Morgan Stanley

07.11.2024

iPhone sales boost revenue for chip designer Arm + Qualcomm beats expectations for fourth quarter + Novo Nordisk: weight loss and diabetes drugs flourish + Trump election victory sends bank shares sharply higher + Aurora Cannabis quarterly figures

The chip designer Arm Holdings $ARM (+0.48%) achieved higher sales in the second quarter than in the same period of the previous year. The company benefited from the sale of Apple's $AAPL (+0.52%) iPhones, Arm announced on Wednesday after the close of the US stock exchange. The British chip designer reported a profit of 30 US cents per share for the past quarter, adjusted for share-based payments and other factors. Analysts had expected a profit of 26 cents per share. Arm's turnover rose by five percent to 844 million dollars, compared to analysts' estimates of 808.4 million. However, the company forecast revenue for the current quarter to be only in the middle of estimates. Arm expects revenue to be between $920 million and $970 million, with a midpoint of $945 million, compared to the average analyst estimate of $944.3 million. The company expects third-quarter earnings of between 32 and 36 cents per share. Analysts had projected earnings of 34 cents per share for the third quarter. Arm collects a license fee for every chip sold that uses its technology. Arm's designs power almost every smartphone in the world.

The results of Qualcomm $QCOM (+1.7%) 's fourth-quarter results were better than expected as the chip supplier posted its fifth consecutive quarter of record automotive sales. Adjusted earnings per share rose to $2.69 from $2.02 a year ago, above the $2.57 consensus surveyed by Capital IQ. Non-GAAP revenue rose 18% year-over-year to $10.24 billion in the three months ended Sept. 29, beating Wall Street expectations of $9.93 billion. Qualcomm shares rose 7% in after-hours trading on Wednesday. Sales at Qualcomm's CDMA technology division, which represents its semiconductor business, rose 18% to $8.68 billion, driven by a 68% increase in the auto division to $899 million. Cell phone sales rose 12% to $6.1 billion, while the Internet of Things division increased 22% to $1.68 billion, the company said. Technology licensing revenue rose 21% to $1.52 billion. Qualcomm expects first-quarter adjusted earnings per share of $2.85 to $3.05 on revenue of between $10.5 billion and $11.3 billion.

The pharmaceutical company Novo Nordisk $NOVO B (-2.54%) continues to do good business with its top-selling diabetes and weight-loss drugs Ozempic and Wegovy. Group-wide sales of the Danish company increased by 21 percent to 71.3 billion Danish crowns (around 9.6 billion euros) in the third quarter, as the manufacturer announced in Baegsvaerd on Wednesday. The bottom line profit climbed by a good fifth to 27.3 billion Danish kroner. The Group thus performed better than analysts had expected. The management is now once again narrowing its sales and profit expectations for the year. An increase in revenue at constant exchange rates of 23 to 27 percent is now expected for the year as a whole. This is one percentage point more at the lower end, but also one percent less at the upper end than recently. The Danes are now predicting an increase in operating profit of 21 to 27 percent, excluding exchange rate effects. This means that the Group is also expecting slightly more at the lower end and slightly less at the upper end than before. In the summer, Novo Nordisk had already lowered its target for this key figure.

Donald Trump's clear victory in the US presidential election catapulted the share prices of US banks and financial services providers higher on Wednesday. Goldman Sachs and JPMorgan climbed to record highs in the Dow Jones Industrial benchmark index. Goldman $GS (+2.89%) recently gained around 12 percent, while JPMorgan $JPM (+2.19%) the gain amounted to more than 9 percent. In the S&P 500 Citigroup $C (+1.62%), Wells Fargo $WFC (+2.42%) and Morgan Stanley $MS (+2.75%) were similarly strong. Capital One Financial $COF (+1.16%)gained over 13 percent. A more protectionist trade policy is emerging in the USA under Trump. There is a threat of high import duties and corporate taxes could be lowered. However, debt could also increase. Bank shares benefited on Wednesday from the prospect of looser financial market regulation. In addition, interest rates could rise in view of a possible increase in debt - this would also be to the benefit of banks, for example in the lending business.

