MORNING NEWS CALL
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U.S. Edlllon
Monday,, Jan,ay 28, .2024
TOP NEWS
• PREVIEW-Microsoft set for AI-powered revenue surge as stock pulls ahead
Microsoft is expected to report a 15.8% jump in quarterly revenue, its best growth in nearly two years, as rising
adoption of its products infused with generative AI fuels demand for its cloud services.
• Financiers grapple with plane shortages amid Boeing MAX crisis
The financiers behind the world's airline industry are meeting for the first time since a mid-air cabin blowout
pushed Boeing into a new safety crisis, compounding a shortage of airplanes as regulators stepped up factory
inspections.
• US economic expansion likely hinges on a nimble Fed this time
It took a stock market crash, a housing crash and a pandemic to kill the last three U.S. economic expansions. But
of all the risks facing a resilient economy right now, the Federal Reserve may top the list, as U.S. central bankers
debate when to lower the restrictive interest rates used to beat inflation that now seems to be in steady decline.
• ADM postpones some exec bonuses amid accounting probe -memo
Archer-Daniels-Midland Co will delay paying performance bonuses to some executives until its financial
statements are completed and audited, according to a staff memo seen by Reuters.
• Italy watchdog says OpenAI's ChatGPT breaches privacy rules
Italy's data protection authority said it told OpenAI that its artificial intelligence chatbot application ChatGPT
breaches data protection rules.
BEFORE THE BELL
U.S. main index futures were muted at the start of a week packed with major events including the Federal
Reserve's interest rate decision and big-ticket tech earnings that could set the tone for Wall Street after a recordbreaking rally. European equities edged higher, helped by strength across the energy sector. In Asia, Chinese
stocks fell despite fresh government curbs on short selling, while Japan's Nikkei closed higher. The dollar gained
ahead of Fed meeting in a data-heavy week. Gold prices firmed as escalating tensions in the Middle East lifted
bullion's safe-haven appeal. Oil prices rose on supply disruption concerns.
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MORNING NEWS CALL - U.S. EDITION
January 29, 2024
STOCKS TO WATCH
Results
• Ryanair Holdings Plc: The Irish airline trimmed its profit forecast for the year to the end of March after some
online travel agents suddenly stopped selling its flights in December, forcing it to cut fares to fill seats as costs per
passenger inched up. Ryanair had for years accused the websites of adding illegitimate extra charges and
launched a series of court cases against them, but appeared to be taken by surprise when they stopped selling the
airline's tickets. The airline, Europe's largest by passenger numbers, forecast an after-tax profit of between $2
billion to $2.1 billion for its financial year to March 31. Net profit for the three months to the end of December, the
third quarter of its financial year, was 15 million euros, significantly lower than the 49 million euros expected by
analysts polled by the company. Traffic in the third quarter was up 7% to 41.4 million passengers, while average
fares were 13% higher than last year, the airline said. Separately, Ryanair has told Boeing that if any U.S.
customers refuse to take delivery of 737 MAX 10 aircraft, that it would buy them "at the right price," executives
said.
Deal of the Day
• McGrath RentCorp & Willscot Mobile Mini Holdings Corp: Willscot Mobile Mini said it will buy business-tobusiness rental company McGrath RentCorp in a deal valued at $3.8 billion, as the portable storage solutions
company looks to expand its presence in North America. McGrath RentCorp's shares were up before the bell. The
cash-and-stock deal includes about $800 million of debt, and the per-share consideration represents a premium of
10.1% to McGrath RentCorp's close on Jan. 26, the companies said. Under the terms of the deal, McGrath
RentCorp shareholders will get either $123 in cash or 2.8211 shares of WillScot common stock for each share
held.
IPOs
• American Healthcare REIT: American Healthcare REIT said it was aiming to raise up to $840 million in an initial
public offering in New York. The investment trust said it plans to sell 56 million shares priced between $12 and $15
each. BofA Securities and Morgan Stanley are the lead underwriters for the IPO.
• Holim AG: Switzerland's Holcim will spin off 100% of its North American operations in a New York flotation which
could value the business at $30 billion, the building materials giant said on Sunday, as it also named a new chief
executive. Miljan Gutovic, currently head of Europe at Holcim, will replace Jan Jenisch as CEO beginning May 1,
said the company, one of the world's biggest cement makers. The spin-off could value the new company at around
$30 billion, Jenisch told reporters, with Holcim retaining no stake. "We're going to do a full capital market
separation of our North American business, so we will list 100% of the business on the New York Stock
Exchange," said Jenisch, who was confident of getting shareholder backing for the flotation. The U.S. business
aims to boost annual sales from around $11 billion at present to more than $20 billion and generate operating
profit of more than $5 billion by 2030, the company said.
