Tag Archives: analysts

Relations with Afghanistan are tricky, analysts say

Chinese State Councilor and Foreign Minister Wang Yi meets with Mullah Abdul Ghani Baradar, political chief of Afghanistan’s Taliban, in north China’s Tianjin, July 28, 2021.

Li Ran | Xinhua News Agency | Getty Images

China was one of the first countries that expressed willingness to engage with Taliban militants diplomatically when they swept to power in Afghanistan — analysts say it’s a pragmatic move, but relations could be “tricky” considering Beijing’s strategic interests.

Beijing has for years been preparing for the possibility of the Taliban’s return to power, according to Derek Grossman, a senior defense analyst at Rand Corporation.

“Unofficially, they’ve been speaking with the Taliban for many years now, hedging their bets,” he told CNBC’s “Squawk Box Asia” on Wednesday.

But the relationship between China and the Islamist militant group is “tricky” because Beijing targets what it calls religious extremism among ethnic minority Muslims in Xinjiang, said Ian Johnson of the Council on Foreign Relations.

On the one hand, Beijing … would be willing to work with [the Taliban]. On the other hand, Islamist groups in Xinjiang are such a problem.

Ian Johnson

Council on Foreign Relations

Xinjiang is home to the minority Uyghur Muslims. The United States, the United Kingdom and the United Nations have accused China of human rights abuses including forced labor and large-scale detentions in Xinjiang. Beijing denies those claims.

“If they have an Islamist political party that is … running a neighboring country, that could be, potentially, a problem for China,” said Johnson, who is the CFR’s Stephen A. Schwarzman senior fellow for China studies.

“At least optically, it seems kind of weird that, on the one hand, Beijing … would be willing to work with [the Taliban]. On the other hand, Islamist groups in Xinjiang are such a problem,” he told CNBC.

Fears of extremist attacks

China is worried that Afghanistan will become a haven for an Uyghur extremist group called the East Turkestan Islamic Movement, according to a Eurasia Group note. Beijing believes the group could launch attacks in response to the “widespread repression of Uyghurs,” analysts wrote.

Chinese authorities may be trying to protect their country from terror attacks by building relations with the Taliban, according to Neil Thomas, China and Northeast Asia analyst at Eurasia Group.

“Beijing hopes that offering economic assistance and possibly diplomatic recognition to the Taliban will persuade them to protect China’s security interests in Afghanistan,” he told CNBC in an email.

China’s decision to engage with the Taliban is a “pragmatic move,” Thomas said.

It makes “perfect sense” for Beijing, according to Rodger Baker, senior vice president of strategic analysis at Stratfor.

“We’ve seen around the world — the Chinese are perfectly willing to deal with any side that’s in a country, so long as that side agrees to keep China’s interests,” he told CNBC’s “Squawk Box Asia” on Wednesday. That may include keeping the region stable so that China’s Belt and Road infrastructure projects will not be derailed, and preventing terrorism or other attacks, he added.

Taliban members patrol the streets of Afghan capital Kabul on August 16, 2021, as the Taliban takes control of Afghanistan after President Ashraf Ghani fled the country.

Sayed Khodaiberdi | Anadolu Agency | Getty Images

Hua, the foreign ministry spokesperson, said China has maintained contact and communication with the Taliban “on the basis of fully respecting the sovereignty of Afghanistan and the will of all factions in the country.” The Taliban assured Beijing that it would “never allow any force to use the Afghan territory to engage in acts detrimental to China,” she added.

“China will try to hold the Taliban to its word but there are unanswered questions about the unity and the level of extremism in the new regime,” Thomas said.

Formal ties with Taliban in question

China has “laid the groundwork” and made preparations to work with the Taliban, but it’s difficult to predict whether Beijing will formally recognize them as Afghanistan’s government, said Johnson of the CFR, adding that Western countries may not want anyone to affirm the Taliban.

“It may take a little bit of time,” he said. Beijing “might want to see assurances that the Taliban is going to be ‘a normal government’ and not … have massacres and massive killings or something like that before they give them formal diplomatic recognition.”

If the Taliban behaves “more or less normally,” China is likely to recognize it “at some point” before Western countries, he added.

Rand Corporation’s Grossman echoed that sentiment, noting that China may think it’s time to start the process of potentially recognizing the Taliban as a “legitimate governing entity.”

“But they’ve also said that they want to make sure that the Taliban is making a ‘clean break’ with terrorist proxies,” he said.

