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UOB cuts Wuxi Bio's rating to sell from hold

Wuxi Biologics faces headwinds in the next two years, as the biotech industry makes a slow recovery in a high interest-rate environment, UOB Kay Hian analysts say. The company's shares have tumbled since it cut its 2023 revenue guidance to 10% from 30%. The analysts expect Wuxi Bio to post double-digit revenue and profit growth for 2024 and are more conservative on its 2025 outlook as the industry lacks growth catalysts. The company may also come under significant margin pressure in the next two years due to lower-than-expected new project numbers in 2023 and delays in mega projects, the analysts add. UOB Kay Hian cuts Wuxi Bio's rating to sell from hold and lower its target price to HK$22.00 from HK$47.00 given the much lower guidance.

RBC Capital Markets downgraded HSBC to 'sector perform' from 'outperform'

RBC Capital Markets downgraded HSBC to 'sector perform' from 'outperform' and cut the price target to 775p from 825p as it said the shares are looking more fair value. It noted that HSBC has outperformed UK bank peers by 31% year-to-date, but said now is a good time to take profits. "Earnings momentum looks to have turned and an improved capital distribution profile is now reflected in consensus," it said. "Therefore, with the shares looking more fair value, we downgrade our rating." RBC said rates are expected to fall by around 190 basis points weighted across HSBC's core geographies over the next two years, broadly equivalent to a headwind of around $5bn. It said the headwind from lower rates will be partially offset by balance sheet growth, but that is unlikely to be anything "remarkable" about over the next two years.

General Motors' plans to return billions to shareholders seem to have changed little

General Motors' plans to return billions to shareholders seem to have changed little about the company's overall financial picture, per the three major credit rating agencies. Fitch maintains its rating, as it expects GM to keep its automotive cash near or above the previous $18 billion target, with enough flexibility in the case of a downturn. Moody's says the move is credit-negative, but the agency does not believe it signals a shift in overall financial policy, and therefore GM's ratings and outlook are "unaffected." S&P Global says the company will have enough positive cash flow to handle investments in electrification and other technology, "therefore, all of our ratings on GM are unchanged," S&P says GM expects to generate operating profit of $11.7 billion to $12.7 billion this year, which is slightly lower than its previous forecast. GM also expects to generate free cash flow of $10.5 billion to $11.5 billion this year, higher than a previous forecast.

Goldman Sachs has upgraded its rating on Standard Chartered from 'neutral' to 'buy"

Goldman Sachs has upgraded its rating on multinational banking group Standard Chartered from 'neutral' to 'buy', saying that upside risk isn't reflected in the current share price. The stock currently trades close to record-low valuations, despite a near-decade-high return on tangible equity of 11% next year, and offering a 10% total capital return yield, Goldman said. Meanwhile, StanChart is set to show a "rare out-performance relative to its bank peers over the next two years", according to Goldman. Analysts expect the bank to deliver a double-digit compound annual growth rate (CAGR) in earnings per share (EPS) and a 2.7 percentage-point improvement in return on equity (ROE), compared with low single-digit EPS CAGR and declining ROE at peer banks. Goldman said that improvements in EPS and ROE will be driven by four factors: an unwind of loss-making hedges put-on by the group during late 2021, starting in February 24; a better outlook for non-funds income; a new chief financial officer to be appointed next year who could focus on the outsized corporate office function relative to its peers; and the possibility for continued buyback with capital now at the top-end of the target range. Third-quarter results from StanChart last month came in about 10% below consensus forecasts on a pre-tax profit level. "We expect 4Q23 results delivery to be cleaner, in-line with expectations, and to be further supported by a c.US$750mn buy-back announcement. The stock tends to react to earnings and can rise into a potential buy-back," Goldman said. Our information/charts are NOT buy/sell recommendations. Are strictly provided for educational purposes only. Trade at your own risk and analysis.

UBS upgrades Anglo American, Antofagasta to 'buy'

UBS upgraded its stance on miners Anglo American and Antofagasta to 'buy' from 'neutral'. On Anglo, it said the risk/reward was attractive after underperformance. It noted the shares are down 40% from the high in January, underperforming Rio Tinto and BHP by around 28% due to weakness in platinum group metals and diamonds, concerns about Woodsmith and ongoing operational challenges. "We believe the risk/reward is now attractive, with Anglo to benefit from improving copper prices in 2024/25, resilient iron ore and met-coal prices as well as recovering PGM and rough diamond prices," it said. In 2024, UBS expects the operational performance to gradually improve, and for more than $1bn of working capital to be released. UBS said it also believes the market now ascribes no value to the Woodsmith project. "Anglo has strong ESG credentials, high quality assets and a strong balance sheet," the bank said. On Antofagasta, UBS said the bottom-up investment case was at an inflection. It said Anto has had a challenging two to three years that resulted in guidance downgrades, declining output, significant increases in unit costs and capex for key projects at Los Pelambres lifting materially eroded returns. "Looking forward, in our view, Anto's bottom-up investment case is attractive," it said. "We expect a combination of organic volume growth and unit cost improvement to drive superior earnings growth versus mining peers (diversified and copper pure plays apart from Ivanhoe) in the next three to five years and believe earnings growth (rather than the re-rating/large dividends) will drive attractive returns." On top of this, UBS said reckons the copper market is also close to a fundamental inflection point and that Anto is one of the few "lower risk" large cap global copper miners that offers leverage to copper price upside.

