction at $54.20 per share price)
- RADA -3.4% (releases Leonardo DRS presentation)
- NIO -3.3% (provides update on response to short seller report)
- LLAP -3.1% (files for 27,714,791 share common stock offering by selling shareholder)
- SU -2.3% (CEO to step down immediately, appoints Kris Smith as Interim CEO)
- UBER -2.2% (Uber attempted to lobby politicians and broke laws in effort to expand globally, according to The Guardian)
- VIPS -1.3% (Chief Technology Officer Pengjun Lu tendered the resignation from his current position due to personal reasons effective July 11)
- GFI -1.1% (Gold Fields provides update on Yamana Gold (AUY) acquisition)
Analyst comments:
- DOCN -7.1% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
- DUOL -3.7% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)
- BROS -3.5% (downgraded to Neutral from Outperform at Robert Baird)
- ABC -2.5% (downgraded to In-line from Outperform at Evercore ISI)
- BDX -2.5% (downgraded to Sell from Neutral at Citigroup)
- AME -2.3% (downgraded to Neutral from Buy at BofA Securities)
- ALLE -1.4% (downgraded to Neutral from Buy at BofA Securities)
- ABB -1.3% (downgraded to Neutral from Buy at Citigroup)
Early premarket gappers
- Gapping up:
- DWAC +18.8%, HITI +5.9%, CAMT +4.2%, AZZ +3.4%, PRGO +2.3%, EURN +2.1%, LLAP +1.5%, CBZ +0.8%
- Gapping down:
- SWVL -8.8%, TWTR -6.6%, LVS -5.3%, GBX -5%, VIPS -4.2%, NIO -3.6%, RADA -3.4%, MGNX -1.4%, SU -1.2%, AUY -0.8%, GFI -0.7%, QQQ -0.7%, SPY -0.5%, IWM -0.5%
- Rio Tinto (RIO1 TH) +0.8%
- Watch European Miners, Energy Stocks Amid China Covid Outbreak
- Raiffeisen (RAW TH) -2.4%
- Aegon (AEND TH) -2.4%
- Sanofi (SNW TH) -2.4%
- Unibail (1BR1 TH) -2.4%
- Aixtron (AIXA TH) -2.5%
- GTT (9TG TH) -2.5%
- Hugo Boss (BOSS TH) -2.6%
- German Holdings Round-Up: HelloFresh, Hugo Boss
- Delivery Hero (DHER TH) -2.9%
- Delivery Hero Has Good Portfolio, But Lacks Visibility, MS Says
- Uniper (UN01 TH) -3.1%
- Finland Sees No Possibility for More Uniper Financing Via Fortum
- Lanxess (LXS TH) -4.3%
>>> Up
* Bank of America Raised to Buy at SocGen; PT $37.50
* Credito Emiliano Raised to Market Perform at KBW; PT 6.90 euros
* EDF Raised to Overweight at JPMorgan; PT 12 euros
* Hargreaves Lansdown Raised to Buy at Investec; PT 970 pence
* Mattel Raised to Buy at Goldman; PT $31
>> Down
* ABB Cut to Neutral at Citi
* BPER Banca Cut to Market Perform at KBW; PT 2.06 euros
* Credit Agricole Cut to Underperform at KBW; PT 10.50 euros
* Fabege Cut to Sell at ABG; PT 100 kronor
* Fortum Cut to Reduce at AlphaValue/Baader
* ManpowerGroup Cut to Neutral at JPMorgan; PT $78
* Siemens Gamesa Cut to Hold at Mirabaud Securities
>>> Initiation
* Anglesey Mining Rated New Buy at Stifel Canada; PT 5.50 pence
* Avanza Rated New Underweight at Morgan Stanley
* Delivery Hero Resumed Equal-Weight at Morgan Stanley
* Endesa Reinstated Hold at Mirabaud Securities; PT 22 euros
* flatexDEGIRO Rated New Underweight at Morgan Stanley
* Greggs Rated New Hold at Deutsche Bank; PT 1,950 pence
* JTC PLC Rated New Buy at Investec; PT 906 pence (+)
* Ninety One Rated New Hold at Peel Hunt; PT 214 pence
* Nordnet Rated New Overweight at Morgan Stanley
* Restaurant Group Rated New Hold at Deutsche Bank; PT 47 pence
>>> Call
* ABB Downgraded at Citi; Siemens, Rexel Among Top Sector Picks
* Citi Strategists See Earnings Strength Driving US Stocks Rally (+)
* Citi Lists Kone, Alfa Laval and Volvo as Capital Goods Key Picks (+)
* Investment Platforms Facing Tough Outlook, Morgan Stanley Says
* Italian Banks’ Asset-Quality Risks Are Under Control, KBW Says
* Morgan Stanley’s Wilson Says Stock Rally to Wane as Dollar Soars
DAX:
- Bayer (BAYN TH) -1.8%
- BMW (BMW TH) -1.9%
- Daimler Truck (DTG TH) -1.9%
- Henkel (HEN3 TH) -2.1%
- Mercedes (MBG TH) -2.3%
MDAX:
- Hugo Boss (BOSS TH) -2.2%
- Uniper (UN01 TH) -2.3%
- Finland Sees No Possibility for More Uniper Financing Via Fortum
- Aixtron (AIXA TH) -2.6%
- Delivery Hero (DHER TH) -3.1%
- Delivery Hero Has Good Portfolio, But Lacks Visibility, MS Says
- Lanxess (LXS TH) -3.2%
SDAX:
- VERBIO Vereinigte (VBK TH) -2.6%
