Top US stocks to watch before the bell: Apple, Facebook and McDonalds

Apple and Facebook both beat expectations, people flock back to McDonalds, drugmakers Merck and Bristol Myers disappoint, Moderna plans to ramp-up vaccine production, Caterpillar sees demand improve, and Ford warns the chip shortage will severely hit output.

USA (1)

Apple

Apple on Wednesday breezed past market expectations in the first quarter as it sold considerably more iPhones and Mac computers as people continue to work from home during the pandemic, but warned the global shortage in chips could start to bite in the second.

Revenue was up 54% at $89.6 billion and came in well ahead of the $77.4 billion expected by analysts. EPS of $1.40 per share was also significantly better than the $0.99 forecast. iPhone sales came in around $6.5 billion higher than expected while Mac sales beat expectations by one-third.

That has buoyed optimism over demand for Apple’s new 5G phones and products using its new M1 chip. However, it warned revenue could take a $3 billion to $4 billion hit in the second quarter thanks to the shortage in chips after burning through its reserves in the first. Apple also launched a new $90 billion share buyback.

Facebook

Facebook also released first quarter results yesterday and revealed it performed better than expected as it continued to acquire new users and benefit from a surge in digital advertising during the pandemic.

Revenue jumped 48% to $26.17 billion thanks to increased advertising spend and net income rose to $3.30 per share from $1.71. That beat expectations for revenue of $23.67 billion and earnings of $2.37. It ended March with 2.85 billion users, 10% more than it had a year earlier.

Facebook said it was focusing on three key areas of virtual and augmented reality, ecommerce features and empowering content creators to make money on its platform. It also warned that Apple’s upcoming privacy changes will impact its business going forward.

McDonalds

McDonalds said sales grew faster than expected during the first quarter as customers start to return to restaurants in the US and overseas.

Global comparable sales were up 7.5% in the period and surpassed pre-pandemic levels. Analysts were only expecting 4.7% growth. Sales at US restaurants open for longer than a year were up 13.6% as restrictions on dining room capacity were relaxed and ahead of the 9.25% expected.

Revenue was up 9% at $5.12 billion and beat forecasts for $5.03 billion. Net income jumped to $2.05 per share from $1.47 the year before.

Mastercard

Mastercard said profits fell during the first quarter due to a large drop in cross-border spending thanks to the slump in international travel during the pandemic, but still beat expectations.

Adjusted net income per share fell to $1.74 per share from $1.83 the year before, but still beat the $1.57 expected by analysts. Net revenue was up 4% to $4.2 billion from $4.0 billion, boosted by domestic spending returning to pre-pandemic trends. Meanwhile, cross-border volumes fell 17% year-on-year.

Merck

Merck warned that it expects the pandemic to have a bigger impact on sales this year as it missed expectations during the first quarter.

Demand for Merck’s drugs that need to be administered in a clinic has fallen during the pandemic and the company warned the coronavirus will have a 3% hit to 2021 revenue rather than 2% as previously expected. First quarter sales took a hit of around $600 million.

Net earnings fell to $1.25 per share from $1.26 the year before. Adjusted EPS of $1.40 was below the $1.63 expected by analysts.

Caterpillar

Caterpillar reported a strong rise in profits during the first quarter as demand for heavy equipment improves after being severely hit last year by the pandemic.

Revenue was up 11.8% at $11.89 billion and beat the $11.09 billion expected by analysts, boosted by an uplift in sales across all three of its core divisions. Adjusted profit rose to $2.87 per share from just $1.65 the year before.

Caterpillar said it was ‘encouraged’ by improving conditions in its end markets. It is expected to be among the biggest beneficiaries of new infrastructure being built in countries like the US and China as their economies reopen.  

Bristol Myers Squibb

Bristol Myers Squibb missed expectations in the first quarter after a stronger performance from its lower-margin blood thinner drug failed to offset a weaker outcome from its higher-margin cancer drugs.

The company reported adjusted earnings of $1.74 per share compared to $1.72 the year before. However, that was below the $1.82 expected by analysts. It is expecting to deliver annual earnings in the range of $7.35 to $7.55 per share.

Bristol Myers Squibb said it expects its blood thinner drug Eliquis to continue growing going forward while sales of cancer drug Opdivo should improve as it secures approvals to be used on new types of tumours and to treat advanced lung cancer.

