|Bid||39.92 x 800|
|Ask||39.93 x 2900|
|Day's Range||39.42 - 40.19|
|52 Week Range||36.74 - 50.43|
|Beta (3Y Monthly)||1.24|
|PE Ratio (TTM)||8.72|
|Forward Dividend & Yield||1.40 (3.58%)|
|1y Target Est||N/A|
Morgan Stanley (MS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
George Wells, Chairman, Principal & Co-Founder of Wells Group of New York By John Jannarone Many young companies have almost all the right ingredients for success. But without a capable Chief Financial Officer or Chief Operating Officer in place, there is a serious risk a business will experience a failure in corporate governance and even […]
(Bloomberg) -- Cloudflare Inc., a firm that helps websites protect and distribute content, warned potential investors in its initial public offering that risks to its business go beyond the boilerplate Silicon Valley advisory that it may never become profitable.The San Francisco-based company said in its IPO filing Thursday that the risks include negative publicity from the use of its network by 8chan, a website favored by white supremacists and used by gunmen before mass shootings in El Paso, Texas and Christchurch, New Zealand, this year. It also cited the use of its services by neo-Nazi website The Daily Stormer around the time of the 2017 protests in Charlottesville, Virginia.Activities of such groups have had “significant adverse political, business, and reputational consequences” for the company, Cloudflare said in the filing. Terminating those accounts, though, has raised censorship concerns, it said.“We received significant adverse feedback for these decisions from those concerned about our ability to pass judgment on our customers and the users of our platform, or to censor them by limiting their access to our products, and we are aware of potential customers who decided not to subscribe to our products because of this,” according to the filing.Cloudflare co-founder and Chief Executive Officer Matthew Prince has publicly struggled with decisions balancing freedom of speech on the internet with the need to limit hateful, racist online posts and potentially dangerous calls for violence.Risky PrecedentAfter deciding to cut services to The Daily Stormer, Prince said the move could set a dangerous precedent.“After today, make no mistake, it will be a little bit harder for us to argue against a government somewhere pressuring us into taking down a site they don’t like,” Prince wrote.In its filing with the U.S. Securities and Exchange Commission, the company listed the amount of its offering as $100 million, a placeholder that will change when terms of the share sale are set later.Customers, LossesCloudflare said about 10% of Fortune 1,000 companies are paying customers. Its security services blocked an average of 44 billion cyber threats a day during the second quarter, it said.For the first six months of the year, Cloudflare lost $37 million on revenue of $129 million, compared with a loss of $32 million on revenue of $87 million for the same period last year, it said in its filing.Prince currently controls 16.6% of Cloudflare’s shares, according to the filing. Its largest investor is the venture capital firm New Enterprise Associates Inc., with a 20.4% stake, followed by Pelion Ventures with a 18.8% share and Venrock Associates with 16.2%.After going public, the company will have a dual-class stock structure that will give its Class B stockholders 10 votes per share, according to the filing.The offering is being led by Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. Cloudflare is applying to list the shares on the New York Stock Exchange under the symbol NET.(Updates with details of risks starting in second paragraph)To contact the reporter on this story: Michael Hytha in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Liana Baker at email@example.com, Michael Hytha, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Cisco Systems Inc. shares sank on Thursday, after the company gave a first-quarter outlook that was below expectations, pressured by macroeconomic headwinds, including the U.S.-China trade war.The Chinese market was seen as a major factor behind weakness in service-provider orders, and Morgan Stanley wrote that “outsized” macro headwinds “were too much to provide much opportunity for upside.” The firm was one of at least six to trim its price target on the stock.Shares fell as much as 8% in its biggest one-day percentage loss since May 2017. Closing with a decline of that magnitude would represent Cisco’s worst session since November 2013, according to historical data compiled by Bloomberg. At current levels, Cisco is trading at its lowest level since February, and it has dropped more than 18% from a peak in July.Here’s what analysts are saying about the results:Morgan Stanley, James Faucette“The outsized headwinds” in service-provider orders, along with weakness in China and other emerging markets, “were too much to provide much opportunity for upside” to the quarter.The current valuation is “appropriate.” While the macroeconomic environment is worsening, Cisco’s cash flow gives it flexibility to make acquisitions or return cash to shareholders.Equal-weight rating, price target trimmed to $49 from $51.Jefferies, George NotterInvestors are likely “over-estimating the size of the negative top line growth inflection.”“Cisco has traditionally been very conservative when they’ve reduced expectations,” and historically, “upsets relative to consensus have been followed by several quarters of outperformance.”The outlook “likely contains a healthy dose of conservativism,” but there isn’t much “octane” in the stock right now.Buy rating, price target lowered to $54 from $62.JMP Securities, Erik Suppiger“Orders were flat Y/Y, the worst performance in two years.”About 70% of the company’s software revenue was generated from subscriptions, “suggesting that the company is executing on its strategy of becoming a provider of software and services.”Market-perform rating.Piper Jaffray, James FishThe results were “fine overall,” although the softness should extend into the first quarter.“Cisco is executing better than other vendors in this current macro-downturn,” and Piper is “cautiously optimistic Cisco can manage the macro.”The post-earnings sell-off looks “slightly overdone.”Overweight rating, target trimmed to $55 from $58.UBS, John RoyThe company’s fundamentals are strong despite the weak first-quarter outlook.Buy rating, price target lowered to $58 from $61.What Bloomberg Intelligence Says:“The company’s global IT exposure can’t dodge weakening macroeconomics, despite solidly carrying out its business-model transformation toward a healthier mix of software and recurring sales.”