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Last Week’s Highlights
Nike cuts its sales forecasts
Nike has adjusted downward its annual sales projections due to caution in consumer spending and a weaker performance in e-commerce. The company plans to implement a $2 billion savings plan over three years, focused on optimizing product offerings and improving the supply chain. This announcement led to an 11% drop in Nike shares. Persistent pressure in the wholesale business and a slowdown in online sales contributed to this expectation adjustment. Despite the challenges, the company highlights the introduction of new styles, such as the Sabrina 1, LeBron 21, and Tatum 1 sneakers, to stimulate demand. Upcoming launches of lines such as GT Cut, Book 1, and Kobe are expected to drive sales in the coming months.
Rocket Lab surges on millionaire contract
Shares of Rocket Lab experienced a 15% rise during Thursday’s session, boosted by news that its subsidiary, Rocket Lab National Security, was awarded a significant $515 million contract with a U.S. Government customer. This contract covers the manufacture and operation of 18 space vehicles. Despite recent challenges, such as a mission postponement in September that impacted third-quarter revenue and gross margin, Rocket Lab has achieved notable milestones, such as the successful launch of the 42nd Electron rocket. Although shares at a penny have experienced fluctuations, Wall Street analysts are bullish, backing the company with a Strong Buy consensus rating and a median price target of $8.20, suggesting an upside potential of 85.10% from current levels. With a strong track record and outlook for quarterly improvement, Rocket Lab is favorably positioned to deliver stronger financial results soon.
Coming Up This Week
Karuna shares jump on buyout deal
Bristol Myers Squibb has agreed to acquire Karuna Therapeutics for $14 billion, marking a strategic move to strengthen its drug portfolio in the face of patent expirations on older therapies. The focus falls on Karuna’s experimental drug KarXT, intended for the treatment of schizophrenia, which is expected to drive sales in the late 2020s and into the next decade. This innovative antipsychotic activates muscarinic receptors in the central nervous system, providing therapeutic benefits without the adverse effects common to current antipsychotics. Bristol Myers CEO Chris Boerner highlights expansion opportunities in current and emerging therapeutic areas, such as neuroscience. The acquisition is being made for $330 per share in cash, representing a 53.4% premium, and the deal is expected to affect Bristol Myers’ earnings in the coming years positively. This strategic move follows Bristol Myers’ recent acquisition of Mirati Therapeutics, consolidating its position in the pharmaceutical market.
Tesla’s battery plant in Shanghai
Tesla is moving forward with construction of its mega-battery plant in Shanghai, China, after acquiring a 19.7-hectare parcel of land for approximately $31.1 million, according to Reuters reports. The strategic location near the existing Model 3 and Model Y vehicle plants will allow for efficient production integration. The battery plant, which is scheduled for completion in the fourth quarter of 2024, is expected to have the capacity to produce 10,000 megapacks per year. This development comes amid Panasonic Energy’s withdrawal of plans to establish a new battery plant in Oklahoma, while BYD, the Chinese electric vehicle giant, expands its global presence with plans for a new factory in Hungary. Despite recent concerns about vehicle defects and challenges in Norway, Tesla shares have experienced a 103% gain over the past year, maintaining a moderate buy consensus valuation, with a median price target of $247.39, indicating a 2.8% downside potential.
