In today’s top stories, Amazon bids for healthcare platform Signify Health, Tesla raises the prices of its driver-assistance features and Buffett’s Berkshire Hathaway ups its stake in Occidental. Meanwhile, the energy sector’s earnings growth helped boost the S&P 500 and analysts speculate whether the growth rally could last until the end of the year.
Amazon to join bidding war for Signify
Healthcare platform Signify Health [SGFY] looks set to be the subject of a bidding war. Earlier this month it was reported that pharmacy chain CVS Health [CVS] was eyeing up the company in a bid to move into at-home health services. However, The Wall Street Journal reported on Sunday night that Amazon [AMZN] and UnitedHealth [UNH] are also considering bids that could value Signify at over $8bn.
Tesla raises driver-assistance price
Solving self-driving capabilities is ultimately what will make or break Tesla [TSLA] in the long run — or as Elon Musk put it, it’s “really the difference between Tesla being worth a lot of money and being worth basically zero”. Achieving self-driving autonomy will require big investment and Musk tweeted over the weekend that it would be raising prices for driver-assistance features from $12,000 to $15,000 for any orders placed from 5 September.
Energy EPS growth fuels S&P 500
Companies continue to surprise with positive second-quarter earnings reports. “A retailer-heavy earnings week portrayed a consumer that continues to hold up despite confidence battered by inflation,” noted Evercore ISI strategists in a note seen by MarketWatch. Yet, blended EPS growth for the quarter for consumer staples was -15.7%. The S&P 500’s blended EPS growth of 6.3% was propped up by the energy sector, which swelled 298.6% year-over-year.
Buffett to up Occidental stake
The Federal Energy Regulatory Commission has given Berkshire Hathaway [BRK-B] the go-ahead to acquire a 50% stake in Occidental Petroleum [OXY]. Buffett held roughly one-third of shares at the end of June, valued at over $23bn, according to the latest 13F filing. David Kass, a finance professor at the University of Maryland’s Robert H Smith School of Business, told CNBC that “it is likely that Buffett will buy the whole thing eventually”.
Growth to rally until year-end
As markets inch towards September, historically a poor month for major indices, JPMorgan analysts led by Mislav Matejka are convinced that the growth stock rally “has some further to go, perhaps even until year end”. According to a note seen by CNBC, bond yields peaking in June and soft economic activity are catalysts. “We think that one should not switch back into value before the yield curve starts re-steepening,” they wrote.
Earnings preview: XPeng
The supply chain will be in focus when XPeng [XPEV] reports Q2 earnings later today. Though revenue is expected to fall, the Chinese EV maker was able to restart production at its plant in Zhaoqing in mid-May following Covid-19 outbreaks. “We will continue to manage supply chain uncertainties and we remain confident in our exciting product pipeline planned for 2022 and beyond,” said president Brian Gu in the Q1 release.
Earnings preview: Zoom
Zoom [ZM] has struggled to match the pace of its pandemic growth, but Q2 earnings reported today could help to lift the gloom over the stock, which is down around 45% year-to-date. Zoom ended Q1 with a cash pile of $1.4bn, which has put it in a strong position to expand into new business areas and diversify away from video calling. In May, it agreed to acquire intelligent customer service platform Solvvy.
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