Technology Roundup – Alibaba cut to Sell by CFRA as regulations continue to tighten in China, Apple lands higher estimates at Canaccord due to iPhone 12 strength

Published on: January 6, 2021
Author: Amy Liu

Alibaba cut to Sell by CFRA as regulations continue to tighten in China

  • CFRA analyst John Freeman downgrades Alibaba Group (NYSE:BABA) to Sell from Hold, citing the Chinese Communist Party’s restrictions on software-based businesses that disrupt banking or any industry that President Xi wants to tightly control.
  • Cuts price target by $70 to $210.
  • Also cuts EPS forecast by CNY0.17 to CNY65.27 for FY 21 and by CNY10.75 to CNY91.25 for FY 23.
  • Also today, the Wall Street Journal reported that Chinese regulators are pressing Jack Ma for Ant Group’s consumer data.

Apple lands higher estimates at Canaccord due to iPhone 12 strength

  • Canaccord Genuity boosts its price target on Buy-rated Apple (AAPL +0.6%) to $150 after factoring in strong demand for iPhone 12 products.
  • The firm thinks the iPhone business and other hardware products could see double-digit growth in FQ1
  • Of note, analyst T. Michael Walkley says Apple is well positioned to benefit from the 5G upgrade cycle and points to the ongoing growth with higher-margin services revenue.
  • Canaccord expects FQ1 EPS from Apple of $1.41 vs. $1.40 consensus and anticipates FY21 EPS of $4.46. The $150 PT price target is derived by taking a 30K multiple to the FY22 EPS estimate of $4.97. Shares of Apple traded as high as $136.69 in December.
  • Yesterday, Loup Ventures called Apple its top FAANG stock for 2021.

Chinese telecoms maintain gains as administration suggests reprieve is ‘temporary’

  • Headed into the market close, state-owned Chinese telecoms are mostly holding their session-long gains following a reversal of the NYSE’s decision to delist the stocks: China Mobile (NYSE:CHL) +9.1%; China Telecom (NYSE:CHA) +7.5%; China Unicom (NYSE:CHU) +11.9%.
  • The question for investors whipsawed by the stock movements: whether the decision will be re-reversed yet again.
  • The administration is suggesting that the NYSE’s stance is a “temporary reprieve,” and Fox Business’ Liz Claman says a source tells her NYSE has “full intent” on complying with the executive order, “once things are clarified.”
  • The NYSE based its decision to maintain the stocks’ listings on “consultation with relevant regulatory authorities in connection with Office of Foreign Assets Control” – and presumably even further consultation could lead to another change in stance.
  • Treasury Secretary Steven Mnuchin called NYSE President Stacey Cunningham to express “disapproval” with the exchange’s decision.
  • The order signed by President Trump is set to take effect in six days, on Jan. 11.

Amazon grows fleet with purchase of Boeing jets

  • Amazon (NASDAQ:AMZN) announces the purchase of eleven aircraft from Delta Air Lines (NYSE:DAL) and WestJet Airlines (OTC:WJAFF).
  • The aircraft will join the Amazon Air cargo network this year and next year.
  • The deal marks Amazon’s first-ever purchase Boeing 767-300 aircraft and includes seven aircraft from Delta and four aircraft from WestJet. The company says the expanded fleet supports Amazon’s growing customer base during a time when people continue to rely on receiving items they need quickly
  • “Our goal is to continue delivering for customers across the U.S. in the way that they expect from Amazon, and purchasing our own aircraft is a natural next step toward that goal,” says Amazon exec Sarah Rhoads. “Having a mix of both leased and owned aircraft in our growing fleet allows us to better manage our operations, which in turn helps us to keep pace in meeting our customer promises,” she adds.
  • The four aircraft purchased from WestJet in March are currently undergoing passenger to cargo conversion and will join Amazon Air’s network in 2021, and the seven aircraft from Delta will enter Amazon’s air cargo network in 2022. The company says the fleet additions will ensure added capacity in Amazon Air’s network for years to come. The company will continue to rely on third-party carriers to operate these new aircraft.
  • AMZN -0.52% premarket to $3170.23. DAL -1.25%.
  • Keep an eye on Air Transport Services Group (NASDAQ:ATSG), which leases planes to Amazon.

Micron gets double upgrade to buy at Citi

  • Micron (NASDAQ:MU) raised to buy from sell at Citi on the idea that the upturn in DRAM is about to materialize, which should help earnings and the stock.
  • Even with stock up 40% in the past 2 months Citi analyst Christopher Danely still sees “plenty of upside as DRAM upturns usually last two years and supply/demand looks favorable over at least the next year”
  • PT raised to $100 from $35.
  • Shares are up 3.3%premarket to $76.50.
  • Last month, Wells Fargo named Micron a top pick for 2021 on improving DRAM environment