Sony shares are at a 19-year high. Analysts are bullish on PlayStation 5, say stock could rally 20% - CNBC
Sony shares are sitting at their highest level since June 2001, despite a dip on Wednesday. Analysts expect further upside as the company prepares to launch PlayStation 5 games consoles.
Sony shares are sitting at their highest level since June 2001, despite a dip on Wednesday. Analysts say there could be further upside in the next year as Sony prepares to launch the flagship PlayStation 5 games console. The Japanese electronics giant posted better-than-expected earnings on Tuesday for the April to June quarter and provided an outlook ahead of consensus. On average, analysts polled by Refinitiv expect Sony shares to hit 9,538.95 yen ($90.35) in the next 12 months, around 9.5% upside from Wednesday's opening price, buoyed by the company's strong gaming business and recovery in its image sensor division. Sony's 19-year high share price is a vote of confidence by investors in the multi-year turnaround plan that was initiated by previous CEO Kazuo Hirai. Hirai took the role in 2012, and was succeeded by Kenichiro Yoshida in 2018. PlayStation 5 on the horizon Under the two CEOs, Sony has put a large emphasis on its gaming division. In fact, in Sony's fiscal first quarter that just ended, the company's game and network services unit accounted for about 54% of total operating profit. Sony forecast a modest year-on-year rise of 0.6% in the gaming division's operating profit at 240 billion yen for its fiscal year that concludes at end March 2021. That is even as Sony estimates that group profit to decline. Revenue for the gaming business is forecast to jump over 26% year-on-year to 2.5 trillion yen, according to the company. PS5 will be definitely Sony's key driver this fiscal year. It's the start of a new console generation, the previous PlayStation was released seven years ago, and the PS5 hype is already through the roof. With people staying home more in the second quarter of the year due to coronavirus-related shutdowns around the world, Sony sold 91 million software units or games. That was a more than 82% year-on-year rise, even as sales of consoles declined. Of the total number of games sold, 74% were from digital downloads, the highest number on record. Meanwhile, Sony's subscription service called PlayStation Plus, saw subscriber numbers reach 44.9 million in the April to June quarter, higher than 36.2 million in the same period last year. These trends will help Sony's earnings going forward, analysts said. "Across the board if you look at games in particular, what was truly impressive was the strong, over 80% growth in the digital content sales which drove strong profit growth both in the first quarter, and I think will raise expectations for the full year," Damian Thong, co-head of Asia technology research at Macquarie Capital Securities, told CNBC's "Squawk Box Asia." Sony is also gearing up to release the PlayStation 5, its newest console since the PlayStation 4 in 2013. The Japanese firm said the new console will be available in time for the 2020 holiday season, just as Microsoft plans to release its new Xbox Series X. "PS5 will be definitely Sony's key driver this fiscal year," Serkan Toto, CEO of Tokyo-based game industry consultancy Kantan Games, told CNBC. "It's the start of a new console generation, the previous PlayStation was released seven years ago, and the PS5 hype is already through the roof." Thong is also bullish on the prospects for the console. "I expect 6 million units of that to be sold, basically snapped up out the opening gate," he said. "And I would say that if you look at some of the recent trends, especially strong user engagement, strength in digital sales most of this trends will carry over to the PlayStation 5, providing, I think, good earnings momentum for Sony in the next couple of years to three years." Amit Garg, a senior analyst of Japan equities at CLSA, told CNBC he expects Sony to sell 6.7 million units of the console in the current fiscal year and said the company's own profit forecast for the gaming unit will likely be beaten, given the strength in the quarter just gone. "We think Sony can easily beat this they have a lot of buffer in our view in (the) games division," Garg said. Toto forecasts Sony selling 15 million to 20 million units in the PlayStation 5's first year of sales. Concerns Sony saw declines in revenue in other key businesses including movies, music and its image sensing unit. The latter has been a critical business for Sony in recent times given its expertise in smartphone camera sensors, which it sells to customers including Huawei and Apple. Profit fell over 48% year-on-year in the quarter ending in June to 25.4 billion yen. And Sony forecast that this business will see profit decline over 44% for the fiscal year. But Thong expects that the division will see a recovery. "It will be a bit of dampener, I think, into the early part of next year, primarily because of a number of factors including slower demand for high-end smartphones, also slower demand for digital stills camera, and also possibly some effect from the U.S.