Top US stocks to watch before the bell: Amazon, Apple and Chevron

Amazon shows no signs of slowing down, Spotify celebrates a potential win over Apple, Chevron results disappoint compared to its peers, Goodyear sales step up a gear, Twitter warns of slower growth, and Palantir’s CEO earns a handsome payout.

USA (1)

Amazon

Amazon posted record profits in the first quarter as it continues to be one of the biggest winners of the pandemic and said it expects the current boom to continue over the coming months.

Revenue jumped to $108.5 billion from $75.0 billion the year before, with profits soaring to $8.1 billion from just $2.5 billion the year before. That was the fourth consecutive quarter or higher profits during a tough year for most businesses.

Net sales are expected to rise to $110 billion to $116 billion in the second quarter and be up to 30% higher year-on-year, with operating income of between $4.5 billion to $8.0 billion compared to $5.8 billion in the first.

Apple

EU regulators have accused Apple of distorting competition in the music streaming market and provisionally agreed with Spotify, which accused the iPhone maker of unfairly restricting rivals to Apple Music on iPhones.

‘By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition,’ said Margrethe Vestager of the European Competition Commission. ‘This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.’

Apple has denied the accusations while Spotify has welcomed the regulator’s comments. These are preliminary findings and both companies will now be able to respond. If pursued, regulators could ask Apple to make concessions or even fine it up to 10% of its global revenue.

Chevron

Chevron’s results disappointed in the first quarter as the benefit of higher oil and gas prices was more than offset by tighter refining margins, lower production and the loss of contribution due to asset sales last year.

The oil company’s profit dropped to $1.72 billion from $2.45 billion the year before while net profit plunged to $1.4 billion from $3.6 billion. Cashflow of $4.2 billion was over $1 billion below expectations.

Earnings from oil and gas production was down 20% and its refining division only just managed to stay profitable in the period.

Pfizer

Pfizer and its partner BioNTech have applied for permission for its coronavirus vaccine to be used on teenagers aged between 12 to 15 in Europe.

The pair have asked the European health regulator to extend the existing marketing authorisation for its jab, which has already been approved to be used on over 16s in the EU and the US. It follows a clinical trial involving 2,260 participants.

AbbVie

AbbVie said sales and earnings rose in the first quarter and raised its outlook for the rest of the year after strong performances from drugs like arthritis treatment Humira and psoriasis drug Skyrizi.

The company said net sales jumped 51% year-on-year to $13.01 billion, beating the $12.76 billion expected by analysts. Net earnings rose to $3.55 billion from $3.01 billion but the per share figure dropped to $1.99 from $2.02.

AbbVie said it now expects to report annual adjusted earnings of between $12.37 and $12.57 per share compared to its previous target of $12.32 to $12.52.

Goodyear Tire

Goodyear said it outperformed the market during the first quarter thanks to strong demand for its replacement tires as Americans continue to opt for solo travel during the pandemic.

Tire volumes jumped 12% in the period to 35 million units and replacement tire volumes were up 14%. Net sales rose 15% to $3.51 billion, beating the $3.4 billion forecast by analysts, and reported net income of $12 million compared to a $619 million loss the year before.

Intel

Intel is aiming to secure EUR8 billion in subsidies to help construct a new semiconductor manufacturing plant in Europe.

Chief executive Pat Gelsinger was quoted in Politico Europe as stating the company was asking for ‘both the US and the European governments to make it competitive for us to do it here compared to Asia’. The CEO met European commissioner Thierry Breton yesterday to discuss a strategy on semiconductor production.

Twitter

Twitter posted better than expected revenue in the first quarter of 2021 but its outlook disappointed as it warned costs will rise and user growth could slow as life gradually returns to normal after the pandemic.

Revenue rose 28% to $1.04 billion and came in just ahead of the $1.03 billion forecast by analysts. Ad revenue, the main driver of income, jumped 32% and beat expectations.

Twitter said revenue will be lower in the second quarter in the range of $980 million to $1.08 billion, which was geared lower than the $1.06 billion expected by analysts.

Alibaba

Alibaba has frozen pay for its senior executives this year and opted to give pay rises to junior staff, according to reports from Reuters.

Unnamed sources have said top executives will not receive any pay rise this year unless they have performed exceptionally, while junior staff are expected to get a considerable lift in pay. Executives have typically received a 5% to 10% pay rise per year.

Restaurant Brands

Restaurant Brands, the owner of Burger King, Tim Hortons and Popeyes, reported mild growth in the first quarter as customers started returning to restaurants as the economy reopens.

Revenue inched up to $1.26 billion in the quarter from $1.23 billion the year before, and just ahead of the $1.25 billion expected by analysts. System-wide sales increased 1.4% as a 4.9% fall in sales at Tim Hortons was offset by a 1.8% rise at Burger King and a 7% jump at Popeyes.

Adjusted net income rose to $257 million from $227 million the year before and diluted EPS of $0.55 rose from $0.48 the year before.

Palantir

The chief executive of data analytics firm Palantir earned over $1 billion last year after taking the company public, a regulatory filing published on Thursday revealed.

Alexander Karp received a total package worth $1.1 billion, comprised mainly of $797.9 million of options and $296.4 million in shares. He was paid just $12.9 million in 2019. His co-founder and president of the company Steven Cohen was paid $192 million compared to $16.1 million in 2019.  

Clorox

Clorox warned earnings will be considerably less than expected in the current financial year as it struggles to combat higher commodity prices as well as increases in production and logistics costs.

Diluted EPS in the 12 months to the end of June 2021 will now be in the range of $5.94 to $6.41, well below its previous range of $8.05 to $8.25. The reduction is primarily down to higher costs and a one-off charge against its vitamins and minerals business. Adjusted EPS, which strips out those exceptional items, is forecast to come in at $7.45 to $7.65 – which was worse than the $8.35 expected by analysts.

EPS in the third quarter of its financial year came in at $1.62, beating expectations of $1.48, despite reporting flat net sales.

Emergent BioSolutions

Contract drugmaker Emergent BioSolutions beat expectations in the first quarter but lowered its guidance for the year following problems at its Baltimore plant that has severely disrupted US production of Johnson & Johnson’s coronavirus vaccine.

The company is expected to respond to regulators within days about how to resolve the issues that has disrupted output. Emergent said it now expects annual revenue to be in the range of $1.7 billion to $1.95 billion, down from its previous target of $1.95 billion to $2.05 billion. Net income will be between $395 million to $470 million rather than $475 million to $525 million previously.

Emergent reported earnings of $1.53 per share in the first quarter, beating the $1.12 expected by analysts as revenue jumped over 78% to $343 million.

Gilead Sciences

Gilead Sciences on Thursday missed analyst expectations in the first quarter as higher income from its coronavirus treatment remdesivir failed to fully counter the lower sales of its HIV and hepatitis drugs during the pandemic.

Revenue rose 16% in the quarter to $6.4 billion, including $1.46 billion of remdesivir sales, missing the $6.73 billion expected by analysts. Adjusted earnings of $2.08 per share was in line with the $2.07 expected.

Berkshire Hathaway

Berkshire Hathaway will hold a virtual annual general meeting on Saturday as Charlie Munger and Warren Buffet prepare to answer questions from shareholders.

The AGM is one of the most closely-watched in the US and the pair will be reunited after Munger missed last year’s event after it was disrupted by the pandemic.

The event would usually bring in around 40,000 shareholders before the pandemic.

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