This paper details some of the major challenges facing the new Government as it sets out policies to decarbonise the UK economy at the pace required by our legally binding carbon targets. It assesses recent trends in decarbonisation and how they will need to change in the future, how this could impact the living standards of households on low- to middle-incomes, and steps that should be taken over the next five years to ensure that the burden of decarbonisation does not unduly fall on poorer families.

It finds that overall investment levels will need to increase four-fold on those seen since 2010, but that higher upfront costs could limit the affordability of low carbon technologies to those with lower means. As such, effective targeting of support should be a priority, something that successive governments have failed to deliver effectively in recent years.

It also shows that, with the majority of low carbon infrastructure planned for areas in which the population is wealthier and older than the national average, methods to encourage communities to host new developments should be mindful of potentially negative distributional outcomes.

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Net zeroing on investment - Resolution Foundation

Key Takeaways

Bank of America (BAC) shares rose Tuesday as second-quarter revenue and profit beat estimates despite slightly lowernet interest income(NII) than analysts were anticipating.

The bank reported net income of $6.9 billion, or 83 cents per share, below last year's marks but still better than the $6.6 billion, or 79 cents per share, that analysts had projected, according to estimates compiled by Visible Alpha.

Revenue also beat estimates as it grew about 1% year-over-year to $25.4 billion, which Bank of America credited to higher fees, along with improved sales and trading revenue. However, NII dropped 3% to $13.7 billion, narrowly below the $13.79 billion analysts expected, as Bank of America continued a trend of lower NII that started in last week's bank earnings as greater deposit costs offset the benefit of higher interest rates.

Consumer banking revenue slipped 3% to $10.2 billion, but wealth management revenue grew 6% to $5.6 billion, and investment banking fees surged 29% to $1.6 billion.

Bank of America's rivals JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), and Citigroup (C) also reported higher second-quarter revenue from their investment banking activities in recent days.

Bank of America shares rose 3.6% to $43.41 as of 9:55 a.m. ET Tuesday. They are up over 28% in 2024.

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Bank of America Posts Earnings Beat on Investment Banking Boost - Investopedia

Ashley Furniture making major economic investment in Mississippi

Updated: 12:54 PM CDT Jul 18, 2024

Governor Tate Reeves said a big economic investment is coming to Mississippi.Ashley Furniture is spending approximately $80 million on a massive new expansion of its operations. The expansion will create at least 500 jobs and be in the northeast area of the state, according to Reeves.The governor said on a social media post, "This is another huge win for our state!"The furniture company is going to put a lot of technology into their mattress manufacturing facilities, Reeves said.

Governor Tate Reeves said a big economic investment is coming to Mississippi.

Ashley Furniture is spending approximately $80 million on a massive new expansion of its operations. The expansion will create at least 500 jobs and be in the northeast area of the state, according to Reeves.

The governor said on a social media post, "This is another huge win for our state!"

The furniture company is going to put a lot of technology into their mattress manufacturing facilities, Reeves said.

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Ashley Furniture making major economic investment in Mississippi - WAPT Jackson

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that Siemens Healthineers AG (ETR:SHL) does have debt on its balance sheet. But is this debt a concern to shareholders?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

View our latest analysis for Siemens Healthineers

The chart below, which you can click on for greater detail, shows that Siemens Healthineers had 15.7b in debt in March 2024; about the same as the year before. However, because it has a cash reserve of 2.31b, its net debt is less, at about 13.4b.

Zooming in on the latest balance sheet data, we can see that Siemens Healthineers had liabilities of 10.8b due within 12 months and liabilities of 16.8b due beyond that. Offsetting these obligations, it had cash of 2.31b as well as receivables valued at 6.26b due within 12 months. So its liabilities total 19.1b more than the combination of its cash and short-term receivables.

This deficit isn't so bad because Siemens Healthineers is worth a massive 59.8b, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But it's clear that we should definitely closely examine whether it can manage its debt without dilution.

We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio).

Siemens Healthineers has net debt to EBITDA of 3.7 suggesting it uses a fair bit of leverage to boost returns. On the plus side, its EBIT was 8.9 times its interest expense, and its net debt to EBITDA, was quite high, at 3.7. If Siemens Healthineers can keep growing EBIT at last year's rate of 20% over the last year, then it will find its debt load easier to manage. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Siemens Healthineers's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So we clearly need to look at whether that EBIT is leading to corresponding free cash flow. During the last three years, Siemens Healthineers produced sturdy free cash flow equating to 60% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.

