Top US stocks to watch before the bell: AMC, Medtronic and Delta Air Lines

AMC milks the rise in its share price by raising more equity, Medtronic halts sales of its heart device, Delta Air Lines expects to return to profit later this year, FireEye sells its products business, there’s a shake-up to ExxonMobil’s board, and Broadcom is due to release results later.

USA (1)

AMC Entertainment

AMC Entertainment remains very much in focus today after the company said it could issue up to 12 million shares to raise cash and capitalise on the spike in its share price, representing its second share issuance in just three days.

AMC said it will issue up to 11.55 million shares through an at-the-market offering. However, it warned that investors should tread carefully due to the volatility in its share price, which has ranged from as low as $12 to as high as $72 within the last week alone. ‘Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment,’ AMC warned.

Yesterday, AMC launched a new portal to let retail investors to get exclusive rewards, like free popcorn, special screenings and direct communications with its CEO. The day before, it sold 8.5 million shares for $230.5 million to Mudrick Capital, which is reported to have quickly flipped the shares for a profit and decribed the stock as overvalued.

Medtronic

Medtronic has halted sales and deliveries of its heart device named HVAD Systems over health and safety concerns.

‘Medtronic initiated this action in light of a growing body of observational clinical comparisons indicating a higher frequency of neurological adverse events, including stroke, and mortality with the HVAD System as compared to other circulatory support devices available to patients,’ the company warned in a statement.

There are also concerns that the implant could fail to restart properly if it stops, which could cause heart attacks. Physicians have been advised to use alternatives in the meantime, but Medtronic is also opening a programme to support the 4,000-plus people that have already had the implant installed.

Delta Air Lines

Delta Air Lines revised its guidance by forecasting a smaller loss than previously expected in the second quarter of 2021, and said it expects to return to profit in the second half.

The airline said it will now make a pretax loss of between $1.0 billion to $1.2 billion in the three months to the end of June compared to its previous guidance for a loss as big as $1.5 billion. It hopes to return to profit later this year as it announced that domestic leisure travel is expected to exceed pre-pandemic levels in the second quarter compared to just 60% in March.

It also said that sales of premium tickets are outpacing that of main cabins, and that leisure, business and transatlantic demand will drive the next leg of its recovery later this year. Long-haul international travel is not expected to recover until 2022.

ExxonMobil

A third director nominated by Engine No 1 has been elected to the board of directors of oil giant ExxonMobil, signalling that shareholders increasingly agree with the hedge fund that the business needs to change.

Three of the 12 seats on the board will now be held by Engine No 1 nominees following a vote yesterday, which could lead to greater pressure being applied to ExxonMobil to improve returns and accelerate its shift to a low-carbon business.

'We look forward to working with all of our directors to build on the progress we’ve made to grow long-term shareholder value and succeed in a lower-carbon future,’ said chairman and CEO Darren Woods.

FireEye

Cybersecurity firm FireEye on Wednesday announced it has agreed to sell its products business to Symphony Technology Group for $1.2 billion in cash to help funnel more funds into its Mandiant Solutions business.

The sale will include the FireEye name and the deal is expected to close in the final quarter of 2021. Symphony will be buying the likes of its email, cloud security and network products and FireEye will be left with Mandiant’s controls-agnostic software and services business.

FireEye also announced that it is launching a new $500 million share buyback programme.

Meredith

Meredith Corp has accepted an increased takeover offer for the company from Gray Television.

Meredith had agreed to sell its television stations to Gray last month. However, Meredith said it received an unsolicited offer from another company since entering talks with Gray before receiving the improved offer. It said it analysed both offers and decided Gray’s proposal was superior.

Gray Television had previously made a bid worth $14.51 per share but has now upped that to $16.99, valuing the business at around $2.82 billion. Meredith is recommending shareholders accept the deal.

JPMorgan

JPMorgan has filed an application to take full control over its joint venture in China dealing in securities in the hopes it can follow Goldman Sachs, which is also looking to own its Chinese venture outright, according to media reports.

JPMorgan currently owns 71% of the venture, having boosted its stake by buying-out one of its partners last year. It followed China’s decision to scrap restrictions on foreign ownership limits in the securities and mutual fund industry from at the start of April. The move is regarded as positive, as it will allow US and other foreign firms to gain more exposure to the massive Chinese market for things like investment banking, equities sales, fixed income and research.

Separately, one of the bank’s executives revealed to Reuters that the bank intends to open 400 new bank branches to become the first US bank to have a presence in every state apart from Alaska and Hawaii.

Pfizer and J&J

Officials in Taiwan are holding talks with both Pfizer and Johnson & Johnson about securing doses of their coronavirus vaccines.

Taiwan has only received jabs made by AstraZeneca and Moderna so far, but the country is hoping to diversify and secure more supplies. Both Pfizer and J&J have remained tight-lipped on the matter, possibly due to the sensitivities over the relationship with Taiwan and China. Taiwan has previously blamed China for preventing a deal being struck with Pfizer’s partner, BioNTech, in talks supported by the German government.

The reports come after Japan announced it would donate around 1.2 million doses of the AstraZeneca jab to Taiwan. Taiwan has a population of around 23.5 million people and only 3% is thought to have been protected so far.

Broadcom

Broadcom, the semiconductor and infrastructure software company, will publish a second-quarter trading update after the markets close today.

The company is aiming to deliver quarterly revenue of $6.5 billion and convert around 59% into adjusted Ebitda, implying a figure of around $3.83 billion, which would compare to the $3.20 billion booked the year before. Analysts are expecting net income of $1.26 billion compared to just $563 million the year before.

Investors will also be keeping an eye on the quarterly dividend payment and for evidence that Broadcom is continuing to benefit from the accelerated digital transformation during the pandemic.

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