Top US stocks to watch before the bell: Beyond Meat, AMC and Peloton

Beyond Meat sees its losses widen, AMC sees signs of recovery, Peloton counts the cost of its treadmill recall, Tesla could struggle to launch full self-driving technology this year, Citigroup considers entering cryptocurrencies, and stocks relying on the gig economy remain under the spotlight.

USA (1)

Beyond Meat

Beyond Meat on Thursday reported a wider than expected loss in the first quarter but said it is hoping for a gradual recovery in demand as restaurants and other leisure outlets reopen this year.

Net sales rose 11% in the first quarter to April 3 to $108.2 million, slightly below the $113.7 million expected by analysts. It said growth would accelerate to 19% to 32% in the second quarter to a range of $135 million to $150 million. Beyond Meat turned to a net loss of $26.8 million in the period from a $1.8 million profit the year before, and its adjusted loss of 42 cents per share was wider than the 19 cent loss forecast by Wall Street.

Beyond Meat hopes to benefit as restaurants, sports centres and other leisure outlets open, which should improve sales. It also cited heavy discounting by its rival Impossible Foods but said it would not be drawn into a price war.

AMC Entertainment

AMC Entertainment on Thursday said revenue fell and it remained in the red as restrictions continue to weigh on the cinema industry, but said it expects business to improve over the coming months as the vaccine rollout progresses.

The company said revenue dropped to $148.3 million in the first quarter from $941.5 million the year before. Its net loss of $567.2 million was narrower than the $2.17 billion booked the year before. Attendance was down 88% year-on-year.

AMC said 99% of its US theatres and just 27% of its international cinemas are currently open at reduced capacity and said it hopes things will improve across the US, Europe and the Middle East as vaccination programmes advance and the film slate picks up.

Peloton

Peloton on Thursday warned it expects to book a $165 million charge from its recent recall of its treadmill due to safety concerns, which has also prompted it to delay the launch of Tread in the US.

Peloton said it will no longer go ahead with plans to launch Tread in the US on May 27 as previously planned and is working with regulators on improving the safety of its products. The company said revenue was up 141% in the third quarter of its financial year to $1.26 billion, driven by strong growth in subscriptions for its stay-at-home fitness plans. It reported a net loss of $8.6 million, narrower than the $55.6 million loss the year before.

It said it expects to book revenue of $915 million in the final three months of its financial year to the end of June, missing the $1.17 billion forecast by analysts. Annual revenue should be around $4 billion.

Cigna

Health insurer Cigna raised its expectations for the full year on hopes its newly rebranded health services unit can drive growth.

It follows on from peers UnitedHealth and Anthem both raising their guidance last month. Cigna is now expected adjusted income from operations of at least $20.20 per share in 2021, slightly higher than the previous target of $20. It upped its revenue guidance by $1 billion.

Cigna beat expectations in the first quarter as it posted 13% growth in adjusted revenue and medical-care ratio, which measures the difference between claims versus income from premiums, of 81.8% compared to 78.3% the year before.

Pfizer

Pfizer and its German partner BioNTech have applied for full approval of their coronavirus vaccine in the US.

The jab is currently authorised under emergency approval and the duo are hoping their vaccine can become the first fully approved jab if the Food & Drug Administration agrees to grant it. Longer-term data is needed for full approval and the two companies have continued to collect data on its effectiveness, stating it was 91% effective in April based on a trial involving 12,000 patients.

Lear

US auto parts maker Lear beat expectations and raised its guidance for the full year after seeing strong growth in China.

The company reported a 20% rise in net sales to $5.4 billion in the first quarter, beating the $4.89 billion expected by analysts. Adjusted earnings of $3.73 rose from $2.05 and was well ahead of the $2.95 expected. Lear, which supplies the likes of Ford and General Motors, said global vehicle production was up 14% and that China was the main driver of growth, up 80%.

Lear now expects to deliver adjusted Ebitda of $1.7 billion to $1.87 billion in 2021 compared to its previous target of $1.69 billion to $1.86 billion.

Tesla

Tesla has told regulators in California that its fully autonomous self-driving technology may not be ready before the end of the year as hoped, according to a memo by the state DMV.

Tesla’s chief executive Elon Musk said in January he was ‘highly confident’ that it could rollout a beta programme of its self-driving tech by the end of 2021. Tesla is currently only at Level 2 out of 5, meaning that would be a huge leap in technological development.

‘Tesla indicated that Elon is extrapolating on the rates of improvement when speaking about L5 capabilities. Tesla couldn’t say if the rate of improvement would make it to L5 by end of calendar year,’ the memo said.

Citigroup

Citigroup is considering providing cryptocurrency services to capitalise on a surge in demand from clients, according to a report from the Financial Times.

Trading, custody and financing services are all being considered but no final decision has been made. Citi is reported to have seen ‘very rapid’ growth in interest in cryptocurrencies from a broad range of customers, including asset managers, according to the bank’s global head of foreign exchange Itay Tuchman.

Uber, Lyft, GrubHub and Postmates

Stocks that rely on gig workers like Uber, Lyft, GrubHub and Postmates remain under the spotlight as talk of tighter regulations in the US increase, with the Labor Department set to investigate how their pay packets compare to federal laws that protect workers.

A rule introduced by former president Donald Trump was set to come into force earlier this year that would have made it harder for gig workers to demand the likes of overtime pay, but the Labor Department is set to have conversations with the industry over the coming months to decide how workers should be classified.

That could lead to millions of gig workers becoming eligible to overtime and a minimum wage. Uber recently revealed large charges after the UK forced it reclassify its workforce despite the country accounting for only a small proportion of revenue. A similar change in the US could be game-changing for the industry but the likes of Uber are hoping to find middle ground that incorporates the best of both worlds.

Square

Payments firm Square on Thursday smashed expectations in the first quarter thanks to strong demand for cryptocurrency transactions on its peer-to-peer payment platform Cash App.

Adjusted net income of $0.41 per share turned from a $0.02 loss the year before, and was ahead of the $0.16 expected by analysts. That came as Cash App’s bitcoin revenue came in more than eleven times higher than the year before at $3.51 billion. Excluding bitcoin, total revenue was still up 44% year-on-year thanks to the likes of subscription and service-based revenues.

News Corp

News Corp, the owner of Dow Jones and the Wall Street Journal, beat expectations during the third quarter of its financial year and said it was on course to deliver its most profitable year on record since its reincarnation in 2013.

Revenue was up 3% year-on-year at $2.34 billion, ahead of the $2.2 billion forecast by analysts. Adjusted Ebitda rose to $298 million from $242 million the year before, mainly thanks to strong growth from Dow Jones, its book publishing segment and its real estate services division.

‘The financial year is on a trajectory to be the most profitable since our reincarnation in 2013. This highlights the transformed character of the Company, with improved revenue performance and a 23% increase in profitability in the third quarter,’ said chief executive Robert Thomson.

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