Comcast

Comcast said earnings jumped in the first quarter thanks to continued demand for its internet and wireless services as people spend longer at home whilst the pandemic continues to disrupt its theme park and entertainment businesses.

Overall revenue was up 2.2% year-on-year at $27.21 billion, ahead of the $26.70 billion expected by analysts. Adjusted earnings per share grew 7% to $0.76 while reported EPS surged 54% to $0.71.

The company acquired more broadband customers than expected but also lost more video customers than analysts had forecast. Income from its theme parks and NBCUniversal suffered but showed signs of improvement as the economy reopens. Its Peacock streaming service that competes with the likes of Netflix and Disney+ ended the period with 42 million subscribers, up from just 33 million the year before.

Qualcomm

Qualcomm on Wednesday posted a better outlook than expected on hopes that consumers will upgrade to 5G phones and buy more phones using its own chips rather than that made by Chinese firm Huawei.

The midpoint of its new target range for adjusted profits is now $1.65 per share on revenue of around $7.5 billion in the third quarter to the end of June. That is better than the $7.11 billion in revenue and profits of $1.52 that was forecast by analysts.

In the recently-ended second quarter, Qualcomm reported revenue of $7.93 billion and adjusted earnings of $1.90. That was ahead of the $7.62 billion and $1.65 expected by analysts.

Ford

Ford smashed expectations during the first quarter but warned the global supply shortage in chips will get much worse before it gets better, casting huge doubt over its near-term prospects.

Automotive revenue in the period came in at $33.55 billion compared to the $32.23 billion expected by analysts. Adjusted earnings of 89 cents was well ahead of the 21 cents forecast.

However, the focus was on its warning that it will lose around half of its planned production during the second quarter thanks to the shortage in chips, up from 17% in the first. That follows a fire at a factory in Japan that supplies Ford and other automakers. It expects to lose about 1.1 million cars in terms of production over the full year.

eBay

eBay reported better-than-expected results in the first quarter as it continues to benefit from the boom in online shopping during the pandemic, although its outlook for the second quarter disappointed analysts.

The company said net revenue rose to $3.02 billion from $2.12 billion, beating expectations for $2.97 billion, and that diluted EPS jumped to $0.82 from $0.57.

However, it said it expected to deliver EPS of $0.91 to $0.96 in the second quarter, below the $1.02 expected by analysts.

Textron

Textron raised expectations for the full year as demand for its commercial helicopters and business jets recovers after falling during the pandemic, allowing it to report strong growth in the first quarter.

Revenue rose to $2.88 billion from $2.78 billion the year before and net income jumped to 75 cents per share from just 22 cents. Profits were boosted by higher demand for its helicopters and specialised vehicles, while deliveries of business jets rose to 28 from 23 the year before.

The company is now expecting annual adjusted earnings of $2.80 to $3.00 a share rather than its previous range of $2.70 to $2.90.

Thermo Fisher

Thermo Fisher said profits almost trebled during the first quarter thanks to demand for its coronavirus tests and a strong performance from its life sciences unit.

The company said revenue rose 59% to $9.91 billion. Life sciences revenue soared to $4.2 billion from only $1.77 billion the year before, while its specialist diagnostics unit that makes coronavirus tests saw sales jump 69% to $1.62 billion.

Net income rose to $5.88 per share from $1.97 the year before.

Moderna

Moderna is aiming to produce up to 3 billion doses of its coronavirus vaccine in 2022 compared to its previous forecast of 1.4 billion.

It also said it now hopes to make between 800 million and 1 billion doses this year. Before it had said it could be as low as 700 million doses. Production will be boosted at factories in Switzerland, Spain and the US to meet demand and is in talks with other manufacturers about producing the jab.

New data suggests Moderna’s vaccine can be stored safely in a refrigerator for up to 3 months, which could be key as developing countries try to source jabs.

Nio

Chinese electric carmaker Nio has started constructing a new industrial park in the eastern city of Hebei that will be able to produce around 1 million cars per year when completed.

Neopark will accommodate around 10,000 R&D personnel and 40,000 technical workers.

Baidu

Baidu is hoping to launch self-driving taxis in Beijing next month, representing one of the first real-life uses of the technology on public roads.

Baidu has been testing its autonomous Apollo Robotaxi on the streets since last October. The service will be commercially launched in the city’s Shougang Park, where people will be able to hail the self-driving taxi using its app.

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