Best Buy Just Keeps Getting Better
Topic of the day
Best Buy (+8,4%) has gone from Amazon’s showroom to a rising competitor to the e-commerce giant. The consumer electronics retailer handily beat Wall Street expectations on both the top and bottom lines in the quarter ended July 31, with net income 56% higher than analysts were penciling in. Even compared with the pre-pandemic year, its revenue grew 24%. Chip shortages don’t seem to be crimping sales much. Best Buy continues to take market share: Its quarterly revenue growth compared with 2019 was more than double the industrywide figure for electronics and appliances over the same period, according to Census Bureau data. Though Best Buy has gained 19% year to date, its shares are valued reasonably. They trade at roughly 15 times forward-12-month earnings, right where their valuation was pre-pandemic, and around half the valuation fetched by the S&P 500 retailing index.
The Swiss stock market fell steadily on Tuesday - albeit within a narrow range. After a small recovery in the closing business, the SMI emerged from the day with a minus of 0.3 percent to 12,437 points. In the SMI, the Novartis share was in focus. It was the laggard with a minus of 1.7 percent. The pharmaceutical company had announced a setback with its drug Kymriah. In the second tier, Adecco slipped 0.8 percent to 50.60 francs following a price target cut by Credit Suisse from 65 to 58 francs. Flughafen Zürich gained just over 1 percent following its quarterly results. Shares in elevator manufacturer Schindler (-0.3 percent) did not benefit from the fact that the company was awarded a contract to supply and install 180 escalators as part of a construction project for the metro network in Bangalore, India. The shares of building supplier Arbonia (+0.2%) also showed little movement after the presentation of its half-year figures. In the third tier, Cembra Money Bank recovered by just over 3 percent after its share price crashed by around 30 percent at its peak on Monday upon news that a credit card contract had been terminated.
European shares extended gains on Tuesday, supported by a near-record close on Wall Street and the FDA's full approval of the Pfizer-BioNTech Covid-19 vaccine. Gains were minor and tentattive however, with the Stoxx Europe 600 ending almost stable at 471.8 points. In Paris, the CAC 40 was down 0.3% and the SBF 120 gave up 0.2%. In Frankfurt, the DAX gained 0.3%, while the FTSE 100 in London rose 0.2%. Miners and travel-related stocks rose, as did the oil majors, after the price of Brent crude ticked higher. "Markets are struggling for direction a little bit after we have had a huge run," said Mike Stritch, chief investment officer at BMO Wealth Management. "People are asking, what is the next catalyst to propel the market higher, or are the handful of risks that are out there enough to collectively give people a little more pause?" he said. Wood Group shares dropped 4% in London after the U.K. consulting and engineering company reported interim results. Jefferies said while the Wood's comments on its outlook were positive, once again the cash side disappointed, with net debt of $1.28 billion higher than guidance and a net debt-to-Ebitda ratio of 2.9 times. Valneva (+4.8%) continued to rise after already gaining more than 5% on Monday, supported by the announcement that it has launched its application for marketing authorization for its anti-Covid vaccine with the British health agency, the MHRA (Medicines and Healthcare Products Regulatory Agency). Hermès International (-1.6%) and LVMH (-1.9%) gave up some of their gains in recent sessions. On Monday, the two stocks had risen by 3% and 2.7% respectively, after having already increased by more than 1% on Friday.
The S&P 500 on Tuesday notched its 50th record close of 2021 as economically-sensitive stocks lifted the market. Shares of banks, oil producers and companies in the travel industry helped power the stock-market rally. The broad U.S. equity index rose 6.70 points, or 0.1%, to 4486.23, its ninth record this month. The Dow Jones Industrial Average added 30.55 points, or 0.1%, to 35366.26. The tech-heavy Nasdaq Composite gained 77.15 points, or 0.5%, to 15019.80, its first close above 15000. Meme stocks also rallied. Companies that are favorites among retail traders, including GameStop and AMC, surged 28% and 20%, respectively, while other names including BlackBerry, Koss and Naked Brand Group also jumped. The rally marks a reversal from the group’s recent performance. Before Tuesday, many meme stocks in recent weeks have seen relatively muted daily moves. A catalyst behind Tuesday’s jump wasn’t immediately clear. The full approval from U.S. regulators for the Covid-19 vaccine from Pfizer and partner BioNTech has boosted broader market sentiment, raising hopes that more unvaccinated people will get the shot, potentially diminishing a threat to the economic outlook. Stocks have been grinding higher as investors weigh strong corporate earnings and the economic rebound against the global surge in Covid-19 cases, which is prompting fresh restrictions in some markets. Money managers are also assessing whether the Federal Reserve may slow down plans to pare back its easy-money policies because of signs that economic growth may be slowing. Energy stocks led the S&P 500’s 11 sectors as oil prices rose, boosted by a decline in Covid-19 cases in China and signs of a pickup in travel activity in major cities. Brent crude, the benchmark in international energy markets, rose 3.3% to $71.05 a barrel. Among individual stocks, shares of Palo Alto Networks jumped $69.30, or 19%, to $441.87 after the cybersecurity company reported better-than-expected revenue growth late Monday. CrowdStrike Holdings shares rose $19.83, or 8.1%, to $265.63 after Nasdaq said it would add the stock to its Nasdaq-100 index on Thursday. Best Buy shares rose $9.33, or 8.3%, to $121.49 after the company said that sales rose in the second quarter.
At midweek, the stock exchanges in East Asia more or less hover around the closing prices of the previous day. In Tokyo, the Nikkei 225 index is 0.1 percent lower. In Seoul, prices drop by an average of 0.2 percent. The Hang Seng Index falls in Hong Kong by 0.4 percent. In Shanghai, on the other hand, the Composite Index rises by 0.3 percent.
Long-dated Treasury yields edged higher Tuesday as the S&P 500 and Nasdaq Composite indexes extended their climbs into record territory, and as the U.S. House Democrats closed in on a vote for President Joe Biden’s infrastructure and social-spending packages. Meanwhile, an auction of $60 billion in 2-year notes produced strong buy-side demand, according to Jefferies LLC. The 10-year Treasury note yields 1.289%, compared with 1.254% on Monday at 3 p.m. Eastern Time.
eutsche Bank increases Gea target to EUR 33 (31) - Hold
Berenberg raises Marks & Spencer target to 200 (195) p - Buy
Citi lifts Jungheinrich target to EUR 51 (46.50) - Neutral
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