France’s Orange SA announced an exclusive agreement to divest 50% of its fixed fibre assets for about €1.3 billion ($1.58 billion) to help rollout networks in rural France.
As part of the deal, Orange (ORAN) has agreed to sell a 50% equity interest of Orange Concessions to a consortium of three investors, which are La Banque des Territoires (Caisse des Dépôts), CNP Assurances (CNP) and EDF Invest. The transaction, which is expected to close by the end of 2021, values Orange Concessions at €2.675 billion. As part of the deal, Orange and the consortium of investors will enter into a partnership to co-control the fibre network assets.
According to the telecoms operator, Orange Concessions will be France’s leading fibre-to-the-home (FTTH) operator of networks, which will be rolled out and operated on behalf of local public authorities. Orange Concessions will offer 23 public initiative networks (PIN) and deploy over 4.5 million built or to-be-built plugs in rural areas in France.
“I am delighted that Orange, Europe’s leader in fibre roll-out, is now set to establish this partnership in its domestic market with recognized investors who share our vision of digital communication infrastructure development,” Orange CEO Stéphane Richard stated. “Through this partnership, Orange holds the means to pursue the development of fibre in rural areas, by winning new public initiative networks or by participating in market consolidation."
"As to its financial merits, the achieved valuation reveals the value of Orange’s investments in fibre as well as the relevance of such strategic move,” Richard added.
As part of the partnership, Orange will be the operator of the fibre network rollout and maintenance. Moreover, Orange also retains a call option to take control and consolidate Orange Concessions in the future.
Shares of Orange are down 2.1% over the past month and have dropped 19% over the past year. (See ORAN stock analysis on TipRanks)
Meanwhile, Wall Street analysts have a cautiously optimistic Moderate Buy consensus on the stock based on 1 recent Buy rating versus 1 Hold rating. That’s with an average price target of $17.04, implying that 46% upside potential lies ahead in the coming months.
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Verra Mobility has sealed a deal to buy 100% of the issued share capital of rival Redflex Holdings Ltd. for a total of A$146.1 million ($113 million). Shares of Nasdaq-listed Verra Mobility rose 3.9%, while Redflex listed on the Australian Securities Exchange spiked 115% on Jan. 22.
As part of the acquisition proposal, Arizona-based Verra Mobility (VRRM) has offered to pay Redflex shareholders A$0.92 per share, reflecting a 130% premium to its closing price on Jan. 21.
The smart mobility software company said that the combination with Australia-based Redflex, which develops traffic management products, including red light and speed cameras, will strengthen and expand its global market reach of road safety products and services. The company’s products are sold in the Asia Pacific, North America, the UK, Europe and the Middle East.
"We are incredibly excited for this step forward in building the Verra Mobility of the future, expanding our portfolio of safe city solutions, and solidifying our position as a global leader in smart transportation," said Verra Mobility CEO David Roberts.
The transaction is expected to close in May 2021, subject to the approval by Redflex shareholders and regulatory permission.
William Blair analyst Louie DiPalma reiterated a Buy rating on the stock as he believes that the deal should help boost the shares by “at least” 15%. This is based on expected cost synergies and the 8-times deal multiple versus Verra's current multiple of 13.6 times, according to DiPalma.
Furthermore, the deal can be seen as an opportunity to open the business up to international markets, while it also removes one of Verra Mobility's biggest competitors. (See VRRM stock analysis on TipRanks
The rest of the Street shares DiPalma’s bullish stock outlook. The other two analysts recently covering the stock also have a Buy rating, which together add up to a Strong Buy analyst consensus. Looking ahead, the average price target stands at $14 and implies 3.6% upside potential over the coming 12 months.
Meanwhile, on TipRanks’ Smart Score system, VRRM is rated a 5 out of 10, which indicates that the stock is likely to perform in line with market expectations.
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Boeing has itself a target for its commercial airplanes to fly on 100% sustainable aviation biofuel by 2030 in an effort to reduce carbon emissions.
Boeing (BA) disclosed that it has already conducted test flights replacing petroleum jet fuel with 100% biofuels to address the “urgent challenge of climate change.”
The aerospace giant has worked with airlines, engine manufacturers and others to conduct biofuel test flights starting in 2008 and gained approval in 2011. In 2018, Boeing deployed the world's first commercial airplane flight using 100% biofuels with a 777 freighter, in collaboration with FedEx Express.
Airplanes will need to be capable of flying 100% on biofuels well before 2050 in order to meet the aviation's commitment for reducing carbon emissions by 50% from 2005 levels by 2050, Boeing noted.
