Credit Suisse Analysts Bullish On McDonald's

Ever since the fast food giant has posted better than expected results, analysts have reiterated "outperform" rating for the stock

Analysts from Credit Suisse Group, Jordy Winslow and Jason West have given the “outperform” rating to McDonald’s Corporation, according to the recent note issued to the investors. The price target set by analysts is massive $135.

Analysts have purported that there are two chief points that are deduced out of the company’s earning calls. They proposed that the management of the Golden Arches has now come out of its initial recovery phase and therefore short-term updates need not be necessary. This, according to analysts, indicates that the increase in the same store sales will not be restricted domestically but the gained momentum will be observed globally as well. But, the fast food giant will lose the benefit of the Leap Day on the basis of which, analysts have projected the company’s same store sales, globally, of 3.7% and the same store sales in the U.S. of 3.5%, which is respective 6.2% and 5.4% lower than the company’s sales during the first quarter.

The management has emphasized that their strategy for turnaround has finally kicked in. Therefore, sometime later, the company will plan a stronger longer-term strategic update. CEO Steve Easterbrook, during the conference call, proposed that through the ongoing investments made in the labor and technology, the organization would be able to reach the 2-year same-store sales acceleration. Analysts also endorsed Mr. Easterbrook’s vision and believe that the company has potential of posting 2% global same-store sales in second half of 2016.

Analysts have also taken up their EPS projections to $5.57/$6.32 to $5.45/$6.17 because of few foreign exchange improvements and the better-than-expected results of the company in the first quarter. Analysts have estimated that from 2015 to 2017, the EPS will undergo growth of 27% chiefly due to the reductions in General and Administrative Expenses and buybacks.

Last week, the Oak Brook, Illinois based company posted its first quarter earnings and the organization outperformed analysts estimations and posted magnificent results. After the earnings report, the fast food giant’s stock went up by 2%. Since the last year, the stock has gained over 32.5%.

The largest fast food chain managed a 46% increase in its EPS. On revenue of $5.09 billion, the company earned EPS of $1.23. While analysts had predicted the company will earn revenue of $5.81 billion and an EPS of $1.16.

Similarly, the same stores sales have gone up 6.2% surpassing the Street expectation of growth of 4.5%. The company has reported that domestically, its McPick 2 scheme and all day breakfast have increased the same-store sales by 5.4%

At the market close on Monday, McDonald’s Corporation stock stood at a price of $127.5. 

Investors Concerned About Netflix Price Hike

Investors are concerned about user growth and revenues amidst price hikes

Last week it was speculated that Netflix Inc. is looking to raise its standard streaming plan prices by $2 to $9.99. Its previous price hike was two years ago in March when it raised for the new streaming subscribers who had to pay $8.99 for the standard streaming plan. The company exempted the existing subscribers from paying the new subscription fees.

Now Netflix is taking a bold step of raising prices for the long time subscribers. This step is making the investors and the Wall Street concerned. Wall Street said that it is prepared for customers to ditch the streaming platform for better and cheaper alternative.

Investors believe that the price hike result in losing many customers; hence, the growth in the United States will be suffered. The subscribers in the US who are still paying $7.99 will have to be $2 more to the same streaming plan from next month onwards. These are the same longtime subscribers, which previously were exempted from paying the new prices by grandfathering them at a lower rate; but now, the golden days are gone.

Netflix is struggling for the past year in terms of user growth rate in the United States. This is one of the main reasons of as to why Netflix chose a global expansion plan so that it may not lose its position in the streaming industry. Analysts believe that the user growth was stalled in the US during the last months of 2015 and analysts are now concerned if it would lose more amid the price hike. On the other hand, investors are raising questions if the company has reached its peak in the US television industry.

In a letter written to the shareholders by CEO Reed Hastings and CFO David Wells, the company said, “Our high penetration in the US seems to be making net additions harder than in the past.”

The streaming service provider expanded in the international markets so that the stalled US growth on a larger scale does not hurt it. It is now available in almost every country but China. Netflix has almost 75 million subscribers and two thirds of its total customer base belongs in the United States i.e. 45 million streaming subscribers. JP Morgan Chase believes that this new price hike will affect 70% of the US subscribers.