Aurora Cannabis figures $ACB (+3.02%)

• Record adjusted EBITDA1 of USD 10.1 million, an increase of 210% year-on-year
• Quarterly net revenue1 increased 29% to $81.1 million, with 41% growth in Global Medical Cannabis
• Reaffirms target of positive free cash flow1 in the quarter ending December 31, 2024
• Maintains a strong balance sheet with ~$152 million in cash and a debt-free cannabis business2

Thursday: Stock market dates, economic data, quarterly figures

ex-dividend of individual stocks

H & M Hennes & Mauritz (B) 3.25 SE

BP 0.08 USD

Ford Motor 0.15 USD

Unilever 0.37 GBP

Quarterly figures / company dates USA / Asia

12:30 Moderna quarterly figures

12:55 Under Armour quarterly figures

22:00 Expedia | News Quarterly figures

Quarterly figures / Company dates Europe

06:45 Adtran Networks | Zurich Insurance | Basler Quarterly figures

07:00 Daimler Truck | Heidelberg Materials | Lanxess | Nemetschek | Nordex | Rational | Arcelormittal | AMS-Osram | Aareal | Hamborner Reit | Knaus Tabbert quarterly figures

07:15 Air France-KLM quarterly figures

07:30 Compugroup | Delivery Hero | Munich Re | Rheinmetall | Telefonica | Adyen | Deutz quarterly figures

07:30 Dürr | Instone | Koenig & Bauer | Mutares | SGL Carbon | SNP Schneider quarterly figures

07:50 Suss Microtec quarterly figures

08:00 Verbund AG | PNE | BT Group | National Grid | CRH Quarterly Figures | Rolls-Royce Trading Update 3Q

10:00 Qiagen quarterly figures

14:30 Hochtief quarterly figures

17:50 Pirelli quarterly figures

18:00 Freenet quarterly figures

Economic data

• 08:00 DE: Trade balance September trade balance calendar and seasonally adjusted FORECAST: +19.0 bn Euro previous: +22.5 bn Euro Exports FORECAST: -2.8% yoy previous: +1.3% yoy Imports FORECAST: -0.2% yoy previous: -3.4% yoy
• 08:00 DE: Production in the manufacturing sector September seasonally adjusted FORECAST: -0.9% yoy previous: +2.9% yoy | Turnover in the service sector October
• 11:00 EU: Retail Sales September Eurozone PROGNOSE: +0.5% yoy previous: +0.2% yoy
• 13:00 UK: BoE, outcome and minutes of the Monetary Policy Council meeting and Monetary Policy Report October Bank Rate FORECAST: 4.75% previously: 5.00%
• 14:30 US: Initial jobless claims (week) FORECAST: 220,000 PREVIOUS: 216,000
• 14:30 US: Productivity ex Agriculture (1st release) 3Q annualized PROGNOSE: +2.5% yoy 2Q: +2.5% yoy Unit labor costs PROGNOSE: +1.1% yoy 2Q: +0.4% yoy
• 20:00 US: Fed, outcome of FOMC meeting Fed funds target rate FORECAST: 4.50% to 4.75% Previous: 4.75% to 5.00%

All of these shares reached new ALL-TIME HIGHS at some point today ⤵️

Nvidia $NVDA (+1.51%)

Amazon $AMZN (-1.7%)

Netflix $NFLX (+1.95%)

Walmart $WMT (+2.04%)

JPMorgan $JPM (+2.19%)

Goldman Sachs $GOS0

Palantir $PLTR (+0.69%)

Blackrock $BLK

American Express $AXP (+2.5%)

Arista $ANET (+6.77%)

Apollo $APO PR A

Blackstone $BX (+4.39%)

Booking $BKNG (+4.55%)

Instacart $INSTA

Caterpillar $CAT (+3.05%)

Capital One $COF (+1.16%)

Discover Financial $DFS (+1.82%)

Electronic Arts $EA (+0.34%)

GE Vernova $GEV (+0.62%)

Hilton $HLT (+1.43%)

Howmet $HWM (-0.22%)

Interactive Brokers $IBKR (+3.09%)

$KKR (+4.3%)

Cheniere $LNG (+2.63%)

Morgan Stanley $MS (+2.75%)