-China dispute which affects one of their key customers," Thong said, referring to Huawei. "These issues will probably go away as the Covid-19 issues are relieved and as they win more customers and re-boost their market share into next year." Stock to rally 20%? Garg said he has a 12-month price target on Sony of 10,400 yen. If realized, that would be a nearly 19.5% rise from Wednesday's opening price of 8,704 yen. Meanwhile, Thong's 9,650 yen price target, if hit, would be nearly 11% upside. Still, on Wednesday, the Japanese-listed stock was around 2.2% lower at 8,495.00 yen at 13.12 p.m. Tokyo time, though CLSA's Garg sees this as a temporary blip, given shares stand at a 19-year high. "It is primarily driven by profit-taking post strong rally into the announcement," Garg said. "There was possibly some concerns also raised from weak CMOS image sensors profit guidance. I see this as temporary and expect stock to see regain momentum again." CMOS refers to the type of image sensor chip Sony sells to smartphone makers.
Dow futures jump more than 200 points after Moderna says its vaccine produces antibodies to coronavirus - CNBC
Stocks directly tied to an economic reopening jumped following the vaccine news.
Stock futures rose in premarket trading Wednesday after drug developer Moderna said its coronavirus vaccine produced antibodies in all patients in an early trial, raising hopes for a faster economic recovery. Futures on the Dow Jones Industrial Average pointed to a nearly 200 point gain at the open. S&P 500 futures and the Nasdaq 100 futures also indicated a positive start to the day. Moderna's potential vaccine to prevent Covid-19 produced a "robust" immune response, or neutralizing antibodies, in all 45 patients in its early stage human trial, according to newly released data published Tuesday evening in the peer-reviewed New England Journal of Medicine. Shares of Moderna surged more than 16% in after-hours trading on Tuesday. Stocks directly tied to an economic reopening jumped following the vaccine news. American Airlines, United Airlines, Royal Caribbean Cruise all popped more than 4% each in extended trading. "This should further increase confidence that we are getting a robust immune response, in that there should be greater confidence that this will be protective to a degree in transmission of Covid," Michael Yee, a managing director at Jefferies, said on CNBC's "Fast Money." "This is all along our positive thesis and our view that both Moderna and Pfizer-BioNTech are definitely on a good track to get a vaccine by the end of the year." Stocks finished Tuesday's volatile session on a high note with the Dow jumping more than 500 points to post its best day in two weeks. The S&P 500 jumped 1.3%, boosted by cyclical names sensitive to the economic recovery. The tech-heavy Nasdaq underperformed for a second day, rising 0.9% as the massive rally in Big Tech slowed down. Investors will monitor another batch of corporate earnings results on Tuesday with Goldman Sachs, UnitedHealth, Bank of NY Mellon, U.S. Bancorp and PNC Financial all set to report before the bell. Earnings from big banks so far have been mixed. JPMorgan Chase reported better-than-expected quarterly results on the back of a massive surge in trading revenue. Wells Fargo suffered a $2.4 billion loss and slashed its dividend to 10 cents per share. Meanwhile, tensions between the U.S. and China continue to rise. President Donald Trump said Tuesday that he signed legislation to impose sanctions on China in response to its interference with Hong Kong's autonomy. CNBC's Jesse Pound contributed reporting. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
City in China's Inner Mongolia warns after suspected bubonic plague case - CNBC
Plague cases are not uncommon in China, but outbreaks have become increasingly rare. From 2009 to 2018, China reported 26 cases and 11 deaths.