\-- Analyst Woo Jin Ho\-- Click here for the research(Updates stock and chart to market open)To contact the reporter on this story: Ryan Vlastelica in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, Steven Fromm, Courtney DentchFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Morgan Stanley famously nabbed this year’s largest initial public offering, thanks partly to its top technology banker’s moonlighting job as an Uber driver. But the firm is nowhere to be found on what’s shaping up to be the year’s second-biggest IPO, WeWork.Morgan Stanley stepped back from a lesser role in the deal after WeWork rejected its pitch to be the top underwriter, according to people with knowledge of the matter. The relationship became strained when the bank wouldn’t extend as much debt financing as WeWork was seeking from key lenders, the people said, asking not to be identified discussing non-public information.The lead roles on the IPO and debt financing are held by JPMorgan Chase & Co., one of WeWork’s biggest investors and a long-time banker to Chief Executive Officer Adam Neumann. On the IPO alone, underwriters could slice up what could be more than $122 million in fees, assuming WeWork ends up paying 3.5%, a figure the company was discussing with banks this month. The final payout hasn’t been disclosed.After the snub, Morgan Stanley chose not to commit as much as its biggest rivals to a $6 billion credit facility for the loss-making company, complaining about WeWork’s risk profile and credit requirements, people with knowledge of the matter said. It did offer to contribute a smaller amount along with a commitment from the bank’s largest shareholder and occasional partner, Mitsubishi UFJ Financial Group Inc. But WeWork wasn’t interested in that kind of arrangement, they said.Bankers at the firm knew their decision to balk at the full credit commitment would risk Morgan Stanley’s role on an IPO, which is slated for September, some of them said. WeWork lost $690 million in the first half of the year, according to a regulatory filing Wednesday.Representatives for Morgan Stanley, WeWork and MUFG declined to comment.Morgan Stanley’s move was a surprise, considering its years-long pursuit of WeWork’s business. Michael Grimes, the New York-based firm’s top technology banker, had previously made a pitch to Neumann for a starring role on the IPO, people familiar with the matter have said.Yet Grimes and Neumann didn’t hit it off, standing in the way of a closer partnership, the people said. Morgan Stanley’s competitors also had a leg up: Affiliates of both JPMorgan and Goldman Sachs Group Inc. are investors in the company.Morgan Stanley was among lenders that led a junk-bond offering for WeWork last year, and it previously underwrote almost $10 million of mortgages for Neumann’s own homes. It was also part of a credit facility almost four years ago with JPMorgan, Citigroup Inc. and Deutsche Bank AG.Morgan Stanley is also among WeWork’s clients. The bank hired the startup last year to overhaul some of its office space to make it more millennial-friendly.But unlike JPMorgan, Morgan Stanley wasn’t among banks to loan Neumann money with his privately held shares as collateral. That $500 million loan, which also involved UBS Group AG and Credit Suisse Group AG, was considered risky by Morgan Stanley’s bankers, the people said.WeWork’s IPO is expected to raise about $3.5 billion, second only this year to Uber Technologies Inc.’s $8.1 billion IPO in May. JPMorgan is leading WeWork’s $6 billion credit facility, and all the banks listed as arrangers are also underwriters on the IPO, including Goldman Sachs, Bank of America Corp., Citigroup and Barclays Plc.Morgan Stanley could still do business with WeWork in the future, people familiar with the matter said.(Updates with client relationship in 10th paragraph.)\--With assistance from Michelle F. Davis.To contact the reporters on this story: Sonali Basak in New York at firstname.lastname@example.org;Gillian Tan in New York at email@example.comTo contact the editors responsible for this story: Alan Goldstein at firstname.lastname@example.org, Steve Dickson, Daniel TaubFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Baidu Inc. has dropped off the list of China’s five most valuable internet companies, underscoring the challenges facing the search giant from a weakening economy to intensifying competition.NetEase Inc., China’s second-largest gaming house, has overtaken Baidu in market value after posting better-than-expected quarterly earnings last week. Shares of NetEase have gained 11% this year, while Baidu’s plunged 40%. The latter company, once touted as a member of China’s internet triumvirate alongside Alibaba Group Holding Ltd. and Tencent Holdings Ltd., has bled $66 billion of capitalization since its peak in May 2018 -- the equivalent of one Morgan Stanley.Baidu has struggled to fend off competition from the likes of Tencent and ByteDance Inc., both of which are luring smartphone-savvy consumers and advertisers to their popular mini-video and social media apps.The company enjoyed a near-monopoly in Chinese internet search after Google departed the market in 2010 over government censorship. This week, ByteDance launched its own standalone search engine, posing a serious threat to the almost two-decades-old Baidu. The company was previously pushed out of the Top 3 in market value by e-commerce operator JD.com Inc. and food delivery service Meituan.Baidu, together with rivals Alibaba and Tencent, has long formed part of a trio of leading internet companies known by the acronym BAT. Now even that title seems under threat, with some dubbing ByteDance the new “B” in the group. Baidu in May posted its first quarterly loss since its 2005 stock market debut, after the Chinese economy slowed and rivals chipped away at its advertising sales.To contact the reporter on this story: Zheping Huang in Hong Kong at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Markets continued to monitor Donald Trump’s Twitter account, as tweets from the U.S. president this week regarding the U.S.-China trade war and the Federal Reserve triggered extreme volatility. Trump sent markets on a wild rollercoaster rise this week, all with less than 280 characters on Twitter. Wall Street stocks took a beating on Monday, with the S&P 500 losing 1.2%, amid concern over the lack of progress in U.S.-China trade talks.
