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BenzingaEditorial

Johnson and Johnson Emerging Out of a Dark Place

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It seems that Johnson and Johnson (NYSE:JNJ) has finally started shaking off those heavy legal headwinds. Accusations of tainted baby powder was just the latest chapter in its long book of controversy. Although the complicated legal process can drag on for years, its stock has posted a 6% return in the first 11 months of 2019. Dow’s return was 22% return but the result highlights the company’s resiliency in the face of heavy negative sentiment and severe legal headwinds. And after it announced extensive tests showed no trace of asbestos that FDA claimed to find in October, its stock rose 1% on Wednesday.

No asbestos after all!

On December 3, as part of Johnson and Johnson’s latest effort to prove the safety of its products, more tests showed that the baby powder was free of asbestos. Therefore, the company concluded that the most probable cause of FDA’s report that led to a nationwide recall of 33,000 products in October was due to either a contaminated sample, analyst error or both. This was the first time the company recalled its famous baby powder for possible contamination with this known carcinogen, and also the first time US regulators announced such a finding in this product. But, this was only the latest blow as the company is facing more than 15,000 lawsuits that also target its opioids, medical devices and the antipsychotic Risperdal. Just in September, they were forced to pay $572 million after being found guilty of deceptive marketing relating to its opioid drugs. They even needed to pay $8 billion in damages to a consumer due to not warning that use of Risperdal could cause male breast growth. And let’s not forget patent concerns as it already lost US patent exclusivity to Remicade which was its once top-selling drug and its last US patent for Stelara which generated 6% of total revenue last year is about to expire in 2023. And there are many lawsuits on this front as well.

Position

This is the world’s largest healthcare company. But the question is: is it eroding? While its brand has remained strong through it all, it is dropping in popularity and consequently, value, due to all this reputational damage.

Bayer (OTC:BAYRY) is also facing its legal battle but at least it managed to buy more time. The company reached an agreement to postpone lawsuits over the alleged cancer-causing effects of its glyphosate-based weed killers, giving more time for talks seeking a settlement.
The Cincinnati-based maker of consumer goods, Procter& Gamble (NYSE:PG) decided to commercialize the research on packaging for liquid products through an Innventure portfolio company called AeroFlexx. Their revolutionary package solution is at least 50% less plastic, enhances the consumer experience and reduces shipping costs as it’s easier to move along the supply chain. Overall, it has great odds of boosting P&G’s revenue.

Unilever (NYSE:UL) just hired its new CMO, 13 months after it got its new CEO. The CMO title went to Conny Braams, a not-so-well-known operational hero that use to run its middle-Europe segment. By not going for a ‘brand-building’ name, the company has put a clear emphasis on wanting to build its complex operational effectiveness. Like others, it is being squeezed by discount retailers and venture capitalists who offer both cheap products and premium innovations and these are not easy to compete with. And let’s not forget Colgate Palmolive (NYSE:CL) which is generating significantly more profit after accounting for expenses comparing to its market peers, yet it is a somewhat riskier investment.
due to not investing in short-term assets in an optimal way. So, a somewhat mixed picture showing both strengths and weaknesses. As of the whole sector.

Outlook

The bottom line is that despite the reputational damage due to an endless flow of legal proceedings, the stock is not showing any signs of technical damage. This surely raises the odds of breaking out in the coming months as the company continues to stabilize as all that legal dust settles. Investors have a reason to worry considering all those eroding factors. But considering the weight of those headwinds, it has always found a way to pull through whereas other companies facing similar challenges have seen their stock plunge. One thing is for sure: the more than 130-years old healthcare conglomerate deserves a medal for stock resiliency, or to be more precise, for its successful diversification across healthcare.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

Working From Home Trend and Gaming Did The Trick for Microsoft

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On Tuesday, Microsoft (NASDAQ: MSFT) succeeded in beating forecasts far above expectations due to a boom in PC sales, increased demand for gaming and cloud services. The pandemic might have put a lot of constraints to its customers, but it also led to a structural change as businesses across the globe shifted to digital operations and saw it as key to increasing their resilience. Upon the results, Microsoft’s stock was up 5% in after-market trading.

