Month: May 2024

Investing.com– Bitcoin price fell further on Wednesday, briefly slipping below key support levels as anticipation of a Federal Reserve meeting kept traders averse to speculative assets such as cryptocurrencies. 

Recent data showing sustained outflows from Bitcoin investment products, particularly exchange-traded funds (ETFs), also weighed on sentiment, while the launch of new spot crypto ETFs in Hong Kong offered little cheer. 

Bitcoin fell sharply in the past 24 hours, hitting as low as $56,500. As of 13:52 ET, the leading cryptocurrency is down 4.9% in the last 24 hours, trading at $57,558.5.

Fed anticipation sees traders prefer dollar over Bitcoin 

Bitcoin’s losses coincided with a sharp surge in the dollar on Tuesday, which saw the greenback come close to a six-month high.

Kristian Haralampiev, Structured Products Lead at Nexo, told Investing.com that Bitcoin price is softer amid “a current risk-off statement across the board.”

This trading regime has been “instigated by slow volumes from Honk Kong ETFs, typically seasonal effects of the market, and further regulatory headwinds in the U.S, all in an uncertain macroeconomic environment,” he said.

Traders were largely biased towards the dollar before the conclusion of a Federal Reserve meeting on Wednesday, where the central bank is widely expected to keep rates steady.

But Chair Jerome Powell is likely to strike a hawkish chord, especially in the wake of several hotter-than-expected inflation readings.

Expectations of such a scenario saw traders steadily price out expectations of early interest rate cuts by the Fed. The central bank is now expected to begin cutting rates only by September, if at all. 

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Higher-for-longer U.S. interest rates bode poorly for Bitcoin and the broader crypto industry, given that the space usually thrives in a low-rate, high-liquidity environment. 

This notion was also a key driver of capital outflows from crypto investment products in recent weeks, as hype over spot Bitcoin ETFs dwindled in the face of higher-for-longer rates.

“The market may feel tired and lacking a stimulant may be ready to test further bottoms in the $50,000 range,” Haralampiev added.

However, this crypto expert sees this dip as a buying opportunity as he expects the world’s largest digital coin “to reclaim the low $60,000 range.”

Crypto price today: Ethereum tracks Bitcoin losses

Broader crypto prices also retreated as sentiment remained dour. World no.2 crypto Ethereum fell 2.6% to $2,925.67. XRP and Solana have faired better, rising 2.6% and 1.2%, respectively. 

On the regulatory front, disgraced Binance founder Changpeng Zhao was sentenced to four months in prison after pleading guilty to violating U.S. anti-money laundering laws. 

Zhao was once considered the most powerful man in crypto, and is the second major crypto CEO to be sentenced to prison after FTX’s Sam Bankman-Fried in 2023. But Zhao’s sentence was substantially milder than the 25 years received by Bankman-Fried.

 

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

 

Following the release of its earnings report, Super Micro Computer Inc (NASDAQ:SMCI) stock has tumbled, capturing the attention of analysts and investors alike.

As the market digests the financial performance and guidance provided by the company, five analysts have weighed in with their insights and perspectives on SMCI’s stock trajectory, evaluating key metrics and providing their insights into the company’s future growth prospects.

Super Micro Computer’s Q1 results breakdown

SMCI reported Q3 earnings of $6.65 per share, $0.85 better than the analyst estimate of $5.80. However, revenue for the quarter came in at $3.85 billion, below the consensus estimate of $3.99 billion.

Looking ahead, the company sees Q4 2024 EPS between $7.62 and $8.42, versus the consensus of $7.14, while revenue for the quarter is seen between $5.1 billion and $5.5 billion, versus the consensus of $4.89 billion.

For the full-year, SMCI expects its EPS to be from $23.29 to $24.09, versus the consensus of $21.99, with revenue between $14.3 billion and $14.7 billion, versus the consensus of $14.6 billion.

SMCI stock outlook as per analysts

Following the report, Barclays analysts noted the strong June quarter guide, upping their price target for SMCI stock to $1,000 from $961 per share. The bank said SMCI delivered a strong June quarter revenue guide, consistent with their checks.

They also stated that the September quarter and December quarter are expected to grow sequentially due to improving supply and AI tailwinds.

“Hopper demand remains much stronger than expected, even considering a product transition is coming,” said Barclays, which maintained an Overweight rating on the stock.

