It’s been an interesting day in the stock market today. While the overall action in U.S. indices was relatively calm, there were a lot of individual stories to keep pace with. One of the more notable reads from Wednesday came from General Electric (NYSE:GE).
Three years ago, GE stock was trading for almost $30 per share, and man, it doesn’t feel like it’s been that long. In any regard, all the analysts were bullish to neutral on the stock. After all, GE was a dividend-paying, blue-chip industrial stalwart. Why shouldn’t analysts be on board?
Then JPMorgan analyst Stephen Tusa came along. When Tusa turned negative on the stock, he was seemingly the only one on Wall Street who saw the issues that are now glaring in hindsight.
Whenever investors thought the worst may be over, Tusa would publish more damning research on GE. Usually days or weeks later, Tusa’s findings would pan out, and the stock would get hammered. Eventually investors wised up to Tusa’s superior insight, selling mercilessly whenever he’d come out bearish.
However, since going from a “sell”-equivalent rating to a “hold” rating in December — which ignited a massive rally — and back to a “sell” rating again, investors haven’t seemed to listen as much to Tusa.
His latest note isn’t very positive, either.
Management raising earnings guidance isn’t indicative of an all-clear sign, he argues. The way the headlines make it appear, the company is doing better than expected. In truth though, GE is “missing guidance on core business that was set in March,” Tusa says.
Essentially, operating earnings are below expectations. While lower restructuring spending could be a positive, the core business continues to struggle, Tusa concludes, maintaining an “underweight” rating.
Disney+ Has the Momentum
On Tuesday we discussed a few things surrounding Disney (NYSE:DIS). First, it was the launch of Disney+, and even though the platform had some hiccups, it shouldn’t derail investors’ long-term view. After all, the technicals still looked okay.
On Wednesday though, shares erupted more than 7.3% on news that the company has already harnessed more than 10 million subscribers. Holy moly that’s going to put optimistic projections in play from the analysts. While there will be free trials and different subscription combinations to consider, we’re looking at about $720 million in back-of-the-envelope annual cash flow from the service — and that’s based on no new subscriptions.
The news could easily send to Disney stock to $150-plus.
Movers in the Stock Market Today
AbbVie (NYSE:ABBV) is pricing $30 billion worth of aggregated notes to help finance its $63 billion acquisition of Allergan (NYSE:AGN). The notes vary in maturity, ranging from $750 million due in May 2021 to $5.6 billion due in 2049. In all, there are 10 different maturities in the private offering, ranging from 2.15% on the low end to 4.25% on the high end.
Reports suggest Google is considering offering checking accounts to users next year, and plans to work with Citigroup (NYSE:C) to run the accounts. Combined with the company’s recent acquisition of Fitbit (NYSE:FIT) and the recent privacy issues around “Project Nightingale,” and it’s clear Google is hungry for consumer data.
Apollo Global (NYSE:APO) announced it will acquire Tech Data (NASDAQ:TECD) for $5.4 billion. The company will pay $130 per share for TDEC, a 25% premium to the 30-day weighted volume price ending Oct. 15. After that, merger and acquisition speculation drove up the price and explains why shares rallied “just” 4.4% on the day, although closed at $130.89, above the offer price.