“Our industry and customers are committed to addressing climate change, and sustainable aviation fuels are the safest and most measurable solution to reduce aviation carbon emissions in the coming decades," said Boeing Commercial Airplanes CEO Stan Deal. "We're committed to working with regulators, engine companies and other key stakeholders to ensure our airplanes and eventually our industry can fly entirely on sustainable jet fuels."
Today, sustainable aviation fuels are mixed directly with jet fuel on a ratio of up to 50/50, which is the maximum allowed under current fuel regulations. Going forward, Boeing plans to work with regulatory bodies across the industry to determine what changes are required for its current and future commercial airplanes to fly on 100% biofuel, and what needs to be done to raise the current ratio limit.
According to the US Department of Energy and other scientific studies, sustainable aviation fuels reduce CO2 emissions by up to 80% over the fuel's life cycle with the potential to reach 100% in the future, Boeing said. Sustainable aviation fuels can be made from a wide variety of feedstocks, including non-edible plants, agricultural and forestry waste, non-recyclable household waste, industrial plant off-gassing and other sources, the planemaker added.
Coming now to BA’s performance, shares have seen some recovery. The stock is up 23% over the past three months after plunging 35% over the past year as COVID-19 travel restrictions have resulted in a deep cut in the number of commercial jet orders. (See BA stock analysis on TipRanks)
Boeing reported earlier this month that fourth-quarter deliveries included 31 of its 737 Max aircraft, which had been grounded for a 20-month period, following two fatal crashes.
In reaction to the delivery report, Berenberg Bank analyst Andrew Gollan lifted BA’s rating to Hold from Sell and raised the price target to $215 from $150, as he believes that the uptick in 737 deliveries “marks a turning point” for a potential recovery.
Gollan views the stock as fairly valued, with “sentiment risks balanced between recovery potential and ongoing near-term headwinds and virus uncertainty.”
“Now that Max deliveries are underway, we do not expect significant new charges. We estimate that $8bn of cash costs remain outstanding, the majority of which will be paid in 2021. The cash burden then recedes and, helped by rising volumes, Boeing’s cash generation should greatly improve from 2022,” the analyst concluded.
The rest of the Street is mostly in line with Gollan’s outlook. The Hold analyst consensus shows 9 Holds, 4 Sells, and 8 Buys. That’s with an average analyst price target of $227.17, indicating 10% upside potential lies ahead over the coming 12 months.
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Morgan Stanley CEO James Gorman's has seen his pay rise by 22% last year, bumping his annual salary up by $6 million to $33 million for the year, Reuters reported.
According to Reuters, the CEO's compensation was approved by Morgan Stanley's (MS) board and is based on the bank’s record earnings results for 2020 that were released two weeks ago. Gorman's pay increase came after it had been cut by 7% in 2019.
Morgan Stanley recently reported record net revenues of $48 billion, beating the 2019 figures by 16%. Net Income also came in at record highs of $11 billion, up 22% from the year before.
Gorman’s compensation is comprised of a base salary of $1.5 million, a cash bonus of $7.9 million, deferred equity of $7.9 million, and a performance related bonus of $15.8 million, Reuters reported. (See MS stock analysis on TipRanks)
Barclays analyst Jason Goldberg reiterated a Buy rating on the stock last week, raising his price target to $95 from $88. This implies upside potential of around 28% from current levels.
Goldman believes that two-year targets should be achievable based on “Strong asset levels, healthy pipelines, and engaged institutional and retail clients.”
Consensus among analysts is a Moderate Buy based on 9 Buys and 5 Holds. The average price target of $81.42 suggests upside potential of around 10% over the next 12 months.
News Sentiment for Morgan Stanley is Very Positive based on 103 articles over the past seven days. 100% of the articles have a Bullish Sentiment, compared to a sector average of 62%.
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Shares of MoneyGram jumped 7.3% on Jan. 22 after the payments transfer company announced a deal to expand its Visa debit card deposit service across Europe. The company, through its tie-up with Checkout.com, will use Visa’s push payments platform, Visa Direct, to send money in real-time.
As a result of the collaboration MoneyGram’s (MGI) customers will be able to send money to Visa debit cardholders across Europe through its website or mobile application.
The cross-border P2P (peer-to-peer) payments transfer company is increasingly concentrating on its digital direct-to-consumer strategy through its consumer channel. The digital channels include transactions made through its mobile app, website, through its digital partners, online wallets, or account deposit services. (See MGI stock analysis on TipRanks)
In 3Q20, total digital transactions comprised 27% of the company’s money transfer transactions. MoneyGram's money transfer revenue generated through its digital channels amounted to $53.2 million in 3Q20 versus $27.3 million during the same quarter a year ago.
