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Global Stocks Trending in the News for March 20th, 2019

Mar 20, 2019

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Global Consumer Stocks Trending in the News

  • Altria (MO) shares suffered in the wake of San Francisco announcing a proposal to ban e-cigarette companies from occupying city-owned property.  There is also a proposal to ban the shipment of e-cigarettes to San Francisco stores.   For the time, these are just proposals.  Altria is rated “Neutral” in our US Large-Cap and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Asos Plc (AIM: ASC) shares fell the most intraday in 2019 after the company issued a profit warning for its full-year. Asos reported FY2Q2019 sales growth that largely missed its prior guidance, driving Asos to pull-back its full-year profit target. A profit warning from the UK-based online retailers shows that the UK retail crisis is not contained within domestic brick-and-mortar stores. Asos is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • 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.  DSW 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.
  • General Mills (GIS) reported fiscal third quarter adjusted EPS of 83 cents, beating consensus of 69 cents.  General Mills reported fiscal third quarter revenue of USD$4.20 billion in line with USD$4.19 billion consensus.  General Mills reported organic volume growth of 5% and sees full year EPS growing 0-1%, up from a drop in sales of up to 3% originally expected.  General Mills is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Staples Global Top Stock Ideas.
  • GrubHub (GRUB) shares slipped after KeyBanc Capital Markets wrote in a note to clients that internal data points are indicating weakening trends in the company’s user base. KeyBanc analyst Andy Hargreaves wrote in the note, “Diner retention, initial diner spend, and peak diner spend all appear to be deteriorating, which suggests lifetime value in newer cohorts is declining.” GrubHub is rated “Unattractive” in our US Large-Cap 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.
  • Overstock.com (OSTK) provided first quarter guidance, saying revenues will fall 17-19% “as a result 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.
  • 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.
  • Zozo Inc. (TSE: 3092) shares dipped after JPMorgan pulled-back its earnings estimates, citing downsides to the company’s new Arigato service appeared to be aimed at securing subscription revenue. JPMorgan lowered its profit estimates for Zozo by 12% and 25% in FY2018 and FY2019, respectively. JPMorgan also slashed Zozo’s price target from 2,700 yen/share to 2,300 yen/share. Zozo is not rated in our Global Top Stock Ideas.

Global Information Technology and Communication Services Stocks Trending in the News

  • Advanced Micro Drives (AMD) shares rallied after Alphabet’s (GOOG.L) Google announced a new gaming initiative, which will present a significant opportunity for the chip company. Morgan Stanley wrote on the news, “This seems like a material positive in a market where AMD has largely abdicated its position in gaming oriented graphics.” AMD is rated “Top Short” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas. Alphabet is rated “Unattractive” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Alphabet’s (GOOG.L) Google launched a new video game streaming service called Stadia.  Stadia is a platform upon which developers can develop streaming games that can be accessed over the web, bypassing gaming consoles.  Google also introduced its own gaming controller.  Alphabet is rated “Unattractive” in our US Large-Cap and “Attractive” in our US Information Technology 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 an 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.
  • Facebook (FB) announced it will no longer include age, gender and zip code targeting with ads on its site, as part of a settlement to settle five discrimination lawsuits filed by advocacy groups.  Facebook will also pay just under USD$5 million.  Facebook COO Cheryl Sandberg said, “There is a long history of discrimination in the areas of housing, employment and credit, and this harmful behavior should not happen through Facebook ads.”  Facebook is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Nvidia (NVDA) said it is on track to clear out the inventory it built up anticipating cryptocurrency mining demand that did not materialize.  Nvidia maintained guidance for flat revenue in fiscal 2020 as it completes its inventory draw down, delivering guidance better than the 4% drop in revenue expected by analysts.  Nvidia is rated “Top Short” in our US Large-Cap and “Unattractive” in our US Information Technology Global Top Stock Ideas.
  • StoneCo Ltd. (STNE) shares soared after the company reported earnings that crushed consensus. StoneCo generated net income of USD$127.1mm in CY4Q2018 while analysts expected a loss of USD$25.4mm. StoneCo’s revenue of USD$529.4mm surpassed consensus of USD$465.6mm by more than 13%. StoneCo is not rated in our Global Top Stock Ideas.
  • Tencent Holdings Ltd. (SEHK: 700) is targeting layoffs of about 10% of its existing managers in an effort to clear space for younger executives, according to people familiar with the matter. According to reports, President Martin Lau told employees at an internal meeting last year that the company’s lowest-performing general managers should prepare to leave the company or be demoted. The news comes after China froze gaming approvals for 9 months in 2018. 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.
  • Walt Disney (DIS) has completed its acquisition of the major asset of 21st Century Fox (FOXA) in a USD$71.3 billion transaction.  In the wake of the deal, Disney will control Fox’s movie and television production studios, the FX cable channel, Fox Searchlight and National Geographic properties.   The combination of these assets is designed to provide the heft needed to effectively compete in the new media landscape.  Walt Disney is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  21st Century Fox is not rated in our 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

