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Global Stocks Trending in the News for March 19th, 2019

Mar 19, 2019

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Global Consumer Stocks Trending in the News

  • Coty (COTY) could be completely acquired by JAB Holdings Ltd. (AIM:JBH) in the wake of its offer for about 60% of the outstanding shares of the company, according to Consumers Edge Research.  In a note Consumers Edge comments that it believes that JAB will eventually offer to acquire the rest of the shares.  A special committee of the board of Coty recommended shareholders accept the offer from JAB.  Coty is rated “Top Short” in our US Large-Cap and “Neutral” in our US Consumer Staples Global Top Stock Ideas.  JAB is not rated in our Global Top Stock Ideas.
  • DSW (DSW) reported fourth quarter adjusted loss per share of 7 cents missing consensus of 3.2 cents per share earnings.  DSW saw same store sales growth of +5.4%, above 5% consensus.  DSW announced a 3-year plan for growth that is will detail on investors day.  DSQ will also provide forward guidance at that time.  DSW is rated “Top Short” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Kraft-Heinz (KHC) announced it has not met the deadline for filing its 10-K with the US SEC.  It is likely the delay is being caused by the SEC investigation recently announced into Kraft-Heinz’s procurement practices.  Kraft did not say how long until it expects to make the filing.  S&P placed Kraft-Heinz on credit watch because of the delay since it needs the 10-K to stay current with its credit rating.  Kraft-Heinz is rated “Unattractive” in our US Large-Cap and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Leoni AG (DB: LEO) shares fell to their lowest in eight years after the German automotive company walked-back its prior forecast, replaced its CFO, and announced plans for 2,000 job cuts. Leoni, citing a slowdown in China, also issued its third profit warning in just 6 months. Leoni also explained that it will face, “significantly greater costs,” as it struggles to ramp up production at its plant in Merida, Mexico. Leoni AG is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas.
  • Lumber Liquidators (LL) reported fourth quarter adjusted EPS of USD$0.17 beating consensus of USD$0.14.  Lumber Liquidators reported fourth quarter revenue of USD$268.9 million a touch below consensus of USD$272.3 million.  Lumber Liquidators saw same store sales growth of +9.4%, well above 7.9% consensus.  Lumber Liquidators gave same store growth guidance of negative low single digits.  Lumber Liquidators is rated “Attractive” in our US SMID-Cap and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas.
  • Marriott International (MAR) outlined its 3-year guidance which includes the return of up to USD$11 billion to shareholders.  Marriott intends to add between 275k and 295k rooms by 2021.  Marriott sees EPS of USD$7.65-8.50 by 2021 with a compound growth rate of 11-15% over 2018 adjusted results.  Marriott sees dividends payouts of ISD$1.9-2 billion with share repurchases of USD$7.6-9 billion.  Marriott International is rated “Neutral” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Overstock.com (OSTK) provided first quarter guidance, saying revenues will fall 17-19% “as a results of our return to a disciplined approach to marketing.”  Overstock fourth quarter revenue of USD$452.5 million trailed the USD$483.5 million consensus with a loss per share of USD$1.39.  Overstock’s CEO said there will be further administrative cost reductions in 2019 and the company expects to return to profitability this calendar year.  Overstock.com is rated “Neutral” in our US Large-Cap and “Top Short” in our US Consumer Staples Global Top Stock Ideas.
  • Prada SpA (SEHK: 1913) shares fell to their lowest in over 2 years after a slump in China dragged down the Italian fashion designer’s profits. Prada explained further that Chinese tourists are slowing spending due to weakness in the yuan. Prada is rated “Unattractive” in our China All-Cap Global Top Stock Ideas.
  • Revlon (REV) shares are suffering after telling the market that is delayed 10-K filing may reveal “a material weakness” in its financial controls.  Revlon said it is having a problem with its enterprise planning software and it will cost USD$54 million to fix the problems.  Revlon said the delayed 10-K will not cause any change in its reported results.  Revlon is rated “Top Buy” in our US SMID-Cap and “Top Short” in our US Consumer Staples Global Top Stock Ideas.

