Top US Stocks: Goldman Sachs, Moderna and Microsoft

Goldman Sachs

Goldman Sachs smashed expectations this morning, capping off a solid week for US banks, as Wall Street’s biggest investment bank benefited from the explosion in global deal making this year.

Net revenue rose 26% from last year to $13.61 billion while EPS soared to $14.93 from just $8.98. That was well ahead of the $11.52 billion in revenue and $9.70 EPS forecast by analysts.

The bank benefited from the boom in M&A deal making and remained the number one adviser on global M&A and IPO activity in the period. As a result, its Investment Banking unit delivered its second-ever highest quarterly net revenue of $3.7 billion. Meanwhile, Global Markets reported strong growth in equities, fixed income, currency and commodities, while its Consumer & Wealth Management divisions produced quarterly revenue of over $2 billion for the first time.

 

Moderna

A panel of advisors to the US Food & Drug Administration has voted in favour of Moderna’s Covid-19 jab being authorised to be used as a booster shot to help improve protection in people over the age of 65 and those at high risk from the virus.

That sets a confident tone ahead of the FDA making a decision which, if approved, will pass on to the US Centers for Disease Control & Prevention, which is ultimately responsible for deciding who is entitled to what shots. Reports suggests the CDC will meet to discuss the matter next week.

Notably, the same panel is expected to discuss whether J&J’s vaccine should be used as a booster today. The Pfizer jab has already been approved for booster shots.

 

Microsoft

Microsoft has announced it will shut down LinkedIn in China after failing to engage users as much as it had hoped and because of ‘a significantly more challenging operating environment and greater compliance requirements in China’.

The company launched a localised version of LinkedIn in China back in early 2014, which allowed users in the country to access to the platform’s global social media platform. It said it had been successful in helping users find a job and stay up to date, but ‘have not found that same level of success in the more social aspects of sharing and staying informed.’

As a result, it is shutting down the platform in China later this year and refining its focus on to helping people secure jobs with a new service named InJobs – a new standalone jobs application platform designed for China that will not offer social feeds or the ability to share articles or posts.

 

Amazon

US senator Elizabeth Warren has called once again for the break-up of Amazon and Indian retailers are calling for a probe into the business after a report from Reuters earlier this week suggested it copied products and rigged search results in the country to favour its own brands.

The report released on Wednesday was based on thousands of internal Amazon documents that had been leaked and said Amazon run a ‘systematic campaign’ of creating knock-off products and prioritising its own brands in search results.

Warren said ‘this is one of the many reasons we need to break it up’, reiterating calls she has made since back in 2019. Some Republicans also criticised the company for being anticompetitive. Reuters also said a group representing millions of bricks-and-mortar retailers in India called on the government to take action yesterday, with the Confederation of All India Traders claiming Amazon ‘is causing a great disadvantage to the small manufacturers’ and ‘eating the cake that is not meant for them’.

 

Abbott Laboratories

The US Food & Drug Administration has announced that a unit of Abbott Laboratories is recalling two of its Covid-19 laboratory test kits because they can deliver false positives when used.

The Alinity m SARS-CoV-2 AMP and the Alinity m Resp-4-Plex AMP tests made by Abbott Molecular are the ones subject to the Class 1 recall – the most serious category of recalls. It follows on from the FDA warning in September that the tests could potentially be providing false positives, possibly because the ‘current mixing parameters of the PCR reaction mixture that may result in potential overflow that could carry over into neighbouring wells in the assay reagent tray.’

 

Johnson & Johnson

Johnson & Johnson said the subsidiary it created to hold and manage the wave of claims made against its talc products over allegations that they cause cancer is filing for bankruptcy.

J&J siphoned off tens of thousands of claims filed against its talc products into a subsidiary named LTL Management. That unit has now filed for Chapter 11 bankruptcy protection. J&J is providing $2 billion in funding and $350 million of royalty revenue streams to LTL to cover any payments the court decides need to be made.

‘This filing is intended to resolve all claims related to cosmetic talc in a manner that is equitable to all parties, including any current and future claimants. Johnson & Johnson and its other affiliates did not file for bankruptcy protection and will continue to operate their businesses as usual,’ J&J said.

 

Virgin Galactic

Virgin Galactic shares are set to fall today after the company announced its enhancement programme for VMS Eve and VSS Unity will begin around one month later than planned with its commercial service now set to launch in the fourth quarter of 2022.

Shares in the company fell in extended trade yesterday and were trading even lower in premarket trade today. The enhancement programme is designed to help improve the performance and flight-rate capability, but stressed it is nothing to do with the recent inquiry looking into a potential defect of a supplier’s components.

 

Corsair Gaming

Corsair Gaming shares are in play today after the company said third quarter revenue came in around $391 million, which would mark a significant fall from the $529.4 million delivered in the second and well below the $484.1 million forecast by analysts.

It also said it expects to book $1.825 billion to $1.925 billion over the full year, which also disappointed compared to the $2.04 billion expected by analysts.

Wedbush cut its price target on the stock to $39 from $45 this morning while Credit Suisse slashed its target to $26 from $31. Corsair Gaming shares trade at just under $27 before the opening bell today.

 

Analyst Recommendations

Boeing had its price target cut to $272 from $285 by CFRA over concerns about the planemaker’s quality control following several problems with its planes.

Tesla had its price target raised to $950 from $850 by Jefferies after the broker raised its delivery forecasts for 2022-2023.

UnitedHealth had its price target raised to $475 from $455 by JPMorgan after the firm beat expectations and raised its outlook yesterday.

Bank of America had its price target raised to $48 from $43 by Evercore ISI after posting better-than-expected profits yesterday and an improvement in net interest income.

Domino’s Pizza was cut to $500 from $522 by Jefferies after the firm reported the first decline in US same store sales in over a decade yesterday.

 

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