Deutsche Bank, Germany’s largest lender, returned to profit in the third quarter, reporting a net income of €1.461 billion ($1.58 billion) attributable to shareholders.

This surpasses the €1.047 billion forecast by analysts polled by LSEG.

The bank’s Q3 performance marks a turnaround from a €143 million loss in the previous quarter, driven by improved litigation provisions and a strong revenue stream.

Amid challenging market conditions and declining interest rates, Deutsche Bank’s results reflect its strategic shift towards cost-saving measures and a renewed focus on shareholder returns.

Deutsche Bank Q3 revenue hits €7.5 billion

• Revenue reached €7.5 billion in Q3, exceeding the €7.338 billion anticipated by analysts.

• Profit before tax jumped 31% year-on-year to €2.26 billion.

• Provision for credit losses increased to €494 million, compared to €245 million a year ago.

• CET 1 capital ratio improved to 13.8%, up from 13.5% in Q2.

• Return on tangible equity (ROTE) rose to 10.2% from 7.3% year-over-year.

Cost-saving efforts key to Deutsche Bank’s Q3 recovery

Deutsche Bank’s profitability in Q3 is partly attributed to its ongoing cost-cutting program.

The bank aims to reduce its headcount by 3,500 roles by 2025, including 800 job cuts announced last year.

The savings initiative aligns with broader industry trends, as European banks adjust to a shifting interest rate environment.

Analysts suggest that further cost reductions will be essential to maintain competitive margins amidst softer market conditions.

The partial release of €440 million in litigation provisions during Q3 provided a significant boost to Deutsche Bank’s profit.

The provisions are tied to a long-running lawsuit over the bank’s acquisition of Postbank.

Notably, 60% of plaintiffs settled with Deutsche Bank in August, allowing the bank to pursue a stalled share repurchase plan.

This litigation relief has helped the bank navigate the financial impact of ongoing legal challenges.

Deutsche Bank distances itself from Commerzbank merger talks

Amid speculation of mergers within Germany’s banking sector, Deutsche Bank has moved away from a potential merger with Commerzbank.

The focus now shifts to Commerzbank’s possible acquisition by Italy’s Unicredit.

Market analysts view Deutsche Bank’s strategic direction as a signal of its intent to strengthen its position independently.

The decision highlights the bank’s focus on internal restructuring rather than pursuing inorganic growth through domestic consolidation.

European banks, including Deutsche Bank, have leaned on stock buybacks and dividend payouts to strengthen shareholder value in recent years.

With the European Central Bank’s shift to a looser monetary policy, banks now face pressure to deliver earnings growth in an environment of falling interest rates.

McKinsey’s Global Banking Annual Review 2024 warns that maintaining current ROTE levels will require European banks to cut costs approximately 2.5 times faster than revenue declines.

As Deutsche Bank eyes further growth, the pressure is on to adapt swiftly to these changing dynamics.

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Tilray Brands (TLRY) stock price has gone nowhere in the past few months. It has found a strong support level at $1.61, where it has failed to move below since November last year. It remains about 50% below the highest point in 2023, and is 97% below the 2021 high. 

Cannabis industry is under pressure

The cannabis industry has come under pressure in the past few years amid rising pricing and regulation risks in key markets.

For example, in Canada, a key market for cannabis, prices have dropped sharply in the past few years as the number of companies has grown. There are now over 900 licensed cannabis companies in Canada.

Lower cannabis prices mean that companies like Tilray Brands, Aurora Cannabis, and Canopy Growth are making less money for each product sold, while still paying substantial taxes. In a recent statement, Irwin Simon, Tilray’s CEO, said that this price compression had costed it $200 million in the past few years.

Other markets are not doing well either. Cannabis is still not yet fully legal in the United States, and the process will likely take longer.

While cannabis has been made legal in the country, there are still major barriers that have hindered the sector. One of it is banking, where many major banks still don’t do business with firms in the cannabis industry because of strict anti-money laundering rules.

The other big issue is that, like in Canada, there are now thousands of cannabis companies in the US. It is estimated that there are over 10,000 licensed players in the sector. 

Worse, there are signs that the reclassification process and the banking bill that the Senate has been working on will not go on.

