Microsoft shares overtake Amazon as hedge fund favourite

In today’s top stories, car manufacturer Volkswagen downgrades its China sales forecast, pharma giant Merck acquired biotech business Imago Biosciences, and Barclays downgrades furniture sellers on housing slowdown signals. Microsoft has also emerged as a top pick for hedge funds, while Goldman Sachs touts Mobile as a self-driving tech leader.

Merck targets blood cancer biotech

Pharmaceutical giant Merck [MRK] is to buy Imago Biosciences [IMGO] for $1.35bn to broaden its oncology portfolio. Imago’s bone marrow cancer treatment relies on bomedemstat, an enzyme inhibitor, and the acquisition could help it to rival Novartis’ [NVS] blood cancer inhibitor, Jakafi, and Bristol Myers Squibb’s [BMY] Inrebic, reported FierceBiotech. The deal is worth $36 per share and led the Imago share price to soar up as much as 51.3% on Monday 21 November.

Mobileye’s 32% upside

After spinning out of Intel [INTC], self-driving car technology company Mobileye [MBLY] has been on a fairly bump-free ride. Goldman Sachs analyst Mark Delaney believes the stock could rise to $36, an upside of 32% from its Monday close. According to a note seen by CNBC, Delaney views Mobileye as “the leading auto tech enabler” for advanced driver assistance systems and autonomous vehicle applications.

Volkswagen’s China sales revision

China is a key market for German automakers, but rising Covid-19 cases and lockdowns could send sales into a tailspin. Volkswagen [VOW3.DE] announced Tuesday that it was lowering its full-year sales forecast from 3.85 million units down to 3.3 million. Its China chief Ralf Brandstaetter said it would need investment further down the road if it’s to compete with domestic EV makers, reported Bloomberg.

Barclays high-end furniture downgrades

There will be many house hunters deciding to pause their search while they wait for inflation and property prices to cool. According to Barclays consumer discretionary analyst Adrienne Yih, a knock-on effect of this will be lower demand for high-end furniture. The bank downgraded both Williams-Sonoma [WSM] and RH [RH] to ‘equal weight’ based “on a weakening housing cycle that we believe will have a trickle-down impact on home furnishing spending over the next 12 to 24 months,” Yih wrote in a note seen by CNBC.

Microsoft leads long positions

Microsoft [MSFT] has surpassed big tech rival Amazon [AMZN] as the stock with the most long positions. Analysis by Goldman Sachs’ Ben Snider found that 82 funds had Microsoft in their top 10 holdings as of 21 November compared with 79 for Amazon. The research, referenced by MarketWatch, also identified Uber [UBER] as a popular long-term holding among 786 hedge funds with a combined $2.3trn of gross equity positions.

Enterprise customers boost work-from-home stocks

More companies may be relying on face-to-face communication to do business in the post-pandemic workplace, but hybrid working isn’t set to disappear completely – and tools and applications that enable and secure hybrid systems will remain in demand. Zoom [ZM], Zscaler [ZS] and Splunk [SPLK] have all reported strong enterprise customer growth recently. However, there could be near-term headwinds as companies trim spending in a high-inflation environment.

Alphabet’s shoppable video push

The social commerce market is expected to grow to $2trn by 2025, according to McKinsey and is even expected to outpace ecommerce. With Alphabet’s [GOOGL] digital ad revenue falling, the company is making a push into shoppable videos. Its YouTube Shorts platform currently boasts more monthly active users than TikTok. Alphabet’s access to personal Google search data and AI algorithms can help it to effectively target certain ads at particular user groups.