It’s possible that China asked its diplomats to stay in Afghanistan to … try to build trust and diplomatic leverage with the incoming Taliban regime.

The Taliban last week pledged peace at its first press conference since taking Kabul, according to a Reuters report.

For now, unlike many other governments who have moved to evacuate embassy staff from Afghanistan, China’s ambassador remains in Kabul. A spokesman for the Taliban’s political office reportedly said the group would not target diplomatic missions in the country.

It’s smart of China to take this approach, which signals that Beijing is not scared, taking sides or running away from the Taliban, said Johnson.

Eurasia’s Thomas said that could also help in the medium term.

“It’s possible that China asked its diplomats to stay in Afghanistan to present a contrast with evacuating Western missions and try to build trust and diplomatic leverage with the incoming Taliban regime,” he said.

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Nvidia stock jumps as analysts say data-center growth ‘has some room to run’

Nvidia Corp. shares rallied Thursday as more than half the analysts who cover the chip maker hiked their price targets following the company’s record quarter and forecast for more new highs based on data-center gains.

Nvidia
NVDA,
+6.13%
shares rallied more than 7% in morning trading to hit an intraday high of $204.95, while the PHLX Semiconductor Index
SOX,
+1.20%
gained more than 1%, and the S&P 500 index
SPX,
+0.32%
gained 0.4%. Nvidia shares last closed at a split-adjusted record high of $206.99 back on July 6, and are up 68% over the past 12 months.

For more on today’s market action, see Market Snapshot

Nvidia forecast revenue of $6.66 billion to $6.94 billion Wednesday, above Wall Street estimates at the time, and said that the “lion’s share” of the $500 million increase will come from data-center sales. That follows new records for total, gaming and data-center revenues that Nvidia reported for the quarter.

What many analysts picked up on is that demand for graphics processing units (GPUs) for cryptocurrency mining didn’t factor that much into the outlook. That came as a relief to analysts, who noted a lower crypto risk compared with 2018 when a fall in cryptocurrency values prompted many miners to sell their gaming card-powered rigs, flooding the market with second-hand cards.

Full earnings coverage: Nvidia reports record data-center and gaming revenue, but supply constraints still a concern

Nvidia broke out sales of its Cryptocurrency Mining Processors, or CMPs, which are intended to divert mining demand away from GPUs made for gamers and not expected to be material in revenue gains.

Data-center sales took up much more of the attention from analysts, however. Bernstein analyst Stacy Rasgon, who has an outperform rating on the stock and raised his price target to a $230 from $180, said that while “the company is having absolutely no trouble continuing to crush gaming,” Nvidia’s data-center story “still feels like it has some room to run.”

“The data-center story is really coming into its own now, with a sizable inflection in the near term and with prospect for the segment to equal, and potentially exceed, gaming in the not-too-distant future,” Rasgon said.

For more: Nvidia’s ARM acquisition is stalled, and there’s a deadline with more than a billion dollars at stake

Evercore ISI analyst C.J. Muse, who has an outperform rating and a $250 price target, called data-center sales a “key for the stock.”

“Data Center revenues were guided to accelerate in 3Q off a very strong comp based on strength across hyperscale and vertical customers, training and inference applications, and compute and networking technologies – the democratization of AI workloads continues to be a front and center theme here, and one we see Nvidia driving and benefiting from over for the foreseeable future,” Muse said.

Cowen analyst Matthew Ramsay, who has an outperform rating and raised his price target to $220.00 from $176.25, said that the data-center acceleration was “the most important takeaway” from the earnings call.

“We expect sustainable data-center and gaming product cycles that should drive >50%+ organic growth for the company in F’2022,” Ramsay said.

Jefferies analyst Mark Lipacis, who has a buy rating and raised his price target to $223 from $214, addressed the lower risk of another crypto-mining debacle.

Read: Crypto is reshaping the world economy, 50 years after Nixon ended the dollar’s peg to gold. Here’s how some are playing it

“We think crypto-miners are 1/10th the gaming GPU sales vs 2018,” Lipacis said. “We continue to believe the risk of a crypto-driven gaming bust is low, and expect Nvidia’s ecosystem moat and increasing software revenues to lead to additional upside surprises.”

Of the 41 analysts who cover Nvidia, 34 have buy ratings, five have hold ratings, and two have sell ratings. Of those, at least 24 analysts hiked their price targets in response to the earnings and one lowered their target, according to FactSet. That resulted in an average price target of $219.23, up from a previous $204.24.