on Wednesday, as the lossmaking property group races to complete an initial public offering that will see it raise billions of dollars to fund its global expansion. Successive infusions of capital from private investors, notably Japan’s SoftBank, WeWork and its co-founder and chief executive Adam Neumann (pictured), have made the shared office provider one of the most valuable non-public companies in the world. The group will list its class A shares under the ticker WE and is expected to debut next month.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Germany’s economy shrank in the second quarter, ramping up pressure on Chancellor Angela Merkel to unleash fiscal stimulus as manufacturers reel from a U.S.-China trade war.The latest report, paired with a protracted slump in business expectations, raises the risk that Europe’s largest economy is on the verge of falling into a recession. It would be the first in six and a half years. Separate data showed euro-area industrial production plunged the most in more than three years in June, while economic growth cooled to 0.2% in the second quarter.German output fell 0.1% in the three months as exports slumped, a second contraction in four quarters. Merkel said Tuesday the country was heading into a “difficult phase” and even hinted her reluctance to respond is softening.Economists’ reactions to the German data resemble different shades of gloom.“We expect a period of protracted underperformance,” said Markus Guetschow, an economist at Morgan Stanley & Co. in London. Robert Greil, chief strategist at Merck Finck Privatbankiers said the second-quarter contraction “is not a drama but a warning shot.”Germany’s performance is weighing heavily on a region struggling to sustain momentum. While the Dutch economy managed to maintain its pace of expansion, growth slowed in the largest euro-area countries. Profit warnings from across the bloc suggest little sign of a turnaround.“The sick man needs its medicine,” Naeem Aslam, chief market analyst at TF Global Markets said. “Hence, the German Chancellor, Angela Merkel, will have to unleash a new fiscal stimulus package for her country to combat the effects of U.S.-China trade war. This may just do some of the trick for the euro-zone’s economy.”Two FrontsHenkel AG summed up Germany’s woes in a profit warning on Tuesday. The industrial firm is facing pressure on two fronts, a slowdown in the auto industry and weaker demand in China, the same environment that’s crippled manufacturing across the country.President Donald Trump on Tuesday delayed the imposition of some new tariffs on Beijing by three months to December. However, there was further bad news from China, the world’s second-largest economy, on Wednesday, with cooling retail sales and the slowest growth in industrial output since 2002.In Germany, second-quarter output was damped by trade, with exports falling faster than imports. Private consumption and government spending rose, and investment increased despite a decline in construction.What Bloomberg’s Economists Say“The industrial sector tipped the economy into contraction in 2Q, and the risk is of further weakness in the second half of the year. If there’s any good news to take from this release, it’s that services must have continued to expand, indicating patches of resilience persist.”\--Jamie Rush.Read the full GERMANY REACTThe European Central Bank has already all but committed to hand out fresh stimulus to jump-start the economy and is forecast to cut interest rates as early as September. All that has helped push yields on German debt to record lows below zero. Earlier this month, the euro fell to the softest since mid-2017.ECB President Mario Draghi has been among the chorus of international voices pleading with Germany to loosen the purse strings after running surpluses over the past half decade.German industry has been mired in a slump as worsening trade woes and weaker global growth sap demand for machinery and cars. Industrial production suffered its biggest drop in a decade in June, and freight volumes at German airports saw the steepest decline since 2012.Among the casualties is Siemens, which said earlier this month it would struggle to meet financial goals because of a deteriorating economy and heightened political uncertainty. Automotive supplier Rheinmetall also lowered its outlook, scrapping expectations for a “tangible” recovery in the coming months.\--With assistance from Kristian Siedenburg, Harumi Ichikura and Catarina Saraiva.To contact the reporter on this story: Piotr Skolimowski in Frankfurt at email@example.comTo contact the editors responsible for this story: Paul Gordon at firstname.lastname@example.org, Jana Randow, Fergal O'BrienFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Investing.com - U.S. futures fell on Wednesday as data from China and Germany showed the continuing damage to the world economy from trade-related disputes.