Alex Holmes, MoneyGram CEO commented at its 3Q earnings in October, “Our customer-centric strategy and growing active customer base helped deliver year-over-year money transfer revenue growth for the quarter, while the strength of our Adjusted EBITDA and cash flow demonstrate how our investments to build a scalable infrastructure are paying off. It's exciting to see the successful execution of our digital transformation be a catalyst for sustainable and profitable growth."
On Jan. 11, Northland Securities analyst Michael Grondahl upgraded the stock from Hold to Buy and set a price target of $9.50.
In an earlier report, Grondahl noted about the company’s focus on its digital channels, “The MGO business is by far the largest single originator of transactions, becoming virtually equivalent to the size of the Walmart money transfer business. 85% of digital transactions are now done via a mobile device. Digital now represents 27% of money transfer transactions providing significant contribution to bottom-line results. We believe only about 75% of walk-in business was live, flat q/q.”
Overall, Wall Street analysts have a Hold consensus on the stock based on Grondahl's Buy call and one analyst recommending a Sell. The average price target of $7 implies 8.4% upside potential to current levels.
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Shares of GameStop Corp. popped 51% on Friday after short seller Citron Research said that it will stop commenting on the video game retailer’s stock following the actions of an “angry mob.”
The stock closed at $65.01 on Jan. 22. The move came after Citron Research had to postpone a planned livestream YouTube video, which would detail the five reasons GameStop (GME) stock will plunge back to $20 per share fast. The video did come out later than announced but not as a livestream event, following “multiple hacking attempts” on its Twitter account, according to Citron Research.
“What Citron has experienced in the past 48 hours is nothing short of shameful and a sad commentary on the state of the investment community,” Citron’s Andrew Left wrote in a letter posted on Twitter. “We will no longer be commenting on GameStop, not because we don’t believe in our investment thesis, but rather the angry mob who owns this stock has spent the past 48 hours committing multiple crimes that I will be turning over to the FBI, SEC and other governmental agencies.”
“This is not just name-calling and hacking but includes serious crimes such as harassment of minor children. We are investors who put safety and family first, and when we believe this has been compromised, it is our duty to walk away from a stock,” Left added.
Meanwhile, GameStop posted in a Twitter post that a “bunch of Redditors with Asperger’s have collaborated to engineer the short squeeze of the decade by buying short-dated, out-of-the-money call options.”
GameStop shares have spiked a whopping 1,513% over the past six months, while analysts have a Hold consensus on the stock. Out of the 6 analysts covering GME, 3 rate it as Hold, and 2 say Sell, and 1 analyst says Buy. (See GME stock analysis on TipRanks).
Following the recent rally, the average price target of $10.72 suggests shares are poised to pull back 84% over the coming year.
Meanwhile, Wedbush analyst Michael Pachter believes that “GameStop is well-positioned to be a primary beneficiary of the new console launches, and we remain quite optimistic that it will return to profitability by FY:21.”
However, for now Pachter reiterated a Hold rating on the stock with a $16 price target as he argues that the “global pandemic remains a hurdle, and we expect it to remain a hurdle until the majority of GameStop’s addressable market is vaccinated.”
“We have a positive bias, and we think the company is positioned to generate solid profits in 2021 and beyond, but until we have greater visibility, we are unprepared to upgrade,” the analyst summed up.
On TipRanks' Smart Score system, GME gets an 8 out of 10, indicating that the stock has strong potential to outperform market expectations.
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AT&T is in exclusive talks to divest a minority stake in DirecTV to private equity firm TPG for an undisclosed amount, Reuters has learnt.
According to Reuters, the deal could value DirecTV at more than $15 billion. DirecTV is the telecommunications giant’s pay-TV service. AT&T (T) had previously announced that it was exploring the sale of its non-core assets. According to Reuters, the impending sale of a minority stake in DirecTV to TPG could be an attempt by the company to further reduce its net debt, which stood at $149 billion at the end of 3Q20.
AT&T shares closed at $28.93 on Jan. 22. Its DirecTV business has been losing subscribers since its acquisition in 2014. However, at the end of 3Q20, DirecTV’s subscriber losses improved from 1,163,000 in 3Q19 to a loss of 590,000 subscribers. The company had said that the reason for the reduction in subscriber losses had been its concentration on high-value subscribers. (See T stock analysis on TipRanks)
Back on Oct. 22, AT&T’s CEO John T. Stankey commented at the company's 3Q earnings call, “I don't know what the cord-cutting rate is going to be over the next couple of quarters, so to speak. I expect that we saw a little bit of an uptick.”
