Research Market strategy
By Swissquote Analysts
Published on 03.11.2021
Morning news

Avis Stock Surges On Strong Results, Brightening Rental-Car Outlook

Topic of the day

Avis Budget Group shares gained 108.3% driven in part by third quarter results that beat analysts’ expectations and included a record adjusted pretax profit of $1 billion. Earlier in the day, shares traded as high as $545 a share, putting pressure on short sellers. Meanwhile, Tesla shares slipped $36.59, or 3%, to $1,172 after Chief Executive Elon Musk said on Twitter that the electric car maker hasn’t yet signed a deal for Hertz to buy its vehicles. Tesla’s shares surged last week after Hertz said it had ordered 100,000 cars. Avis also said it was executing on plans to add more electric vehicles to its global rental fleet and will announce those plans when they are ready. Avis has said it plans to reduce the company’s greenhouse-gas emissions by 30% over the next decade. The rally began late Monday after Avis reported its latest quarterly earnings. The company’s profit hit a new record and sales surged, thanks to a boom in demand for rental cars throughout the summer. On Reddit’s WallStreetBets forum, retail traders posted dozens of comments debating the run-up in Avis’s shares. Heading into November, data had shown short interest mounting in the stock. Traders who sell securities “short” borrow shares and then sell them, betting they can profit by buying the stocks back later at lower prices.

Swiss stocks

On Tuesday, the Swiss stock market extended the previous day's gains. The SMI advanced by 0.9 percent to 12,321 points. Among the 20 SMI stocks, there were 18 price gainers and two losers. 29.66 (previously: 43.58) million shares were traded. While the defensive heavyweight Roche (+2.4%) led the tableau, Adecco gave up 4 percent outside the SMI. Novartis gained 0.3 percent, Nestle 0.2 percent. Here, profit-taking set in after a record high, which led Nestle temporarily even into the red. Meanwhile, Lonza reported two acquisitions, the shares of the pharmaceutical supplier climbed by 1.6 percent. AMS plunged by 8.4 percent after actually positive business results. The outlook however was not well received. Zur Rose gained 3.1 percent - in the wake of competitor Shop Apotheke.

International markets


European stocks were mixed Tuesday as traders took a breather while waiting for the latest Federal Reserve monetary policy decision. The Stoxx Europe 600 index gained 0.1% to 479.5 points. In Paris, the CAC 40 gained 0.5%, setting a new closing record at 6,927.03 points, while the SBF 120 appreciated 0.4%. In Frankfurt, the DAX 40 gained 0.9%, while the FTSE 100 in London gave up 0.2%. The share of the group of collective catering Elior lost 5.6% after Goldman Sachs lowered its recommendation from "buy" to "neutral" on the value. Sodexo gained 1% after the American bank raised its recommendation on the stock by two notches, from "sell" to "buy". Standard Chartered (-7.9% in London) saw its current pre-tax profit jump 44% to $1.08 billion in the third quarter, but the British banking group reported a cautious outlook. British energy group BP (-3.4% in London) posted a net loss of $2.54 billion in the three months to 30 September, due to higher gas prices at the end of that period. The German healthcare company Fresenius shares traded higher after 3Q results were a touch ahead of expectations, Jefferies analysts said. HelloFresh's third revenue guidance upgrade for the year sends a positive signal ahead of the German meal-kit maker's capital-markets day later this year. HelloFresh shares traded 14% higher.

United States

The market’s autumn rally continued Tuesday, with stock indexes hitting more records and the Dow Jones Industrial Average closing above 36,000 for the first time. The Dow, S&P 500 and Nasdaq Composite all picked up traction as Tuesday’s session wore on, breaking out of a lifeless trading pattern that had kept the benchmarks close to the flatline earlier in the day. The latest batch of earnings reports appeared to aid the market’s advance, with Pfizer, Under Armour and others rising after solid quarterly disclosures. The Dow added 138.79 points, or 0.4%, to 36052.63. It was the index’s sixth 1,000-point milestone of the year, the most in a single year on record. In January, the Dow closed above 31000 for the first time. The S&P 500 rose 16.98 points, or 0.4%, to 4630.65. The Nasdaq gained 53.69 points, or 0.3%, to 15649.60. With all three indexes ending the day higher, it is the third trading session in a row where they all set closing records. On Tuesday, Arista Networks led the S&P 500. The networking-hardware company gained $83.30, or 20%, to $491.87 after it posted better-than-expected results Monday afternoon, announced a four-for-one stock split and revealed plans for a $1 billion stock buyback. Under Armour shares added $3.62, or 16%, to $25.60 after the clothing maker posted third-quarter sales and earnings that beat Wall Street’s projections. Pfizer rose $1.81, or 4.1%, to $45.45 after reporting earnings that beat analysts’ forecasts thanks to sales of its Covid-19 vaccine. DuPont rose $6.26, or 8.8%, to $77.49 after its quarterly results surprised to the upside.


In Asia, stock markets weakened. While in Shanghai (-0.4%) and Hong Kong (-0.9%) the negative trend of the previous day continues, the Kospi (-1.2%) in Seoul surrenders its Tuesday gains completely. In Japan, there is no trading due to a public holiday.


The U.S. government debt yield curve steepened again Tuesday, following last week's volatile moves in global bond markets. The Fed is fully expected to lay out plans to begin tapering its $120 billion in monthly bond purchases, a process that's expected to end by mid-2022. The 10-year U.S. Treasury yield eased 3 basis points to 1.549% from 1.562% Monday night. The yield of the German Bund with the same maturity was -0.160%, down from -0.099% Monday night.


Berenberg lowers Holcim target to CHF 56 (62) - Hold
Jefferies lifts Inditex target to EUR 36 (35) - Buy
Berenberg raises BNP target to EUR 55 (52) - Hold

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