(Bloomberg) -- Reliance Industries Ltd. soared the most in more than two years after billionaire Mukesh Ambani revealed a plan to sell a stake to Aramco as part of efforts to pare debt.The conglomerate aims to be a zero-net-debt company in 18 months, Asia’s richest man told shareholders Monday. Aiding that would be a proposed sale of 20% of Reliance’s oil-to-chemicals business to Saudi Arabian Oil Co. at an enterprise value of $75 billion. The company will also start preparing to list its retail and telecommunications units within five years, Ambani said.Shares of Reliance jumped as much as 9.3% in Mumbai on Tuesday, their biggest intraday gain since Feb. 22, 2017. Morgan Stanley, Macquarie Group and BOB Capital Markets were among brokerages that upgraded the stock.Aramco Buys Into Reliance Refining Business as Earnings DropThe tycoon is cleaning up the group’s finances following years of spending on his wireless carrier, whose entry in 2016 with free calls and cheap data upended the industry and spurred a consolidation. The $50 billion plowed into the phone venture, mostly in debt, has raised concerns among analysts including at Credit Suisse Group AG that Reliance’s ballooning borrowings could weigh on growth. Ambani sought to allay those fears.“With these initiatives, I have no doubt that your company will have one of the strongest balance sheets in the world,” he said. “We will also evaluate value unlocking options for our real estate and financial investments.” The group spent $76 billion in the last five years, he said.The Aramco deal should be completed by March and is subject to due diligence, definitive agreements and regulatory and other approvals, Ambani said. He didn’t say how the deal would be structured.Saudi Aramco and Reliance Industries have agreed to a non-binding Letter of Intent regarding a proposed investment in the Indian company’s oil-to-chemicals division comprising the refining, petrochemicals and fuels marketing businesses, according to a statement from Reliance on Monday.Signaling an end to the spending cycle at Reliance Jio Infocomm Ltd., Ambani is setting a new growth path for his group, whose bread-and-butter business has been oil refining and petrochemicals. The company is building an e-commerce platform by leveraging its phone network and Reliance Retail Ltd. to eventually take on Amazon.com Inc. and Walmart Inc.“This is a unique business model we are building in partnership with millions of small merchants” and mom-and-pop stores, he said. As part of the plan, Reliance has been forming partnerships and acquiring technology assets. This month, Reliance announced plans for a joint venture with Tiffany & Co. to open stores for the jeweler in India, and in May paid $82 million for the British toy-store chain Hamleys.The Tiny Deals Behind Mukesh Ambani’s Bid to Take on AmazonThe new businesses are likely to contribute 50% of Reliance’s earnings in a few years, from about 32%, Ambani said.What Bloomberg Intelligence Says“Reliance Industries could dominate the Indian telecom and organized-retail segments through aggressive expansion, capitalizing on its energy business. More than $7 billion in annual cash flow from the energy business provides a war chest to win market share in the retail and telecom industries”\--Kunal Agrawal, energy analystWhile the spending on Jio has helped Reliance lure almost 350 million users in the world’s second-biggest mobile market, the growth has come at a price.Not Since 2013Reliance had a net debt of 1.54 trillion rupees ($22 billion) at the end of March 31, according to Ambani. His plan to carry zero debt would mean the borrowings would fall below the company’s cash reserves to a level not seen since 2013.Last week, Credit Suisse cut its recommendation for Reliance’s stock and the price target citing reasons including rising liabilities and finance costs. Shares of the company pared their losses Tuesday after having earlier slumped about 18% from a record reached on May 3. The benchmark S&P BSE Sensex declined 4% in the same period.Reliance’s debt is backed by “extremely valuable assets,” Ambani said, signaling his group isn’t prone to the kind of troubles that have been plaguing many other corporate borrowers in India. The conglomerate controlled by Ambani’s younger brother, Anil, has been struggling to pay creditors while his mobile carrier has slipped into bankruptcy.Apart from the Aramco deal, Reliance also announced a joint venture with BP Plc this month, under which the European oil major would buy 49% of the Indian firm’s petroleum retailing business. Reliance would receive about 70 billion rupees under this deal.The “commitments” from the Aramco and BP deals alone are about 1.1 trillion rupees, Ambani said, adding that Reliance will induct “leading global partners” in telecom and retail units in the next few quarters.Some of the planned offerings revealed by Ambani:A new broadband service called Jiofiber will start commercial services from Sept. 5 and will be available at tariff packs starting as low as 700 rupees a month with a minimum speed of 100 MbpsJio will install across India one of the world’s largest blockchain networks in the next one yearAfter mobile broadband, Jio to start generating revenues from Internet of Things and broadband for home, businesses and smaller enterprises by March 2020Reliance is getting ready to roll out the new commerce platform at a larger scale to capture what Ambani sees as a $700 billion business opportunityReliance Retail aims to be among the world’s top 20 retailers in the next five years(Updates with stock upgrades in third paragraph)\--With assistance from Ari Altstedter.To contact the reporters on this story: P R Sanjai in Mumbai at email@example.com;Dhwani Pandya in Mumbai at firstname.lastname@example.org;Debjit Chakraborty in New Delhi at email@example.comTo contact the editors responsible for this story: Sam Nagarajan at firstname.lastname@example.org, Bhuma ShrivastavaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- AMS AG re-entered the battle for Osram Licht AG with a 3.7 billion euros ($4.1 billion) offer, days after a major shareholder rejected a lower bid by rivals for the German light and sensor maker.Osram soared as much as 11% Monday, following the weekend approach from AMS that values the target at 38.50 euros a share. That compares with the 35 euros-a-share from private-equity firms Bain Capital and Carlyle Group, thrown into jeopardy last week when top investor, Allianz Global Investors, rejected it as too low.The new offer is in line with an earlier bid that Austrian sensor maker AMS mooted but then withdrew almost a month ago.Osram “raised valid concerns in the past, and I think with the offer we provided them yesterday, we answered all their concerns,” AMS Chief Executive Officer Alexander Everke said in a call with reporters on Monday. “We have been looking at Osram for a long time.”AMS shares fell 8.7% in Zurich. Osram traded at 35.09 euros as of 9:07 a.m. in Frankfurt.AMS is in regular contact with investors, including Allianz, Everke said on the call. Allianz is a shareholder of both companies, holding about 0.38% in AMS and 9.3% of Osram, according to data compiled by Bloomberg.Osram became a takeover target after a series of profit warnings and a public spat over strategy with Siemens AG, which spun off the division in 2013. Its earnings have suffered because of the company’s exposure to the automotive industry, which accounts for over half of its revenue.Carmakers and suppliers are grappling with shrinking demand in China and Europe and the expensive transition to electric cars. Investors also lost confidence in the ability of CEO Olaf Berlien and management to turn the company around. The stock has lost more than half its value since peaking in early 2018.