Welcome to Broyhill's Equity Highlights, where we share a few quick takes on recent news across the portfolio every month.
We aim to make these highlights easy to read and easy to repeat. Feel free to share our work!
Baxter considers sale of kidney care unit to PE firm. After last year’s strategic review, Baxter announced it would sell off its BioPharma segment, spin off its Kidney Care segment, and consolidate its remaining six segments into three. We expect a sale would increase the company's ability to simplify its business model and reduce leverage at a faster clip when compared to a spin off. Given the company's looming maturity wall, we argue management is motivated to sell.
Nintendo’s Latest Wave of Games Is Seriously Stacked. Console releases have historically been the main driver of fundamental performance in the video game industry, but the resilience of software sales in Switch's 8th year may indicate times are changing. As Nintendo continues to release games that maintain consumer interest throughout the console cycle, we think software sales will increasingly dictate overall performance.
What the Supreme Court decision overturning Chevron deference means to you. The Supreme Court recently overturned Chevron Deference which encouraged courts to defer to the interpretations of federal agencies. After the ruling, we expect federal agencies to think twice before attempting to reach beyond the limits of their statutes. This in turn should limit the time and costs that companies across the portfolio have to spend bending to their will.
Apple lets rivals use tap-and-go payments as EU's Vestager warns on tech charges. Despite PayPal's small presence in brick-and- mortar retail, we see this as a positive development for PayPal's branded wallet in the EU.
Disclosures
