Illumina falls on annual profit forecast cut


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Last Week’s Highlights

Illumina falls on annual profit forecast cut

US-based genetic testing specialist Illumina lowered its annual profit forecast for the second consecutive quarter due to low demand for sequencing services and products. Shares fell 9% to $97.51 after missing sales estimates. Illumina also reported financial recognitions, including $712 million in goodwill and $109 million in asset impairments related to Grail. The company faces regulatory pressures from its Grail deal and plans to divest this subsidiary within 12 months if it is unsuccessful in court. Adjusted earnings per share forecast for the year was reduced to $0.60-0.70. Despite revenue of $1.12 billion in the third quarter (below estimates), Illumina beat adjusted earnings per share expectations, coming in at 33 cents compared to analyst estimates of 12 cents. 

American Airlines goes up despite mixed reports

Despite the turbulent reports, American Airlines experienced brief relief among investors, although the stability could be short-lived, especially with the holiday travel season just around the corner. Problems arose, including a complaint from a Florida mother who paid $150 for “unaccompanied minor” service, resulting in her children being left stranded in unfavorable conditions for several hours during a layover in North Carolina. Another incident involved a couple separated in first class due to a broken seat, which was later filled by an American Airlines pilot. During these challenges, the airline offered substantial bonuses to FedEx and UPS pilots, who had reduced hours and flights. These problems, coupled with the holiday travel season, raise uncertainties about American Airlines’ future, despite a bullish price target of $15.19 per share, according to the consensus of Wall Street analysts. 

Coming Up This Week

Google goes all-in on AI

Alphabet’s subsidiary Google is stepping up its bet on artificial intelligence (AI) by considering a significant investment in Character.AI. This AI startup is dedicated to providing a chatbot service that allows users to create characters and engage in conversations with them. The company is seeking funding to train its models and meet growing demand. Google, already partnering with Character.AI, is evaluating the possibility of providing funding through convertible promissory notes, leveraging its cloud services and tensor processing units (TPUs) for model training. This strategy of investing in AI startups is consistent with Google’s ambition to strengthen its capabilities in this field, following competitors’ lead such as Microsoft and Amazon. Wall Street analysts are optimistic about Alphabet’s prospects, with 26 buy and six hold recommendations, supporting a moderate buy consensus. In addition, the average price target for its shares suggests a potential upside of 25.05% from current levels, supporting confidence in the company’s strategic direction. 

Exxon to unveil lithium strategy

Exxon is on the verge of unveiling its lithium strategy in response to growing market demand for improved lithium production, logistics, and associated costs, as it is central to electric vehicle batteries. The oil company plans to collaborate with Tetra Technologies to start lithium production in Arkansas in 2026, extracting it from brackish water, with initial production expected to meet demand for around 100,000 electric vehicle batteries. Exxon’s CEO, Darren Woods, has highlighted the promising opportunities offered by lithium, stressing the suitability of the extraction process to its capabilities and the reduced environmental impact compared to conventional methods. Although commonly identified as an energy company, Woods highlights Exxon’s key role in the global chemical industry, particularly in the management of hydrogen and carbon molecules, which extends to the lithium sector. Meanwhile, Wall Street analysts are cautiously optimistic about Exxon shares, with a consensus rating of “Moderate Buy” and a median price target implying a potential upside of 25.05% from current levels. 

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Market News

On Friday, Wall Street experienced notable gains on the back of momentum in technology and growth companies, while Treasury yields stabilized.

The Nasdaq Composite posted its largest daily percentage gain since May 26, contributing to the positive close of the major indexes with a 2.05% rise.

Meanwhile, the Dow Jones index rose 1.15% and the S&P 500 reached its highest closing level since September 19 with a gain of 1.56%, generating optimism among investors as they await inflation reports and other economic data in the week ahead.

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