“I've said before and I still maintain, there's a certain number of sports-consuming households that are going to be the stickier households in the pay TV bundle. That when we kind of get down to that 55 million, 60 million household range, we're probably going to see a little bit of a plateauing as a result of that. That doesn't mean that the bundle stays the way that it is. I think there'll be a number of channels in the bundle that probably fall away over time, and it gets a little bit thinner,” Stankey added.
When it comes to AT&T’s media division, WarnerMedia, its HBO, and HBO Max are doing better, and together they had 38 million subscribers at the end of 3Q20. During the quarter, HBO Max was a key investment that drove subscriber growth, the company said.
Around a month back, Merrill Lynch analyst David Barden reiterated a Buy rating on the stock and set a price target of $36. Barden noted, “WarnerMedia has been driving synergies by eliminating duplicative positions, has revamped senior management, and is leaning into its HBO Max strategy.”
Overall, Wall Street analysts are cautiously optimistic about the stock and the consensus is a Moderate Buy with 6 analysts recommending a Buy, 5 analysts suggesting a Hold, and 2 analysts recommending a Sell. The average price target of $30.91 implies 6.8% upside potential to current levels.
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Kansas City Southern reported weaker-than-expected 4Q results. However, the transportation company projects double-digit revenue growth and improved earnings in 2021 following. Shares rose 2.2% on Friday.
Kansas City (KSU) expects sales to increase at a double-digit rate in 2021 following a 8% decline in 2020. The company forecasted earnings of at least $9 per share for this year. As for 2022, Kansas City expects its EPS to be in the range of $10.50-$11.
Coming back to the 4Q results, Kansas City’s adjusted earnings of $1.89 per share grew 3.8% year-over-year but missed analysts' estimates of $1.96 per share. Its 4Q revenue of $693.4 million fell 5% and came in below the Street's estimates of $694.5 million.
The company said the decline in 4Q sales was primarily due to lower volumes amid service disruptions at Lazaro Cardenas, lower fuel surcharge, and changes in foreign currency translation.
The company’s CEO Patrick J. Ottensmeyer said, “As we turn our focus to 2021, our primary objective will be the implementation of PSR [Precision Scheduled Railroading] Phase 3, which combines improved operational performance with an intense focus on customer service and revenue growth.” (See KSU stock analysis on TipRanks).
On Jan. 15, Raymond James analyst Patrick Brown raised the stock’s price target to $245 (12.6% upside potential) from $210 and maintained a Buy rating. The analyst believes that Kansas City Southern’s Mexican franchise offers above-average growth opportunities among U.S. railroads over the long-term.
Overall, consensus among analysts is a Moderate Buy based on 5 Buys and 5 Holds. The average analyst price target of $213.50 implies downside potential of about 1.9% to current levels. Shares have gained 32.8% over the past year.
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Ally Financial reported stronger-than-expected fourth-quarter results due to lower provisions for credit losses and higher net financing revenue. The stock closed 1.7% higher on Friday.
Ally Financial’s (ALLY) 4Q earnings spiked 69% year-over-year to $1.60 per share and came in far ahead of analysts’ expectations of $0.98 per share. The company’s 4Q revenue of $1.9 billion exceeded the consensus estimates of $1.67 billion and jumped 16% year-over-year. The bank’s net financing revenue improved 12.7% to $1.3 billion in 4Q, while other revenue jumped 39.2% year-over-year to $678 million.
The bank’s 4Q net interest margin (NIM) grew 26 basis points to 2.90%. The improvement in NIM was “driven by higher gains on off-lease vehicles, lower deposit costs, and retail auto portfolio yield expansion, excluding the impact of hedges.”
Provision for credit losses decreased to $102 million in 4Q from $276 million in the year-ago quarter, reflecting a reduction in net charge-offs and lower retail auto reserves. (See ALLY stock analysis on TipRanks).
On Jan. 13, Credit Suisse analyst Moshe Orenbuch ramped up the stock’s price target to $42 (3.4% upside potential) from $34 and maintained a Buy rating. Orenbuch's optimism stems from the expected improvement in origination yields, share repurchases, and steady used vehicle prices.
The rest of the Street is also bullish on the stock, with a Strong Buy analyst consensus based on 10 unanimous Buys. The average analyst price target of $45.30 implies upside potential of about 11.6% to current levels. Shares have gained about 38.7% over the past year.
Furthermore, ALLY scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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