  • Rockwell Automation (ROK) was downgraded to neutral from buy at UBS.  Rockwell Automation also had its price target cut to USD$182 from USD$190.  UBS sees a decelerating growth environment for Rockwell Automation and at this point sees a balanced risk/reward scenario, a primary reason for the downgrade.  Rockwell Automation 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

  • Danske Bank A/S (CPSE: DANSKE) Chairman Karsten Dybvad highlighted other banks’ ties to the Estonia money laundering scandal in an interview Tuesday. “But we can see in other banks that there are indications that others are involved,” said Dybvad, adding, “So we’ll have to see.” Dybvad also discussed that he fears that the USD$230bn money laundering scandal will end up even bigger as more information is uncovered. Danske Bank is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.

Global Commodities & Energy Stocks Trending in the News

  • Antofagasta (LSE:ANTO) declared another large dividend in the wake of record production.  Antofagasta declared a 37 cents per share dividend which brings the total annual dividend to 43.5 cents per share.  That represents a 60.5% payout, well above the minimum 35% payout that is the company’s policy.  Record production and tight copper markets are benefitting Antofagasta.  Antofagasta is rated "Top Short” in our United Kingdom Global Top Stock Ideas.
  • Norsk Hydro (OB:NHY) is suffering production outages in the US and Europe in the wake of a cyber attack on its systems.   Norsk Hydro has moved production processes to manual mode where possible and where it is not, production has come to a halt.  Norsk is not ready to give a timeline for a return to normal as it is still accessing the problem.  Norsk Hydro is rated “Unattractive” in our European 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. 
  • Vale (VALE) received a favorable court decision in its quest to restart some of its shuttered mining operations in Brazil.  A judge has ruled Vale can restart its Brucutu mine, which would restore 30 million of the 80 million tons of production it was ordered to shutter in the wake of its dam disaster.  Vale still needs the OK from the environmental authorities in the state of Minas Gerais and Vale said inform investors when it has that.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.

Global Healthcare Stocks Trending in the News

  • Pfizer (PFE) agreed to pay USD$636 million for the rights to develop gene therapies under development at Vivet Therapuetics.  Pfizer is paying is paying roughly USD$40 million upfront for a 15% in Vivet.  Further payments, including for the potential acquisition of the rest of Vivet, will occur dependent on progress in developing these therapies.  Pfizer is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Tilray Inc. (TLRY) shares rose before slipping into the red after the company's sales beat was tempered by concerns over the company's valuation. Jefferies analyst Owen Bennett wrote to clients, “This stock remains one of the most expensive in the space by far and yet its revenue trails significantly below closest peers.” Tilray told investors that it expects revenue to at least triple in FY2019 from the prior year’s USD$43mm. Tilray is not rated in our Global Top Stock Ideas.

Global REITs Trending in the New

  • Jones Lang LaSalle (JLL) will acquire all outstanding shares of HFF Inc. (HF) in a cash-stock transaction that values the former’s equity at roughly USD$2bn. HFF shareholders will receive USD$24.63/share of cash and .1505 shares of Jones Lang LaSelle for each HFF share owned. Jones Lang LaSalle expects the acquisition to close in CY3Q2019. Jones Lang LaSalle is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. HFF is rated “Neutral” in our US SMID-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