Top US stocks: Philip Morris, Cisco and Moderna

PMI seals the deal to buy Vectura, Cisco warns margins will remain under pressure, Moderna makes the case for booster jabs, Ryanair says it doesn’t need new Boeing planes for five years, Amazon to expand in Spain, EA delays Battlefield 2042, and AMC is to accept cryptos.

USA (1)

Philip Morris

Tobacco giant Philip Morris secured its controversial £1.1 billion takeover of UK-listed Vectura Group this morning after announcing it has won the support of enough shareholders.

News broke this morning that almost 75% of Vectura shareholders have accepted the 165p per share takeover offer. Philip Morris has said the acquisition is part of its efforts to move ‘beyond nicotine’ and become a ‘broader healthcare and wellness’ company – but some have criticised the deal that will see a tobacco giant buy a company designed to help people with respiratory diseases caused through the likes of smoking.

The deal has already secured regulatory approval, but some charities and organisations have asked the UK government to step in.

Cisco

Cisco outlined medium-term growth ambitions in line with market expectations during a closely-watched investor event yesterday, and revealed that it expects to be making over half of its revenue from software and other recurring sales within the next four years.

The company said it expects to generate $62.9 billion in revenue in the 2025 financial year, representing a compound annual growth rate of around 5% to 7%. Adjusted profits are expected to grow at a similar rate to around $4.07 per share. The topline growth was in-line with market forecasts, although some were left disappointed by the view that margins will remain flat over the coming years.

Although the shift to higher-margin, recurring lines of sales is encouraging, the company said the higher prices of chips used in its hardware – being the largest maker of networking gear for data centres – would continue to pressure profits going forward.

Moderna

Moderna has argued the case for booster jabs to be introduced after noting that the effectiveness of its coronavirus vaccine wanes over time.

The new data suggested people who had received their first dose eight months ago were better protected than those who had been jabbed 13 months ago. The data is yet to be peer-reviewed and is based on data collected between July and August. Moderna’s president Stephen Hoge warned waning immunity could cause 600,000 additional coronavirus cases as the US enters the fall and winter.

‘It is promising to see clinical and real-world evidence adding to the growing body of data on the effectiveness of the Moderna COVID-19 vaccine,’ said  CEO Stéphane Bancel . ‘The increased risk of breakthrough infections in COVE study participants who were vaccinated last year compared to more recently illustrates the impact of waning immunity and supports the need for a booster to maintain high levels of protection. We hope these findings are helpful as health authorities and regulators continue to assess strategies for ending this pandemic.’

Boeing

European low-cost airline Ryanair has no intention of buying new planes from Boeing over the coming years unless there is a drop in prices, the airline’s chief executive Michael O’Leary said today.

Ryanair raised its long-term traffic forecasts this morning, stating said pre-pandemic traffic of 149 million passengers a year is expected to grow to 225 million by March 2026. Previously, Ryanair said traffic would grow closer to 200 million. It also said it would be taking delivery of 210 B737 Gamechanger aircraft over the next five years, assuming the pandemic does not throw up any more problems for the travel industry.

‘Whenever Boeing are willing to meet our pricing targets then we'd be happy to order more aircraft. In the meantime we have no shortage of aircraft for the next five years,’ O’Leary said in an interview with Reuters after its AGM today.

Ryanair was recently in talks with Boeing about ordering new 737 MAX 10 jets but talks collapsed after the pair failed to agree on prices. It has already agreed to take 210 MAX 200s over the next five years from Boeing, but said it would sell fewer second-hand planes if it has to in order to meet demand going forward.

Amazon

Amazon is planning to more than double its workforce in Spain as it continues to open new logistics sites across the country, according to the company’s vice president and general manager for Spain and Italy.

Mariangela Marseglia said Amazon’s payroll in Spain will expand to 25,000 by the end of 2025 from just 12,000 last year. That comes as Amazon rapidly opens new facilities across the country with the view of having 40 of them by the end of this year alone, with just 31 in operation at present. This will be coupled with a push to help 50,000 SMEs to sell their products online.

The news comes a day after Amazon announced it would be hiring 125,000 workers across the US going forward, with the firm increasing pay and incentives to attract workers in a tight labour market.

Electronic Arts

EA has pushed back the launch of its blockbuster title ‘Battlefield 2042’ by one month, citing the ‘unforeseen challenges’ for video game developers during the pandemic.

The game will now launch across consoles and platforms on November 19, but said the delay has not impacted its guidance for net bookings this year.

‘Building the next generation of Battlefield during a global pandemic has created unforeseen challenges for our development teams. Given the scale and scope of the game, we had hoped our teams would be back in our studios together as we move towards launch. With the ongoing conditions not allowing that to happen safely, and with all the hard work the teams are doing from home, we feel it is important to take the extra time to deliver on the vision of Battlefield 2042 for our players,’ said Oskar Gabrielson, the GM of DICE Studio.

Chevron

Chevron CEO Mike Wirth said the oil and gas giant would rather use cash to pay dividends to shareholders than invest in wind or solar power, just days after the company announced plans to accelerate its ambitions to lower its carbon emissions.

Wirth, speaking during an interview with CNBC, said solar and wind projects generate low financial returns and that he would rather return cash to shareholders ‘and let them plant trees’ as a result.

Earlier this week, Chevron said it was tripling its budget through to 2028 to reduce carbon emissions to $10 billion, which will see it focus on increasing capacity in production of natural gas, renewable fuels, hydrogen and improving its carbon capture. At the same time, it reaffirmed its goal to generate $25 billion of excess cash over the next five years and said it plans to continue growing its dividend and conducting buybacks.

AMC

The chief executive of AMC Entertainment, Adam Aron, has confirmed that the cinema chain will accept bitcoin, Ethereum, Litecoin and bitcoin cash for online ticket sales and concessions before the end of 2021.

Tweeting out the news, Aron confirmed the company had decided to add other cryptocurrencies to the list after announcing it would start accepting bitcoin back in August.

Analyst Recommendations: Beyond Meat and DoorDash

Beyond Meat was downgraded by Piper Sandler to Underweight, stating the company’s momentum lags behind consensus estimates.

DoorDash was upgraded by Bank of America to Buy, with the bank seeing potential upside to 2021 estimates and solid growth prospects over the next five years.

Fisker was downgraded by the Bank of America to Hold, citing intensifying competition among electric vehicle startups.

Lordstown Motors was also downgraded by the bank to Underperform for similar reasons.

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