February 26th, 2024 | 07:15 CET
Infineon, Saturn Oil + Gas, Block - Things are heating up here
Last week, all eyes were on chip giant Nvidia, which once again surprised Wall Street with a positive performance and a net profit increase of almost 770%. In Germany, Allianz also made headlines with a record profit and a significant dividend increase. In contrast, a report that could significantly impact the future of green technologies, with positive signals for the oil and gas industry, went somewhat unnoticed.
time to read: 3 minutes
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Author:
Stefan Feulner
ISIN:
INFINEON TECH.AG NA O.N. | DE0006231004 , Saturn Oil + Gas Inc. | CA80412L8832 , Block Inc. | US8522341036
Table of contents:
Author
Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
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Saturn Oil & Gas - Clear the way for fossil fuels
The earnings season for the full year 2023 is currently dominating the stock markets, but a report first published on February 16 by Reuters could shake up the future of green energy. According to the report, asset managers such as JP Morgan and BlackRock are withdrawing around USD 14 trillion from the climate protection initiative Climate Action 100+, which aimed to encourage companies to reduce emissions. If we look at the US election campaign, the Green Deal vision could be further undermined. If Donald Trump returns to power, he has already announced his intention to increase the promotion of fossil fuels.
This rethink would once again boost the profits of oil producers. Saturn Oil & Gas should benefit disproportionately in the next upward wave, as the Calgary-based company is too undervalued compared to its peer group. With a recently implemented capital measure of CAD 50 million, the current loans are to be repaid, and production is to be continued, at least at the current high level, with targeted drilling programs. At the end of the past financial year, average production after the most extensive drilling program in history amounted to around 28,000 barrels of oil equivalent per day.
The striking undervaluation becomes even more apparent when one looks at the current reserves. Saturn Oil & Gas reported 145.3 million barrels of oil equivalent for proven and probable reserves, an increase of 131% compared to the previous year. This puts the cash value forecast at CAD 6.72 per share for proven, developed and producing reserves. Saturn's share price, on the other hand, is hovering around CAD 2.30. In their current analysis, the analysts at Echelon Capital Markets issued a "Buy" rating with a price target of CAD 5.80.
Infineon - Beneficiary of Nvidia and Top Pick
With its sensational fourth-quarter figures, the US flagship company from Santa Clara lifted the entire chip industry. Thanks to the flourishing market for artificial intelligence, Nvidia recorded quarterly sales that exceeded analysts' expectations for the sixth time in a row. In the fourth quarter, the Company reported a 265% year-on-year increase in revenue to USD 22.1 billion. The average forecast of analysts was USD 20.4 billion. The data center processor segment, in particular, showed extreme growth with a five-fold increase to USD 18.4 billion. This segment had already almost quadrupled in the previous quarter.
Semiconductor shares around the globe benefited from the sensational news. Infineon rose by more than 4% after the announcement but gave back its gains over the course of the week and is trading close to the striking vertical support area at EUR 32.90.
For the major British bank HSBC, the Munich-based company is clearly one of the best chip companies in Europe. The target price for the "Buy" candidate is EUR 53. HSBC forecasts annual EBIT growth of 33% for the years 2024 to 2026 thanks to the Company's leading positions in the power semiconductor and automotive industries.
Block - Share price explosion
In addition to Nvidia, there were further share price fireworks on Wall Street this week. The reason for the 20% rise in the payment provider Block was a significant increase in estimates. The US company is forecasting adjusted core earnings of between USD 570 million and USD 590 million for the quarter to March 31, well above analysts' average estimates of USD 511.76 million. Despite economic uncertainties, US consumer spending remained robust, especially during the holiday shopping season, signaling a positive outlook for 2024.
To drive profitable growth, Block has cut costs by reducing headcount and office space and expects a significant improvement in operating margins. In the fourth quarter, total net revenue grew by 24% to USD 5.77 billion; excluding Bitcoin revenue, it was USD 3.25 billion. Gross profit reached USD 2.03 billion, an increase of 22% compared to the previous year.
The EBITDA forecast was raised from USD 2.40 billion to at least USD 2.63 billion. In addition, the Cash App card recorded 23 million monthly active users in December, an increase of 20% and more than double the growth rate of overall activity.
Nvidia's figures dominated the stock markets last week, benefiting the German company Infineon. The payment service provider Block was also able to come up with significantly higher forecasts. If there is a renewed focus on fossil fuels in the future, Saturn Oil & Gas should benefit significantly due to its undervaluation.
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