US OPEN: Q2 earnings season kicks off; Tesla stock surges 12%

US indices started the week on a positive note, as investors digest recent spike in COVID-19 cases. Yesterday Florida recorded a record increase of more than 15,000 new coronavirus cases, more than hard-hit New York state at the peak of its crisis in April. However markets turn their attention to corporate earnings season to grasp the impact of the pandemic on companies. According to analysts' expectations, S&P 500 index  second-quarter earnings will be approximately 45% lower compare to the same quarter last year. Goldman Sachs (GS.US) has become a little more optimistic on earnings prospects this year, lifting its baseline forecast for S&P 500 earnings per share in 2020 to $115, up from a prior estimate of $110. Today Pepsi Co (PEP.US) reported better than expected earnings results. BioNTech (BNTX.US) and Pfizer (PFE.US) shares rose as two of their experimental coronavirus vaccines received the US FDA's 'fast track' designation, and could be ready for approval by the end of October. A lot of major US companies will release earnings  this week including JPMorgan, Citigroup, Wells Fargo, Goldman Sachs, Netflix, IBM, Johnson & Johnson, UnitedHealth, and Blackrock.  There are no major, market moving data scheduled for release today, but tomorrow investors will get to know U.S. consumer inflation data for June, while retail sales, a key gauge of consumption, are released on Thursday.

 

 

Tesla (TSLA.US)  lowered the price of its model Y SUV by $3,000, putting the starting price at just under $50,000. This follows price cuts for Tesla’s Model 3, Model X, and Model S. Separately the company announced on Friday that the battery technology day will take place Sept. 22 in California and can be attended, in person, by analysts and large investors. This event is important for both Tesla bulls and bears who endlessly debate Telsa’s lead in EV technology and how this will affect long-term profits. The event will most likely have greater impact on the stock than pandemic-affected second-quarter figures which will be published in a couple of weeks.

 

JPMorgan (JPM.US) upgrades Darden Restaurants (DRI.US) to an Overweight rating after having the restaurant stock lined up at Neutral.
"Marketing is being given a complete re-appraisal and G&A is also being looked at now that the worst of the crisis is behind the company. Finally, DRI's cash position allows flexibility as the crisis continues whether for a scale-benefitting well-priced acquisition or reinstatement of the dividend." JPMorgan increases its price target on DRI to $82 from $74 to value Darden at 14X the firm's 2022 EPS estimate. The average sell-side PT is $85.52. Shares of Darden are up 2.65% premarket to $74.00.

 

Maxim Integrated (MXIM.US) agreed to be acquired by Analog (ADI.US) for $20.91 billion in stock. Analog shareholders will own 69% of the combined company, while Maxim shareholders will own the rest. Also Analog lifted its current-quarter revenue guidance thanks to strength in end markets like industrial and communications.

 

Carnival (CCL.US) will remove 13 ships from its fleet, lowering capacity by about 9%.  The cruise line operator CEO Arnold Donald said that the company is aiming to emerge from the coronavirus pandemic as a leaner and more efficient operation.

 

Walt Disney (DIS.US) – Goldman Sachs rates Disney with a “buy” in new coverage, saying that investors are underestimating the profitability of the company’s Disney+ streaming service.

Moderna (MRNA.US)  was rated  a “buy”  by Jefferies, based on its expectation that the drugmaker's Covid-19 vaccine candidate will be approved and that it could generate about $5 billion in orders over the next few years.