“This counter bid will test how keen the private-equity consortium is for the Osram asset as AMS has now secured financing to offer 10% more per share,” Morgan Stanley analyst Lucie Carrier said in a note.If AMS were successful in its takeover attempt, it would sell off Osram’s digital division that makes lighting controls for use in horticultural and medical systems, among others. The company would also not touch Osram’s collective bargaining agreements for five years, according to the statement.(Updates with AMS CEO comment in sixth paragraph)\--With assistance from Eyk Henning.To contact the reporter on this story: Oliver Sachgau in Munich at email@example.comTo contact the editors responsible for this story: Anthony Palazzo at firstname.lastname@example.org, John BowkerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Phone carriers are huge energy users, and need to cut emissions. They also face massive bills to build out the next generation of wireless networks. Green bonds promise to help them with both.A steady flow of issuance could be building: Orange SA and BT Group Plc are poised to follow Telefonica SA and Verizon Communications Inc. in selling securities designed to fund environmentally friendly projects. The industry has already completed at least $3 billion of sales since January, its first steps into a sustainable debt market that Bloomberg New Energy Finance estimates could exceed $370 billion this year.The proceeds can help telecom companies replace power-hungry copper wires with fiber-optic cables, or build the 5G networks that promise to make cities, homes and factories more efficient. There’s plenty of investor appetite for this new take on sustainable investing, but there’s a catch: any hint that a bond doesn’t genuinely help the planet can cause some buyers to flee.“Telecoms have to invest a lot. In the long run, having green bonds in place is going to be very important,’’ said Juuso Rantala, who holds Telefonica’s green bond in the 400 million-euro ($449 million) fund he manages at Aktia Asset Management Ltd. in Finland. “If I find out that I cannot trust the company in the case of green bonds, I cannot trust them in many other ways too. If I cannot trust them, I don’t invest.’’The securities show how green debt is expanding beyond its original universe of the clean energy industry. Beef supplier Marfrig Global Foods SA and Australian retailer Woolworths Group Ltd. have tapped this market to help their operations become more environmentally friendly.For carriers, the task is urgent. The communications industry accounts for about 10% of global electricity demand, and that could exceed 20% by 2030 as demand for data balloons, according to Huawei Technologies Co.Telecom companies have ways to clean up their act. For example, replacing copper with glass wires would use 85% less energy, according to Telefonica. And 5G can enable a range of environmental benefits by allowing smart buildings to monitor heating, connected warehouses to optimize their logistics and power grids to better allocate electricity.But these companies are already staggering under a mountain of debt from, among other things, buying 5G licenses. They’ll need to make sure they can keep their borrowing costs low and tap investors when needed.That’s where green bonds can help: the interest costs are about the same as on these companies’ conventional securities, but they offer the opportunity to access a wider pool of investors.The share of funds focused on socially responsible investing, which includes environmental projects, has risen 34% over the last two years, and now accounts for $30.7 trillion of assets globally, according to the investor group Global Sustainable Investment Alliance.“Many more green telco bonds are likely,” Morgan Stanley analysts led by Emmet Kelly wrote in June. “Demand from funds that have incorporated sustainability into their investment framework has been key.’’Telefonica, based in Madrid, is a good example. Demand for the issue, which priced in January, was significant: the company received five times the orders than what was available for sale, and obtained a spread more than the mid-swap rate that was about 25 basis points lower than initial indications.The yield on the 1 billion-euro 5-year security is in line with the rest of its curve, Bloomberg data show, indicating it didn’t have to pay a premium to tap demand for sustainable credit. It’s a similar story for Verizon and Vodafone Group Plc.Orange and BT Group are paying attention -- they have inserted clauses into their Eurobond prospectuses which would let them issue green bonds in the near future. And Deutsche Telekom AG is monitoring the surging market closely, said a spokesman.For investors, the risks go beyond what’s expected for any fixed-income asset. Buyers also have consider just how green these bonds are.“The question is whether or not a bond offers a real energy efficiency gain or overall gain for the environment,’’ said Arnaud-Guilhem Lamy, who holds telecom securities in his 340 million-euro ($381 million) green bond fund at BNP Paribas Asset Management in Paris. “If we think it’s insufficient, we would sell.’’For a start, there’s always the possibility that this new breed of green-bond borrowers divert proceeds to inappropriate purposes, including pooling them into general funds. Though monitoring groups such as credit rating firms can discourage such behavior, it’s something investors need to watch.But 5G presents a particular environmental paradox.Internet-of-things technologies will connect billions more devices and require many more antennas, so 5G will initially use more power than 4G, according to Sustainalytics, an independent corporate sustainability research firm. This complicates the idea that 5G can be a green investment.However, Sustainalytics estimates the energy savings from 5G outweigh the extra emissions to deploy the new tech by a ratio of 5 to 1. The firm’s analysis of the Verizon bond issue, which included 5G deployment among the potential use of proceeds, found that it was a credible candidate for green financing.It’s a good thing, because Verizon plans on returning to this corner of the bond market. It looks like it will be welcome, too – its $1 billion issue of 10-year green debt was eight times oversubscribed within six hours of being offered for sale, said Jim Gowen, head of supply chain and sustainability for the U.S. carrier.“It was far beyond our wildest expectations,” Gowen said. “We are very interested in doing another one.’’\--With assistance from Paul Cohen and Lyubov Pronina.To contact the reporter on this story: Thomas Seal in London at email@example.comTo contact the editors responsible for this story: Rebecca Penty at firstname.lastname@example.org, Jennifer RyanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Weaker demand in China contributed to a fall in producer prices for the first time in three years, reviving fears of deflation as the country’s manufacturers come under the strain of an intensifying trade war with the US. Consumer prices for July edged up slightly, however, as the cost of pork, China’s main form of protein, rose as a result of African swine fever that has decimated China’s pig population. The decline in the producer price index and economists’ expectations that those deflationary pressures will continue have revived concerns for manufacturers in the country who are already struggling amid US-China trade tensions.