Marriot $MAR (+1.85%)

Nasdaq $NDAQ (+1.94%)

News Corp $NWSA (+1.08%)

Oracle $ORCL (+1.67%)

Palo Alto $PANW (+7.32%)

ServiceNow $NOW (+1.98%)

Steel Dynamics $STLD (+1.3%)

Stryker $SYK (+1.66%)

Royal Caribbean $RCL (+1.15%)

Reddit $RDDT

Trade Desk $TTD (+3.8%)

Visa $V (+1.31%)

Wells Fargo $WFC (+2.42%)

📊 MSCI: More than just indices - the secret data king of the financial markets 👑

MSCI Inc. is a leading global provider of equity, bond and real estate indices as well as multi-asset portfolio analysis tools. The company also offers innovative ESG and climate products that enable institutional investors to develop sustainable investment strategies. Founded in 1968 and headquartered in New York City, the company has $MSCI (+0.54%) has established itself as an indispensable partner for capital markets and asset managers worldwide.

Historical development

The origins of MSCI date back to 1968, when Capital International first published global equity indices for non-US markets. In 1986, Morgan Stanley secured the license rights and coined the name Morgan Stanley Capital International (MSCI). With the acquisition of Barra in 2004, MSCI added analytical tools to its portfolio. The IPO in 2007 marked a further milestone, which was completed in 2009 with the full spin-off of $MS (+2.75%) Stanley in 2009.

Business model and core competencies

MSCI's business model rests on four central pillars:

1. index segment : development and licensing of globally recognized equity indices, including the MSCI World and MSCI Emerging Markets.

2. analytical segment: provision of sophisticated portfolio analysis tools used primarily by asset managers and hedge funds.

3. ESG segment: MSCI is a pioneer in sustainable investing and provides comprehensive ESG analysis to support environmental and socially responsible investment strategies.

4. private assets: diversification into unlisted assets, in particular real estate and private equity.

MSCI's core competence lies in the development of global indices that offer investors a comprehensive representation of opportunities and risks across different sectors and countries. A key competitive advantage is decades of data collection, which is crucial for strategy development, portfolio management and risk analysis.

Market position and competition

MSCI has established itself as one of the global market leaders in financial indices and acts neutrally towards regulatory authorities worldwide. This independence has enabled the company to generate 17% of its revenue in the Asia-Pacific region - a significant advantage over competitors such as $SPGI (+2.04%) which only achieve a share of less than 3% in this region.

Future prospects and strategic initiatives

MSCI's future strategy is characterized by continuous innovation and expansion.

1. ESG and climate products: The acquisition of Carbon Delta in 2019 strengthened MSCI's position in climate risk analytics and sustainability.

2. private asset segment: Through acquisitions such as Real Capital Analytics (2021) and Burgiss Group (2023), MSCI is expanding its expertise in unlisted assets

3. options: A cooperation with Cboe Global Markets since 2021 opens up new opportunities in options trading on MSCI indices.

4. fixed income indices: The development of new bond indices in collaboration with MarketAxess (2022) demonstrates MSCI's efforts to gain a stronger foothold in the fixed income space.

Total Addressable Market (TAM) and equity performance

The total market that MSCI addresses is enormous: over 13 trillion US dollars are invested worldwide in funds based on MSCI indices. The company continuously generates income through license fees of 0.02 to 0.04 percent of assets under management.

For the development (company figures), a better view and more, check out the free blog: https://topicswithhead.beehiiv.com/p/msci-mehr-als-nur-indizes-der-heimliche-datenk-nig-der-finanzm-rkte

Conclusion

MSCI's business model may seem simple at first glance, especially because it is easy to imitate, but it is not that simple. MSCI has established a strong brand with high recognition value, even among retail providers, and enjoys excellent relationships with asset managers. In addition, the company benefits from an extremely attractive business model, with high profitability, impressive scaling synergies and a promising trend. Revenues are recurring and therefore highly predictable and MSCI has successfully positioned itself in all markets, which is also reflected in an attractive revenue distribution. Capital efficiencies have been at a first-class level for some time and there are therefore few negative aspects, apart from the high level of debt, which at the same time offers leverage and a high valuation. Anyone who can acquire the shares at a lower price after a small crash should definitely buy them, as the company is a real cash machine if managed correctly.