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Wells Fargo analysts maintained an Equal Weight rating on SMCI, lowering its price target for the company’s shares to $890 from $960. The bank see the stock sell-off as reflective of increased valuation sensitivity as gross margin scrutiny comes into focus.

Rosenblatt reiterated its Buy rating and $1,300 stock target for SMCI. The firm said: “Supermicro delivered inline sales for the March quarter due to constraints on components largely associated with a faster and bigger liquid cooling rack scale AI transition. Earnings were an upside on better-than-expected GMs in our model at 15.6%.”

Rosenblatt labeled SMCI “the Switzerland of AI,” explaining that its bullish view of SMCI stock is based on the company’s AI dynamics that are “a sweet spot for the company’s building block architecture, Green computing, rapid broad platform deployment, and must-have liquid cooling capabilities.“

Analysts at Loop Capital maintained a Buy rating and a $1,500 price target on SMCI. The firm said SMCI’s Jun quarter guidance and subsequent quarter-on-quarter revenue ramp commentary are right in line with their thesis.

“The core of our thesis is both our net-bullish Gen AI server industry posture (L-T) and SMCI as an increasing leader in the need for both complexity and scale (we note SMCI talked about being an ongoing share gainer on the EPS call),” wrote Loop Capital.

KeyBanc Capital reiterated a Sector Weight rating on SMCI stock. “Super Micro intimated possible less seasonality in F1Q provided strong, record backlog, which leads to our increased estimates,” said KeyBanc. “That said, even at new, higher forecasts, we believe SMCI shares provide a balanced risk/reward at current levels.”

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May 9th, 2024, is gearing up to be a big day for any stakeholder of Norfolk Southern Corporation (NYSE:NSC), owner and operator of one of America’s biggest and most important intermodal rail networks.

Investors, big and small, clients of all sizes, and employees are all holding their breaths, bracing for the shareholder vote that will decide the outcome of a proxy fight between the company’s current management and Ancora, an activist firm pushing for changes at the helm.

A lot is at stake, and with the big day approaching fast, here are key things you need to know about the standoff.

Ancora’s Push for Change

It all began late in January of 2024, when several media outlets reported that a group of investors led by Ancora, an Ohio-based wealth management firm, has taken a $1B stake in Norfolk Southern.

The group was said to have nominated a majority slate of directors to the company’s board in a push to remove Alan Shaw – NSC’s CEO since May of 2022.

Rumors were soon confirmed, when Ancora issued a public statement calling for changes at both executive and board levels, citing “industry-worst operating results, sustained share price underperformance and a tone-deaf response to the devastating East Palestine, Ohio derailment.”

“The future looks equally bleak under Mr. Shaw,” the fund argued, as it proposed Jim Barber, a former UPS executive as new CEO, and Jamie Boychuk, an ex-CSX executive as new COO.

Ancora also sought board changes and proposed eight new nominees, citing current “Board’s poor decisions with regard to the Company’s leadership, safety priorities and strategy.”

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Norfolk Southern, for its part, was quick to respond, pushing back against allegations and highlighting “management’s successful execution of our strategy to balance safe and reliable service, continuous productivity improvement, and the pursuit of smart, sustainable growth.”

“The board regularly evaluates its composition and will continue its careful review of Ancora’s nominees with a focus on advancing our goal of building the safe, reliable, and resilient railroad our customers and shareholders expect,” the company said.

As is often the case with proxy fights, the two sides have since been in a continued back and forth of mutual allegations and rebuttals. Here’s what the arguments come down to:

What Ancora Wants

Ancora’s pitch is simple: “Norfolk Southern has underperformed peers across all relevant financial metrics,” and there’s a “value creation opportunity,” should the company change its ways.

The fund estimates NSC may achieve $800M in additional cost savings over the next 12 months, by removing inefficient locomotives and train cars, reducing fuel consumption per Gross Ton Mile, and redesigning the switching system.

The $800M cost trim is projected to bring down NSC’s operating ratio – a key railroad performance indicators calculated as a percentage ratio of operating expenses to revenue – to 62-63%, significantly lower and therefore healthier than NSC’s 2023 ratio of 67.4%.

To implement the plan, Ancora nominated seven independent directors to the company’s board of thirteen, seeking to gain a majority.

The theoretical next move is to replace Norfolk’s current CEO Alan Shaw with Jim Barber, the former COO at UPS, and install Jamie Boychuk, ex-EVP of operations at CSX (NASDAQ:CSX), as new COO.