- flatexDEGIRO (FTK TH) -2.9%
- Investment Platforms Facing Tough Outlook, Morgan Stanley Says
- Heidelberger Druck (HDD TH) -3.3%
- Wacker Neuson (WAC TH) -3.4%
- MorphoSys (MOR TH) -4%
Joe Biden seeks reset on Saudi Arabia as oil tensions flare
US president to flag energy security concerns and need for closer ties with Israel during Middle East trip
Joe Biden makes his first trip to the Middle East as president this week as the crisis in global oil markets pushes him to reset relations with Saudi Arabia, a country he once threatened to make a pariah state.
Relations between the US and Saudi Arabia, allies traditionally tightly bound by oil and security concerns, reached a historic low in the wake of the murder of journalist Jamal Khashoggi in 2018 and the war in Yemen.
The fallout from the war in Ukraine, which has sent global oil prices higher, has created an opening to put relations between Washington and the world’s biggest crude producer back on track, and deliver dividends for both sides, officials and analysts in the US and the Gulf say.
Prior to his election in 2020, Biden had promised to reassess relations with the Gulf state. In a pre-emptive defence of his visit, Biden wrote in the Washington Post at the weekend that “from the start, my aim was to reorient — but not rupture — relations with a country that’s been a strategic partner for 80 years”. He said his meeting with Saudi leaders was critical towards advancing US efforts to counter Russia and outcompete China.
Biden will from Wednesday meet Israeli and Palestinian leaders, but much of the attention is on this weekend’s meeting in Jeddah with Saudi Arabia’s de facto leader Crown Prince Mohammed bin Salman. The visit, where he will attend a summit of Arab leaders, will determine whether Biden can secure progress on oil and regional relations that he needs to justify his U-turn on Saudi Arabia to his critics, including those from the progressive wing of the Democratic party.
“Absent the war in Ukraine, the tightening of the oil market and the spiking of oil prices, there would be no rapprochement with Saudi Arabia,” said Martin Indyk, a former US envoy for Israeli-Palestinian negotiations and a distinguished fellow at the Council on Foreign Relations.
In his opinion column, Biden said that Saudi Arabia was “working with my experts to help stabilise oil markets with other OPEC producers”. Analysts expect that Saudi Arabia, the world’s top crude producer, will this week agree to at least some modest increases after the Opec+ agreement, which includes Opec members such as Saudi Arabia as well as Russia, ends in September.
The US does not expect any specific announcements on oil production at this week’s summit but anticipates further increases in the future, according to a person familiar with the administration’s thinking. It might, however, announce a deal connecting Iraq to the Gulf states’ power grid, the person said. This would reduce Iraq’s dependence on Iran for some of its energy needs.
Biden is also expected to announce progress on efforts to get Israel and Saudi Arabia to normalise ties — in the wake of the 2020 Abraham Accords that saw the UAE, Bahrain, Morocco and Israel establish relations — as well as discuss a US effort to integrate regional air defences to better protect Israel and other regional powers from Iranian ballistic missiles and other threats.
“It’s a more operational version of something that has been in the works for many years, enabled by Israel being in Centcom and the new atmosphere between Israel and Arab states,” said Dan Shapiro, a former ambassador to Israel in the Obama administration now at the Atlantic Council think-tank, referring to US Central Command.
US and Israeli officials said the air defence project was a goal rather than something that would happen right away. “We’re not there, it’s a goal that is set and there’s a long way to go,” a senior Israeli official said. Other officials in the region point out that an integrated defence system has long been an ambition of the US, but never made progress.