Podcast episode 60 "Buy High. Sell Low."

Banker interview part 2, job application, life, personal & private matters. Subscribe to the podcast, because part 3 is coming soon!

Spotify

https://open.spotify.com/episode/67iGQ3lcRqhxsQSXgsdHdY?si=pl4NBip0SK2HevoroljtQA

YouTube

https://youtu.be/_T1XtsyfKx4

Apple Podcast

https://podcasts.apple.com/us/podcast/folge-60-b%C3%A4nker-interview-teil-2-bewerbung-leben-pers%C3%B6nliches/id1695869891?i=1000673078238

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$GS (+2.89%)
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#podcast
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#bank
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Morgan Stanley
$MS (+2.75%) today upgraded its "Overweight" rating for Nvidia
$NVDA (+1.51%) with a price target of 150 US dollar.

According to Morgan Stanley the increase in production at Blackwell is extremely robust and they maintain their view that Nvidia in the year 2025 is expected to gain massive market share in AI processors will gain massive market share.

14.10.2024

DAX with a new run-up to record highs? US reporting season could help + Tonies: A box conquers the world + 5 DATES that will be important this week

The reporting season in the USA and the ECB's expected interest rate cut on Thursday should provide fresh impetus for the German stock market in the new week. Billions in economic aid for China should also go down well with the stock market. The DAX could set new record highs. - The weekly outlook.

https://www.deraktionaer.de/artikel/maerkte-forex-zinsen/dax-mit-neuem-anlauf-auf-rekordhoehen-us-berichtssaison-koennte-helfen-20368031.html

Small box, big success: the interactive audio platform from Tonies $TNIE (+0.28%) not only makes children's eyes light up. The investors also have every reason to be happy.

https://www.deraktionaer.de/artikel/medien-ittk-technologie/tonies-eine-box-erobert-die-welt-20367911.html

5 DATES that will be important this week

• 1. ZEW economic expectations rise in October

The economic expectations of investors surveyed by the Center for European Economic Research for Germany are likely to have risen again in October for the first time after three consecutive declines. Economists surveyed by Dow Jones Newswires forecast that the index has risen to 9.0 (September: 3.6) points. The situation assessment index is expected to rise to 84.3 (minus 84.5) points. The Sentix economic index surveyed among the same group of people has also risen.

>>> Tuesday, 15.10.2024; 11:00

• 2. investment banking gives US institutions a boost

According to JP Morgan $JPM (+2.19%) and Wells Fargo $WFC (+2.42%) the other major US banks present their figures for the third quarter. In particular Morgan Stanley $MS (+2.75%) and Goldman Sachs $GS (+2.89%) with their relatively large investment banks, are likely to benefit from the fact that activity on Wall Street has picked up again. The universal banks Citigroup $C (+1.62%) and Bank of America $BAC (+1.49%) will also feel this. However, they are also noticing the waning tailwind in the interest-bearing business.

>>> Bank of America, Morgan Stanley, Citigroup (Tuesday), Goldman Sachs (Wednesday)

• Wells Fargo reported an 11% drop in third-quarter profit to USD 5.1 billion, but beat analysts' expectations due to higher revenues at the investment bank. This led to a rise in the stock in pre-market trading, indicating a positive market reaction despite the earnings decline.
• JPMorgan Chase exceeded analysts' expectations in the third quarter with a profit of 12.9 billion US dollars, which led to a rise in the share price in pre-market trading. This strong increase in earnings compensated for higher loan loss provisions and could have a positive impact on the share price.

• 3. focus at Sartorius is on the outlook

Sartorius $SRT (-1.35%) is likely to have recorded a rather meagre business performance in the third quarter. Analysts' consensus expectations are for sales revenue to be roughly on a par with the previous year, but this is mainly due to a low basis for comparison and not yet a recovery in organic growth. The focus is on the forecast, which the DAX-listed laboratory equipment supplier lowered in July. Sartorius had referred to the high volatility and limited predictability of short-term business development and only held out the prospect of increasing demand momentum for the final quarter. The succession of Group CEO Joachim Kreuzburg, who is not seeking a further term of office after his contract expires in November 2025, is also unclear.