Many of the customers are not fine with Netflix raising its prices for the standard streaming plan while others do not like the way it is doing. Reports suggest that there will be customers who would seek alternatives once their subscription expires at the end of the month while other might stick around because of the original content it provides. Investors wait for April 18 when the streaming giant will announce its quarterly earnings in order to find out about the impact of this price hike on user growth and revenues. William Power, an analyst at Baird, said, “Due in part to the potential for higher church, Q2 guidance could be under an even greater microscope than normal.”

Delta Silently Changes Airfare For Certain Plane Tickets

Delta, American Airlines and United are very secretly changing the price of their tickets

Delta Airlines along with its rivals such as United and American Airlines are changing the price of some tickets as discreetly as possible. The US air carrier might charge its customer many more dollars to travel to certain locations from now onwards. Customers who might face difficulty are searching for the cheapest flights available offering the lowest prices.

The air travelling company will be charging the same airfare for round trips. For passengers who like to go to different locations in just one trip will have to spend more, especially the ones who do not prefer the economy class over the business class. The prices have increased seven times more than the normal rates, which is still unknown to many customers. Now these poor passengers will not have much choice left in the matter and will not be able to save money for shopping when they travel to exotic places.

The passengers, who plan to travel via Delta Airlines, American Airlines and United Airlines, are recommended to visit the official websites of these carriers and recheck the airfare before any bookings. Delta is being accused of illegally coordinating with the other two airlines and changing the airfare for their own benefits putting customers in a vulnerable position. Advocacy group has submitted a request to the Department of Justice to start investigations for the airline scandal.

The chairman of the advocacy group, Kevin Mitchell even said that customers are being blindfolded by this new unannounced change in the prices of the tickets and will have to pay eventually after making the booking when they are booking ticket online through the website of the airline. Delta has even stopped the practice of providing nonrefundable tickets to customers and now only offers refundable tickets to the customers.

Delta Airlines said that these new rules of bookings has its advantages in some areas and is keeping a close eye after making changes, focusing on the feedback of customers.

United Airlines even dropped its plans of buying 24 permits from taking off to landing at the Newark Airport according to the announcement of the Justice of Department. Both these parties might be changing airfare together but they are not together in every perspective apparently. These air carriers made an agreement to sell each other slots for New York. The deal ended on Tuesday after the FAA announced that the slot controls would be lifted on order to promote competition in the aviation industry.  

A spokesman for Untied said that this deal would have provided benefits to the public, but sadly this deal was not successful. 

Walmart Store In Pennsylvania Evacuated Due To Tragedy

A tragic incident occured at Walmart store in Pennsylvania when a robber is shot by the police

Walmart faced a tragedy on Thursday night due to shooting at one of its store in southern York Country, Pennsylvania. The store had to be evacuated and the state police arrived at the scene shortly, shoppers were even asked to stay low.

The giant retailers store faced an armed robbery with a shotgun; the suspect was shot by the police as when he was stealing prescription medications from the store that was already crowded with customers. The police received a call that was made by one of the employees of the Walmart store, who informed that the suspect was even carrying a weapon and stealing from the stores pharmacy. Luckily for the store a trooper was circulating the area when the call was made and went there as quickly as possible to deal with the situation.  

The trooper asked the suspect to drop whatever weapon he was carrying but that did not happen; instead, the robber pointed his gun to the trooper. Both of them fired at one another. Luckily, the shot that the suspect had pulled did not hit the trooper but the wall behind him, while the suspect was shot in the chest. The robber was then taken to the hospital and away from the scene of crime, his condition is not known yet.

This situation at Walmart Wholesale put everyone life in danger at that time including the employees and the customers. The Pennsylvania store will remain closed till Saturday morning for the investigation. All the shoppers were evacuated with the workers, customers were asked how they had felt, and one of them replied that it was frustrating to not know why this was happening.

The call was received at 7:48PM from the store, the robber is now in the hospital and has already been identified by the police, and his identity has not been made public. Even though his condition and health is unknown, he clearly is not dead as he was responding after being shot at the scene. The robber did not just have a gun with him but also a black bag that was wrapping and hiding the weapon.