Q2 2021 figures

Revenues increased 17percent as they amounted to $43.1 billion and exceeded $40.2 billion expected by Bloomberg. Earnings per share were $2.03, topping the expected $1.64.

The commercial cloud businesses which Wall Street sees as the main engine of Microsoft’s future growth is reaccelerating. These businesses that include Office 365 and Azure cloud platform, generated revenue of $16.7 billion in the latest quarter, which is 34 per cent up from a year before. At the same time, the launch of a new Xbox Series S and Xbox Series X lifted the gaming business as revenue of Xbox content and services was up a whopping 40% in the quarter. Personal Computing division was also up by 14 per cent as revenues amounted to $15.1 billion.

Meanwhile, the Productivity and Business Processes division reported revenue of $13.4 billion, which is a 13 percent increase. This growth was fueled by strong demand for Office 365 which grew 20 percent when adjusted for currency, which is line with the previous quarter.

Adding more fuel

Microsoft recently announced that it was investing $2 billion to be the preferred cloud provider of the General Motors (NYSE: GM) and Honda-backed (NYSE: HMC) autonomous vehicle firm Cruise. Under the agreement, Microsoft will provide cloud infrastructure for Cruise to better enable autonomous vehicles to navigate highways and surface streets in the future.

A sign of confidence

Microsoft also forecast revenue for the current quarter in the range between$40.35billion and $41.25bn. Themidpoint of the rangewould represent another quarter of 17 per cent growth, beating the 11 per cent that Wall Street forecasted.

Takeaway

Its strength in the cloud and personal computing enabled Microsoft to blow away Q2 expectations. As Mr. Nadella had put it, digital transformation is sweeping every company and every industry across the globe. Microsoft is powering this second wave of transformation that is even stronger than the first one as the world is now creating a new normal that will stay long after the COVID-19 pandemic becomes history.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Week’s IPOs

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This week has eight scheduled IPOs with three billion-dollar deals coming from bio tech, diagnostics, software and solar equipment, among others.

Biotech

The US biotechnology company that received emergency approval from the FDA for its COVID-19 antibody and antigen tests, Ortho Clinical Diagnostics (NASDAQ: OCDX), plans to raise $1.5 billion at a $4.9 billion market cap. This pure-play in vitro diagnostics business provides diagnostic testing solutions. It is profitable on an EBIT basis, with a revenue retention rate of 99% in 2019.

Customer-survey software

Qualtrics International (NASDAQ: XM) seeks to raise as much as $1.46 billion. It provides a customer and employee experience management platform to over 12,000 organizations. But, despite its sticky customers, it operates in a highly competitive environment with low barriers to entry.

Solar equipment supplier

Shoals Technologies Group (NASDAQ: SHLS) designs and manufactures products used in large solar energy projects. It is a profitable and growing company that plans to raise $1.0 billion at a $3.6 billion market cap. However, its growth depends on international growth and its track record abroad is not impressive.

Asset-light container liner shipping company

Israel-based ZIM Integrated Shipping Services (NYSE: ZIM) plans to raise $306 million at a $2.1 billion market cap. This company positions itself as a global leader in niche markets with competitive advantages that allow it to maximize its profitability.

Mortgage

Residential mortgage producer Home Point Capital (NASDAQ: HMPT) plans to raise $250 million at a $3.0 billion market cap. It utilizes a wholesale mortgage origination channel to connect with nearly broker partners, which allows it to serve roughly 300,000 customers.

Asset management

Brazilian asset manager Vinci Partners Investments (NASDAQ: VINP) plans to raise $236 million at a $944 million market cap. Its portfolio includes private equity, public equities, real estate, credit, infrastructure, hedge funds, and investment products.

Supermarket portfolio

Southeastern Grocers (NYSE: SEGR) plans to raise $134 million (100% secondary) at a $725 million market cap. The company itself won’t sell any shares as part of the offering and will not receive any net proceeds from its public debut.