Authorities in a city in the Chinese region of Inner Mongolia issued a warning on Sunday, one day after a hospital reported a case of suspected bubonic plague. The health committee of the city of Bayan Nur issued the third-level alert, the second lowest in a four-level system. The alert forbids the hunting and eating of animals that could carry plague and asks the public to report any suspected cases of plague or fever with no clear causes, and to report any sick or dead marmots. Sunday's warning follows four reported cases of plague in people from Inner Mongolia last November, including two of pneumonic plague, a deadlier variant of plague. The bubonic plague, known as the "Black Death" in the Middle Ages, is a highly infectious and often fatal disease that is spread mostly by rodents. Plague cases are not uncommon in China, but outbreaks have become increasingly rare. From 2009 to 2018, China reported 26 cases and 11 deaths.
Trump says he's no longer taking hydroxychloroquine - CNBC
"Finished, just finished," the president said of the unproven treatment he'd said he was taking to protect himself from the coronavirus. "And by the way, I'm still here."
President Donald Trump said he had "just finished" taking a two-week course of the antimalarial drug hydroxychloroquine, the medication he has vigorously promoted as a preventative or curative treatment for the coronavirus, even as evidence piles up that the drug may cause more harm than good. "Finished, just finished," he said in an interview that aired on Sinclair Broadcasting on Sunday. "And by the way, I'm still here." The president again defended his decision to take, and talk about, the unproven treatment in the interview, amid Food and Drug Administration warnings against using the drug for COVID-19 outside of hospital settings because of a risk of serious heart problems. Hydroxychloroquine is an antimalarial drug that is often used to treat lupus and rheumatoid disease. There are no approved treatments for COVID-19, the disease caused by the novel coronavirus. "Well, I've heard tremendous reports about it. Frankly, I've heard tremendous reports. Many people think it saved their lives. Doctors come out with reports. You had a study in France, you had a study in Italy that were incredible studies," Trump said, failing to acknowledge the studies that tied the drug to a greater risk of death or those that found no benefit at all. Trump suggested that he'd taken it because two White House workers had tested positive for the virus. "I believe in it enough that I took a program because I had two people in the White House that tested positive," he said. "I figured maybe it's a good thing to take a program." There have been several studies into the effect of hydroxychloroquine on patients sick with COVID-19 that have found the drug to be ineffective or harmful to patients fighting the coronavirus. A study out of China found that patients with mild to moderate COVID-19 who were given hydroxychloroquine and standard care for COVID-19 fared worse than those given standard care, while French researchers in another study found that treatment with hydroxychloroquine didn't stop the progression of the disease. A study in New York that was funded by the National Institutes of Health found no adverse or beneficial effects of the administration of hydroxychloroquine on coronavirus patients. Another study in Brazil was stopped early after patients developed fatal, irregular heartbeats. The World Health Organization announced on Monday that it was suspending a trial of hydroxychloroquine in treating COVID-19 due to potential risks. The president told reporters last week that he was taking the unproven treatment after consulting with the White House physician. He also claimed without evidence that thousands of essential workers, including doctors and nurses, were taking the drug to prevent contracting the disease caused by the coronavirus. Pressed then on why he was using an unproven therapeutic, Trump said: "Because I think it's good. I've heard a lot of good stories."
Richard Branson's Virgin Orbit to attempt its first rocket launch from a 747 aircraft this weekend - CNBC
Sir Richard Branson's Virgin Orbit is set to conduct its first orbital rocket launch on Saturday.
