Top US stocks to watch: Alphabet, Constellation Brands and Bed Bath & Beyond

Alphabet tightens the rules for financial services advertisers, Constellation Brands misses expectations, Bed Bath & Beyond keeps up the momentum, General Mills delivers growth, Micron reports later today, and DiDi and SentinelOne complete their IPOs.

USA (1)

Alphabet

Alphabet’s Google has pledged to crack down on financial fraud in the UK by ensuring all financial services are verified by the regulator before being allowed to advertise on its platforms.

The new rules will come into force at the end of August and companies will need to be authorised by the Financial Conduct Authority before they will be allowed to advertise. Those currently advertising financial services will have to ensure they update their verification before the deadline.  The rules have been drawn up in collaboration with the regulator over the past 18 months, Google said.

‘Today’s announcement reflects significant progress in delivering a safer experience for users, publishers and advertisers. While we understand that this policy update will impact a range of advertisers in the financial services space, our utmost priority is to keep users safe on our platforms — particularly in an area so disproportionately targeted by fraudsters,’ said Google.

Constellation Brands

Alcoholic drinks giant Constellation Brands, which also owns a sizeable stake in cannabis company Canopy Growth, missed expectations when it released its first-quarter results this morning but said it generated record cashflow.

Fourth-quarter revenue rose 6% to $1.90 billion and diluted EPS plunged 68% to $2.04. For the full-year, revenue was up 3% to $8.34 billion and it turned to a loss per share of $0.07 from a $9.12 profit the year before. The company flagged that it managed to deliver record cashflow in the year, allowing it to cut debt, buyback shares and raise its dividend.

Constellation Brands said it is not providing guidance for the year due to the uncertainty posed by the pandemic.

Bed Bath & Beyond

Bed Bath & Beyond said it delivered its fourth consecutive quarter of comparable sales growth and better margins in the three months to May 29, but earnings disappointed analysts.

Net sales of $1.95 billion rose 49% from the year before and came in ahead of the $1.83 billion expected by analysts. Adjusted EPS of $0.05 was an improvement from the $1.96 loss booked the year before, but slightly below the $0.08 expected by Wall Street. Plus, the reported loss per share of $0.48 was far worse than the $0.05 profit expected, albeit still an improvement from the $2.44 loss booked the year before.

Bed Bath & Beyond said it expects second-quarter net sales to come in between $2.04 billion and $2.08 billion and another quarter of comparable sales growth is expected. Adjusted EPS should be in the range of $0.48 to $0.55. Notably, Bed Bath & Beyond raised its revenue and earnings targets for the full-year.

General Mills

General Mills, known for brands including Cheerio cereals and Haagen-Dazs ice cream, reported growth in revenue and profits during its recently-ended financial year, prompting it to grow its dividend and restart buybacks.

Net sales rose 3% in the year to the end of May to $18.1 billion, with operating profit rising 6% to $3.1 billion. Diluted EPS followed 6% higher to $3.78. The dividend was raised 3% to $2.02 from $1.96 and it repurchased 5 million shares for around $301 million during the year.

General Mills said it expects organic net sales to grow 1% to 3% in the new financial year, explaining the mild growth reflects expectations for weaker consumer demand. Profits and EPS are expected to be down around 2% year-on-year.

Micron Technology

Micron Technology will release third-quarter results after the markets close later today, with investors hoping it can continue to build on the ‘rapidly improving market conditions’ flagged in March.

Analysts are expecting Micron to report quarterly revenue of $7.23 billion compared to $5.43 billion the year before, with GAAP diluted EPS to rise to $1.60 from $0.71, in line with Micron’s guidance.

Credit Suisse

Credit Suisse is reported to be considering centralising the management of its bankers serving its wealthy clients and abandoning its regional approach to create a single private bank, according to Reuters.

The Swiss bank introduced the regional approach back in 2015. This helped client managers in the likes of Asia enjoy greater autonomy compared to those operating in the likes of Switerland, something that will be lost if the restructuring goes ahead, although it is expected to cut costs and streamline operations.

The bank has been in the spotlight after being hit by numerous scandals, and executives have reportedly been fearing a hostile takeover bid, prompting concerns that Switzerland’s second-largest bank could be broken-up or bought by a foreign rival.

DiDi

Chinese ride-hailing giant DiDi completed its blockbuster IPO yesterday, raising more than expected and starting out life as a public company with a valuation of $73 billion, making it the biggest Chinese company to go public in the US since Alibaba’s $25 billion listing back in 2014.

Reports from Reuters showed the company upsized the size of its offer and sold at the top end of its price range, thought to be driven by solid demand ahead of the listing. It sold 317 American Depositary Shares at $14 apiece. The valuation compares to its US rival Uber, which currently boasts a market cap of around $95 billion.

SentinelOne

Cybersecurity firm SentinelOne has also completed its IPO yesterday after raising $1.2 billion by selling 35 million shares at around $35 each, ahead of its original $31 to $32 price range.

That price gives SentinelOne an initial valuation of around $8.8 billion, or $10.5 billion when stock options are included.

SentinelOne makes money through the sale of its endpoint security software to enterprises, with the company operating a tiered pricing system starting at $45 per user per year. For comparison, the Falcon Prevent Next Generation Antivirus product from close competitor CrowdStrike (see below) starts at $59.99 per user per year.

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