The good news is that Siemens Healthineers's demonstrated ability to grow its EBIT delights us like a fluffy puppy does a toddler. But, on a more sombre note, we are a little concerned by its net debt to EBITDA. It's also worth noting that Siemens Healthineers is in the Medical Equipment industry, which is often considered to be quite defensive. All these things considered, it appears that Siemens Healthineers can comfortably handle its current debt levels. Of course, while this leverage can enhance returns on equity, it does bring more risk, so it's worth keeping an eye on this one. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For example Siemens Healthineers has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

Find out whether Siemens Healthineers is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Find out whether Siemens Healthineers is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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Is Siemens Healthineers (ETR:SHL) A Risky Investment? - Simply Wall St

Introduction

On June 21, 2024, the U.S. Department of the Treasury issued a Notice of Proposed Rulemaking (NPRM) to implement President Bidens Executive Order 14105 (Outbound Investment Order). The NPRM builds on the Advanced Notice of Proposed Rulemaking (ANPRM) released in August 2023. The Treasury Department is accepting public comments until August 4, 2024, and plans to release the finalized regulations later this year.

The rules seek to address what the U.S. government sees as a loophole in the trade and investment restriction tool kit. While U.S. companies have been barred from selling sensitive technologies directly to China under Department of Commerce export controls, U.S. investors have been free to continue investing in Chinese firms developing the same technologies. U.S. capital may thus be inadvertently fueling Beijings indigenization drive.

The proposed rules aim to restrict outbound U.S. investments into Chinese companies developing the troika of force-multiplier technologies: (1) semiconductors and microelectronics, (2) artificial intelligence (AI), and (3) quantum information technologies.

Broadly, the outbound investment screening mechanism (OISM) is an effort scoped to target transactions that enhance the military, intelligence, surveillance, or cyber-enabled capabilities of China. U.S. investments will be either: (1) prohibited or (2) notifiable, based on whether they pose an acute national security risk or may contribute to a national security threat to the United States, respectively.

However, the criteria defining what constitutes an acute or national security risk are somewhat elastic. In certain instances, it is targeted, prohibiting investments in AI systems or quantum technologies explicitly designed for military, intelligence, cyber, or mass-surveillance end uses, which are commensurate with demonstrable national security concerns. However, the NPRM also introduces broad carveout clauses under each covered category, which effectively proscribe investments into entire classes of technology, including the development of quantum computers, AI models above certain technical parameters, and advanced packaging techniques (APT) for semiconductors. This suggests that the OISM's remit extends beyond immediate national security applications to include avenues that may allow Chinese technological leapfrogging.

Semiconductors & Microelectronics

The NPRM largely aligns with current existing export controls, apart from the addition of APT, and prohibits U.S. investments to develop, produce, design, or fabricate

The prohibition of APT under the OISM marks a shift in the U.S. approach to maintaining a competitive edge over China in the semiconductor industry. Instead of just focusing on individual chip performance gains through continuous node advancementsuch as from 7 nanometers (nm) to 5 nm to 3 nmit has started to recognize the importance of system-level performance gains afforded by APT. Current semiconductor export controls have largely fixated on obstructing Chinas access and capacity to produce chips at the most advanced nodesas seen by restrictions on high-performance chips, EDA tools, and EUV lithography machinesreflect this thinking. This was based on the long-standing assumption that the primary driver for improved chip performance will come from making transistors smaller and packing more of them onto a single chip.

However, with the slowing of Moores Law, which predicted the doubling of transistors every two years, and as transistor scaling (i.e., miniaturization) approaches fundamental physical limits, this approach may yield diminishing returns and may not be sufficient to maintain a significant lead over China in the long term.

APT helps overcome the constraints of traditional transistor scaling. They facilitate system-level performance gains through the heterogeneous integration of different chip functionalities (e.g., logic, memory, and analog) in a single, compact package, either side-by-side (2.5D integration) or stacked vertically (3D integration).

As a result of the increased proximity between components and greater density of connections within a given footprint, APT unlocks a series of cascading benefits. The reduced distance between components means that electrical signals have to travel a shorter distance (i.e., shorter interconnects), while the higher functional density enables increased bandwidth communication between chips due to the greater number of parallel communication channels available per unit area. Together, these enable faster data transfer rates as there are now more data highway lanes, which are also shorter. The advantages extend beyond just speed. Shorter interconnects are less susceptible to signal degradation, reducing latency and increasing overall reliability. Crucially, ATPs improve power efficiency since there is less resistance and capacitance to overcome.

These features are increasingly important in the context of training large frontier AI models. Current large language models (LLMs) have more than 1 trillion parameters, requiring multiple computing operations across tens of thousands of high-performance chips inside a data center. According to unverified but commonly cited leaks, the training of ChatGPT-4 required roughly 25,000 Nvidia A100 GPUs for 90100 days. Efficient training of large models demands high-bandwidth communication, low latency, and rapid data transfer between chips for both forward passes (propagating activations) and backward passes (gradient descent). These are precisely the issues that APT overcomes or mitigates. The increased power efficiency afforded by APT is also particularly important in the context of the mounting energy costs for training and running LLMs.

