Top US stocks to watch: Microsoft, Accenture and Visa
Joshua Warner June 24, 2021 1:12 PM
Microsoft to unveil new Windows, Accenture beats expectations, Visa buys Tink, eBay sells its Korean business, Nike, FedEx and Blackberry all report after the markets close, Confluent and Doximity launch their IPOs today, and Elon Musk says Starlink will eventually go public.
Microsoft is set to unveil the new version of its Windows operating system later today, marking the first revamp since 2015.
Expectations are that the update will unleash Windows 11 to replace the existing Windows 10, which at one point was due to be the end of the line for the operating system. But, with demand rising as people buy computers during the pandemic and the need to cement its position in the market, Microsoft has revived its plans for Windows.
Windows 10 is currently used by 1.3 billion people worldwide, but it has lost ground over the years as other systems from the likes of Alphabet and Apple dominate on smartphones. Analysts are also expecting Microsoft to unveil plans to update the Windows Store and provide news on its gaming division.
IT consultant Accenture beat expectations when it released third-quarter results this morning, as the rise in hybrid-working lifts demand for its cloud and security products, prompting it to raise its outlook for the rest of the year.
Revenue rose 21% in the three months to the end of May to $13.3 billion, up 16% in local currency, with operating income rising 24% to $2.1 billion after being boosted by better margins. Diluted EPS jumped 26% to $2.40. That beat expectations for revenue of $12.8 billion and EPS of $2.23.
Accenture raised its outlook for the remainder of the year. It said fourth-quarter revenue will be between $13.1 billion to $13.5 billion, representing 17% to 21% growth in local currency. For the full year, it is now targeting 10% to 11% revenue growth compared to 6.5% to 8.5% beforehand. EPS should come in the range of $9.07 to $9.16, up from its previous guidance range of $8.67 to $8.85.
Visa has agreed to buy European fintech firm Tink for EUR1.8 billion, only months after a deal to buy US peer Plaid collapsed.
Swedish firm Tink has an open banking platform that is used by banks and financial institutions to share and access data while providing new products and services to customers. It is used by over 3,400 clients in total and serves over 250 million customers across Europe.
Visa’s plans to buy US firm Plaid fell apart in January when the payments giant pulled out of the $5.3 billion deal after regulatory pressure built aimed at blocking the combination.
eBay has agreed to sell a majority stake in its businesses in Korea to local outfit Emart, owned by Shingsegae Group, for around $3 billion.
Emart will acquire an 80% stake in eBay’s Korean businesses, including G-Market, IAC and G-9. The US company will be keeping hold of the remaining 19.99% stake, which will be valued at around $800 million based on the sale price.
The pair said the combination ‘creates one of Korea’s leading ecommerce businesses’ and hopes it will be completed in late 2021 or early 2022. Currently, eBay is thought to be the third-largest ecommerce player in the market, according to data from Euromonitor.
Boat maker Brunswick has announced it is purchasing Norwegian outfit Navico, which makes electronics and sensors for the marine sector, for a total of $1.05 billion.
The acquisition will add a number of industry-leading brands to its portfolio, including Lowrance, Simrad, B&G and C-MAP, all of which will be added to Brunswick’s Advanced Systems Group. The assets will be part of Brunswick’s parts and accessories unit.
Navico reported annual revenue of $470 million in the 12 months to the end of May. That is equal to about one-third of the $1.5 billion in annual revenue generated by Brunswick’s existing parts and accessories business and, combined with Navico, it thinks the unit can achieve an annual run-rate of over $2.0 billion.
EA has splashed out $1.4 billion to buy the mobile games studio responsible for smash hit Golf Clash, which has been downloaded more than 80 million times.
The US gaming giant is buying Playdemic from Warner Bros and AT&T. The purchase is part of EA’s strategy to push more into mobile gaming, and one arm of this involves beefing-up its portfolio of sport games.
Nike will release fourth-quarter and full-year results covering the year to the end of May after the markets close today, with analysts expecting strong growth thanks to weak comparatives and for share buybacks to resume.
