Every day, Wall Street analysts upgrade some stocks, downgrade others, and “initiate coverage” on a few more. But do these analysts even know what they’re talking about? Today, we’re taking one high-profile Wall Street pick and putting it under the microscope…
After underperforming the S&P 500 by more than 17 points over the past year, Alaska Air Group (NYSE: ALK) delivered a pleasant surprise to its shareholders last week, outperforming analyst expectations and beating on both earnings and revenue. The $0.17 per share that Alaska earned in fiscal Q1 2019 topped consensus estimates by more than 50% — and the airline even eked out a small sales beat with its $1.88 billion in Q1 revenue.
FILE
PHOTO: The Airbus logo is pictured at Airbus headquarters in Blagnac
near Toulouse, France, March 20, 2019. REUTERS/Regis Duvignau
PARIS (Reuters) – Airbus shares rose on Tuesday after the European planemaker won a deal worth tens of billions of dollars to sell 300 aircraft to China.
Airbus was up 2.7 percent by 1208 GMT, with the stock having risen nearly 40 percent so far in 2019.
French
officials said the deal was worth some 30 billion euros (25.6 billion
pounds) at catalogue prices. Planemakers usually grant significant
discounts.
The
Chinese order was announced late on Monday, coinciding with a visit to
Europe by Chinese President Xi Jinping and matching a China record held
by U.S. rival Boeing.
Investment bank Citigroup kept its “buy” rating on Airbus.
“We
do not have details of the delivery schedule of this order, but China
has been taking about 20-25 percent of Airbus production per year and
given the A320 family is sold out at announced production rates out to
2024/25, we believe this increases the probability of Airbus moving to a
production rate of 70 per month,” wrote Citigroup.
That positive view was echoed by Morgan Stanley, which kept an “overweight” rating on Airbus shares.
“Clearly
finalisation of this order is a positive for Airbus, and continues to
underpin strong order book coverage and rising production rates in
narrowbody,” Morgan Stanley said.
The
larger-than-expected order, which matches an order for 300 Boeing
planes when U.S. Donald Trump visited Beijing in 2017, follows a
year-long vacuum of purchases in which China failed to place significant
orders amid global trade tensions.
It
also comes as the grounding of the Boeing 737 MAX has left uncertainty
over Boeing’s immediate hopes for a major jet order as the result of any
warming of U.S.-China trade ties.
(Reporting by Sudip Kar-Gupta; Editing by Leigh Thomas and Jane Merriman)
LONDON, Feb 15 (Reuters) – Thomas Cook has enlisted Credit Suisse, Morgan Stanley and Bank of America Merrill Lynch to explore the possible sale of its airline business, a source familiar with the discussions said.
The holiday company this month said it was willing to sell its profitable airline business to fund its fightback from losses racked up in 2018.
Credit Suisse, Morgan Stanley and Bank of America Merrill Lynch declined to comment.
Thomas Cook’s airline, which fared much better last year than the tour operator business, consists of Germany’s Condor and British, Scandinavian and Spanish divisions.
A sale of the airline unit, in whole or in part, would enable the company to invest more in its own hotels, improve its digital sales offering and drive further cost savings.
One banker said the enterprise value of the airline would be around 500-600 million pounds, a little more than the current market value of the whole company.
He added that Lufthansa, Ryanair and easyJet were all vying for bits of the airline business, but that no one wanted the whole unit, and that Thomas Cook had an ageing fleet which would need a massive investment programme to replace it.
Ryanair’s marketing chief said on Thursday that the Irish airline was not interested in any large-scale acquisitions but could vie for airport slots should they become available.
(Reporting by Alistair Smout Additional reporting by Pamela Barbaglia and Clara Denina in London and Arno Schuetze and Ilona Wissenbach in Frankfurt; Editing by David Goodman and Kirsten Donovan)
(Reuters) – Shares in Tesla Inc fell nearly 4 percent on Thursday as Wall Street analysts following up on its fourth-quarter results questioned underlying demand for its crucial Model 3 sedan and the electric car maker’s ability to make inroads in China.
Tesla reported quarterly profit below analysts’ expectations on Wednesday and surprised investors by announcing that Chief Financial Officer Deepak Ahuja, 56, would leave and handover the reins to 34-year-old Zach Kirkhorn, its vice president of finance.
JPMorgan analysts were among those warning that Ahuja’s leaving deprived the company of long automotive industry experience and relative stability in a company which has seen a steady stream of senior staff come and go since 2016.
Analysts were also concerned by Tesla’s indication that it is only making cars for China and Europe right now, and expects a gap of about 10,000 vehicles between production and deliveries due to vehicles in transit at the end of the first quarter.
“This is a strong indication that demand in the U.S. for both the mid-range and long-range Model 3 versions has largely been exhausted, and the company is still working through the estimated ~6.8k of unsold Model 3 inventory,” Cowen analysts said.
Still, the fall in Tesla shares was less than that suggested by initial pricing after Wednesday’s results and also far smaller than some of the swings in one of the past year’s most volatile Wall Street stocks.
The company, which is striving to stabilise production and deliver consistent profit, ended the quarter with $4.3 billion in cash and said it had “sufficient cash on hand” to pay a $920 million convertible bond maturing in March.
Of the 31 brokerages covering Tesla, 10 have a “buy” or higher rating, 10 “hold” and 11 have a “sell” or lower rating and their median price target is 327.50.
Only four changed their price targets on the stock on Thursday, with two raises and two cuts. Wedbush cut its price target by $50 to $390 (297 pounds).
While Tesla is pumping money into a Shanghai factory, which it hopes to bring on line around the end of this year with a target of producing 500,000 vehicles a year, several analysts questioned whether that investment will pay off.
“Tesla serves the purpose of a ‘stalking horse’ to the fast growing domestic Chinese EV industry, but we believe it has limited to zero terminal value in a region where a number of domestic champions should emerge,” Morgan Stanley analysts said.
(Reporting by Sonam Rai and Jasmine I S in Bengaluru; Editing by Anil D’Silva)