Importantly, APT could potentially allow China to technologically leapfrog the United States in AI. By focusing on APT innovation and data-center architecture improvements to increase parallelization and throughput, Chinese companies could compensate for the lower individual performance of older chips and produce powerful aggregate training runs comparable to U.S. AI labs.

In addition to the prohibitions above, the OISM also requires notifications for

The U.S. government is seeking greater visibility on a range of semiconductor-related investments, albeit retroactively within 30 days, as part of its information-gathering exercise.

AI Systems

AI systems are the most open-ended section of the NPRM. It both narrowly targets problematic end uses while containing broad clauses that could sweep in multiple advanced Chinese consumer AI models. It prohibits the development of AI systems that are designed for restricted end uses or that exceed certain technical parameters, including

The OISM also proposes notifications for AI systems that are:

For the uninitiated, FLOP measures the amount of computational power (i.e., compute) required to train an AI system. It is used as a proxy for the capabilities of AI systems as advancements in AI from 2012 have closely correlated with increased compute.

As a reference marker, an AI model that is 10^23, 10^24 or 10^25 FLOP roughly corresponds to the size of ChatGPT-3, 3.5, and 4, respectively. The Treasury Department is still deciding among the compute alternatives and will likely set the relevant amount of compute under notifiable transactions below the amount of compute for the corresponding prohibited transactions (i.e., if 10^24 FLOP is selected for prohibited investments, notifiable investments will be set at 10^23 FLOP).

In terms of the Chinese landscape, according to Epoch AI, as of April 2024, there were no known Chinese AI models above 10^25 FLOP, 5 Chinese AI models above 10^24 FLOP (Qwen-72B by Alibaba, XVERSE-65B by XVERSE Technology, Chat GLM 3 by Zhipu Ai, Tigerbot-70B by Tigerobo, and ERNIE 3.0 TITAN by Baidu), and 14 Chinese AI models above 10^23 FLOP (Qwen-7B by Alibaba, Qwen-14B by Alibaba, Yuan 1.0 by Inspur, GLM-130B by Tsinghua University, xTrimoPGLM-100B by Tsinghua University, Blue LM-13B by vivo AI lab, Naibeige-16B by Nanbeige LLM Lab, Skywork-13B by Kunlun Inc, Baichuan2-13B by Baichuan, CodeFuse-13B by Ant Group, DeepSeek Coder 33B by DeepSeek, DeepSeek LLM 67B by Deepseek, PanGu- by Huawei Noah's Ark Lab, and Yi-34B by 01.AI).

The reason the United States has included general-purpose frontier AI models under the prohibited category is likely because they can be fine-tuned at low cost to carry out malicious or subversive activities, such as creating autonomous weapons or unknown malware variants. Fine-tuning refers to the process of taking a pretrained AI model, which has already learned generalizable patterns and representations from a larger dataset, and further training it on a smaller, more specific dataset to adapt the model for a particular task. Similarly, the use of biological sequence data could enable the production of biological weapons or provide actionable instructions for how to do so.

The use of compute benchmarks, however, especially in the context of national security risks, is somewhat arbitrary. Unlike nuclear weapons, for example, AI does not have a comparable enrichment metric that marks a transition to weaponization. In addition, the compute used to train a model does not necessarily reflect its potential for malicious use. Smaller, specialized models trained on high-quality data can outperform larger, general-purpose models on specific tasks. For example, the landmark experiment that has become the poster child for how AI can manufacture novel pathogens used a model built on a public database in 2020 that would fall well under the 10^23 threshold. Furthermore, different types of AI-enabled threats have different computational requirements. AI-enabled cyberattacks, for example, might be effectively conducted with just modestly capable models.

Moreover, compute benchmarks that define the state of the art are a moving needle. In 2020, there were only 11 models which exceeded 10^23 FLOP. As of 2024, this has grown to 81 models. And as advances in hardware drive down costs and algorithmic progress increases compute efficiency, smaller models will increasingly access what are now considered dangerous capabilities.

Lastly, there are potential workarounds for determined adversarial agents. They can chain together multiple smaller models, each trained below the compute threshold, to create a system with capabilities comparable to a large frontier model or simply fine-tune an existing and freely available advanced open-source model from GitHub.

Quantum Information Technology

Unlike semiconductors, microelectronics, and AI systems, there are no notifiable transactions for quantum information technology. The NPRM prohibits wholesale U.S. investments to develop or produce

The first two categories contain end use provisions targeting military, intelligence, or mass surveillance applications, with the latter specifically targeting the use of quantum technologies for encryption breaking and quantum key distribution.

These prohibitions aim at obvious and direct national security concerns. Unlike other quantum technology subcategories, the potential defense applications of quantum sensors are relatively clear and achievable in the near to mid-term. According to a report by the Institute for Defense Analyses, within the next five years, China could leverage quantum sensors to enhance its counter-stealth, counter-submarine, image detection, and position, navigation, and timing capabilities. Quantum computing also threatens to break current encryption standards, posing warranted cybersecurity risks.

The NPRM also prohibits U.S. investments to develop or produce quantum computers and their components in China entirely. The rules estimate that, while significant technical challenges remain given the early state of the technology, there is a window of opportunity to restrict Chinese access to critical developments in the field. This contrasts with semiconductor export controls, which were implemented after significant technological diffusion had already occurred and China had developed native industry strengths. By acting preemptively, the United States is aiming to maintain a technological advantage in quantum from the outset.

The notifications required under the OISM will call for companies to provide detailed information about their investments in China, providing a dynamic, high-resolution snapshot of the Chinese investment landscape. This data will be fed back to the U.S. government, providing visibility on aggregate and sectoral trends and enabling a bidirectional feedback loop to fine-tune or strengthen export controls and investment screening based on gaps or deficits. In addition, by triangulating various notifications, this system could identify stealth technological developments in China that may have slipped under the radar and serve as a tripwire for potentially problematic Chinese transactions into the United States under the Committee on Foreign Investment in the United States (CFIUS), which screens inbound investments for national security risks.

The OISM goes beyond existing rules in several ways. It not only fills a policy gap but sets up a data flywheel that could introduce complementary effects with adjacent tools, such as export controls and inbound investment screening.

The effectiveness of the proposed OISM hinges on a number of assumptions: (1) that the withdrawal of U.S. capital will be damaging to the Chinese technological landscape, and (2) that U.S. technology scaling know-how and tacit knowledge, which have to date been bundled together with capital, are nonreplicable.

Data from the Rhodium Group shows that U.S. venture capital in China has already fallen off from the peak of $14.4 billion in 2018 to $1.3 billion in 2022. More work also needs to be done to estimate the level of expected backfilling from Chinese domestic and non-U.S. foreign investors. Moreover, while the United States has historically held a significant advantage in scaling technology companies globally, Chinese companies have made significant strides over the past decade. China may well have enough industry veterans and accumulated know-how to coach and mentor the next wave of Chinese champions.

The United States will also need to secure allied buy-in. Encouragingly, the United States has already started to socialize outbound investment screening at the G7 and is also exploring the inclusion of an excepted states clause similar to the one under CFIUS.

Barath Harithas is a senior fellow in the Project on Trade and Technology at the Center for Strategic and International Studies in Washington, D.C.

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Anatomy of a Technology Blockade: Unpacking the Outbound Investment Order - CSIS | Center for Strategic and International Studies

Dream Office Real Estate Investment Trust (TSE:D Free Report) Analysts at National Bank Financial boosted their FY2024 earnings per share (EPS) estimates for Dream Office Real Estate Investment Trust in a report issued on Wednesday, July 17th. National Bank Financial analyst M. Kornack now anticipates that the company will post earnings of $2.92 per share for the year, up from their previous forecast of $2.90. National Bank Financial has a Hold rating on the stock.

Dream Office Real Estate Investment Trust (TSE:D Get Free Report) last issued its quarterly earnings data on Thursday, May 9th. The company reported C$0.61 earnings per share (EPS) for the quarter, missing the consensus estimate of C$0.73 by C($0.12). The firm had revenue of C$48.50 million during the quarter.

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FY2024 EPS Estimates for Dream Office Real Estate Investment Trust (TSE:D) Lifted by National Bank Financial - Defense World

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AST SpaceMobile, Inc. (NASDAQ:ASTS) is on track to disrupt the telecommunications industry thanks to its goal of delivering direct-to-cell ("DTC") services to smartphone users who are out of terrestrial cellular coverage. With the company on track to launch its first five Block 1 BlueBird satellites next month, it is well positioned to realize its first revenues by Q4 this year. Given the significance of this milestone, I expect AST to continue its bullish price movement on a successful launch.

Meanwhile, the companys advanced technology, compared to its direct competitors SpaceX (SPACE) and Lynk (SLAM), as well as its relationships with more than 40 MNOs with user bases of more than 2.8 billion users could see its revenues grow exponentially over the coming years. In my opinion, these factors set AST up to attract a substantial portion of the adults living in the effective coverage gap who are estimated to reach 532 million by 2035. In light of this, Im rating AST as a strong buy with a price target of $144 by 2030, implying 1018% upside from current levels.

AST is a vertically integrated space-based cellular broadband network provider with more than 3350 patents and patent pending claims. The company intends to operate a constellation of LEO satellites that will provide connectivity directly to mobile phones at broadband speeds.

The first five BlueBird satellites of the companys constellation, representing Block 1 and are fully funded, are expected to launch in August, per a supplement filed with the FCC on July 18th. Given that management previously shared that they expect to spend around three months to test and calibrate these satellites in orbit, it could be safe to expect the company to start generating revenues in Q4 this year, including $20 million in revenue commitments from AT&T (T).

FCC International Communications Filing System

Currently, the company is in the process of building and developing the next generation of the BlueBird satellite which is designed to improve throughput by 10 times. The next generation of the BlueBird satellite will be launched as part of Block 2 which will include 20 satellites and its launch is estimated to be in late Q4 2024 or in Q1 2025

With the five Block 1 satellites and 20 Block 2 satellites, AST will be able to provide limited and non-continuous service as it needs 45-60 satellites for continuous services in the US, and 90 satellites to be fully operational. With that in mind, the company stated in its latest 10-Q filing that in addition to its cash balance of $212.4 million, it has to raise between $350-$400 million to fund the costs associated with designing, assembling, and launching the 20 Block 2 BB satellites.

On that note, ASTs business model appears to be following the pattern of high CapEx and low operating costs. The launch and deployment of a large constellation of LEO satellites requires significant upfront investments, as shown by the capital AST used and intends to use for the upcoming launches of BB1 and BB2 satellites.

Once these satellites are successfully deployed in LEO, AST is likely to incur relatively low operating costs associated with monitoring the satellites and maintaining them in orbit. That said, LEO satellites are estimated to have a lifespan of seven to 10 years, which means that the company may have to launch new satellites to replace the old ones by around 2031.

At the same time, it should be noted that AST doesnt have physical infrastructure since it leverages the cellular network infrastructure of its partner MNOs on the ground. This helps the company reduce its need for extensive physical maintenance compared to traditional telecom companies.

ASTs business model also allows it to incur minimal sales and marketing costs since it doesnt offer its service directly to consumers, but its service is offered by its partners to their subscribers. Accordingly, the company relies on its partners subscriber growth to increase its addressable market.

With that in mind, the company estimates that its partnerships with global MNOs provide it with access to more than 2.8 billion subscribers. These partners include AT&T, Rakuten (OTCPK:RKUNY), Vodafone (VOD), and Verizon (VZ), which has recently partnered with the company in late May. This large addressable market is especially promising for AST considering that it might be operating a 50-50 revenue share model based on its deal with AT&T, as mentioned in the Q1 earnings call.

April Investor Presentation

While some might be skeptical of the companys business direction, I believe its tech could be a game changer for the millions living in the coverage gap and on the edge of coverage. Per GSMA estimates, around 240 million adults will be living outside the range of a 3G, 4G, or 5G network in 2025.

At the same time, another group that lives within range of a 3G, 4G, or 5G signal but experiences patchy service at home or in transit for work or travel is estimated to reach 280 million adults in 2025. These groups living in the effective coverage gap will be the main growth drivers for satellite based networks, similar to ASTs offering.

I believe thats the case since integrating satellite and terrestrial mobile networks on these groups mobile phones could help fill in service gaps and maximize geographic and population network coverage. Thus, satellite networks could help bridge the digital divide and bring opportunities and economic benefits to remote communities.

Furthermore, commercial and government services will also drive growth in this emerging market. Communication services for public safety and national safety could be natural use cases for DTC services. In fact, satellite networks can be a lifeline during natural disasters or emergencies when terrestrial networks are down, allowing people to call for help and stay in touch with loved ones during these difficult times.

Looking at the competitive landscape in the DTC space, AST faces direct competition from Lynk Global, which is set to go public through a SPAC merger with Slam Corp. (SLAM) later this year, and SpaceXs Starlink division. That said, ASTs technology appears to be more advanced than its competitors in the field of DTC connectivity.

Over the course of last year, AST achieved several milestones highlighting its satellites capabilities. That said, the most impressive feat the company achieved was making the first ever 5G voice call and achieving a 14 Mbps data rate in September 2023.

April Investor Presentation

In comparison, Starlink successfully sent and received its first text message to and from unmodified cell phones on the ground to its satellites in space using T-Mobile (TMUS) network spectrum last January. While SpaceX didnt share details regarding speeds, latency, or other limitations, the company shared a photo on X showing that one of the sent messages was lost during transmissions. This shows that Starlink is far behind AST in terms of its satellites capabilities given that it plans to expand its service to support voice and data in 2025, something AST has already achieved successfully.

Moreover, Elon Musk previously shared that the cellular Starlink system is designed to supply about 7 Mbps per cell which is only good for text messages. Meanwhile, AST already achieved a data rate double of that at 14 Mbps, as mentioned earlier, and its planned operational satellites are designed to support capacity of up to 40 Mhz which could enable data transmission speeds of up to 120 Mbps.

As for Lynk, the company has built 11 satellites and plans to use the proceeds from its SPAC merger to expand production to 12 satellites per month, per its investor presentation. With that in mind, Lynks CEO Charles Miller, has previously shared that the companys plan is to build 200 satellites per month and reach 5000 satellites within 2 years.

In my opinion, these plans are extremely optimistic considering the financial state of the company. Per Lynks investor presentation, the cost of producing a satellite is $300 thousand and the launch cost is around $650 thousand. Meanwhile, the merger deal has a minimum cash agreement of $110 million. On that note, Slams latest 10-Q filing shows that it has just less than $100 million held in trust. That said, Lynk has a commitment from Antara Capital to invest $25 million to help offset redemptions.

In parallel with its SPAC deal, Lynk is looking to raise $40 million in a Series B funding round. This would bring its total cash raised to $150 million through all of these capital raises, which are expected to help produce more satellites, secure launches, and support satellite designs and operations. In my opinion, these figures dont align with the companys plan to produce 5000 satellites within two years since the cost of producing 5000 satellites, without taking launch costs into consideration, would be $1.5 billion, while that figure would balloon to $4.8 billion when considering launch costs.

Planned Satellites

5000

Cost Excl. Launch

$1,500,000,000

Cost Incl. Launch

$4,750,000,000

Meanwhile, the $150 million Lynk has access to are only enough to produce 500 satellites, without considering launch costs and operating costs, or 158 satellites when taking launch costs into consideration.

Cash

$150,000,000

Launch Cost/Sat

$650,000

Sat BOM Cost

$300,000

Total Cost/Sat

$950,000

Possible Sats Excl. Launch

500

Possible Sats Incl. Launch

158

Moving to technology, Lynk appears to be far behind AST, as per its investor presentation, it requires 25-50 satellites to support messaging every 30 minutes, 74-186 satellites to support seamless messaging, and 250-920 satellites to support voice and broadband services.

Lynk's Investor Presentation

In comparison, ASTs initial five Block 1 satellites and 20 Block 2 satellites can offer all of those services, albeit limited, in the US, and requires 90 satellites only to cover the whole world, per its president Scott Wisniewski.

While ASTs partners have 2.8 billion subscribers, the company cant access this potential customer base until its service is available globally, which can only be possible when it has 90 satellites launched. With the company launching its first five Block 1 satellites next month, and plans to launch 20 Block 2 satellites in late Q4 2024 or Q1 2025, it would have 25 satellites capable of providing limited service in the US.

AST has an existing capacity to produce two satellites per month and a potential capacity of six satellites per month. Assuming the company is able to produce four satellites per month in 2025, it can reach more than the 90 satellites required for full deployment in 2026. This timeline is in line with the companys plan to provide its service in Japan through Rakuten in 2026.

Year

Satellites

2024

5

2025

73

2026

121

Given that AST is partnered with AT&T and Verizon in the US, it can offer its service to both companies user bases of 114.5 million and 114.8 million, respectively, meaning that its potential user base in the US in 2025 is around 229.3 million. Please note that Verizons users figure can be found inside the Financial & Operating Information file.

Meanwhile, unconfirmed reports suggest that AT&T expects between 30-40% of its US users to subscribe to ASTs service which is reported to be around $2 per month. In light of this, Ill be projecting ASTs revenues based on the following assumptions.

Assumptions

Monthly Subscription

$2

ASTS' Share of Subscription

50%

ASTS' Monthly Rev/User

$1

ASTS' Annual Rev/User

$12

For 2025, Im forecasting ASTs revenues assuming 15% of AT&T and Verizons users subscribe to the companys service, which is a conservative approach in my opinion based on the unconfirmed reports from AT&T. Accordingly, my revenue estimate for 2025 is $412.8 million.

For 2026 and beyond, once AST is able to offer its service globally, Im assuming its share of its partners users to be 3% in 2026, 5% in 2027, 7% in 2028, 9% in 2029, and 11% in 2030. The reason why I expect users of ASTs service to increase is that with more satellites launched and better coverage, its service could attract more users in the effective coverage gap, which GSMA estimated to reach 532 million adults by 2035.

In light of these assumptions, my revenue projections for AST until 2030 are as follows.

Own Calculations

Please note that my projections dont take into consideration any potential growth in the user bases of ASTs partners.

In order to reach a price target for AST, Ill be comparing its valuation to SpaceX since Lynks SPAC merger is yet to be closed. As is, both SpaceX and Lynk are the only direct competitors to AST. With that in mind, SpaceX is estimated to be valued at $210 billion based on its latest tender offer in late June. At the same time, SpaceX is forecasted to generate $13.3 billion in revenues this year, including $6.85 billion from its Starlink division.

While these data imply that SpaceXs P/S ratio is 15.79, my target P/S ratio for AST is 10 since SpaceX derives its value from both its launch division and Starlink division, which is ASTs direct competitor.

SpaceX Valuation

$210,000,000,000

SpaceX Proj. Rev

$13,302,000,000

SpaceX P/S

15.79

Based on this, my price targets for AST until 2030, based on my revenue estimates, are as follows.

Own Calculations

Although Im bullish on AST, there are a few risks to consider. The first risk to my thesis is the financial viability of the company. The costs of building, launching, and maintaining LEO satellites are high as the company still anticipates raising $350-$400 million to launch the 20 Block 2 satellites. Therefore, the company might resort to dilution to raise future capital to launch its entire constellation, which is crucial for providing its service globally.

That said, the company is backed by several giant MNOs who can provide it with strategic investments, similar to the investments it received from AT&T, Verizon, and Vodafone. The companys partners could also fund the development and launch of future satellites, given the services potential to attract more users to these MNOs.

The second risk to my thesis is market adoption of ASTs technology. Demand for DTC connectivity, especially 5G connectivity, in underserved areas is still evolving. As such, it remains to be seen whether users will adopt this technology or be willing to pay for such service.

Another risk to my thesis is potential regulatory hurdles as satellite communications and spectrum allocations are subject to heavy regulations. These regulations exist to protect the radio frequency spectrum, which is a finite resource, prevent interference between users on the spectrum to ensure smooth operations, and coordinate spectrum use between countries to avoid conflict. As such, these regulations could impact ASTs operations in some regions.

In summary, Im bullish on AST due to its growth potential through its first mover advantage in the DTC space and technological advantage over its direct competitors, SpaceX and Lynk. The company is on track to launch five Block 1 satellites next month and intends to launch 20 Block 2 satellites in Q4 2024 or in Q1 2025. Through these initial satellites, the company can offer limited service to the 229.3 million AT&T and Verizon users in the US. With that in mind, unconfirmed reports from AT&T suggest that 30-40% of the telco giants users would be willing to subscribe to ASTs service, which is reported to cost $2 monthly.

Meanwhile, AST could be on track to start offering its service globally in 2026, providing it with access to its partners user bases of more than 2.8 billion. Considering that adults living in the effective coverage gap are estimated to reach 532 million by 2035, these relationships could allow AST to attract a substantial portion of this population. In light of these factors, Im rating AST as a strong buy with a price target of $144 by 2030, representing 1018% upside from current levels.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

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AST SpaceMobile: A Moonshot Investment Opportunity In The Direct-To-Cell Race - Seeking Alpha

Social-media behemoth Meta Platforms could be about to buy a small stake in the French-Italian eyewear giant that owns Ray-Ban, Oakley, and the streetwear-focused clothing brand Supreme.

Meta is in talks to acquire 5% of EssilorLuxottica, The Wall Street Journal reported on Thursday, citing people familiar with the matter. The position would be worth about 4.5 billion euros, or $5 billion, based on the latter companys latest market value.

EssilorLuxotticas Paris-listed shares and American depositary receipts both rose 4%. Meta stock climbed 2% to $471.22.

The rumored investment likely forms part of Metas strategy to crack the market for smart glasseswhich could help it achieve its longtime goal of building a so-called metaverse.

The Facebook, Instagram, and WhatsApp parent joined with Luxottica to launch its Ray-Ban smart glasses, known as Ray-Ban Meta, back in 2021. Wearers can use the devices to take photos and listen to music.

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In the past, Big Tech giants have found the market for these devices tough to crack. Alphabet s Google Glass, which failed due to an eye-watering $1,500 price tag and limited functionality, is probably the best-known example. Meta is said to be quietly confident that it can buck the trend, though, with sales of its Ray-Bans reportedly exceeding expectations.

Last year, Meta released a second-generation version of the smart glasses that feature the Magnificent Seven companys own in-house artificial intelligence assistant. They sell for $299.

Advances in AI allow us to create different [applications] and personas that help us accomplish different things, Zuckerberg said as he kicked off the gathering, CEO Mark Zuckerberg said as he introduced the new product. And smart glasses are going to eventually allow us to bring all of this together into a stylish form factor that we can wear.

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Cornering the smart glasses market could also be part of Metas strategy for building a metaverse. Creating a virtual-reality, 3D version of the internet where people can interact has become something of a white whale for Zuckerberg in recent years, even though hes yet to get much buy-in from investors.

Meta expects the third-generation version of its Ray-Bans to be ready for the 2025 holiday-shopping season and believes that buying a stake in EssilorLuxottica would open the door for the two companies to team up to produce more devices, per The Journals report.

EssilorLuxottica made a splashy acquisition of its own on Wednesday when it bought Supremethe New York skateboarding and streetwear brand best known for its iconic red box logofrom VF Corporation for $1.5 billion in cash.

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Meta declined to comment. EssilorLuxottica didnt immediately respond to a request for comment from Barrons.