Walmart Stores Inc. should now be extra conscious in terms of security at its stores worldwide as this is not the first time the company is making the news due to a tragedy at one of its stores. This is essential not just for the safety of its employees but even the customers that come to the stores on a day-to-day basis. 

Luckily Pfizer Has Escaped Numerous Cases Regarding Zoloft

Pfizer has managed to escape hundreds of lawsuits regarding its product Zoloft that is causing birth defects

Thanks to the decision of Judge from Philadelphia who dismissed over 300 cases filed regarding Pfizer Incorporation medication, Zoloft. This medication by the US drug maker is prescribed to combat anxiety and depression among patients as it is an antidepressant. The lawsuits consisted of allegations that this medication was causing birth defects in children that were born to women who were consuming this medicine while they were pregnant.

The pharmaceutical company has already been making headlines for abandoning the $160 billion merge with the Ireland Botox maker, Allergen Plc., due to the changes in the rules and policies changed by the US Treasury that prohibited Pfizer from any inversions and changing its home address to Ireland rather than the United States. The merge would have helped the medicinal company to pay 17 to 18% of taxes instead of paying 25% that it currently pays as taxes to the US. It is only fair that it get some relieve such as the dismissal of these 300 lawsuits.

Pfizer Inc. received this news on Tuesday from the US judge, Cynthia Rufe, East of Pennsylvania, who dismissed the cases by giving the conclusion that there was not enough evidence to prove the allegations that were being made. The Judge believes that plaintiffs failed to produce the needed evidence to relate the accusations scientifically to the birth defects and the drug. The judge believed that it was appropriate to close the gates of litigation since plaintiffs was unable to prove the claims they made from a scientific perspective.

300 lawsuit have been dismissed, which were filed against Zoloft, a spokeswoman for the company, Neha Wadhwa said that this decision of the judge is correct as no evidence has been shed light at, that Zoloft is harmful for babies. The lawyer for plaintiffs has not made any immediate comments or returned calls according to Reuters.

The accusation that Zoloft causes birth defects in babies if the mothers consume this medicine during pregnancy includes congenital heart. Pfizer is also being accused for not warning pregnant mothers to not take this medicine, whoever in its defense the company said that it did keep the FDA and the public aware of the safety hazards regarding the medicine. No evidence to this statement of the Pharma giant has been put forward as yet.

Pfizer says that there is enough science that supports the safety of Zoloft, and that this drug is FDA approved, the benefits and the risks of this medication have been made very clear to the patients. In 2015, the Pharma organization managed to win two lawsuits over accusations in Philadelphia and St. Louis, and was able to escape the settlement money of $2.4 million. Both these cases were related to accusations against Zoloft and the birth defects that it causes. 

Facebook and Snapchat Up Against Each Other

Who knew Snapchat ever pose as a threat to the social media giant; but it is and Facebook needs to be prepared.

Facebook Inc. up till now had no real threat in the market, however, Snapchat with its latest features have signaled the social media giant, that it is here to stay and is not just a play toy anymore. Last month, the social media network bought Masquerade -an app quite identical to the video messaging app, Snapchat and in retaliation the video messaging app bought Bitstrips that gained popularity on Facebook in 2013.

The fact Facebook has been striving to be a leader in the messenger and chat market for a few years now; and the best way to tackle competition in the specific market has been to buy to the competitor. As for Snapchat, before this, the social media giant had not even thought twice about Snapchat – but should it be worried now? Now, that the app has launched features that have been quite prominent on Facebook’s messenger and it is no longer just ‘any other’ app, we believe that the social media website should feel threatened.

Snapchat’s 2.0 upgrade caught Facebook’s eye; the app is now directly a threat to the social media’s messenger. Vanity Fair stated that the upgrade 2.0 lets snapchat users make voice calls, send video and audio messages, and along with that it also allows users to have a private video chat session; users can choose the people they want to talk to and simply starting shooting the video. The upgrade also has over 200 new stickers (as emoticons is the new internet language); these stickers are quite different from the ones that are available on WhatsApp and Facebook messenger however they seem very appealing.