In Other News
• Archer-Daniels-Midland Co: The trading corporation will delay paying performance bonuses to some executives
until its financial statements are completed and audited, according to a staff memo seen by Reuters. The delay,
detailed in a memo sent to staff on Thursday, comes days after ADM sidelined its chief financial officer and
brought in outside lawyers to launch an investigation into accounting practices last week. The investigation is
focused on the nutrition segment, a relatively small unit of the grains trading giant's business which played an
outsized role in executive compensation. Compensation from ADM's performance incentive plan for members of
the company's executive council, including any who retired last year, would be postponed, the note said.
• Boeing Co & United Airlines Holdings Inc: The financiers behind the world's airline industry are meeting for the
first time since a mid-air cabin blowout pushed the planemaker into a new safety crisis, compounding a shortage of
airplanes as regulators stepped up factory inspections. Lessors, bankers, and airlines meeting in Dublin - home to
a booming global air finance sector - are examining the supply consequences of a recent partial grounding of the
Boeing 737 MAX 9, following the Alaska Airlines incident earlier in January. For months, aviation has been
struggling to keep pace with a post-pandemic travel boom amid labor and parts shortages. Separately, the first
Boeing 737 MAX jet delivered to a Chinese airline since March 2019 landed in China on Saturday, ending an
almost five-year import freeze on the planemaker's most profitable jets and heralding the potential delivery of a
backlog of dozens of finished MAXs to China. Meanwhile, United Airlines has approached Airbus about buying
more A321neo jets to fill a potential void left by the delayed Boeing 737 MAX 10, in a trade-off likely to ease
deadlock over a long-delayed separate order for larger A350s, industry sources said.
• Delta Air Lines Inc: The U.S. government said on Friday it did not plan to renew the antitrust immunity that the
airlines and Aeromexico currently operate a codeshare agreement under after the Mexican government made
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MORNING NEWS CALL - U.S. EDITION
January 29, 2024
sweeping changes at the country's main capital airport. Last year, Mexican officials moved cargo flights from
Mexico City International Airport (AICM), the country's busiest airport, to a newer airport ordered built by the
president on the outskirts of town. Later, slot availabilities for commercial flights were slashed in another bid to
reduce saturation at AICM. The actions are to the detriment of existing carriers and potential new entrants,
according to the U.S. Department of Transportation (DOT), which has long been unhappy with slot allocations at
the airport. The decision is pending a final ruling, the department said, adding that the companies tentatively have
until Oct. 26 to wind down their joint venture.
• Excelerate Energy Inc: QatarEnergy and the U.S.-based firm signed a 15-year agreement to supply 1 million
metric tons per year (mtpa) of liquefied natural gas (LNG) to be delivered to Bangladesh for 15 years from January
2026. The deal is the latest in a series state-owned QatarEnergy has with European and Asian partners tied to its
massive North Field expansion project, which is expected to lift Qatar's LNG production to 126 mtpa by 2027 from
77 mtpa now. "This new agreement will further strengthen our relationship with Excelerate while also supporting
the energy requirements of the People's Republic of Bangladesh and its stride towards greater economic
development," QatarEnergy Chief Executive Saad al-Kaabi said in the statement.
• Intel Corp & Taiwan Semiconductor Manufacturing Co: President Joe Biden's administration is expected to
award billions of dollars in subsidies in coming weeks to top semiconductor companies including the two
chipmakers to help build new factories in the U.S., the Wall Street Journal reported on Saturday. The forthcoming
announcements aim to kick-start manufacturing of advanced semiconductors that power smartphones, artificial
intelligence, and weapons systems, the WSJ reported, citing industry executives familiar with the negotiations. The
executives expect some announcements to come before Biden's State of the Union address on March 7,
according to the report. Among the likely recipients of the subsidies, Intel has projects underway in Arizona, Ohio,
New Mexico, and Oregon that will cost more than $43.5 billion, the paper said. Another likely recipient, TSMC has
two plants under construction near Phoenix for a total investment of $40 billion. South Korea's Samsung
Electronics, also a contender, has a $17.3 billion project in Texas. Micron Technology, Texas Instruments, and
GlobalFoundries count among other top contenders, WSJ added citing industry executives.
• Microsoft Corp & Apple Inc: Microsoft's early lead in artificial intelligence has the software heavyweight's stock
market value poised to pull decisively ahead of Apple's over the next five years, 13 institutional investors
unanimously agreed ahead of the tech titans' quarterly results this week. Microsoft's shares have surged 7% so far
in 2024, recently sending its stock market value above $3 trillion and dethroning Apple as the world's most
valuable company. As of Friday, the Redmond, Washington software maker's market capitalization was a few
billion dollars above Apple's. Asked which would be more valuable five years from now, all 13 investment
strategists and portfolio managers consulted by Reuters last week said they expect Microsoft to outpace Apple.
• Natera Inc & CareDx Inc: The genetic-testing company Natera convinced a jury in Delaware federal court on
Friday that medical diagnostics rival CareDx's AlloSure and AlloSeq kidney-transplant tests infringe one of its
patents, a Natera spokesperson confirmed. The jury will now consider how much Brisbane, California-based
CareDx owes Natera in monetary damages. CareDx said in a court brief on Friday that Natera was seeking more
than $149 million in lost profits. A CareDx spokesperson said the jury determined that the company infringed one
of two Natera patents at issue. The spokesperson said the company would have further comment at the end of the
trial. Austin, Texas-based Natera accused CareDx of infringing patents related to the use of cell-free DNA to
assess the risk that a person's body will reject a kidney transplant. The jury on Friday determined after a weeklong trial that CareDx's tests infringed one of the patents.
