Top US stocks to watch: Netflix, UBS and IBM

Netflix kicks-off earnings season for Big Tech today, UBS delivers record profits, IBM, Travelers Cos and JB Hunt all beat expectations, Nasdaq looks to spin-off its private markets platform, and Comcast and Viacom consider working together overseas on streaming.

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Netflix

Netflix is scheduled to release second quarter earnings after the markets close today, kicking-off the earnings season for Big Tech.

Netflix is up against some extremely tough year-ago comparisons. Streaming subscriptions surged in the second quarter of 2020 in lockdown. Netflix added 10 million new subscribers in the second quarter of last year, pulling in almost 26 million subscribers in the first half of last year. Management at Netflix believe that a lot of demand for streaming was pulled forward to 2020, explaining why Netflix added just 4 million in the first quarter of 2021 and why Netflix is guiding for just 1 million new subscribers in the second quarter results to be released today. Guidance for the third quarter could start to normalise.

Netflix is targeting quarterly revenue of $7.30 billion and analysts are expecting it to slightly beat that. Diluted EPS is expected to come in at around $3.16.

UBS

UBS beat expectations in the second quarter of 2021 as it reported a surge in profits thanks to increased engagement with its wealthy clients.

The Swiss bank reported a 63% jump in net profit in the second quarter to $2.01 billion, smashing the $1.34 billion expected by analysts. That marks the highest profit levels in over five years.

Chief executive Ralph Hamers said momentum was on the bank’s side, stating growth will continue on the wealth side of the business and that it will benefit from improved efficiency going forward.

IBM

IBM beat expectations when it released second-quarter results yesterday, driven by higher client spending for its cloud and consulting businesses.

Revenue inched-up 3% in the quarter to $18.75 billion and came in higher than the $18.29 billion expected by Wall Street. Still, net income dropped to $1.33 billion from $1.36 billion the year before.

For the first-half, revenue was up 2% at $36.5 billion and net income was down 10% at $2.3 billion. IBM’s guidance is targeting annual growth in revenue.

Travelers Cos

Property and casualty insurance outfit Travelers Cos said fewer claims allowed it to post higher revenue and profits in the second quarter.

Core net income of $879 million compared favourably to the $50 million loss booked the year before. That was $3.45 on a per share basis and came in well ahead of the $2.39 expected by analysts. Net written premiums grew 11% year-on-year to $8.13 billion.

The improvement was led by higher net investment income, fewer catastrophes and bigger gains from underwriting. For the first-half, revenue was up 6% to $15.64 billion and core income jumped to $1.57 billion from just $626 million.

Halliburton

Halliburton reported higher revenue and profits in the latest quarter as markets continue to recover from the pandemic.

The company reported net income of $227 million in the second quarter, up from $170 million the year before. That climbed to $0.26 from $0.19 on a per share basis. That growth was driven by a rise in revenue to $3.7 billion from $3.5 billion, which also rose 7% from the first quarter.

Halliburton said markets in North America and overseas continues to improve and that margins are expanding in several areas of the business. ‘The positive activity momentum we see in North America and international markets today, combined with our expectations for future customer demand, gives us conviction for an unfolding multi-year upcycle,’ said chief executive Jeff Miller.

Nasdaq

Nasdaq and a number of other companies have formed a new joint venture to launch a new secondary trading venue for private company stock for institutional clients, ahead of releasing its second-quarter results today.

Nasdaq, SVB Financial Group, Citi, Goldman Sachs and Morgan Stanley are launching Nasdaq Private Market, which will be a separate, standalone, independent business. Nasdaq is spinning off the infrastructure needed while the partners are providing the investment needed to get the operation off the ground.

‘Since we launched Nasdaq Private Market in 2014, we have created a trusted platform for private companies resulting in a strong track record and robust pipeline of secondary transactions,’ said president of the Nasdaq Stock Exchange  Nelson Griggs. ‘This joint venture will accelerate our opportunities in the private company secondary trading market and establish the standard for technology-driven operational efficiencies, compliance and execution.’

PPG Industries

PPG Industries on Monday said it delivered record net sales of $4.4 billion in the second quarter, around 45% higher than the year before.

The company said EPS rose to $1.80 per share from just $0.42 the year before. Adjusted EPS of $1.94 was slightly below the $2.19 expected by Wall Street but ahead of the $1.09 booked the year before.

‘Our strong organic sales growth reflects a partial demand recovery from the pandemic, including above-market contributions across many of our businesses. However, our volume growth was significantly tempered due to various supply and component disruptions, including those that reduced the overall manufacturing capability of our customers. In addition, despite strong underlying end-use market demand, various coatings raw material shortages and logistics issues reduced our ability to fully supply our existing order book within the quarter. Our recent acquisitions also contributed to our strong year-over-year sales growth, and they are meeting our expectations,’ said chairman and chief executive Michael McGarry.

JB Hunt Transport Services

JB Hunt reported strong double-digit growth in revenue and earnings during the second quarter, beating market expectations.

The company said revenue rose 36% year-on-year to $2.91 billion. Operating income increased 38% to $241.5 million and EPS increased 41% to $1.61, coming in slightly ahead of the $1.57 forecast by analysts.

The company said all divisions reported double-digit growth from last year, led by its Integrated Capacity Solutions and Truck divisions that reported 100% and 70% growth in revenue, respectively.

Crown Holdings

Crown Holdings released second quarter results that beat expectations yesterday as it announced it will be expanding capacity to meet increased demand for beverage cans.

Net sales in the quarter jumped to $2.85 billion from $2.13 billion the year before. Adjusted earnings per share increased to $2.14 from $1.33 the year before, and smashed the $1.78 expected by analysts. Reported EPS held steady at $0.95 versus $0.94. Crown Holdings said demand for beverage cans grew 20% in the quarter while demand for food cans remained ‘solid’.

Crown Holdings previously announced plans to offload its tinplate business in Europe and said the deal should be completed in the third quarter. Proceeds will be used to reduce debt, buyback shares and fund an expansion of beverage can capacity around the world by building new plants and growing existing sites. It expects beverage can capacity to be 28% higher at the end of 2022 compared to 2019.

Comcast and Viacom

The chief executives of Comcast and Viacom have met in recent weeks to discuss a potential streaming partnership for international markets, according to reports from the Wall Street Journal.

A meeting was reportedly held around the end of June to talk about a variety of ways that both companies could enter non-US markets together. Viacom has its Paramount+ service while Comcast is pushing its Peacock service and its Sky unit also has its own streaming site.

The reports have reignited theories that a full-blown merger between Comcast and Viacom could be on the cards in the future as the pair battle against fierce competition from leading streaming platforms Netflix, Disney and Amazon.

Moderna

An additional 50 million doses of the Moderna vaccine will be supplied to Japan and distributed by local partner Takeda Pharmaceutical.

The doses will start to be delivered in 2022 and builds on the previous agreement to supply 50 million doses in 2021. Moderna will be responsible for manufacturing the jabs.

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