Investment firm UBS has reiterated its confidence in the semiconductor sector, particularly highlighting AMD (AMD, Financial) and Micron Technology (MU, Financial) as its top picks for 2024. UBS analysts, led by Timothy Arcuri, suggest that the industry is approaching a "sweet spot" due to peaked inventory levels that are now converting to revenue. They also see potential in analog chip companies, especially Analog Devices (ADI, Financial), and propose Teradyne (TER, Financial) as an innovative pick due to advancements in artificial intelligence and smartphone industry recovery. UBS continues to favor other semiconductor players including Nvidia (NVDA, Financial), Broadcom (AVGO, Financial), Marvell Technology (MRVL, Financial), Microchip Technology (MCHP, Financial), and Lam Research (LRCX, Financial).
Shares of Karuna Therapeutics (KRTX, Financial) surged approximately 47% in pre-market trading following news of a $14 billion acquisition agreement with Bristol Myers Squibb (BMY, Financial). The $330 per share offer for Karuna represents a significant premium over its last closing price, with Bristol Myers slightly down in response. The acquisition will bring KarXT, a potential treatment for schizophrenia and Alzheimer’s disease psychosis, into Bristol Myers' portfolio. The transaction is expected to be completed in the first half of the next year.
On the inflation front, the core personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure, showed a year-over-year increase of 3.2% in November, a deceleration from the 3.4% rise in October. This moderation in core PCE, along with a month-over-month increase of 0.1%, aligns with expectations for a potential Federal Reserve policy rate cut in March. Renaissance Macro Research highlighted the possibility of continued benign inflation due to factors such as used car & truck prices and housing rents.
Ansys (ANSS, Financial) shares experienced a 12% premarket jump amid reports that the company is considering a sale. Oppenheimer analyst Ken Wong suggested that Ansys could be valued between $375 and $400 per share in a potential acquisition, citing recent software M&A deals as benchmarks. Altair Engineering (ALTR, Financial) is also expected to benefit from this news, as it is considered a more likely acquisition target in the simulation space.
The Coca-Cola Company (KO, Financial) is focusing on a turnaround in 2024 after a soft performance in the stock market. Investors remain cautious due to concerns over volume growth, emerging market volatility, and commodity cost fluctuations. Coca-Cola aims to maintain its long-term organic sales growth target, with expectations of innovation and partnership announcements to drive progress in the coming year.
Chinese tech stocks faced a significant downturn after the Chinese government released draft guidelines aimed at curbing excessive online gaming spending. NetEase (NTES, Financial), Tencent (TCEHY, Financial), and Bilibili (BILI, Financial) saw substantial premarket declines, with the new regulations causing an estimated $80 billion market value loss for these companies. Other Chinese stocks such as Alibaba (BABA), Baidu (BIDU), JD.com (JD), Weibo (WB), and PDD (PDD) also traded lower, reflecting investor concerns over the regulatory environment.
Daseke (DSKE, Financial) announced an acquisition agreement with TFI International Inc. (TFII, Financial), with the all-cash transaction valuing Daseke at approximately $1.1 billion. Daseke shareholders are set to receive $8.30 per share, a significant premium over recent trading prices. The transaction is expected to close during the upcoming year, pending regulatory approvals and customary closing conditions.
Berkshire Hathaway (BRK.B) has increased its stake in Occidental Petroleum (OXY, Financial) to nearly 28%, purchasing additional shares worth approximately $310 million. The acquisition follows Occidental's recent $12 billion deal to buy Permian producer CrownRock, highlighting Berkshire's continued investment in the energy sector.
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