• Spotify Technology SA & Apple Inc: Spotify said on Friday that Apple's new plan to comply with the European
Union's Digital Markets Act (DMA) is "a complete and total farce." From early March, developers will be able to
offer alternative app stores on iPhones and opt out of using Apple's in-app payment system, which charges
commissions of up to 30%, under the bloc's new rules. However, developers will still be required to pay a "core
technology fee" of 50 euro cents per user account per year under Apple's new EU regime. "From the beginning,
Apple has been clear that they didn't like the idea of abiding by the DMA. So they've formulated an undesirable
alternative to the status quo," the music-streaming giant said on Friday. Spotify said it would have to pay a 17%
commission if it stays in the App Store and offers its own in-app payment under the new terms.
• TKO Group Holdings Inc: Vince McMahon resigned from the wrestling giant and the subsidiary WWE that he
founded, over a lawsuit accusing him of sexual assault and trafficking, which he said he will fight, the company
said on Friday. "I have decided to resign from my executive chairmanship and the TKO board of directors, effective
immediately," McMahon said in a statement released by TKO. The suit by a former employee filed on Thursday in
federal court in Connecticut accuses McMahon, WWE, and another executive of "physical and emotional abuse,
sexual assault and trafficking at WWE," and seeks unspecified costs and damages. WWE President Nick Khan
wrote in a memo to employees that McMahon "will no longer have a role with TKO Group Holdings or WWE."
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MORNING NEWS CALL - U.S. EDITION
January 29, 2024
• Toyota Motor Corp: The Japanese automaker said it would suspend shipments of some models including the
Hilux truck and Land Cruiser 300 SUV after finding irregularities in certification tests for diesel engines developed
by affiliate Toyota Industries. A special investigative committee found irregularities during horsepower output
testing for the certification of three diesel engine models. Ten models use the affected engines globally, Toyota
said, including the Hiace van, Fortuner SUV, Innova multi-purpose vehicle, and Lexus-branded LX500D SUV.
Toyota, the world's biggest automaker by sales, has been separately seeking to resolve a case of misconduct
related to rigged collision safety tests at small car specialist Daihatsu. The company said it sought to thoroughly
explain the matter to authorities and would take measures such as running new engine certification tests in the
presence of regulators as needed.
• Western Digital Corp: Bain Capital is in talks with SK Hynix to restart negotiations to merge the memory chip
maker with Japan's Kioxia Holdings, Kyodo newswire reported on Saturday, citing unidentified sources. The South
Korean chip maker is a rival to both companies and is also an investor in Kioxia. The merger talks, which have
continued on and off since 2021, stalled in October because SK Hynix opposed the deal, citing the potential impact
on the value of its investment in the Japanese company.
ANALYSIS
Activist investors fret over Exxon Mobil's lawsuit bypassing US regulator
Investors that use shareholder resolutions to pressure companies on environmental and social issues said they
are worried that an Exxon Mobil lawsuit bypassing the U.S. securities regulator could undermine their influence.
ANALYSTS' RECOMMENDATION
• American Express Co: TD Cowen raises target price to $205 from $186, saying the company's 2024 guidance
calls for revenue growth is stronger than consensus.
• Banc of California Inc: Piper Sandler raises target price to $21 from $17.50, based on the company's stronger
net-interest income, better fees, and more benign credit costs.
• Colgate-Palmolive Co: JPMorgan raises target price to $91 from $90, following the company's better-thanexpected fourth-quarter results.
• Regeneron Pharmaceuticals Inc: JPMorgan raises target price to $1,050 from $950, believing that the
company's Dupixent drug is well positioned for further upside to estimates with strong growth.
• Union Pacific Corp: Daiwa Capital Markets raises target price to $249 from $222, as the company's revenue
and margin performance came better than estimates.
ECONOMIC EVENTS (All timings in U.S. Eastern Time)
1030 Dallas Federal Manufacturing Business Index for Jan: Prior -9.30
COMPANIES REPORTING RESULTS
F5 Inc: Expected Q1 earnings of $3.04 per share
Franklin Resources Inc: Expected Q1 earnings of 57 cents per share
Nucor Corp: Expected Q4 earnings of $2.87 per share
Whirlpool Corp: Expected Q4 earnings of $3.56 per share
CORPORATE EVENTS (All timings in U.S. Eastern Time)
1100 Franklin Resources Inc: Q1 earnings conference call
1630 F5 Inc: Q1 earnings conference call
EX-DIVIDENDS
Conagra Brands Inc: Amount $0.35
ONEOK Inc: Amount $0.99
(All analysts' estimates are according to LSEG IBES data)
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