(Bloomberg) -- Booking Holdings Inc.’s better-than-expected earnings drew positive commentary on Wall Street and suggested that the online travel company may finally be back on track.The shares rose as much as 6.8% Thursday, their biggest intraday gain in almost three months. Analysts called the results “better than feared” and a “welcome surprise” after disappointments in previous quarters. At the same time, the company’s forecast for room night growth in the third quarter missed estimates and sparked some concerns about slowing growth.Here’s what Wall Street is saying:Wedbush, James HardimanThe results were a “welcome surprise” after the fourth quarter “spooked investors with regards to the European outlook” and first-quarter earnings “did little to alleviate these concerns.”Now, Booking “seems to be back to its standard of comfortably exceeding quarterly expectations and providing a quarterly guidance that, while certainly not blowing away Street estimates, does encompass the consensus.”Neutral, price target raised to $1,950 from $1,850.Benchmark, Daniel L. KurnosThe shares should see a relief rally on the back of solid results, especially 12% room-night growth that exceed analyst estimates of 9%. However, the third-quarter forecast calls for only 6%-8% room-night growth as Booking continues to pull back on spending.“There may be intrinsic value in the shares but the balance between investors’ need for growth and holding margins flattish to maintain the Company’s premium valuation feels tenuous at best.” Benchmark has a holding rating on the stock.Morgan Stanley, Brian NowakBuybacks helped drive the earnings per share beat in the second quarter and, along with Booking’s forecast, “continue to reaffirm our view that we are entering a period of slower growth and smaller EPS beats.”The company will need more growth in alternative accommodations and/or more penetration in the U.S. market to maintain double-digit room-night growth. Challenges in U.S. brand marketing make it difficult to see this as the “base case” scenario.“Valuation isn’t stretched relative to many consumer sectors but we would rather deploy incremental capital in FB/GOOGL at these levels given the growth/valuation relationship and more durable longterm growth.”Morgan Stanley has an equal-weight rating on Booking and raised its price target to $2,100 from $2,050.Susquehanna, Shyam PatilThe results were “much better than feared.” While the third-quarter room nights outlook came in below the average analyst estimate, Booking tends to beat its guidance. The company also “remains somewhat cautious around the EU travel macro” environment.Susquehanna has a positive rating on the stock and raised its price target to $2,250 from $2,100.What Bloomberg Intelligence Says“Similar to the last quarter, Booking Holdings’ room-night growth view for 3Q looks conservative given strong 2Q results at 500 bps above the midpoint of company guidance. We believe Booking’s expanding supply in alternative accommodations will remain a tailwind for room-night growth in 2H.”-- Mandeep Singh and Andrew Eisenson, tech analysts-- Click here for the researchTo contact the reporter on this story: Catherine Larkin in Chicago at email@example.comTo contact the editors responsible for this story: Courtney Dentch at firstname.lastname@example.org, Jennifer Bissell-LinskFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of...
