Dow Jones gains 400 points as Boeing stock skyrockets, Apple App Store sees sustained demand
the Dow Jones Industrial Average (DJINDICES: ^ DJI) was on the rise again on Wednesday, despite a backdrop of a persistent pandemic, high unemployment and widespread civil unrest in major US cities. The Dow was up about 1.5% at 1:20 p.m. EDT.
Boeing (NYSE: BA) was the star performer of the Dow Jones, soaring after rumors emerged that an activist investor took a major stake. Meanwhile, Apple (NASDAQ: AAPL) the stock stalled even after an increase in an analyst’s price target.
Boeing flies on activist-investor rumors
Shares of aircraft maker and defense firm Boeing rose about 9.7% early Wednesday afternoon following a rumor that the hedge fund Third Point had taken a significant stake. Boeing’s shares have been hammered in recent months as the pandemic decimated demand for air travel and shocked the airline industry.
While Boeing shares are down about 57% from their 52-week high, the stock has nearly doubled since its low in March. If the rumors are true, Third Point probably thinks the title could continue to recover.
The problems facing Boeing are immense. Before the pandemic, the downtime of the 737 Max following two fatal crashes had an impact on Boeing’s finances. The situation has only gotten worse now as airlines struggle to survive the drop in demand due to the pandemic. In the first quarter of this year, Boeing delivered just 50 commercial aircraft, down 66%. Free cash flow was a loss of $ 4.7 billion.
Boeing recently raised $ 25 billion by selling new debt and striving to cut costs. The company reportedly began involuntary layoffs late last month, affecting nearly 7,000 employees, and production is reduced for some planes.
It may take years for the airline industry and Boeing to fully recover, and Boeing will likely emerge from this crisis burdened with additional debt. The stock could certainly bounce back faster than that, but it will take patience for anyone who wants to invest in this area. industrial giant.
Apple upgraded on the strength of the App Store
While the iPhone is Apple’s most important revenue stream, the App Store helps drive the growth of the company’s rapidly growing service business. Morgan stanley estimates that App Store revenue jumped 35% year-over-year for the first two months of Apple’s current quarter, a performance good enough to push up target prices.
Morgan Stanley raised its price target on Apple shares from $ 326 to $ 340, saying the high levels of engagement that drove App Store spending to the worst of the pandemic have persisted. The investment bank expects App Store revenue to grow 32% in Apple’s current quarter, even taking into account an expected slowdown in June. This growth will lead to 16.7% growth in the broader services segment, according to estimates from Morgan Stanley.
This App Store momentum is expected to continue beyond the current quarter, with Morgan Stanley predicting that higher App Store growth rates will contribute to 16.9% increase in services revenue for the year 2020 and 17.8% of service revenues for fiscal 2021.
Apple shares were up about 0.1% early Wednesday afternoon. The stock is only a few dollars below its 52 week high.
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