Global Information Technology and Communication Services Stocks Trending in the News

  • America Movil SAB (BMV: AMX L), the telecommunications company owned by billionaire mogul Carlos Slim, has agreed to buy Nextel Telecomunicacoes in a deal that values the latter at USD$905mm less net debt. The acquisition by America Movil SAB is the second acquisition for the company this year following its USD$648mm purchase of Telefonica SA’s (BME: TEF) businesses in Guatemala and El Salvador. America Movil is rated “Attractive” in our Mexico All-Cap Global Top Stock Ideas. Telefonica is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Apple (AAPL) debuted a new mid-tier model of its iPad and an update to the iPad mini.  The new iPad model is called the iPad Air and features and 10.5-inch screen; this model was phased out a few years ago when the iPad Pro was introduced.  The iPad min saw the first update since 2015.  The announcements come a week before Apple is expected to introduce a media and entertainment bundle with TV and streaming, including Apple produced content.  Apple is rated “Neutral” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • China Telecom (SEHK:728) reported full year net income that beat consensus.  Full year net income of 21.2 billion yuan beat the 20.44 billion yuan consensus.  China Telecom full year dividend per share is 12.5 Hong Kong cents per share.  China Telecom said 80% of its customers are using 4G at the end of the quarter.  China Telecom is focused on 5G rollout.  China Telecom is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.
  • Disney (DIS) has rehired director James Gunn to direct the third “Guardians of the Galaxy” film after firing him eight months ago.  He was fired then after offensive tweets of his from years ago were published.  In a surprise move, Disney announced he is set to return after a backlash from fans demanding his return.  Disney is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Facebook (FB) was downgraded to hold from buy at Needham in a note highlighting concern over its recent pivot toward privacy and encrypted messages.  Facebook saw its price target cut to USD$187 from USD$205.  Needham also noted the growing risk of government regulations and its likely negative effects on Facebook.  Facebook has seen some key executives depart recently, further adding to the concerns for Needham.  Facebook is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Fidelity National Information Services (FIS) agreed to acquire Worldpay Inc (WP) for close to USD$34 billion in cash and stock.  FIS will also assume Worldpay’s debt load, which brings the enterprise value of the deal to about USD$43 billion.  Upon closure of the deal, FIS shareholders will hold 53% of the new company with Worldpay holders owning 47%.  Worldpay shareholders will receive USD$11 per share cash and 0.93 shares of FIS.  Fidelity National Information Services is rated “Neutral” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.  Worldpay is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Infineon Technologies (XTRA: IFX) shares moved higher after Commerzbank announced a new buy recommendation for the stock. Commerzbank also announced a price target of 25 euros/share for Infineon Technologies, implying a 29% upside from Friday’s closing price. Infineon currently maintains an average price target of 23.33 euros/share across 29 analyst recommendation, 20 of which are buys, 7 of which are holds, and 2 of which are sells. Infineon is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Qualcomm (QCOM) won its first patent infringement case against Apple (AAPL) in the United States.  Qualcomm was awarded USD$31.6 million in damages in a San Diego court, giving the company the full amount it asked for.   Qualcomm contends its portfolio of technology patents provides significant value to smartphones.  Qualcomm is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.  Apple is rated “Neutral” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Synaptics (SYNA) was downgraded to neutral from buy at Mizunho Securities.  Synaptics saw its price target cut to USD$39 from USD$48 as well.  Mizunho highlights Synaptics’ loss of market share in multiple product lines as well as the recent announcement that its CEO is leaving.  Synaptics is rated “Neutral” in our US SMID-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Tencent (TCEHY, SEHK:700) is planning on pruning the bottom 10% of present managers, according to a report in Bloomberg.  Tencent is making the move as it confronts slower growth.  It is said the pruning will occur mainly because it has not been done before.  Tencent is set to report results Thursday with consensus expecting a 16% drop in profit.  Tencent is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Twitter (TWTR) is the subject of a USD$250 million from Congressman Devin Nunes charging defamation.  Twitter was orchestrating an effort to harm Nunes, according to his suit.  It alleges Twitter “intended to generate and proliferate false and defamatory statements” about Nunes in an effort to intimidate him.  The content in question violated Twitter’s the platform’s user guidelines, it is alleged.  Twitter is rated “Unattractive” in our US Large-Cap and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Xiaomi (SEHK:1810) reported fourth quarter operating profit of 3.2 billion yuan, handily beating consensus of 1.6 billion yuan.  Xiaomi saw the average selling price of its phones at 1,005 yuan in 2018, up from 824 yuan in 2017.  Internet services revenue grew 39% y/y and accounted for 9.1% of Xiaomi’s revenue.  Xiaomi is rated “Neutral” in our China All-Cap Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Alstom (ENXTPA:ALO) was upgraded to buy from hold at Kepler Cheuvreux.  Alstom’s price target was raised to 43.50 euros from 38.50 euros.   Alstom has a healthy backlog with potential for winning further business in 2019.  Alstom is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.
  • Boeing’s (BA) crisis deepens as preliminary evidence from the 737 Max crash indicates the plane was set to dive, similar to the situation found in the first crash, according to a report in Bloomberg.  Investigators have downloaded all the information from both the flight-data recorder and cockpit voice recorder.  Press reports indicate very similar circumstances preceding this crash as the first crash.  Boeing is rated “Attractive” in our US Large-Cap and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Union Pacific (UNP) was downgraded to hold from buy at Lop Capital today.  Union Pacific’s price target was cut to USD$182 from USD$193.  Loop commented that the dual problems of the ice cold polar vortex and extensive flooding in the Midwest will weigh on near term results.  Union Pacific is rated “Top Buy” in our US Large-Cap and “Attractive” in our US Industrials Global Top Stock Ideas.