>>> Thursday, October 17, 2024; 07:00

• 4. the ECB takes an extra step downwards

The European Central Bank (ECB) will probably not be able to escape the pull of falling inflation rates and weaker economic indicators. Statements from ECB Governing Council members of all stripes and data suggest that the ECB will decide on Thursday to cut its key interest rate by 25 basis points to 3.25 percent - a month after trying to avoid exactly this impression. Normally, central banks try to avoid such abrupt swings. However, one must give the ECB credit for the fact that it would only be implementing its promise to adjust interest rates to the data situation.

>>> Thursday, 17.10.2024; 14:15

• 5 China's economic problems are worsening

Economic growth in China could also fall short of official targets in the third quarter of 2024, write the economists at Bank of America (BofA) in a research note. Gross domestic product (GDP) growth is likely to slow to 4.6 percent in the third quarter after 4.7 percent in the second quarter, the economists expect. Beijing has set itself a growth target of 5 percent for the year as a whole. The reluctance of Chinese politicians to take major economic measures, together with contradictory political goals, is contributing to the downturn. Many experts are concerned. Analysts at Gavekal warned at a briefing that deflation is on the way and there is little sign that Beijing's efforts to stabilize the property market and improve consumer and business sentiment are working. For the rest of the world, China's worsening problems are increasing the risk of a global economic slowdown and putting pressure on commodity prices, with a focus on China.

>>> Friday, October 18, 2024; 04:00

Monday: Stock market dates, economic data, quarterly figures

Stock market holiday Canada | Japan | US bond market (US equity markets are open, however)

Quarterly figures / company dates Europe

07:00 Fraport traffic figures for September

Untimed: Volkswagen Pre-Close-Call 3Q | Bawag quarterly figures

Economic data

• 02:00 SG: GDP 3rd quarter FORECAST: +2.0% yoy/+4.0% yoy previous: +0.4% yoy/+2.9% yoy
• 04:00 CN: Foreign trade September trade balance Forecast: +89.80 bn US dollars previous: +91.02 bn US dollars Exports Forecast: +6.0% yoy previous: +8.7% yoy
• Without time specification: AT: Opec oil market report October

Earnings next week 🗓️

$WBA (+1.41%)

$UNH (+0.11%)

$BAC (+1.49%)

$C (+1.62%)

$JNJ (+2.5%)

$GS (+2.89%)

$SCHW (+1.23%)

$UAL (+0.23%)

$ASML (+3.19%)

$MS (+2.75%)

$ABT (+1.35%)

$TSM (+1.17%)

$NFLX (+1.95%)

$ISRG (+1.97%)

$AXP (+2.5%)

$PG (+2.05%)

Today the inflation data is published, an overview of what the big players are saying:

• Bank of America
  $BAC (+1.49%): 2.3%
• Barclays
  $BARC (+1.12%): 2.3%
• BNP Paribas
  $BNP (-0.09%): 2.3%
• Citigroup
  $C (+1.62%): 2.2%
• Deutsche Bank
  $DBK (+0.74%): 2.3%
• Goldman Sachs
  $GS (+2.89%): 2.3%
• Jefferies
  $JEF (+3.41%): 2.3%
• JP Morgan
  $JPM (+2.19%): 2.3%
• Morgan Stanley
  $MS (+2.75%): 2.3%
• Nomura
  $NMR (+2.2%): 2.3%
• TD Securities
  $TD (+0.28%): 2.3%
• Wells Fargo $WFC (+2.42%): 2.3%

• UBS
  $UBSG (+0.2%): 2.4%

Live coverage is of course exclusively available from me live on Getquin.

Current analyst opinions on Tesla $TSLA (+0.05%)

Morgan Stanley
$MS (+2.75%) confirmed its price target of 310 $ for Tesla
$TSLA (+0.05%) and maintained its "Overweight" rating.

Truist raised his price target for Tesla from 215 $ to 236 $, but maintained its "Hold" rating.

Bernstein confirmed its price target of 120 $ for Tesla and reiterated its "Underweight" rating.