Global equities are reeling again on Wednesday as not one but three central banks (New Zealand, Thailand and India) cut interest rates as policymakers around the world struggle to get in front of weakening economic fundamentals and what looks like a burgeoning currency war between the major powers in Asia, Europe, and the United States.It's a race to the bottom, as competitive devaluations become the norm in the wake of worsening trade tensions between the U.S. and China. Beijing fired the latest salvo this week, with an aggressive cut to the valuation of the yuan in response to President Trump's threat to slap a 10% tariff on all remaining untariffed Chinese imports -- which would include things like new Apple (NASDAQ:AAPL) iPhones.Lower interest rates, at at time when negative interest rates are becoming more common around the world, will only further pressure bank earnings as the difference between long-term interest rates (which are falling fast) and short-term interest rates declines.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks to Buy on the Trade War Dip Here are five major bank stocks to sell now: Bank of America (BAC)The first of our bank stocks, Bank of America (NYSE:BAC) is falling further below its 200-day moving average, testing the critical lows set in March and again in May. A violation of those levels would set the stage for a decline back to the December lows, which would be worth a loss of roughly 17% from here.The company will next report results on October 16 before the bell. Analysts are looking for earnings of 68 cents per share on revenues of $22.9 billion. When the company last reported on July 17, earnings of 74 cents per share beat estimates by three cents on a 2.7% rise in revenues. Citigroup (C)Citigroup (NYSE:C) shares are testing their 200-day moving average, threatening a return to their March lows which would be worth a loss of around 8% from here. This caps a sideways consolidation range going back to late 2017. This comes after analysts at Keefe Bruyette upgraded the stock in anticipation of an "extended" economic cycle. Bad timing on that one. * 10 Cyclical Stocks to Buy (or Sell) Now The company will next report results on October 15 before the bell. Analysts are looking for earnings of $1.96 per share on revenues of $18.5 billion. When it last reported on July 15 earnings of $1.95 beat estimates by 15 cents on a 1.6% rise in revenues. JPMorgan (JPM)JPMorgan (NYSE:JPM) shares are testing their 200-day moving average, threatening to break below their late May lows and return to levels last tested in March. The drop would be worth a loss of roughly 8% from here. This caps a sideways consolidation range going back to early 2018. JPM is among five banks that will face a lawsuit (Editor's Note: paywall) in Europe accusing them of manipulating foreign exchange markets.The company will next report results on October 15 before the bell. Analysts are looking for earnings of $2.44 per share on revenues of $28.1 billion. When the company last reported on July 16, earnings of $2.82 beat estimates by 33 cents per share on a 3.9% jump in revenues. Wells Fargo (WFC)Wells Fargo (NYSE:WFC) shares are testing lows near the $45-a-share threshold, continuing to struggle below its 200-day moving average and threatening a return to its late December low. This caps a two-year long downtrend pattern going back to early 2018 as shares are mired near levels seen throughout 2016. Shares were recently downgraded by analysts at Macquarie. * 3 Steps Every Investor Should Take Before the Next Stock Market Crash The bank stock will next report results on October 15 before the bell. Analysts are looking for earnings of $1.17 per share on revenues of $20.7 billion. When WFC last reported on July 16, earnings of $1.30 beat estimates by 14 cents on a 0.1% rise in revenues. Morgan Stanley (MS)Shares of Morgan Stanley (NYSE:MS) are collapsing down the right side of what looks like a multi-month head-and-shoulders reversal pattern, setting up a decline back to the December lows and beyond. Such a move would, at the least, be worth a 10% decline from here. This, in turn, make the right shoulder of an even larger head-and-shoulders reversal pattern that traces back to 2016 and could set the stage for a 50%+ decline.The company will next report results on October 15 before the bell. Analysts are looking for earnings of $1.22 per share on revenues of $9.9 billion. When the company last reported on July 18, earnings of $1.23 beat estimates by seven cents on a 3.4% decline in revenues.As of this writing, the author held no positions in the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on the Trade War Dip * The 5 Highest-Rated Dow Stocks Right Now * 4 Cybersecurity Stocks to Buy for Long-Term Gains The post 5 Big Bank Stocks to Sell as Central Banks Cut Rates appeared first on InvestorPlace.
The markets are looking perilous right now, with rising trade tensions and Federal Reserve uncertainty sparking heavy selling. While there has been a flight out of stocks generally - Standard & Poor's 500-stock index is off almost 6% over the past five days - dividend stocks are gaining a little appeal.Investors were caught off guard after the Federal Reserve lowered its benchmark interest rate by a quarter-point. Some were expecting a half-point cut, and others were expecting Fed Chairman Jerome Powell to signal another quarter-point cut later in the year (he didn't). Then America's trade war with China flared up after President Donald Trump threatened a new round of tariffs, which the Chinese replied to by cutting off imports of U.S. agricultural products and momentarily letting its yuan currency slip above a key level.Dividend stocks can help smooth out returns during volatile periods like this. Morgan Stanley private wealth adviser Christopher Poch is a firm believer in dividend investing. He writes, "In over 33 years in the wealth management industry, I have seen what works for the long-term, tax paying investor. The importance of dividends and the contribution to overall total return, for new and experienced investors alike, should not be overlooked.""Not only do dividend stocks as a group have less volatility year- to- year, they outperform nondividend paying stocks over time as well," Poch writes. "Over the last 90+ years, dividends have accounted for more than 40% of the total return equation."Here are five dividend stocks that TipRanks has identified as earning a "Strong Buy" rating by Wall Street's analyst community. Each of these stocks boasts relatively high yields between 3% and 5% - well more than the broader market's current 1.9% - and are projected to gain between 17% and 65% over the next 12 months. SEE ALSO: 57 Dividend Stocks You Can Count On in 2019