Analysts and diplomats also caution that Saudi Arabia is unlikely to establish formal diplomatic relations with Israel for years. Most likely, they say, the US this week will announce deals to expand overflight rights for planes coming from Israel and finalisation of the transfer of two Red Sea islands from Egypt to Saudi Arabia, which requires Israel’s backing. The parties are also discussing allowing Palestinian religious pilgrims with Israeli passports to fly directly to Saudi Arabia for the Hajj.
After years of wariness among Gulf states about Washington’s willingness to stay engaged in the region for the long haul, Saudi Arabia, for its part, is looking for greater security assurances, particularly after it felt Washington did not do enough when Iran-backed militants launched waves of drone and missile attacks this year.
“They’re looking for a US commitment to respond to future Iranian attacks on Saudi energy facilities and to set some sort of threshold that would merit a forceful US response,” said Mark Dubowitz, president of the Foundation for the Defense of Democracies, who recently met senior officials in Saudi Arabia.
He also said the Saudis would look for promises that the Biden administration would lobby Congress to support military sales to Riyadh. Such deals face staunch opposition among legislators critical of Saudi Arabia’s role in the war in Yemen, home to one of the world’s worst humanitarian crises.
More broadly, for Saudi Arabia, the visit is a chance to restore Prince Mohammed’s place on the world stage, particularly after the US publicly released an intelligence report saying he authorised the operation to “capture or kill” Khashoggi. Riyadh has blamed the killing by Saudi agents on a rogue operation.
“They see this as an opportunity to get out of the penalty box and reinforce the legitimacy of the King and MBS,” said Brian Katulis, vice-president for research and senior fellow at the Middle East Institute and who recently visited Saudi Arabia.
While Biden administration officials have said that the US president will meet Prince Mohammed, they have taken pains to say that no separate huddle is scheduled between them. They stress that the purpose of the Saudi visit is to see all Gulf Cooperation Council leaders, not just Saudi officials.
Biden administration officials said he would press human rights issues in Saudi Arabia, but analysts said there would be a limit to how far he could go. “We want the best relations with America, but not like the old days and if he starts talking about human rights he’s not going to get anywhere,” said Abdulkhaleq Abdulla, an Emirati political science professor.
Chinese stocks drop on threat of renewed Covid lockdowns
Outbreaks of contagious Omicron subvariant hit shares of property developers and commodity prices
Chinese shares fell as the reintroduction of harsh Covid-19 restrictions at the weekend raised concerns that lockdowns could once again weigh on the growth of the world’s second-largest economy.
China’s benchmark CSI 300 index of Shanghai- and Shenzhen-listed stocks dropped about 2 per cent on Monday as spooked investors dumped shares in response to the imposition of measures to halt the spread of new Covid outbreaks.
The emergence of the highly contagious BA.5 Omicron coronavirus sub-variant in mainland China has raised concerns that cities across the country could soon be forced back into stringent lockdowns.
Shares in Chinese developers were among the worst performers in the region on Monday, with the Hang Seng Mainland Properties index falling as much as 5 per cent on concerns that a rush of restrictions could undercut a nascent recovery in consumer confidence that has helped buoy real estate sales in recent weeks.
The latest measures announced by authorities included a mandate for testing more than 6mn residents in the southern Chinese city of Guangzhou and orders for further compulsory testing by authorities in Shanghai, where a two-month lockdown weighed heavily on growth in the second quarter.
Traders were also unnerved after Beijing fined technology groups including Alibaba and Tencent for failing to comply with anti-monopoly regulations.
Hong Kong’s Hang Seng Tech index shed as much as 3.7 per cent on Monday. Alibaba dropped 6.5 per cent, while Tencent declined 3.4 per cent.
Commodity prices fell on fears of demand-constraining lockdowns, with active iron ore contracts in Dalian declining as much as 5.6 per cent. Brent crude, the international oil benchmark, shed 0.7 per cent to trade at $106.31 per barrel.
Futures pointed to a drop of 0.6 per cent for the S&P 500, while the FTSE 100 was expected to fall 1 per cent when trading begins later in the day.
Shares in Macau casino operators were knocked lower after authorities announced that all non-essential businesses would be shuttered for a week from Monday and ordered residents to stay home.
The move sent Hong Kong-listed shares in Wynn Macau down about 8 per cent, with Sands China tumbling almost 9 per cent and MGM China Holdings shedding about 7 per cent.
The city, which is the only place in China where casino gambling is legal, has strictly adhered to China’s zero-Covid policy, adopting a similar health code system for tracking the virus and designating neighbourhoods according to their infection risk level.