In today’s top stories, Airbnb leaves the Chinese market, Gold Fields and Yamana Gold agree a $7bn merger, and several major financial institutions plan to launch new ETFs. The headlines also included Credit Suisse’s top undervalued picks as earnings improve.
GSK acquires Affinivax.
UK drug maker GSK [GSK.L] is splashing $2.1bn on Affinivax with a potential further $1.2bn in milestone payments. The US vaccine firm’s treatment solution for pneumonia and meningitis is close to a late-stage trial. GSK’s chief scientific officer and president of R&D, Dr Hal Barron, said: “The proposed acquisition further strengthens our vaccines R&D pipeline [and] provides access to a new, potentially disruptive technology.”
Airbnb’s China exit.
With Shanghai set to come out of lockdown on Wednesday, there are likely to be plenty of Chinese travellers keen to go abroad. The delay in a full reopening has been the final nail in the coffin for Airbnb [ABNB], which has decided to exit China, though the market only accounted for roughly 1% of its total revenue, sources told CNBC. The company will instead focus on listings for outbound travellers from the country.
Picks for improving earnings.
Battered stock valuations may not have reached their floor yet, but Credit Suisse analysts have identified 25 stocks from the S&P 500 whose share prices have collapsed but earnings are improving. The list includes Twitter [TWTR], Penn National Gaming [PENN], Disney [DIS] and Salesforce [CRM]. According to strategist Jonathan Golub, their median price/equity multiple has fallen by 27.5% from their peak but they’ve seen a 3.3% increase in projected earnings per share.
Gold mining merger.
South African miner Gold Fields [GFI] has agreed to buy Canadian miner Yamana Gold [AUY] in a $7bn all-cash deal that will see it become the world’s fourth biggest gold producer. Although the Gold Fields share price was 15% lower in premarket trading on Tuesday, Rene Hochreiter, an analyst at Noah Capital Markets in Johannesburg, isn’t fazed. “It’s a good deal… It adds a lot of value to Gold Fields,” he told CNBC. Yamana Gold was up 13% in premarket trading.
Big players debut ETFs.
A handful of the biggest financial institutions, including AB, Morgan Stanley and Neuberger Berman, are set to debut ETF products in the US to take advantage of falling fund fees that are making them more attractive than mutual funds. According to the Financial Times, in the five-year period to 2021, US ETF assets increased by 185% to $7.2trn in comparison with a 65% rise to $27trn seen by mutual funds.
The North Sea oil and gas giants BP [BP.L] and Shell [SHEL.L] have shrugged off any concerns relating to the energy windfall tax slapped on their profits. Both share prices recorded 52-week highs yesterday. On the contrary, the share prices of electricity firms SSE [SSE.L], Drax Group [DRX.L] and National Grid [NG.L] have been trading lower in the last week despite not being subject to the levy — yet.
Following a big run up in growth in 2020 and 2021, PayPal has seen customer spending stagnate in recent quarters. The company’s spending reached $323bn in the first quarter of 2022, representing the smallest year-over-year increase in five years. Job cuts will save the company $260m a year in employee-related costs, according to Benzinga.
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