Agriculture

Agricultural technology company Agrify (NASDAQ: AGFY) plans to raise $25 million at a $115 million market cap. This company is highly unprofitable but fast growing. It aims to differentiate itself with a bundled solution of equipment, software, and services that is optimized for growth.

By the looks of it, the 2021 IPO market seems to be continuing 2020’s momentum.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Earnings Week Will Be a Busy One

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Apply (NASDAQ: AAPL), Facebook (NASDAQ: FB), Microsoft (NASDAQ: MSFT) and Tesla (NASDAQ: TSLA) are ready to report record sales this week, along with nearly a quarter of S&P 500 companies scheduled to release their earnings reports. It will also be a busy week, or more precisely a busy Tuesday, for the Dow with 3M (NYSE: MMM), Johnson & Johnson (NYSE: JNJ), American Express (NYSE: AXP) and Verizon (NYSE: VZ) joining Microsoft as fourth-quarter earnings season gets into full swing.

Tuesday

The chip saga continues with Advanced Micro Devices (NASDAQ: AMD) whose shares rose about 5% over the past week and are now up 1.2% year to date. Expectations are high due to its strong fourth quarter results and Intel Corporation’s (NASDAQ: INTC) upside guidance that was issued last week. Wall Street expects earnings of47 cents per share on revenue of $3.02 billion as it assumes the pandemic made a minimal disruption to its business with positive trends in the datacenter business and PC sales. AMD has steadily gained market share from Intel in both of these categories.

Microsoft will also report after the close with Wall Street expecting earnings of $1.64 per share on revenue of $40.18 billion. The trends of working and learning from home continue to intensify demands for Microsoft’s offerings, as evidenced by the strong Q4 demand. But its biggest strength over the past year has been the commercial cloud business and Wall Street remains strongly positive about the company’s outlook for fiscal 2021 due to Azure’s momentum as it’s revenue was up 48% on a YoY basis in the previous quarter. But, this is a slight deceleration from the 50% growth in Q4 and investors will want some evidence that both Azure and Microsoft’s Teams that competes against Zoom (NASDAQ: ZM) can continue fueling its revenues to new heights.

Wednesday

Apple will report after the close and Wall Street expects earnings of$1.40 per share on revenue of $102.76 billion. Holiday quarter is the quarter for Apple and it needs to meet these high expectations as last year’s quarter saw earnings of $1.25 per share on revenue of $88.5 billion. This quarter will be all about sales of the iPhone 12 that has been lauded as revolutionary. The iPhone 12 came with 5G capabilities and features such as its world-facing LIDAR sensor. However, Apple is about more than the iPhone as its services business now accounts for almost 22% of total revenue. Last quarter, its revenue surged to a new record of $14.5 billion.

Facebook will also report after the close with Wall Street expecting earnings of $3.19 per share on revenue of $26.34 billion. Facebook shares had an impressive run over the past week, suggesting that the concerns over digital advertising due to the pandemic have vanished. The social media giant topped consensus earnings expectations in each of the past eleven quarters and has missed earnings estimates just once over the past half of a decade. Yet, over the past year, its shares have been under-performing due to fears of regulatory and political risk. But if it shows a strong surge in daily and monthly active users with an upbeat revenue guidance, its stock should be just fine.

Tesla (NASDAQ: TSLA) will report its first quarter since it became part of the S&P 500 after the close. Wall Street expects earnings of$1.00 per share on revenue of $10.32 billion. Tesla’s shares are up 20% year to date and 99.9% since the company last reported earnings on October 21st, confirming that it is not showing any signs of slowing down. Elon Musk’s focus has been on executing the strategy that brought top and bottom-line improvements, while delivering almost half a million vehicles in 2020. Now, the electric vehicle pioneer has to show it intends to keep pressing the gas pedal.

Takeaway

A number of Republicans don’t support President Joe Biden’s $1.9 trillion new round of fiscal stimulus and have even criticized the price tag. Fortunately, mega tech companies that are reporting this week don’t depend on fiscal stimulus that much, as dar revenue and earnings growth is concerned.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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