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“Norfolk Southern shareholders have the opportunity to install operationally proficient leadership with a proven strategy for transforming the railroad’s infrastructure and running a PSR-powered Scheduled Network that drives superior safety, customer service and financial performance,” Ancora said in its presentation.

The plan seems to have gained both attention and some traction – over the past several weeks, it received endorsements from two worker unions, BLET Teamsters and BMWED Teamsters, which collectively represent “approximately half of Norfolk Southern’s unionized workforce.”

It also earned support of Lourenco Goncalves, CEO of Cleveland-Cliffs Inc (NYSE:CLF), “one of the largest customers of Norfolk Southern as well as a meaningful supplier of steel rails.”

What Says Norfolk Southern

Comments by Norfolk Souther’s current board and management paint an entirely different story.

Alan Shaw was brought on as CEO in May of 2022 with emphasis on fixing the company’s broader operations and improving key operational metrics.

His efforts yielded some very clear results – NSC’s train speed rose by 22%, terminal dwell fell by 11%, and on-time service performance increased by 30%, all since Shaw took over.

Putting operations back on track, metaphorically and literally, has come at a cost of lower margins, but now that the dirty work is behind, management believes it is “on a clear and achievable path to close the margin gap with peers by achieving a sub-60% operating ratio in 3-4 years.”

The company’s comments also underscore that Ancora fails to “acknowledge the obvious and significant financial impact of East Palestine.”

While Norfolk Southern accepts full responsibility for the disastrous incident, it argues that it’s a one-off, “black swan”-type of event that overshadowed an otherwise clear trend of operational and financial improvements.

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For its emphasis on operations and safety, NSC’s current management received endorsements from “the vast majority of rail unions.”

Additionally, Norfolk Southern questions Ancora’s cost-savings plan and believes it is mathematically unrealistic without major furloughs, noting: “Achieving near-term targets would require ~2,900 employee furloughs, putting service and safety at substantial risk, sparking backlash from regulators, and jeopardizing long-term shareholder value.”

Lastly, the company is a vocal critic of the proposed new management, as it notes that the CEO candidate has no prior railroad experience, and the COO has questionable safety and operations record from his time at CSX.

Coupling the last two points together, NSC seems to question – if Ancora isn’t willing to set realistic financial targets, how can anyone expect the proposed questionable management to execute on them?

What Proxy Advisors Think

Independent proxy advising companies are another major party in any proxy fight, as their opinion is often the key factor determining how major institutional investors, such as mutual funds, pension funds, and endowments, vote on their shares.

In this case, the two biggest proxy advisors – ISS and Glass Lewis – made matters more complicated, not less.

For Ancora’s plan to work, it needs to secure a majority on the board, meaning shareholders need to vote in favor of all seven directors it has nominated.

While ISS and Glass Lewis both endorsed Ancora’s proposals, the former recommended clients vote for only 5 directors, notably excluding proposed CEO Jim Barber, while the later supported 6 nominees – neither firm’s recommendation gives Ancora a majority on the board, potentially making it problematic for the fund to proceed with its plans.

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It should be noted that proxy advisor recommendations are not deal-breakers, and the vote may still go either way.

What the Wall Street Thinks

Wall Street’s brightest minds also couldn’t shy away from such a big story, especially considering “neither here, nor there” sentiment from proxy advisors.  

UBS analysts had the following to say about the ISS recommendation: “the result reflects both an indication of the need for change but also a continuation of the current CEO Alan Shaw” – a less than ideal case for Ancora, which made removing Alan Shaw the center point of its activist campaign.

The sentiment is echoed by their counterparts at Bernstein who said: “assuming this goes to a vote, and advisory firms recommendations are followed, the newly constituted board will have 4-5 incumbents, 3 new directors put forward by the company, and 5-6 activist candidates.”

The Big Day

Company executives, fund managers, advisors, and analysts may be loud and emotional in their arguments, but it’s the shareholders who decide what happens next.

The vote, set to take place exactly one week and one day from today, on May 9th will show which side has been more persuasive.

One major indicator – the market itself – appears undecided: while NSC shares recorded strong gains following Ancora’s original announcement, the stock has given them all back since and currently trades more or less where it was pre-announcement.

What’s next for Norfolk Southern? We will learn on May 10th.

 

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.