If Donald Trump wins, there are chances that the cannabis reclassification process to a less harmful product will stall. Also, with the Senate and the House of Representative expected to be divided, no major banking legislation will continue. 

There are rising odds that Donald Trump will win, with Polymarket placing his odds at 63%. Also, there are rising odds that Republicans will dominate in other state elections. 

Read more: Tilray Brands stock sits at a make-or-break price: now what?

Tilray Brands is no longer just a cannabis company

Tilray Brands is significantly different from other companies in the industry. For one, unlike most of them, it has worked to diversify its business by investing in the beverage industry.

It did that through acquisitions and internal research and development (R&D). For example, the company acquired eight beer brands from AB InBev in 2023 and additional more from Molson Coors this year. The company also owns SweetWater Brewing Company through its Aphria buyout. 

Therefore, it hopes that these acquisitions will help its business continue growing in the next few years. Also, it wants the cannabis and alcohol businesses to even out each other. In this, if the cannanis industry struggles, then it will be offset by the alcohol business. 

To be clear: investing in the alcohol business is a risky bet now that the young people are not drinking as much as their parents did in the past. Nonetheless, there is a room for growth, especially in the craft brewing sector, where Tilray is now one of the biggest brands. 

The company also hopes that its cannabis business will rocket higher when the US passes friendly regulations in the future. This is notable since Tilray does not have a big presence in the US cannabis industry.

Read more: Tilray Brands stock price analysis: risky but a short squeeze is likely

Diversification is paying off

There are rising signs that the diversification process is starting to pay off even though it is too early to tell.

Its beverage alcohol revenue came in at $56 million in the last quarter, a 132% increase. The cannabis revenue rose to $61.2 million, while its distribution and wellness revenues rose to $68.1 million and $14.8 million, respectively. 

The cannabis gross margin came in at 40%, while the beverage business has 41%. The other two businesses have lesser margins.

Additionally, the company has diversified its sources of revenue because of its strong presence in Germany. 

The other catalyst is that Tilray Brands is seeing improved bottom line. Its net loss in the last quarter was $34 million, a 38% improvement from the $55.9 million it lost in the same period last year.

Tilray Brands stock analysis

TLRY chart by TradingView

The daily chart shows that the TLRY share price has found a strong bottom at $1.61, meaning that sellers are afraid of shorting it below that level. As such, there are signs that the stock has bottomed, meaning that a bullish breakout cannot be ruled out.

Tilray’s stock remains below all moving averages, meaning that sellers are a bit in control for now. 

Therefore, from a risk/reward perspective, I believe that the stock may stage a comeback in the near term. If this happens, it may rally to $2.95, its highest point on April 4, which is about 72% higher than the current level. A break below the support at $1.61 will point to more downside, potentially to below $1.

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Goldman Sachs Group Inc. has downgraded its outlook on Indian equities from overweight to neutral, citing concerns about weakening economic growth and corporate earnings.

The downgrade comes as India’s key stock indices experience sharp declines, with the NSE Nifty 50 Index seeing its steepest monthly fall since the onset of the pandemic.

In a research note released on Tuesday and reported by Bloomberg, Goldman Sachs strategists, including Sunil Koul, said,

“While we believe the structural positive case for India remains intact, economic growth is cyclically slowing down across many pockets.”

They added that worsening earnings sentiment, an accelerating pace of earnings-per-share cuts, and a weak start to the September-quarter results season indicate an impact on profits.

“A large ‘price correction’ is less likely given support from domestic flows, but markets could ‘time correct’ over the next three to six months,” Goldman Sachs strategists said, indicating that Indian equities could face a period of stagnation rather than a sharp correction.

As a result, the firm lowered its 12-month target for the Nifty 50 Index from 27,500 to 27,000, implying only a 10% upside from Tuesday’s closing levels.

High valuations and a challenging macroeconomic environment are expected to limit any significant gains in the near term.

The Nifty 50 currently trades at 20 times its 12-month forward earnings, higher than its five-year average of 19.4 times, signaling possible overvaluation.

Foreign sell-offs, and slowing earnings growth

Indian equities have been hit hard by a wave of foreign investor selling, with overseas funds withdrawing a net $7.8 billion in October, according to Bloomberg data.

This is the largest monthly outflow since March 2020, as foreign investors react to India’s weakening economic data and mounting inflationary pressures.

Analysts have widely raised concerns about a slowdown in earnings growth, citing challenges such as a high base, weakening demand, and shrinking margin tailwinds.

Other leading brokerages, including Motilal Oswal Financial Services, Nuvama Institutional Equities, and Axis Securities, forecasted that Q2 earnings growth would decline to a post-pandemic low, with profit growth expected to sharply moderate to around 2% for the July-September period.

According to MOFSL, this would represent the slowest earnings growth for Nifty companies in 17 quarters.

In terms of sector outlook, Goldman Sachs remains overweight on automobiles, telecom, and insurance, while upgrading realty and internet sectors to ‘overweight.’

Conversely, it downgraded cyclicals such as industrials, cement, chemicals, and financials.

The brokerage advises investors to prioritize quality, earnings visibility, and targeted alpha themes to navigate the current volatility in Indian equities.

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Lloyds Banking Group announced on Wednesday that its third-quarter profits exceeded expectations, reflecting growing financial confidence among its customers and reaffirming its performance guidance for 2024.

The UK’s largest mortgage lender reported a statutory pretax profit of £1.8 billion ($2.34 billion) for the period from July to September.

While this figure is a slight decrease from £1.9 billion in the same quarter last year, it surpasses the average analyst forecast of £1.6 billion.

Lloyds, along with competitors like NatWest, has benefited from increased profitability in recent years due to rising interest rates, which enhanced lending returns.

However, the bank now faces the challenge of sustaining its profit levels as interest rates begin to decline.

Despite concerns about Britain’s growth prospects and the state of public finances, Lloyds has opted to keep its performance guidance unchanged.

The bank anticipates a return on tangible equity of around 13% for this year, along with a net interest margin exceeding 2.9%.

Group Chief Executive Charlie Nunn attributed the strong quarterly results to factors such as income growth, disciplined cost management, and high asset quality.

The bank reported an increase in total lending balances, which rose by £4.6 billion to reach £457 billion during the quarter, primarily driven by growth in credit card and unsecured loan offerings.

Additionally, Lloyds’ mortgage portfolio grew by £3.2 billion over the same period.

Looking ahead, Lloyds predicts house prices will rise by 3.1% this year, up from a prior forecast of 1.9% growth made earlier in the year.

The bank also anticipates one more base rate cut from the Bank of England before the end of 2024.

Furthermore, Lloyds confirmed it has made no additional provisions related to the ongoing motor finance review by the Financial Conduct Authority.

Should you buy LLOY stock?

Lloyds shares have performed well recently, trading close to their 52-week and four-year highs.

Regarding valuation, the shares are currently priced at a forward-looking price-to-earnings (P/E) ratio of approximately 9.3. Analyst Edward Sheldon suggests that they are fully valued at this earnings multiple, while others believe there may still be some potential for value.

Lloyds Banking Group has a TipRanks Smart Score of ‘4 Neutral’ and is categorized as a ‘hold’ by analysts, with 2 ‘buy’ and 7 ‘hold’ ratings.

According to LSEG Data & Analytics, analysts classify Lloyds Banking Group shares as a ‘hold,’ with 1 ‘strong buy,’ 6 ‘buy,’ 11 ‘hold,’ and 1 ‘sell’ rating.

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AppLovin Corp (NASDAQ: APP) continues its remarkable ascent, hitting new all-time highs daily, including a peak of $163.13 yesterday.

On October 22, Loop Capital initiated coverage on the stock with a ‘Buy’ rating and a $181 price target.

Analyst Rob Sanderson emphasized AppLovin’s indispensable role in the mobile gaming industry and its emerging position in big data and AI.

He noted that despite the stock’s impressive growth and recent breakout, it remains relatively undiscovered and misunderstood.

Sanderson also compared AppLovin to The Trade Desk, highlighting that AppLovin’s software business is larger with higher margins.

He suggested that an expansion into e-commerce advertising could significantly boost the company’s total addressable market.

AppLovin: strong Q3 earnings anticipated

The company is set to report its Q3 earnings on November 6, and expectations are high. Thirteen Wall Street analysts who cover the stock have a consensus forecast earnings per share (EPS) of $1.21 on revenue of $1.13 billion.

This represents a substantial increase from the EPS of $0.30 on revenue of $864.3 million reported in Q3 of the previous year.

Notably, all 13 analysts have revised their EPS estimates upwards in the last 90 days, reflecting strong confidence in AppLovin’s performance.

Mixed analyst ratings and price targets for AppLovin

While Loop Capital’s initiation adds a positive outlook, other analysts have varied opinions.

On October 14, Goldman Sachs downgraded the stock from ‘Buy’ to ‘Neutral,’ even as it slightly raised the price target from $147 to $150.

Analyst Eric Sheridan pointed out that after a 113% increase since the last earnings report, the risk-reward profile has become more balanced.

He acknowledged the company’s strong execution and profitability but advised caution ahead of the Q3 earnings.

Morgan Stanley maintained an ‘Equal-weight’ rating but raised its price target from $80 to $110.

Analyst Matthew Cost questioned the sustainability of AppLovin’s ambitious goal to grow its ad business by 20-30%, especially when consumer spending on mobile games is projected to grow by only 5%.

He noted that while the company has recently gained a significant edge, sustaining this growth may require outperforming competitors like Meta and Google.

Contrasting the cautious views, Citi increased its price target to $155 from $110, citing increased confidence in AppLovin achieving over 20% revenue growth.

Analyst Jason Bazinet highlighted multiple paths for growth, including incremental share gains in mobile gaming ad spend, higher take rates, and expansion into e-commerce advertising.

UBS also upgraded the stock to ‘Buy’ from ‘Neutral,’ raising the price target to $145 from $100.

The analysts expressed better visibility into revenue growth over the medium term and potential upside from expansion into new verticals like e-commerce.

AppLovin: business fundamentals show robust growth

AppLovin’s financial performance has been strong. In Q2 2024, the company reported revenue of $1.08 billion, a 44% year-over-year increase, driven largely by its software segment.

Adjusted EBITDA rose 80% to $601 million, resulting in a 56% adjusted EBITDA margin, up from 52% in the previous quarter.

The software platform contributed $711 million in revenue and $520 million in adjusted EBITDA with a 73% margin.

This growth is attributed to enhancements in their AXON system, improving the platform’s ability to identify high-value users for advertisers.

APP stock: valuation metrics

The stock’s rapid appreciation has led to higher valuation multiples. Some analysts caution that the stock may have outpaced its fundamentals.

For example, using a discounted cash flow analysis with optimistic assumptions, the stock still appears to be overvalued by about 10-20%.

Morningstar’s model also suggests a fair value below the current trading price.

However, forward-looking metrics indicate a significant decrease in the price-to-earnings ratio in the coming years, suggesting that the valuation may become more reasonable if growth continues as expected.

Insider selling raises concerns

Recent insider transactions have raised some eyebrows. The CEO sold stock worth $21.5 million, and other executives have also sold significant shares recently.

While insider selling can be for various reasons, substantial sales may indicate that insiders believe the stock’s upside potential is limited in the near term.

AppLovin’s ascent to new heights is underpinned by strong financial performance, strategic expansion plans, and positive analyst sentiment, albeit with some cautionary notes.

The upcoming Q3 earnings report will be a crucial indicator of whether the company can meet the high expectations set by analysts and justify its current valuation.

With the stock reaching new all-time highs and significant developments on the horizon, it’s an opportune moment to examine the technical factors that could influence its future trajectory.

Threefold returns YTD: Strong upward momentum for APP

AppLovin has been one of the best-performing large-cap tech stocks this year, rising nearly threefold thus far.

With the stock making new all-time highs every day, it is displaying exceptional upward momentum across timeframes.

Source: TradingView

Considering that investors and traders with a bullish view can buy the stock at current levels.

However, cautious investors with a bullish view can wait for a retracement or a minor pullback toward $138 levels before initiating fresh long positions.

Traders who want to take the opposite trade must refrain from doing so with the strong displaying strong upward momentum in the short-term charts.

A short position must only be considered if the stock hits resistance and starts making lower highs and lower lows.

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