On the contrary, Facebook, in an effort to tackle this new move by the video and photo messaging app, is working on a new feature of the messenger by the name of Secret Conversations. No other details regarding this feature have been made available or announced by the social media site currently however it will interesting to find out what the company has in store for its users now. The name does suggest that the new feature could be something Snapchat’s disappearing ability – maybe the messages might disappear after 10 seconds, who knows!

Vanity Fair is stated that if this new Secret Conversation feature is not something close to Snapchat’s disappearing feature, then this feature could simply mean that the social media network is working on some heavy encryption to keep user’s conversations and chats private.

Yet another concern that the social media website has regarding Snapchat is advertisers. To make money, Facebook has heavily relied on advertisements however now that Snapchat is making an impact, many advertiser might prefer to go towards that app as it will be able to interact with customers in a more social way. Snapchat is providing an alternative to advertisers in place of TV ads however if it wants to go forward with that, it will need to open up to the kind of tracking and targeting that Facebook provides to its advertisers.

However, we do believe that will not be much an issue for Facebook due to its huge customer base; its current billions of users already overshadows Snapchat users all across the world. The company will be working on keeping its user’s attention towards itself which can provide to be a difficult task for the company of that magnitude though not impossible.

Tesla's Model 3 Garnered Massive Reservations

The high demand of Model 3 can provide huge growth to Tesla Motors

Tesla Motors Inc.’s recently launched prototype, Model 3 electric car garnered massive 276,000 reservations in mere 72 hours since March 31.

The impressive figures indicate the future advancement for the automaker and electric cars. CEO Elon Musk updated through his Twitter account about the reservations received by the company by the end of Saturday. The Model 3 prototype was debuted on Thursday’s evening but it is not expected to come out any time before late 2017.

The compact luxury electric car has the capacity of five seating and has a mileage of around 215 miles on a charge and going of 0-60 mph in less than 6 seconds. The vehicle has a starting price of $35,000 but since Tesla sets price on its vehicle in “tiers” therefore the Model 3 may be sold at an average price of $42,000 depending on the options’ inclusion by the consumers, according to Musk’s estimates.

The overwhelmed CEO has also announced that as a token of appreciation the company has planned to send gifts to people who waited in queue at Tesla stores.

The colossal number of reservations has financially been transferred into $11.6 billion backlog of orders. In the previous year, the Palo Alto, Calif. firm’s global revenues amounted to be around $4 billion. Additionally, the automaker giant has earlier specified its goals of reaching the annual production tenfold to 500,000 by the year 2020.

But, for the analysts, the high level of demand has never been the question. However, the concern is whether the company will be able to efficiently produce and supply the cars accordingly. The automobile now has 20 months to ramp up its production while simultaneously struggling with hefty cash outflows and quarterly losses. To date, the Californian EV maker has shipped mere 110,000 vehicles most of which comprise of Model S sedans. Also, the company has showcased slow performance while producing its sport utility vehicle Model X that was launched last year. Therefore, the high number of demand might turn out well for the company’s business or it might add more complexities for the company to perform in an already saturated market.

Earlier, Tesla Motors had strong holding in the electric car market however since the established manufacturers came out to produce the electric cars the company was left facing strong competition. The key rival, General Motors is producing Chevrolet Bolt EV which is likely to hit the road late this year. Moreover, the vehicle has a starting price of $35,000.

Additionally, redesigned BMW’s i3 and Nissan Leaf are due late next year. However, if the Tesla can make enough cars then it is likely to outsell America’s best-selling BMW 3 series compact luxury sedans. The production of Model 3 ought to correspond with the operation of the auto-tech giant’s giant battery factory, named “gigafactory” by the CEO. The production plant will manufacture the batteries pivotal for Model 3. Also, the company has to prudently set the price for the batteries which can help in keeping the price of the vehicles affordable.

After the launch of the prototype, Tesla’s stock performed quite well at the market which closed down on Friday. It went up by 8% and closed at $237.59. Also, during after-hours trading, the stock jumped up massive 10% and closed at $247.10.