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Wall St Week Ahead-Where Netflix goes, Big Tech may follow

By Reuters

Published: 01:01 EST, 19 January 2018 | Updated: 01:01 EST, 19 January 2018

By Noel Ra..

By Reuters

Published: 01:01 EST, 19 January 2018 | Updated: 01:01 EST, 19 January 2018

By Noel Randewich

SAN FRANCISCO, Jan 19 (Reuters) – Netflix Inc's quarterly report on Monday may offer an advanced preview of whether Facebook Inc, Amazon.com Inc and other heavyweights behind much of the U.S. stock market's record-breaking rally can keep delivering.

Many of the S&P 500's largest companies – Microsoft Corp , Apple Inc, Alphabet Inc, and Amazon.com – have outperformed in the first 12 trading days of 2018, with investors betting strong earnings growth will justify tech valuations at their highest levels in a decade.

As of Thursday, Netflix, which is due to report its quarterly results on Monday after the stock market closes, had jumped nearly 15 percent this year, outpacing the S&P 500's 5 percent increase.

Netflix's 53 percent surge in 2017, along with rallies by shares of Amazon.com and Silicon Valley's largest tech companies, helped propel the stock market to new highs.

"Netflix is going to be a great early indicator of risk appetite for these high-volatility growth names," said Wedbush trader Joel Kulina. "Netflix's drivers are very company-specific, but if this stock can deliver, there's no reason this whole market can't keep going higher."

The Los Gatos, California company faces increasing competition from streaming services including Amazon.com's Prime Video and moves by traditional media companies. But investors remain optimistic about its ability to beat expectations.

Its stock recently traded at 95 times expected earnings for the next 12 months, versus AMC Entertainment at 44 times earnings and Time Warner Inc at 14 times earnings, according to Thomson Reuters data.

Underscoring investors' willingness to pay premium prices for fast-growing stocks, Phil Blancato, head of Ladenburg Thalmann Asset Management in New York, recently helped a client buy $1.5 million worth of shares in Facebook, Amazon.com, Apple, Netflix and Google's parent Alphabet as investments for his grandchildren.

"I said, 'You're crazy,' but he was very direct, he wanted the FAANG stocks," Blancato said, using an acronym for those companies widely used on Wall Street.

Analysts on average expect S&P 500 technology companies to deliver a 15.9 percent increase in earnings for the December quarter, according to Thomson Reuters I/B/E/S. Earnings for the entire S&P 500 are seen rising 12.2 percent, bolstered by lower unemployment and fatter wages.

Technology investors during the reporting season just underway are also eager to hear company executives explain how their bottom lines will be affected by corporate tax cuts passed by Congress in December, and whether they plan to repatriate overseas profits.

Apple said on Wednesday it would make about $38 billion in one-time tax payments on its overseas cash, and investors want to know how much of the $252 billion held abroad Apple will bring home and potentially spend on dividends, share buybacks or acquisitions.

In its quarterly report on Oct. 16, Netflix added more global subscribers than analysts had expected. In response, its stock hit a record high in after-hours trade before dipping the following day.

In October, Netflix hiked U.S. prices for the first time since 2015, potentially providing more cash to produce original content, but also increasing the risk of losing customers.

Netflix has forecast adding 6.3 million subscribers worldwide in the December quarter, which would bring its global customer base to nearly 115.6 million.

Analysts on average expect a 32.5 percent jump in revenue to $3.28 billion, and net income of $186.3 million, up 179 percent. Analysts expect earnings per share of 41 cents.

Up 42 percent in the past 12 months, the S&P 500 information technology index is trading more than 19 times expected earnings, its highest since 2008, according to Thomson Reuters data.

Facebook will post quarterly results on Jan. 31, followed by Amazon.com, Apple and Alphabet on Feb 1. Nvidia, which surged 81 percent in 2017 and replaced Qualcomm as the most valuable U.S. chipmaker after Intel Corp, reports on Feb 7. (Reporting by Noel Randewich; Editing by Richard Chang)

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Australia

Great Southern sets development pathway for Mon Ami gold operation

Great Southern Mining Ltd (ASX:GSN) has set a development pathway for gold operations at Mon Ami in Western Australia after completing an in-house preliminary economic evaluation of the potential for an open-pit development.

Results are sufficiently positive for the company to initiate the full suite of requisite preliminary activities targeted at obtaining a mining approval under the Mining Act 1978 (WA) in 2021.

This progression towards development is expected to add significant underlying value to Mon Ami and the company’s gold strategy.

Development of the deposit offers a potential source of cash flow for ongoing funding of aggressive exploration plans across the gold portfolio – including Cox’s Find, at depth at Mon Ami and the Edinburgh Park Gold Project in North Queensland.

Testing high-grade extensions
Great Southern Mining chief executive officer Sean Gregory said: “We are pleased to announce that our in-house preliminary economic review has identified a potential low-cost..

Great Southern Mining Ltd (ASX:GSN) has set a development pathway for gold operations at Mon Ami in Western Australia after completing an in-house preliminary economic evaluation of the potential for an open-pit development.

Results are sufficiently positive for the company to initiate the full suite of requisite preliminary activities targeted at obtaining a mining approval under the Mining Act 1978 (WA) in 2021.

This progression towards development is expected to add significant underlying value to Mon Ami and the company’s gold strategy.

Development of the deposit offers a potential source of cash flow for ongoing funding of aggressive exploration plans across the gold portfolio – including Cox’s Find, at depth at Mon Ami and the Edinburgh Park Gold Project in North Queensland.

Testing high-grade extensions

Great Southern Mining chief executive officer Sean Gregory said: “We are pleased to announce that our in-house preliminary economic review has identified a potential low-cost development pathway for an open-pit mining operation at Mon Ami.

“The planned drilling program seeks to expand on this opportunity and test for higher grade extensions to the deposit at depth.

“Rapid development at Mon Ami has the potential to deliver a robust source of cash flow for GSN, allowing the further acceleration of the aggressive exploration plans across our Australian gold portfolio.”

Near-surface high-grade gold hits

Recent drill results at Mon Ami included several near-surface high-grade results – 11 metres at 7.9 g/t gold from 26 metres including 4 metres at 15.9 g/t and 4 metres at 12.4 g/t from 80 metres.

Initial technical studies have been scoped at the project to support a mining approval and include a review of the existing drill core and optical televiewer data by the company’s geotechnical consultants to recommend pit design parameters.

GSN believes that the high grades could extend to depth in an analogous fashion to the Ida H deposit 14 kilometres to the north of Mon Ami along the same regional shear zone, the Barnicoat Shear.

Upcoming drilling

The metallurgical characteristics of Mon Ami were tested in 2018 where the recoveries averaged 95% in the fresh and transitional rock, which will be the focus of any open pit development.

The maiden inferred resource of 1.1 million tonnes at 1.7 g/t for 59,000 ounces was estimated in 2018 and since then 2,073 metres of reverse circulation (RC) drilling has been conducted with further drilling is planned.

As a part of upcoming drilling, GSN plans to upgrade the resource to the indicated status based on an improved understanding of the deposit from the quality assured drilling and improved confidence around modifying factors.

Drill rig secured

The company has secured the services of its preferred RC drilling contractor to resume drilling operations at Laverton from the first week of December 2020.

Drilling will test these targets at Mon Ami as well as the targets at Cox’s Find.

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Australia

Tempest Minerals in trading halt with capital raising news pending

Tempest Minerals Ltd (ASX:TEM) (FRA:LIF) has a capital raising announcement pending and has been granted a trading halt by the ASX.

The halt will remain in place until the earlier of the start of normal trading on Tuesday, November 17, 2020, or when an announcement is released to the market.

Securities last traded at 3.8 cents and since the market close on August 28 have traded in the range of 2.4 cents to 5.3 cents.

Drilling underway
The company is active at the Yalgoo projects around 400 kilometres north of Perth in WA with drilling of three priority targets beginning last month at the Warriedar West Prospect.

Tempest considers Yalgoo the forgotten goldfield, with world-class deposits every 10 kilometres, including high-grade gold, copper, zinc, tungsten and iron, and major infrastructure in place which represents a low-cost, high-impact exploration opportunity.

The drilling at Warriedar West is targeting intrusion-related gold system (IRGS) mineralisation.

Gold and trace eleme..

Tempest Minerals Ltd (ASX:TEM) (FRA:LIF) has a capital raising announcement pending and has been granted a trading halt by the ASX.

The halt will remain in place until the earlier of the start of normal trading on Tuesday, November 17, 2020, or when an announcement is released to the market.

Securities last traded at 3.8 cents and since the market close on August 28 have traded in the range of 2.4 cents to 5.3 cents.

Drilling underway

The company is active at the Yalgoo projects around 400 kilometres north of Perth in WA with drilling of three priority targets beginning last month at the Warriedar West Prospect.

Tempest considers Yalgoo the forgotten goldfield, with world-class deposits every 10 kilometres, including high-grade gold, copper, zinc, tungsten and iron, and major infrastructure in place which represents a low-cost, high-impact exploration opportunity.

The drilling at Warriedar West is targeting intrusion-related gold system (IRGS) mineralisation.

Gold and trace element anomalies typical of IRG-style mineralisation are present in the project and it includes considerable nugget-rich free gold exploited in modern times by prospectors as well as high-grade gold in rock chips.

Tempest is also undertaking surface sampling and drill planning at other projects within its portfolio.

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Australia

S&P/ASX 200 dips 0.40% as new COVID-19 cases in the US top 150,000 for the first time

S&P/ASX 200 (INDEXASX:XJO) fell 26 points or 0.4% to 6,393 by around 1.40 pm as COVID-19 cases in the northern hemisphere continue to surge, leading to further lockdowns.

Despite today’s losses, the index is still on track for a weekly gain of about 3.2% after rising 4.4% last week.

Financials, energy and industrials were leading the declines today while materials and communications advanced.

Energy stocks were also underperforming but they are still up by 13% this week.

COVID-19 update
The number of new COVID-19 cases in the US topped 150,000 on Thursday, eight days after 100,000 cases were found in a day for the first time, according to a New York Times report.

Deaths are rising too with more than 1,000 on average each day and COVID-19 hospitalisations set a record on Thursday, climbing to 67,096.

The pandemic has risen to crisis levels in much of the nation, especially the Midwest, as hospitals warn of dwindling bed space and as coroners deploy mobile morgues.

Top gainers
Tod..

S&P/ASX 200 (INDEXASX:XJO) fell 26 points or 0.4% to 6,393 by around 1.40 pm as COVID-19 cases in the northern hemisphere continue to surge, leading to further lockdowns.

Despite today’s losses, the index is still on track for a weekly gain of about 3.2% after rising 4.4% last week.

Financials, energy and industrials were leading the declines today while materials and communications advanced.

Energy stocks were also underperforming but they are still up by 13% this week.

COVID-19 update

The number of new COVID-19 cases in the US topped 150,000 on Thursday, eight days after 100,000 cases were found in a day for the first time, according to a New York Times report.

Deaths are rising too with more than 1,000 on average each day and COVID-19 hospitalisations set a record on Thursday, climbing to 67,096.

The pandemic has risen to crisis levels in much of the nation, especially the Midwest, as hospitals warn of dwindling bed space and as coroners deploy mobile morgues.

Top gainers

Today’s top gainers on the ASX include FYI Resources Ltd (ASX:FYI) (+13.89%), Euro Manganese Inc CDI (ASX:EMN) (+17.31%), Rimfire Pacific Mining N L (ASX:RIM) (+20.00%), Technology Metals Australia Ltd (ASX:TMT) (+10.00%), Andromeda Metals Ltd (ASX:AND) (+15.38%), Auteco Minerals Ltd (ASX:AUT) (+10.00%), Macarthur Minerals Ord Shs (ASX:MIO) (+10.64%) and Nanoveu Ltd (ASX:NVU) (+15.00%).

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