Analysts are expecting fourth-quarter revenue to jump to just over $11.00 billion from only $6.31 billion the year before, and turn to diluted earnings per share of $0.51 from a $0.51 loss. Notably, Nike is coming up against weak comparatives as the three months to the end of May 2020 was when the pandemic erupted and lockdowns started to be introduced.
Nike is expected to perform well in North America, spurred on by the fact lockdown has eased at a time when consumers are flush with cash thanks to stimulus cheques and tax refunds. However, sales in China will be closely watched after Nike was boycotted last month after pledging not to use cotton from Xinjiang. Sales in China account for about one-fifth of total sales and jumped 42% in the third quarter.
FedEx will release fourth-quarter and full-year results covering the year to the end of May after the markets close, with investors hoping the delivery giant won’t lose steam and that the increase in demand built up during the pandemic can be sustained.
The momentum built over the last year is expected to have continued into the final quarter of the financial year. Analysts are expecting fourth-quarter revenue to come in at $21.5 billion, up from $17.4 billion the year before. Wall Street anticipates adjusted EPS will almost double year-on-year to $4.99 from $2.53 and that FedEx will turn to reported EPS of $4.85 from a $1.28 loss.
FedEx has said it believes the boom in business this year is sustainable, but investors will want to see evidence that it has carried this momentum into the new financial year as shops reopen, potentially unwinding some demand from online shopping. Also watch out for commentary on costs and margins after it warned in the previous quarter that costs for the likes of labour were on the rise.
Blackberry, among the favourites of retail traders, will release first-quarter results covering the three months to the end of May after the markets close today, with focus on how its cybersecurity product SPARK, operating system QNX and its new IVY platform launched with Amazon Web Services are performing.
Although operational progress has been made, analysts are expecting Blackberry’s first-quarter revenue to fall to $171.25 million from $214 million the year before, and for it to turn to a non-GAAP loss per share of $0.05 from earnings of $0.02 the year before. The GAAP loss per share is expected to widen to $1.97 from $1.14.
Blackberry will also provide its outlook for the remainder of the year today, and investors will hope the operational progress being made will start to translate to an improvement in results. Analysts are currently expecting Blackberry to remain in the red this year but forecast losses will be a fraction of what was reported in the recently-ended one, and there is still a possibility that it could return to profitability sooner than expected.
Confluent shares are set to start trading on the Nasdaq today after the company priced its initial public offering higher than expected at $36 per share, giving it an initial valuation of around $9 billion.
The company had previously said its IPO would be priced between $29 and $33 each. As of most recent 2020 figures, the company’s revenues are in excess of $300 million, with revenue in the first quarter of 2021 jumping 51% from the year previous.
Confluent is a tech company that enables enterprises to access and interpret fluid data in the form of real-time streams, in order to better manage their operations. Information is derived from sensors placed in areas such as manufacturing floors and retail stores, which are used to monitor everything from inventory levels to stock capacity. Then, the information is transferred and analysed.
Doximity, the social media platform designed for doctors, has also launched its IPO today and achieved a higher price than expected at $26.
It had previously hoped to achieve a price of between $20 to $23 per share and the IPO price gives it an initial valuation of around $4.6 billion. The company raised around $494.3 million by issuing over 19 million shares, while existing investors cashed-in by selling a further 4.3 million shares.
Doximity has around 1.8 million members on its platform and claims to have the largest community of healthcare professionals in the US. It says over 80% of all doctors in the US are signed-up.
Starlink, the satellite arm of Elon Musk’s SpaceX, will go public when it is generating predictable cashflows and Tesla shareholders are set to be given preference, the billionaire revealed yesterday.
Musk admitted that ‘going public sooner than that would be very painful’, adding he will ‘do my best to give long-term Tesla shareholders preference’. The tweets were in response to questions asked about Starlink’s IPO on the social media platform.
Starlink is expecting to provide ‘near global coverage’ of high-speed, low-latency satellite-driven broadband this year, helping connect places that cannot be hooked up using traditional infrastructure.
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