 

 

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Global Financials Stocks Trending in the News

  • Allianz (DB:ALV) shares are rising on speculation it could combine its assets with DWS (DB:DWS), the asset management arm of Deutsche Bank.  With news of Deutsche Bank (DB:DBK) discussing a possible merger many are speculating it may shed assets with DWS being described as a prime target.  DWS has one of the largest offerings of ETFs and real estate business among European asset managers.  Deutsche Bank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  DWS is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.  Allianz is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Commerzbank’s (DB:CBK) potential merger with Deutsche Bank (DB:DBK) finally got the green light to start formal merger talks.  Germany’s Finance Minister has said he will not oppose the massive jobs cuts that will be needed to make a merger of the two banks work.  Last week labor leaders at Deutsche Bank expressed the same opposition to any merger with Commerzbank.   Commerzbank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  Deutsche Bank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Manulife Financial Corp. (TSX: MFC) shares edged higher alongside other Canadian life insurers after a judge dismissed a legal case involving hedge funds, who sought that insurers should be compelled to accept unlimited deposits into high-yielding investment policies. Prominent short seller Carson Block had said in October that he was shorting Manulife over the lawsuit, as it could have driven billions in losses for the company. Manulife Financial Corp. is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.

Global Commodities & Energy Stocks Trending in the News

  • ArcLight Capital Partners has agreed to acquire the rest of American Midstream Partners (AMID) that it does not already own.   A price of USD$5.25 was agreed upon and the deal is expected to close by the end of the second quarter.  ArcLight cut its bid price to USD$4.50 from USD$6.10 in January after American Midstream said it would not pay its first quarter dividend.  A revised price was agreed up since then.  American Midstream Partners is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.
  • Carrizo Oil & Gas Inc. (CRZO) shares moved higher following reports that the company is considering a merger with US energy explorer SM Energy Co. (SM). The two companies have reportedly held early-stage discussions regarding a merger, according to people familiar with the matter. Carrizo Oil & Gas is rated “Top Short” in our US Large-Cap Global Top Stock Ideas. SM Energy Co. is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • Cloud Peak Energy Inc. (CLD) shares tanked the most in its history after the US coal miner issued a warning that it could file bankruptcy within weeks. In its announcement, Cloud Peak Energy cited long-term debt, limited access to capital markets, illiquidity, and production problems as reasoning for the potential bankruptcy. Cloud Peak Energy is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.
  • Rio Tinto (LSE:RIO) must face a lawsuit from the US SEC regarding the company’s valuation of its coal assets in Mozambique, according to a ruling from a federal judge.  In 2017 the SEC filed suit alleging the coal assets’ value were inflated by Rio Tinto when acquired in 2017.  Rio Tinto had sought to dismiss the case from the SEC but the judge ruled it can proceed.  Rio Tinto is rated “Neutral” in our United Kingdom Global Top Stock Ideas. 
  • Steel Dynamics (STLD) shares slipped after reporting CY1Q2019 guidance that missed the average analyst estimate. Steel Dynamics told analysts that it expects CY1Q2019 EPS between USD$0.88 and USD$0.92, the midpoint of which notably misses consensus of USD$1.08. Steel Dynamics’ guidance was brought down on lower product pricing for its steel products, which is expected to decrease more than the cost of average scrap consumed. Steel Dynamics is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

Global REITs Trending in the New

  • China Resources Land Limited (SEHK: 1109) shares spiked alongside other Chinese developers as investors are cheering the prospect of lower policy risk and a strong earnings outlook, according to Rhb Osk Securities. In the near term, the sector faces little policy risk because there was no mention of real estate-related policy changes in the country’s latest legislative meeting. China Resources is rated “Neutral” in our China All-Cap Global Top Stock Ideas.

 

Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS
Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS