What is the worst thing an investor could hear from a market share leader? According to Jefferies’ analyst Owen Bennett, it is probably the need to "understand what consumers want.”And that’s just what Canopy Growth (CGC) has said. According to the analyst, the Canadian cannabis producer’s disappointing FQ4 results indicate “things are worse than thought.”Canopy's Q4 net revenue came in at C$107.9 million, well below the C$128.9 million estimate and down by 13% from the previous quarter. The enormous overall net loss of C$1.3 billion, amounted to C$3.72 per share, far worse that the Street’s expectation of C$0.59 per share. Cue investors running to the exit door and a drop of 20% in the following trading session.Bennett recently upgraded Canopy’s rating from Sell to Hold, based on the reasoning “top line pressures were better understood,” and under the impression cost saving actions were moving the company in the right direction.Pointing out the slim bull case for Canopy rested on “increased focus on cost structure and profit delivery,” the analyst believes the turnaround appears more sluggish than anticipated as evidenced by operating expenses. Instead of improving, these increased by 17% compared to the previous quarter.Additionally, looking ahead, Canopy reduced expectations, describing FY21 as a “transition year,” and taking off the table previous forecasts for when it would achieve positive adjusted EBITDA.Along with the letdown of the report, the tone coming from Canopy’s direction has not impressed Bennett, who said, “While it said it is addressing certain headwinds with a shift into value and more high THC offerings, what really concerned us was commentary around needing to "understand what consumers want", and "servicing different segments". This is just basics and an issue we flagged over 12 months ago when initiating (Canopy having a catch all brand with no segmentation) and is something that in our view should be addressed prior to legalisation, not over a year into it, and especially from a market share leader.”To this end, Bennett reiterated a Hold and has a C$22.00 (US$16) price target on Canopy shares. (To watch Bennett’s track record, click here)Most of Wall Street echoes a neutral point of view, with TipRanks analytics exhibiting Canopy Growth as a Hold. Based on 15 analysts tracked by in the last 3 months, 2 say Buy, 10 suggest Hold, while 3 recommends Sell. Meanwhile the 12-month average price target stands at C$22.44, which aligns with where the stock is currently trading. (See Canopy Growth stock analysis on TipRanks)To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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OPEC leader Saudi Arabia and non-OPEC Russia have agreed a preliminary deal to extend existing record oil production cuts by one month while raising pressure on countries with poor compliance to deepen their output cuts, OPEC+ sources told Reuters. “Any agreement on extending the cuts is conditional on countries who have not fully complied in May deepening their cuts in upcoming months to offset their overproduction,” one OPEC source said. OPEC+ agreed last month to cut output by a record 9.7 million barrels per day, or about 10% of global output, in May and June to lift prices battered by plunging demand linked to lockdown measures aimed at stopping the spread of the coronavirus.

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(Bloomberg) — Coronavirus has exposed a lack of investment in the big batteries crucial to unlocking solar and wind power.A drop in energy demand caused by the pandemic has left European grids overloaded with green electricity, raising the threat of blackouts and underlining the need for energy storage in a low-carbon energy system.Europe is striving to rid its power grids of carbon emissions by the middle of the century. But what should be an incentive to increase the use of batteries isn’t happening nearly fast enough with installations dropping last year, according to BloombergNEF.“Batteries are extremely critical,” Fatih Birol, executive director of the International Energy Agency, said in an interview. “They are ready for the big time” and should be included in post-virus economic recovery packages, he said.One reason for the drop in battery installations comes down to how power markets are set up, according to Marco van Daele, chief executive officer of Susi Partners AG, a clean energy infrastructure fund. The newness of storage technology and the lack of long-term income streams has put investors off.“An obstacle for much wider investment in the space is the lack of contracted and visible revenue,” he said. Even as the costs of building batteries come down, “the remuneration of that capacity needs to become more visible in order to attract the large-scale investment needed.”For decades, power markets have been designed around demand and ensuring there is enough supply to fulfill peak consumption. Slowly the focus is changing to how to control an oversupply when it’s sunny or windy. And with renewables having priority feeding into the grid, they have more influence over how the system is managed.Read more about how renewables are impacting the grid in BritainThe slide in demand caused by the virus lockdowns has been “like pressing a fast-forward button in power markets to where you have large amounts of generation but not the investment in flexibility,” said Peter Osbaldstone, research director on European power and renewables at Wood Mackenzie Group Ltd.For its part, the EU has proposed a 750 billion-euro ($824 billion) recovery plan to accelerate the transition to clean transport, increase energy savings and boost the production of renewable power.Read more about the Green Deal hereThe European Battery Alliance wants to use the opportunity to accelerate projects that would create 1 million jobs in the sector that could be worth 210 billion euros within the next 2-1/2 years, according to European Commission Vice President Maros Sefcovic.European carbon emissions are on track for a 17% reduction this year, thanks to a higher proportion of renewables used to meet demand.For battery owners, swings in prices when renewables hit the grid could be a major opportunity. Batteries can charge up when solar and wind generation is plentiful and market rates are low, and then sell power to the grid when prices are higher. With enough capacity on the system, buying and selling from battery operators could ultimately help ease the price swings.The U.K., Ireland, Italy, France and Germany have high potential for growth in the short-term, according to Marek Kubik, market director for U.K. and Ireland at Fluence Energy LLC.Factors such as retiring thermal generation, fast-growing variable renewable generation and a move to electrify sectors like transport and heat all point to a need for flexibility that can be easily supplied by battery-based energy storage, he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — A meeting between OPEC and its allies this month was in doubt as Saudi Arabia and Russia drew a hard line over quota cheating by some nations.The two leaders of OPEC+ told other members that talks planned for early June to discuss extending record output cuts may not happen if countries including Iraq and Nigeria don’t make firm promises to implement their supply curbs, said people familiar with the matter.Without any changes to the deal, the group is due to start easing its cuts from July. Oil erased gains in New York, trading at $36.79 a barrel as of 6:10 a.m. local time. Four days after a proposal to bring forward the meeting to this Thursday was first floated, there was still no agreement on the date. And while a plan to extend output cuts by one month was gaining support, delegates said Saudi Arabia and Russia were seeking assurances that all members would comply with the cuts they have promised. For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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Top news and what to watch in the markets on Wednesday, June 3, 2020.

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(Bloomberg) — It’s the rise of the robots: Japan’s second-largest company is now a maker of industrial automation systems, highlighting the rising importance of a less visible sector to a nation long associated with consumer-facing brands.Keyence Corp., a maker of machine vision systems and sensors for factories, has jumped 19% this year to become Japan’s second-largest company by market value. At a valuation of over 11 trillion yen ($100 billion), it has overtaken telecommunications giants SoftBank Group Corp., and NTT Docomo Inc., which have jostled for the honor to sit behind Toyota Motor Corp. over most of the past decade.Keyence is famed for its dizzying profitability with an operating profit margin of more than 50%, among the country’s highest. That’s enabled by its “fabless” output model, according to analysts, with production of its array of pressure sensors, barcode readers and laser scanners outsourced to avoid high capital costs.Its industry-leading sales system creates bespoke solutions for clients, and its frequently listed as the highest-paying company in Japan. The surge in its shares has also benefited founder Takemitsu Takizaki, who has overtaken SoftBank’s Masayoshi Son by a good margin to become Japan’s second-richest man.“It’s got everything — high growth, high dividends and a high operating margin,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “It’s the type of long-term stock you want to leave to your kids or your grandkids.”Keyence has more than tripled in market value since early 2016. “We feel the sense of expectation from our shareholders,” said Keyence director Keiichi Kimura when asked to comment on the milestone. “We’ll do our best to live up to those expectations.”The rise has also underscored how important the country’s parts and robot makers have become to the stock market, shown in the weighting of companies that make up the the country’s benchmark Topix index. Japan stocks were once dominated by banks and automakers — but years of zero rates which now dip into negative have hurt the profitability of the former, while the importance of the latter was declining even before the coronavirus sent the industry into reverse gear.The weighting of the Topix’s Electrical Appliance sector, also home to the likes of Sony Corp., Murata Manufacturing Co., and Fanuc Corp., has increased to almost 15%, the highest in about a decade, as the importance of the Banks and Transportation Equipment sectors have declined. The Information and Communication sector, headed by the five listed companies that dominate Japan’s mobile carriers, is the second-most heavily weighted segment.The growing presence of IT shares has also been a feature in the U.S. stock market, with the sector making up the highest proportion of the S&P 500 Index since the dot-com bubble burst. The coronavirus pandemic has amplified a trend for investors to prefer companies that eliminate humans from the process — a trend Keyence benefits from both with its fabless production model, and by enabling companies to automate their own production.“It’s a business model that grows the more factory automation throughout the world progresses,” said Mitsubishi UFJ Morgan Stanley Securities’ Fujito.Founder Takizaki holds about 23% of Keyence’s shares, Bloomberg-compiled data show. For the Topix, which takes the free float of the shares into account in its weightings, those holdings mean Keyence is less heavily weighted than Sony, whose market value trails by comparison. Toyota the biggest company on the index, and even forecasting an 80% drop in profit this year, the automaker remains Japan’s largest business with a market value double that of Keyence.“We like Keyence as it outsources production instead of owning factories, allowing it to focus on R&D,” HSBC analysts including Helen Fang wrote in a May 26 report that initiated coverage of the company with a buy rating. “It also uses a direct-sales model that keeps it close to clients. This strategy means it can better capture market share in a widening array of industries and can focus on high-value client solutions.”While the coronavirus pandemic will depress profits this year, Nomura sees a recovery “to record-high profit levels” the following year and sees a record profit the next, analyst Masayasu Noguchi wrote in a report May 28 raising its target price on the stock.“It’s unclear how long the coronavirus pandemic will continue,” Keyence’s Kimura said. “The global uncertainty is likely to continue and in the midst of that we’ll continue to do what we can.”Factory Automation in Asia May Be First to Recover From PandemicThe notoriously tight-lipped Osaka-based company does not provide earnings guidance in its sparse quarterly disclosure. It’s an outlier in a country where companies are being encouraged to boost their transparency and communication with the market.“They are an efficiency-above-any-other kind of company, so doing extra that doesn’t result in revenue addition is probably less of a priority,” said Bloomberg Intelligence analyst Takeshi Kitaura. “They think generally those following the company are happy when they manage solid earnings and growth.”Yoshiharu Izumi, an analyst at SBI Securities Co., says that Keyence holds talks with shareholders and that reassures investors, and doesn’t view the paucity of disclosure as a problem. “Keyence has overtaken Sony, which is extremely proactive in responding to shareholders,” he said. “When Keyence starts putting energy into disclosure, that might be the time to sell.”(Updates with quotes from Keyence from sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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Shares in Lyft (LYFT) rose 5% in Tuesday’s after-hours trading, after the company provided an encouraging update on May business trends and on its Adjusted EBITDA outlook for the second quarter.Rides on Lyft’s rideshare platform in May 2020 increased 26% versus April 2020, although they were still down 70% year-over-year.Rideshare rides have increased week-over-week for 7 consecutive weeks since the week ended April 12, 2020, Lyft also revealed. In the week ended May 31, 2020 rideshare rides were down approximately 66% versus the year ago period and increased 5.5% versus the prior week.Recent monthly rideshare ride growth has been stronger in specific cities where restrictions on social activities and visiting business venues have been eased, says Lyft. For example, rideshare rides increased 73% in Austin, 41% in Denver, 54% in Las Vegas, and 59% in Miami, in May versus April. In addition, bike rides on the Lyft platform increased 118% in May 2020 versus April 2020.Given the stronger performance in May 2020 versus April 2020, Lyft now expects that its Adjusted EBITDA loss for the second quarter will not exceed $325 million if average daily rideshare ride volume in June is unchanged from May- a roughly 10% improvement relative to the company’s prior expectation of a loss not exceeding $360 million.Lyft also pointed out that it has taken further steps to improve its financial position. In May, Lyft completed a convertible debt offering, along with corresponding capped call transactions. On a pro forma basis for these transactions, Lyft held approximately $3.3 billion of unrestricted cash, cash equivalents and short-term investments as of March 31, 2020.Overall the Street has a cautiously optimistic take on LYFT with a Moderate Buy consensus and $43 average analyst price target (35% upside potential).(See Lyft stock analysis on TipRanks) Shares have plunged 26% year-to-date, but RBC Capital analyst Mark Mahaney argues that Lyft “should be a very good Rebound Stock.”“As SIP restrictions are lifted, we expect Rides demand to recover to full growth by H1:21” he says, adding “In the meantime, we believe LYFT’s scale to profitability is improving. Thanks to $300MM in additional fixed expenses, LYFT believes that it can now achieve EBITDA profitability with 15%-20% lower Ride volume than it previously modeled.” Mahaney has a buy rating on the stock and $51 price target (61% upside potential).Related News: Carl Icahn Initiates Position in Delek US Holdings, Boosts Occidental Petroleum Uber In Partnership With MoneyGram For Driver Discount During Pandemic More recent articles from Smarter Analyst: * Google In $5 Billion U.S. Lawsuit For Collecting Users’ ‘Private’ Internet Data    * Alibaba Rolls Out Online Business Services As Covid-19 Boosts Digitalization Need * Glu Mobile Sinks On $100M Public Offering Announcement * Zoom Lifts Full-Year Sales Guidance As Quarterly Revenue Balloons 169%

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China’s oil demand has recovered to more than 90% of the levels seen before the coronavirus pandemic struck early this year, a surprisingly robust rebound that could be mirrored elsewhere in the third quarter as more countries emerge from lockdowns. While China – the world’s second-largest oil consumer – is the outlier for now, easing travel restrictions and stimulus packages aimed at resuscitating economies could accelerate global oil demand in the second half of 2020, industry executives said. “The brisk resumption of Chinese oil demand, 90% of pre-COVID levels by the end of April and moving higher, is a welcome signpost for the global economy,” said Jim Burkhard, vice president and head of oil markets at IHS Markit.

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China’s oil demand has recovered to more than 90% of the levels seen before the coronavirus pandemic struck early this year, a surprisingly robust rebound that could be mirrored elsewhere in the third quarter as more countries emerge from lockdowns. While China – the world’s second-largest oil consumer – is the outlier for now, easing travel restrictions and stimulus packages aimed at resuscitating economies could accelerate global oil demand in the second half of 2020, industry executives said. “The brisk resumption of Chinese oil demand, 90% of pre-COVID levels by the end of April and moving higher, is a welcome signpost for the global economy,” said Jim Burkhard, vice president and head of oil markets at IHS Markit.

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