Write to George Glover at george.glover@dowjones.com

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Metas Next Investment Might Not Be a Tech Company. Why the Facebook Parent Is Interested in Sunglasses. - Barron's

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?

Let's take a look at what these Wall Street heavyweights have to say about Apple (AAPL) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.

Apple currently has an average brokerage recommendation (ABR) of 1.62, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 30 brokerage firms. An ABR of 1.62 approximates between Strong Buy and Buy.

Of the 30 recommendations that derive the current ABR, 20 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 66.7% and 10% of all recommendations.

Brokerage Recommendation Trends for AAPL

Check price target & stock forecast for Apple here>>>

While the ABR calls for buying Apple, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near -term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABR

In spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.

The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

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Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.

In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.

Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.

Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.

Is AAPL Worth Investing In?

In terms of earnings estimate revisions for Apple, the Zacks Consensus Estimate for the current year has increased 0.1% over the past month to $6.59.

Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Apple. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, the Buy-equivalent ABR for Apple may serve as a useful guide for investors.

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Apple Inc. (AAPL) : Free Stock Analysis Report

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Apple (AAPL) Is Considered a Good Investment by Brokers: Is That True? - Yahoo Finance

How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.

Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.

What if you'd invested in Apple (AAPL) ten years ago? It may not have been easy to hold on to AAPL for all that time, but if you did, how much would your investment be worth today?

Apple's Business In-Depth

With that in mind, let's take a look at Apple's main business drivers.

Apples business primarily runs around its flagship iPhone. However, the Services portfolio that includes revenues from cloud services, App store, Apple Music, AppleCare, Apple Pay, and licensing and other services now became the cash cow.

Moreover, non-iPhone devices like Apple Watch and AirPod gained significant traction. In fact, Apple dominates the Wearables and Hearables markets due to the growing adoption of Watch and AirPods. Solid uptake of Apple Watch also helped Apple strengthen its presence in the personal health monitoring space.

Apple is expanding non-iPhone portfolio with the launch of Apple Vision Pro a spatial computer that blends digital content with the physical world.

Headquartered in Cupertino, CA, Apple also designs, manufactures and sells iPad, MacBookand HomePod. These devices are powered by software applications including iOS, macOS, watchOS and tvOS operating systems.

Apples other services include subscription-based Apple News+, Apple Card, Apple Arcade, new Apple TV app, Apple TV channels and Apple TV+, a new subscription service.

In fiscal 2023, Apple generated $383.29 billion in total revenues. The companys flagship device iPhone accounted for 52.3% of total revenues. Services, Mac and iPad category contributed 22.2%, 7.7% and 7.4%, respectively. Wearables, Home and Accessories products category contributed 10.4%.

Apple primarily reports revenues on a geographic basis, namely the Americas (North & South America), Europe (European countries, India, Middle East and Africa), Greater China (China, Hong Kong & Taiwan), Japan and Rest of Asia Pacific (Australia & other Asian Countries).

In fiscal 2023, Americas, Europe, Greater China, Japan and Rest of Asia-Pacific accounted for 42.4%, 24.6%, 18.9%, 6.3% and 7.7% of total revenues, respectively.

Apple faces stiff competition from the likes of Samsung, Xiaomi, Oppo, Vivo, Google, Huawei and Motorola in the smartphone market. Lenovo, HP, Dell, Acer and Asus are its primary competitors in the PC market. Other notable competitors are Google & Amazon (smart speakers) and Fitbit & Xiaomi (wearables).

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Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Apple ten years ago, you're probably feeling pretty good about your investment today.

According to our calculations, a $1000 investment made in July 2014 would be worth $9,495.93, or an 849.59% gain, as of July 19, 2024. Investors should keep in mind that this return excludes dividends but includes price appreciation.

Compare this to the S&P 500's rally of 180.28% and gold's return of 79.01% over the same time frame.

Going forward, analysts are expecting more upside for AAPL.

Apples near-term prospects remain foggy due to sluggish China sales amid stiff competition. It expects the June quarters (third-quarter fiscal 2024) revenues to grow low-single-digit year over year. Unfavorable forex is expected to hurt revenues by 2.5%. Apple has been playing catch-up in the AI space compared with Alphabet, Microsoft and Amazon, its peers in the magnificent seven group. Following the launch of Apple Intelligence, its competitive position is expected to improve. Moreover, Apple is benefiting from increasing customer engagement in the services segment. The expanding content portfolio of Apple TV+ and Apple Arcade helped drive subscriber growth. Apples top-line benefits from strong growth in emerging markets and growing adoption of its devices among enterprises.

Over the past four weeks, shares have rallied 6.92%, and there have been 3 higher earnings estimate revisions in the past two months for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.

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Here's How Much a $1000 Investment in Apple Made 10 Years Ago Would Be Worth Today - Yahoo Finance