Sir Richard Branson's Virgin Orbit is set to conduct its first orbital rocket launch as early as Saturday, in the final test of its Boeing 747 aircraft-based system. Virgin Orbit's modified aircraft is scheduled to take off from the Mojave Air and Space Port in California at 1 p.m. EDT and fly out over the Pacific Ocean. If all the company's systems are ready, the aircraft will release the LauncherOne rocket, which will then fire its engine and head for space. The company plans to use the rocket to launch satellites, with the "air launch" system giving a schedule flexibility that Virgin Orbit touts over more common ground-based launch systems like those of SpaceX and Rocket Lab. Virgin Orbit is a spin-off of Branson's Virgin Galactic space tourism company. While both of the companies launch spacecraft from the air rather than the ground that's where the similarities end. Virgin Orbit uses a former commercial jet and will launch satellites the size of refrigerators to orbit, while Virgin Galactic has a one-of-a-kind aircraft and plans to send paying tourists on rides at the edge of space. Last year the company conducted a drop test of a rocket from the 747, in a final key test before this first launch. Virgin Orbit told CNBC on Wednesday that last week it conducted a wet dress rehearsal in preparation for this launch, fueling up the rocket and flying with it to verify it's ready. The company has a four-hour window in which to launch on Saturday, as well as Sunday and Monday. The company has yet to make the final decision on which day it plans to launch, although the back-up launch windows are for similar times of the day. Once done testing, Virgin Orbit has over a dozen launches lined. Virgin Orbit CEO Dan Hart told CNBC last year that the majority of those launches are for spacecraft from private companies, with only one for NASA and another for the Pentagon's Defense Innovation Unit. But Virgin Orbit has been regularly speaking with the U.S. military about the applications of its technology. Branson met with Air Force leadership last year to discuss Virgin Orbit's capabilities. Following the meeting, Air Force acquisitions head Dr. Will Roper said he was "very excited about small launch," because "if you lose a satellite" you can "put another one up at the time you need it." Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
Microsoft stock is up because businesses want secure video conferencing, says Robert Herjavec - CNBC
"The use of Teams at the corporate enterprise level is really taking off," the "Shark Tank" investor said on CNBC's "Squawk Alley."
Cybersecurity entrepreneur Robert Herjavec said Thursday that Microsoft's stock has been lifted by businesses who want secure video conferencing during the coronavirus pandemic. "The use of Teams at the corporate enterprise level is really taking off," the "Shark Tank" investor said on CNBC's "Squawk Alley." "I think that's one of the reasons Microsoft's stock is doing so well." Shares of Microsoft rose 3% to $177 each on Thursday. While the stock sits about 7% below its February high, it is up 12.2% year to date. The S&P 500, by contrast, is down about 13% in 2020. Teams, which lets people exchange chat messages and hold video calls, is part of the Office 365 subscriptions that also includes access to Word and Excel. Herjavec, founder and CEO of cybersecurity firm Herjavec Group, said his company has recently turned to Teams as work-from-home policies in response to the coronavirus pandemic changed how business is conducted. "When all of this first happened we wanted to use Zoom because all our customers use Zoom but I've got to tell you, some of the security issues are really pretty bad within Zoom," he said. Zoom has seen dramatic usage increases as the Covid-19 outbreak forced millions of people to stay at home. While initially targeted toward enterprise use, the company's service has been adopted by schools and people who want to host virtual happy hours with friends, for example. But its newfound popularity has brought about privacy concerns, for which the company has apologized and vowed to fix. Herjavec told CNBC earlier this month that in general his company, which provides cybersecurity products and services to business, has seen a spike in security breaches. He said the pandemic has created "the golden age for hackers." In addition to companies like his own now turning to Teams, Herjavec said his firm also sees an increased reliance on Webex, the video conferencing service by Cisco. Herjavec's comments Thursday came shortly after Verizon announced its acquisition of BlueJeans, another video conferencing platform. The increased use of these services will likely outlast the coronavirus crisis, Herjavec argued. "Customer meetings will change forever. In the past, I never thought that I could do a Zoom call or a Teams call with the CEO of a company I'm trying to sell to," he said. "In the future, I don't think my customers will want me to come and see them." Also on Thursday, Microsoft announced a deal with the National Basketball Association to use its Azure cloud and Surface tablets. Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank," on which Robert Herjavec is a co-host.