(Bloomberg) -- When WeWork Cos.’ Adam Neumann sits down with investment bankers, he’s known to casually mention one of his longtime financial advisers: JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon.Neumann and Dimon chat from time to time. A JPMorgan fund bought a stake in WeWork five years ago and the bank has since propelled the startup’s growth, providing more financing than any other lender. When Neumann wanted to use his stock to borrow money, the bank made it happen. When he added to his collection of luxury homes, JPMorgan was the lender, issuing almost $40 million in mortgages.Now all of that attention is poised to pay off.As WeWork prepares for an initial public offering next month, Dimon’s bank is helping Neumann’s company line up its most ambitious fundraising yet: a $6 billion package of debt financing that depends upon the IPO raising at least $3 billion. Behind the scenes, JPMorgan has indicated it will contribute $800 million of the loans, more than any other lender. The bank also is expected to take the coveted first -- or lead left -- position in WeWork’s syndicate for the IPO, giving the firm bragging rights and a hefty chunk of the fees.“It’s a well-known company with explosive growth and big-name backers,” EquityZen analyst Adam Augusiak-Boro said in an interview. And “there certainly is this allure of large fees.”The unorthodox pairing of debt and equity injections could pose unusual challenges for JPMorgan’s bankers, along with reputational damage if the IPO flops. WeWork achieved a $47 billion valuation in its latest private fundraising, a level that now looks like a stretch for its market debut, Augusiak-Boro said. But if all goes well, JPMorgan stands to profit handsomely over the long term.A fund within JPMorgan Asset Management reported a stake in WeWork that has multiplied in value over the past half decade, to surpass $600 million, a regulatory filing from last month shows. A successful listing could help the firm monetize that holding.WeWork also will need to keep tapping markets to carry out its expansion into more types of properties and businesses in coming years, creating yet more work for investment bankers.SoftBank BusinessAnd then there is WeWork’s biggest backer, SoftBank Group Corp.’s $100 billion Vision Fund. Bankers have long seen WeWork’s IPO as an opportunity to cozy up with the deep-pocketed investment vehicle, potentially gaining the opportunity to cater to its stable of startups for decades.JPMorgan’s ties to WeWork CEO Neumann and his company are varied. The bank led an offering earlier this year of commercial mortgages including one for a building where WeWork is completing an 11-floor build-out of a boutique office within walking distance of two of Neumann’s Manhattan apartments. JPMorgan also issued him mortgages so he could buy one of those homes and one in Westchester County, according to public filings. And a savings plan for JPMorgan’s own employees has put roughly $800,000 into WeWork’s junk-rated debt.Landing the stock sale would be a coup for JPMorgan. The bank has been the underdog to Goldman Sachs Group Inc. and Morgan Stanley in handling Silicon Valley IPOs. Handling WeWork’s offering could show that JPMorgan is gaining momentum after leading Lyft Inc.’s offering earlier this year.Still, it’s hardly the only firm that engaged with Neumann in ways that could help curry favor.Goldman TiesGoldman’s efforts were publicly visible in December, when the firm’s former CEO, Lloyd Blankfein, palled around with the entrepreneur at a charity event. Taking the podium, Neumann told an audience packed with Wall Street leaders about getting to know Blankfein, marveling at his ability to hold court on any topic.“We have been having so much fun,” Neumann said, gesturing to the banker. One time, over dinner, “Lloyd said, ‘Ask me anything,’ and I said, ‘Spanish Inquisition -- go!’ And you said so many names and so many things I didn’t even know existed. It was amazing.”Goldman’s lead bankers on the deal are Dan Dees, Kim Posnett and David Ludwig, according to people with knowledge of the matter. Like JPMorgan, Goldman acquired a stake during WeWork’s venture-funding rounds, and filings show that the bank’s real estate trusts have exposure to WeWork mortgages. The lender is expected to help lead the IPO with JPMorgan, according to people with knowledge of the discussions.Morgan Stanley’s star technology banker, Michael Grimes, also has sought to build a relationship with Neumann, according to a person with knowledge of the situation. Property records show Morgan Stanley provided him with almost $10 million of mortgages for homes in Manhattan and the Hamptons.Wealth AdviserUBS Group AG’s strongest relationship with Neumann is through a private-wealth adviser, Adam Epstein, people with knowledge of the matter said. The Swiss bank, like JPMorgan, helped Neumann capitalize on his stake in WeWork before an IPO by taking out a loan against his interest.UBS also agreed last year to have WeWork overhaul a 30-year-old wealth-management office overlooking the Hudson River in the office-sharing company’s largest design deal at the time. UBS is likely to land spots in both the debt and equity fundraisings, and will be one of the biggest lenders, according to people with knowledge of the situation.Bank of America Corp., meanwhile, agreed to have WeWork revamp three floors of its tower near midtown Manhattan’s Bryant Park. And when WeWork raised more than $700 million in its debut junk-bond offering last year, Bank of America was among the biggest underwriters. Chief Operating Officer Tom Montag and Karen Fang, an executive in the bank’s bond-trading division, tended to the relationship.Representatives for WeWork and the banks declined to comment.There were more than a dozen banks on last year’s debt offering, and the list of IPO banks is expected to be even longer. Pressure on the syndicate will be high after this year’s tumultuous listings for Lyft and Uber Technologies Inc.Still, said EquityZen’s Augusiak-Boro, “if WeWork is a complete nightmare, I think Morgan Stanley, Goldman Sachs and JPMorgan are still going to be here in six months chasing the big IPOs and getting hired for them anyway.”(Updates with details on UBS and Bank of America after Wealth Adviser subheadline.)\--With assistance from Sridhar Natarajan, Ellen Huet, Gillian Tan, Tom Maloney and Lananh Nguyen.To contact the reporter on this story: Sonali Basak in New York at email@example.comTo contact the editors responsible for this story: Michael J. Moore at firstname.lastname@example.org, David Scheer, Daniel TaubFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.