Top US Stocks: J&J, Merck and Tesla

J&J’s Covid-19 shot could be used as a booster, Merck starts to get orders for its potentially game-changing pill, Tesla reports record deliveries, Delta Air Lines sees improvement, Facebook whistle-blower reveals their identity, and Volvo and GitLab eye IPOs.

Johnson & Johnson

Johnson & Johnson is poised to submit applications to get its Covid-19 vaccine approved for booster shots in the US, according to reports from the New York Times.

Regulators have already approved the Pfizer vaccine as a booster shot for those aged 65 and over, but the debate about whether boosters should be given to the wider population is still ongoing. The report said the Food & Drug Administration is set to meet on October 15 to discuss whether J&J’s single-dose vaccine should be given emergency approval to be used as booster.

J&J’s jab has stood out as a single-shot vaccine but has only be given to around 15 million Americans, which have mostly been protected by those developed by Pfizer and Moderna. Last month, J&J said a second shot of its vaccine two months after they have received the first dose improved its effectiveness to 94% from only 70%.

 

Merck

Thailand is in talks about placing an order for 200,000 courses of Merck’s pill that could prove to be the first oral treatment for Covid-19, according to the country’s director general of the Department of Medical Services.

Somsak Akksilp told Reuters that the country is working on a purchase agreement that should be signed by the end of this week and that it has already pre-ordered 200,000 courses, with the first set to be shipped as early as December. Merck has said it will be able to produce 10 million courses before the end of 2021.

Merck revealed last week that its experimental oral drug named molnupiravir has cut the risk of people being hospitalised by Covid-19 by 50% in its latest trial, prompting it to seek emergency approval in the US and elsewhere as soon as it can. Pharmaceutical firms are turning their attention to developing easier-to-administer drugs to help in the fight against the virus, with current vaccines and treatments requiring people to visit healthcare facilities. Watch other vaccine stocks like Moderna today, which could lose some appeal as new and easier treatments emerge.

 

Tesla

Tesla revealed over the weekend that it delivered a record number of vehicles during the third quarter.

The electric carmaker said it produced 237,823 vehicles during the third quarter and delivered 241,300 of them to customers. That marks a new record for the company, following news that last week was the most intense in terms of deliveries in the company’s history.

That was ahead of the 229,242 vehicles that Wall Street had expected to be delivered, supporting the view that Tesla is managing to mitigate the chip shortage that is plaguing the wider industry better than its rivals.

RBC raised its target price on the stock to $755 from $745 this morning while Cowen & Co upped its target to $580 from $562.

 

Delta Air Lines

The chief executive of Delta Air Lines, Ed Bastian, said the airline is set to meet its guidance in the third quarter when it releases results next week as ticket sales stabilise and improve.

Speaking to reporters at a meeting of airlines on Sunday, Bastian said the firm will meet its target for quarterly revenue to be at the lower-end of its guidance for it to be 30% to 35% below pre-pandemic levels seen in 2019. The airline is set to report earnings on October 13.

The CEO added that business travel is starting to recover in the US, while domestic bookings are not expected to surpass pre-pandemic levels until next year.

 

Facebook

A Facebook whistle-blower revealed her identity on Sunday and accused the social media giant of prioritising growth and profits over safety.

A former product manager named Frances Haugen, speaking to the ’60 Minutes’ programme on CBS, revealed she was the whistle-blower that had leaked information that led to a series of media investigations by the Wall Street Journal around the impact Instagram has on its youthful users. She is set to testify to a Senate hearing on Tuesday titled ‘Protecting Kids Online’, which is set to look at the company’s research into how Instagram affects the mental health of teenagers.

There were conflicts of interest between what was good for the public and what was good for Facebook,’ she said during the interview yesterday. ‘And Facebook over and over again chose to optimize for its own interests like making more money.’ She also said that her lawyers have filed at least eight complaints with the SEC.

 

McDonalds

McDonalds said it is aiming to become a net-zero emissions company by 2050, building on its existing ambitions laid out to 2030.

The firm said it is joining the UN’s ‘Race to Zero’ campaign and accelerating its emissions reduction plans outlined in its existing 2030 targets. McDonalds said it has already cut absolute emissions by 8.5% across its restaurants and offices and by 5.9% across its supply chain compared to 2015 levels.

 

Volvo Cars

Volvo Cars is set to be spun-off and IPO in Stockholm in what would be one of Europe’s largest listings of the year, according to reports from Reuters.

Volvo is currently owned by China’s Geely Holdings, which is reported to be in advanced discussions about a listing, which one unnamed source said was originally pencilled in for the end of September. Geely bought Volvo from Ford over 10 years ago for just $1.3 billion in cash and a $200 million note.

The report said some sources believe the valuation could be as high as $30 billion, although some have estimated a lower range of $10 billion to $15 billion. Volvo reported a rise in revenue to SEK184.6 million in the first six months of 2021 from $164.7 million the year before, with EPS jumping to SEK8.72 from just SEK2.16.

 

GitLab

Coding platform GitLab is looking to secure a valuation of almost $9 billion through its initial public offering in the US, a new regulatory filing has revealed.

The firm said it is looking to price its listing at $55 to $60 per share. The company plans to sell 8.4 million shares to raise between $463 million to $505 million with existing shareholders set to sell an additional 1.98 million shares for between $109 million to $119 million. The listing is set to deliver a higher valuation that the $6 billion value it earned from its last fundraising back in January.

 

Analyst Recommendations

Southwest Airlines was upgraded to Overweight from Equal Weight by Barclays, which sees greater potential for airlines focused on offering low fares.

3M was downgraded to Neutral from Overweight by JPMorgan Securities over a lack of direction and catalyst for the stock.

Charles Schwab had its price target raised to $89 from $83 by Jefferies after being impressed by the consistency of its trading and its strong margins.

 

How to trade top US stocks

You can trade a wide variety of UK stocks with City Index in just four easy steps:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the company you want to trade in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade

 

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.