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Tesla Q2 deliveries meet analysts’ estimates despite chip shortage, shares gain

  • Shares up 3% on record vehicle deliveries
  • Deliveries of higher priced models fell

July 2 (Reuters) – Tesla Inc (TSLA.O) on Friday posted record vehicle deliveries for the second quarter that were in line with Wall Street estimates as the electric-car maker coped with a shortage of chips and raw materials.

Tesla delivered 201,250 vehicles in total during the second quarter. Analysts had expected Tesla to deliver 200,258 vehicles, according to Refinitiv data.

“Congrats Tesla Team on over 200,000 car built & delivered in Q2, despite many challenges!!” Musk said in a tweet.

Shares of the company were up 3% in early trading on Friday.

The numbers showed that strong deliveries of its Model 3 sedans and Model Y crossovers, its two lower priced variants, offset a drop in deliveries of higher-end Model S and X variants.

Tesla has been raising prices for its vehicles in recent months, which its billionaire boss, Elon Musk, blamed in May on “major supply chain price pressure”, especially raw materials. read more

He also said in early June that “Our biggest challenge is supply chain, especially microcontroller chips. Never seen anything like it.”

Tesla sold 21,936 cars to Chinese customers in May, rebounding from a sales slump in April, but still well below March numbers. read more

MODEL S,X DELIVERIES FALL

Overall deliveries of its higher priced Model S and X cars fell to 1,890 during the April to June period, from a meager 2,020 the preceding quarter, Tesla said.

After delays, the company launched the Model S Plaid in June, a high-performance version of its Model S, starting at $129,990. read more

A Tesla Model S Plaid electric vehicle burst into flames on Tuesday while the owner was driving, just three days after the car was delivered. Tesla did not have an immediate comment when contacted by Reuters. read more

Total production in the second quarter rose about 14% to 206,421 vehicles from the first quarter.

Reporting by Akanksha Rana in Bengaluru and Hyunjoo Jin in Berkeley, Calif, Additional reporting by Subrat Patnaik; Editing by Sriraj Kalluvila, Saumyadeb Chakrabarty and Philippa Fletcher

Our Standards: The Thomson Reuters Trust Principles.

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Target Q4 earnings beat analysts’ forecasts across the board, skips 2021 guidance

TipRanks

Goldman Sachs Predicts Over 50% Rally for These 2 Stocks

Stocks started this year with heft gains, edged back last week, and now are rising again. The big tech giants led the moves, with volatility in Apple and Amazon leading the NASDAQ on its gyrations. The strategy team at investment bank Goldman Sachs have taken notice of the market shakeups, and are working out what it means for investors. According to macro strategist Gurpreet Gill, watching bond yields and stock values closely, “The rise in global yields is a reflection of improved growth prospects given encouraging vaccine progress and in the US forthcoming sizeable fiscal stimulus. [It] also signals higher inflation expectations and in turn pulled forward expectations for the timing of monetary policy normalization.” Monetary policy may be key to calming investor worries – and on that score, Federal Reserve Chair Jerome Powell’s testimony to Congress is seen as positive. In his comments to lawmakers, the head of the central bank indicated that the Fed has no intention to raise interest rates any time soon. So far, the outlook is in-line with predictions made by Goldman economist Jan Hatzius, who stated his belief earlier this year that the Fed would hold tight on rates and that 2021 will be a good year for long positions on stocks. So much for the macro outlook. At the micro level, turning to individual stocks, Goldman’s analysts have been busy locating the equities which they believe will gain should current conditions hold for the near- to mid-term. They found two stocks in particular with, in their view, 50% or higher upside potential. Using TipRanks’ database, we found out both tickers also sport a “Strong Buy” consensus rating from the rest of the Street. Vinci Partners Investments (VINP) The first Goldman pick we’re looking at is Vinci Partners, an alternative investment and asset management firm based in Brazil. The company offers customers a range of services and funds, including access to hedge funds, real estate and infrastructure investment, private equity, and credit investment. Vinci boasts a global reach and a leading position in Brazil’s wealth management industry. To start the new year, Vinci went public on the NASDAQ index. VINP shares started trading on January 28, at $17.70, slightly under the company’s initial pricing of $18. The first day’s trading saw 13.87 million shares of VINP go on sale. After some 4 weeks on the public markets, Vinci has a market cap of $910 million. Covering this stock for Goldman Sachs, analyst Tito Labarta describes Vinci as a well-diversified asset platform with strong growth potential. “We think Vinci is well positioned to gain share and outpace market growth given strong competitive advantages. Vinci has one of the most diverse product offerings among its alternative asset management peers, with seven different investment strategies and 261 funds. Moreover, Vinci has outperformed its benchmarks in all strategies, having a strong track record and being recognized with awards from relevant institutions, such as Institutional Investor, Morningstar, Exame and InfoMoney. The company has developed strong communication tools to reinforce its brand and institutional presence in the Brazilian marketplace, such as podcasts, seminars, investor days with IFAs, among other participations in events and webinars,” Labarta opined. In line with his upbeat outlook, Labarta rates VINP a Buy, and his $39 price target implies an impressive 141% upside potential for the year ahead. (To watch Labarta’s track record, click here) One month on the NASDAQ has brought Vinci positive attention from Wall Street’s analysts, with a 3 to 1 split in the reviews favoring Buys over Holds and giving the stock its Strong Buy analyst consensus rating. The stock is currently selling for $16.15 and its $26.75 average price target suggests it has room for ~66% growth in the next 12 months. (See VINP stock analysis at TipRanks) Ortho Clinical Diagnostics Holdings (OCDX) Goldman Sachs analysts have also pointed out Ortho Clinical Diagnostics as a potential winner for investors. This company, a leader in the field of in vitro diagnostics, works with hospitals, clinics, labs, and blood banks around the world to deliver fast, secure, and accurate testing results. Ortho Clinical Diagnostics possesses several important ‘firsts’ in its industry: it was the first company to deliver a diagnostic test for Rh +/- blood typing, for detection of HIV and HEP-C antibodies, and more recently has been working on COVID-19 tests. Ortho is the world’s largest pure-play in vitro diagnostics company, handling over 1 million tests every day, from more than 800,000 patients around the world. Like Vinci Partners above, this company went public on January 28. The IPO saw Ortho put 76 million shares on the market, with trading on the first day opening at $15.50, below the $17 initial pricing. Even so, the IPO raised $1.22 billion in gross funds, and the over-allotment option from the underwriters brought in an additional $193 million. Goldman Sachs analyst Matthew Sykes believes the company’s past growth performance justifies a positive sentiment, and that Ortho is capable of deleveraging its balance sheet. “The key to the equity story for OCDX is successfully resetting their organic growth rate to a durable 5-7% from an historical pace of roughly flat. Given the level of profitability and potential FCF generation, if OCDX were to reset growth, they could delever the balance sheet and increase their level of inorganic and organic investments to create a durable growth algorithm,” Sykes wrote. The analyst added, “The key growth driver in our view is the increase in OCDX’s lifetime customer value driven by a transition in the product set of their Clinical Lab business from a stand-alone clinical chemistry instrument to an integrated platform and ultimately to an automated platform. This transition is taking place largely within their own customer base, therefore is not dependent upon displacement, but rather serving the need of increasing throughput of a customer’s diagnostic capabilities. To this end, Sykes rates OCDX a Buy, and sets a $27 price target. At current levels, this implies a one-year upside of 51%. (To watch Sykes’ track record, click here) Ortho has a long history of delivering results for its customers, and that has Wall Street in a mood to rate the stock well. OCDX shares get a Strong Buy from the analyst consensus, based on 9 Buy reviews set since the IPO – against a just a single Hold. The average price target is $23.80, indicating ~33% upside potential from the current trading price of $17.83. (See OCDX stock analysis on TipRanks) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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Here are analysts’ top picks

Chemdawg marijuana plants grow at a facility in Smiths Falls, Ontario, Canada October 29, 2019.

Blair Gable | Reuters

Reddit traders had a new target this week: cannabis stocks.

Before falling back on Thursday, shares of Tilray rallied over 50% on Wednesday, while Aurora Cannabis jumped around 20%. Both stocks then tumbled, but remain higher since the start of the week.

The WallStreetBets Reddit thread has shone a light on a sector that analysts have been watching for some time, describing it a “big long-term opportunity.”

In a recent note, analysts from Piper Sandler said cannabis could become a $115 billion market by 2030, if recreational use is legalized at a federal level. Even if legalization is not U.S.-wide, the industry potential is still “attractive,” reaching $50 billion by 2030, the investment bank added. Recreational cannabis use has now been legalized in 15 U.S. states.

Of analysts’ top weed stocks, one in particular was popular with three of investment firms, while Goldman Sachs noted a company that has been “underestimated” by investors.

Here are the investment firms’ top cannabis picks.

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