Deere shares increase despite profit drop
Deere’s shares jumped after it pledged to lower its costs and offered an outlook cut that was less than some investors feared as it fights to overcome a disruptive trade war and a slowing global economy.
The world’s top tractor maker gained the most in seven months, climbing as much as 5.1 percent after announcing earnings Friday to recover some of the losses earlier in the week. While quarterly earnings trailed the average estimate, its guidance and a vow to boost efficiency may have comforted investors battered by a tumultuous two weeks in agriculture markets.
American growers are resisting major purchases as the U.S.-China trade war stretches into a second year and after a season when wild weather battered their crops. An escalation in trade tensions led to China halting purchases of American farm products, while corn prices tanked Monday when the U.S. government came out with acreage and yield numbers that exceeded estimates.
“There’s been so much negative sentiment with the erosion of the trade environment and then the disastrous WASDE report,” said Chris Ciolino, a Bloomberg Intelligence analyst. “People were bracing for more doom and gloom.”
With production costs in some segments rising, the Moline, Ill.-based company said it’s “initiating a series of actions to make the organization more structurally efficient and profitable.”
For fiscal 2019, equipment sales are now projected to rise about 4 percent, with net income forecast at $3.2 billion, Deere said in a statement. Three months ago, it predicted 5 percent equipment sales growth and $3.3 billion profit.
While Deere remains positive on general economic conditions, it lowered guidance for construction and forestry and expects fiscal 2019 economic growth in the United States to be in line with 2018, downgrading a previous forecast for acceleration.
On a net basis, quarterly profit slipped to $899 million from $910 million a year ago. Sales fell 3 percent.
— Bloomberg News
Lyft's early investors can divest on Monday
Some early investors in the ride-hailing company Lyft, one of the most anticipated yet disappointing IPOs of the year, will get their first opportunity to sell shares on Monday.
The lockup expiry was brought ahead from Sept. 24, as the original date would have fallen within Lyft’s blackout period ahead of third-quarter earnings.
Lyft estimated that about 258 million class A shares may become eligible for sale at the market open on Aug. 19. The company had 280 million Class A shares outstanding as of July 31, according to Bloomberg data. Including Class B shares, equity award plans and restricted stock units, the total diluted number of shares stood at about 341.5 million.
The company’s shares gained as much as 1.8 percent in New York on Friday.
In a report published after Lyft’s earnings on Aug. 7, D.A. Davidson analyst Tom White said the company’s co-founders Logan Green and John Zimmer will not be selling shares at the time of the lockup expiry.
Lyft’s latest quarterly results, which surpassed expectations, outshone larger rival Uber, which reported a “messy” quarter, analysts said. Lyft shares have fallen 12 percent since reporting earnings on Aug. 7.
— Bloomberg News
Wells Fargo piled onto an increasingly gloomy outlook for banks on Friday, cutting its price targets and earnings estimates for more than a dozen stocks. The firm reduced its annual estimates by about 6 percent for 2020-2021 and also trimmed expectations for the second half of 2019. Wells Fargo expects about 30 basis points of net interest margin compression between 2018 and 2021, vs. earlier expectations that bank industry NIM would increase about 10 basis points over that period. Wells Fargo said disclosures suggest more downside at current interest rate levels.
Champagne, caviar and seared tuna will be on the menu for Virgin Galactic astronauts in training when they arrive at the company's new home in the desert scrublands of southern New Mexico. As for when the actual flights will begin, no one's saying yet. Virgin Galactic offered journalists a tour of their new headquarters and customer center this week at Spaceport America, declaring the facility "operationally ready" for space tourism.
— Bloomberg News