Citigroup Upgrades HP to Buy, Raises Price Target to $33

Citigroup analyst Asiya Merchant upgrades HP (NYSE:HPQ) from Neutral to Buy and raises the price target from $31 to $33. Citi believes HP continued enhancements in the company's PC ecosystem favorable to its stock and expects potential cost cuts to contribute to the company's rebound in earnings. Citi is reminding investors has taken out billions of dollars in excess costs from their business. And then the other catalyst, which not only applies to HP guys, is this upgrade cycle potential for PCs as AI gets layered on top of it. Major milestones that we hit operationally, key roadmap milestones in PC, the AI PC, the server progress, our AI product lines. But maybe most importantly, the process technology or five nodes and four years just hitting major milestones on that audacious plan that we laid out. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

Broadcom revenue from its semiconductor segment grew only 3% year over year

Broadcom revenue from its semiconductor segment grew only 3% year over year to $7.3 billion in the fiscal fourth quarter. Chip companies on the PHLX index averaged gross margins of 49% for the trailing 12-month period, according to data from S&P Global Market Intelligence. The quarter’s results were solid and closely in line with our expectations. Sales of $9.3 billion rose 4% year over year and 5% sequentially, with growth in both semiconductors and software. Broadcom’s networking chips continue to see impressive demand, largely driven by AI, and it saw typical seasonal strength for its wireless chips that sell into Apple’s products like the iPhone. Broadcom’s other chip markets of broadband and storage are softening, and we expect this to continue through fiscal 2024. Non-GAAP gross and operating margins of 74% and 62%, respectively, were within typical ranges for the firm and remain extremely impressive.

Citigroup Upgrades Clorox to Buy, Raises Price Target to $150

Citigroup analyst Wendy Nicholson upgrades Clorox from Neutral to Buy and raises the price target from $135 to $150. As of October 31, 2023, the average one-year price target for Clorox is 137.05. The forecasts range from a low of 119.18 to a high of $179.55. The average price target represents an increase of 18.79% from its latest reported closing price of 115.38. On September 20, 2023 the company declared a regular quarterly dividend of $1.20 per share ($4.80 annualized). Shareholders of record as of October 25, 2023 will receive the payment on November 9, 2023. Previously, the company paid $1.20 per share. At the current share price of $115.38 / share, the stock's dividend yield is 4.16%. Looking back five years and taking a sample every week, the average dividend yield has been 2.73%, the lowest has been 1.90%, and the highest has been 4.12%. The standard deviation of yields is 0.44 (n=235).

Visa is still seeing signs of resilience

Despite the elevated macroeconomic headwinds facing consumers, Visa is still seeing signs of resilience as trends through the first three weeks of November remain stable compared with year-ago levels, UBS analysts say after hosting CFO Chris Suh at their annual tech conference. In the US specifically, volume and transactions have remained consistent, and cross-border volumes continue to recover relative to 2019 levels, the analysts say. Were the economy to enter a recession, Visa would lean on the debit portion of its business for some cushion, the analysts say, noting that Visa's debit transaction growth was above 10% during each quarter of the 2007-08 financial crisis.

Citigroup Downgrades NXP Semiconductors to Sell, Lowers Price Target to $150Share

Citigroup analyst Christopher Danely downgrades NXP Semiconductors (NASDAQ:NXPI) from Neutral to Sell and lowers the price target from $216 to $150. Analyst Christopher Danely lowered his rating on NXP Semiconductors (NXPI) shares to sell from neutral with a price target of $150 and said that as a result of the potential downturn, he foresees 2024 earnings per share of roughly 40% below consensus. A consensus of analysts expect NXP (NXPI) to earn $14.72 per share in 2024. Danely also worried that the correction in the industrial and automotive markets is starting to catch up with NXP (NXPI), as it guided the first-quarter of 2024 down to mid-to-upper-single digits sequentially. This information is only for educational purposes. These information does not contain investment advice or investment recommendation, or an offer or solicitation for a transaction in any financial instrument.

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