Global Stocks Trending in the News for March 28th, 2019
Mar 28, 2019
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Global Consumer Stocks Trending in the News
- At Home Group Inc. (HOME) shares fell after the company announced an outlook for CY1Q2019 that was well below analyst expectations. At Home Group expects adjusted EPS between USD$0.03 and USD$0.04 in CY1Q2019, largely missing the consensus forecast for USD$0.20. At Home Group also said that it projects revenue between USD$300mm and USD$305mm, in line with consensus for USD$303mm. At Home Group is rated “Neutral” in our US SMID-Cap and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.
- Carnival Corp. (CCL) shares fell the most intraday in 2019 after the cruise line cut its top-end FY2019 EPS guidance to USD$4.55/share from previously offered guidance of USD$4.80/share. Analysts had expected EPS of USD$4.76 from Carnival in FY2019 prior to the announcement. Carnival cited fuel costs and currency fluctuations as reasoning for the guidance cut. Carnival is rated “Unattractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
- Five Below (FIVE) reported fourth quarter EPS of USD$1.59 in line with USD$1.58 consensus. Five Below posted fourth quarter revenue of USD$602.7 million in line with USD$601.4 million consensus. Five Below gave first quarter EPG guidance of 32-35 cents, below 39 cents consensus. Full year sales are expected to be USD$1.87-1.89 billion, in line with consensus. Five Below is rated “Attractive” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
- Ford (F) announced it will close 2 of its 3 in Russia as part of its overhaul of international operations. The 2 plants being close produce cars and that which will not be closed produces commercial vehicles. The third plant will be turned over to its local partner as Ford exits the country. Ford will take of charge of USD$450-500 million as part of the closings. Ford was a pioneer in Russia and once saw it as a key to its growth strategy. Ford is rated “Top Short” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
- Kinder Morgan (KMI) was downgraded to neutral from buy at Citi. Kinder Morgan’s price target was maintained at USD$20. The downgrade was based on valuation given the recent performance of the stock and not any fundamental change it the story. The average price target for Kinder Morgan is USD$21. Kinder Morgan is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
- JC Penny (JCP) announced it has found a new CFO, 6 months after starting its search. JC Penny will welcome Bill Wafford as its new CFO on April 8th. JC Penny has struggled to revive lagging sales in the competitive retail sector. JC Penny recently reported a 9.5% drop in sales in the fourth quarter. JC Penny is rated “Unattractive” in our US Large-Cap and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas.
- Johnson & Johnson (JNJ) settled its most recent talc-asbestos case in Oklahoma. The suit involved allegations from a 77 year old woman related to her rare cancer. Johnson & Johnson was cleared in a New Jersey case yesterday that involved very similar allegations. 2 weeks ago a jury in California awarded a woman USD$29 million in another talc case. The most recent case ended with a confidential settlement sealed to the public. Johnson & Johnson is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
- Lyft (LYFT) has increased its price range for its IPO. Lyft upped the range to USD$70 to USD$72, up from USD$62 to USD$68. Rest assured, the bankers are smiling. The hike is indicative of strong demand for the shares as the IPO approaches. The new range values Lyft at USD$23 billion. The IPO is set to price this Friday and aims to raise USD$2.2 billion. Lyft is not yet rated in our Global Top Stock Ideas.
- Lululemon (LULU) reported bullish EPS guidance for 2019, saying it expects them to come in the range of USD$4.48-4.55, above present consensus of USD$4.41. Lululemon expects 2019 revenue of USD$3.7-3.74 billion, in line with consensus. Lululemon reported fourth quarter adjusted EPS of USD$1.85, beating consensus of USD$1.74. Same store sales grew 7%, trailing the 8.3% consensus. Lululemon is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
- Manchester United Plc (MANU) has decided to give its caretaker manager Ole Gunnar Solskjaer the job full-time. Solskjaer was appointed manager in December after the team ousted Jose Mourinho. Solskjaer then went on to win 14 of his first 19 games. Manchester United is not rated in our Global Top Stock Ideas.
- Suedzucker AG (DB: SZU) shares fell the most in 3 years following a 94% decline in fiscal year profit ending February 2019. Suedzucker also warned investors that it could see losses of as much as 300mm euros as the company closes 5 factories in an effort to cut costs amid a sugar industry supply gut. Suedzucker is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.
- Tesla’s (TSLA) new CEO Robyn Denholm said she things Elon Musk’s use of tweets to communicate is part of the regular routine of many executives these days, saying she thinks “he uses it wisely.” Musk ’s tweets have drawn the ire of the SEC and regulators continue to threaten further action if his tweets cross their line. Musk was forced to give up the CEO role because of his tweets. Telsa is rated “Top Short” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas
Global Information Technology and Communication Services Stocks Trending in the News
- Adobe (ADBE) announced the launch of the Experience Platform, a new platform that looks to pull together all the services from acquisitions in the past year and integrate it with third-party apps. Adobe wants to offer a platform similar to what Salesforce.com (CRM) offers, a hub for data with software offerings to analyze that data. Adobe is looking to emulate the success Salesforce.com and the ecosystem based on data is has successfully created. Adobe is rated “Attractive” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas. Salesforce.com is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
- Apple (AAPL) launched its much anticipated streaming service and a number of other initiatives. Apple will offer Apple TV+, a subscription service with original content and other pay services; Apple News, a subscription service allowing access to 300+ magazines and Apple Arcade, a subscription service giving access to 100+ exclusive video games. For the first time Apple’s Apple TV app will work on many platforms, not just its own. Apple also launched the Apple Card, a credit card, with Goldman Sachs (GS). Apple is seeking to expand beyond hardware and deeper into services with the softening of sales of its flagship iPhone. Apple gave a price of $9.99 for its news service but did not give pricing for the other services announced, raising a few eyebrows. Apple is rated “Neutral” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
- Infineon Technologies (XTRA:IFX) slashed its revenue forecast for 2019, now expecting revenue to grow just 5.3% to 8 billion euros, down from 9% growth. Infineon said it is cutting its forecast due to “continued global economic uncertainties and weaker end-market demand.” Margin expectation falls to 16% from 17.5%. Infineon added that “business indicators point to a slower demand recovery than expected thus far.” Infineon is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
- Nvidia (NVDA) will not pursue any mergers or acquisitions for the remainder of the year after the company purchased Mellanox Technologies (MLNX). According to a Reuters report, Nvidia CEO Jensen Huang made comments at a conference in Tel Aviv on Tuesday expressing that the company is, “going to save money for a while.” Nvidia is rated “Top Short” in our US Large-Cap and “Unattractive” in our US Information Technology Global Top Stock Ideas. Mellanox Technologies is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
- Paychex (PAYX) reported fiscal third quarter EPS of 89 cents, a touch above 88 cents consensus. Paychex reported fiscal third quarter revenue of USD$1.1 billion, beating USD$1.04 billion consensus. Reported results do not include impact of the Oasis deal. Paychex is rated “Top Buy” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
Global Industrials Stocks Trending in the News
- Boeing (BA) has a plan to restore confidence in its 737 Max jetliner that is presently grounded. Boeing is calling customers and news organizations to explain the update to its software that is designed to be much simpler to operate for pilots. At about the same time the FAA will brief lawmakers on how it is overseeing these changes from Boeing. Boeing is rated “Top Short” in our US Large-Cap and “Neutral” in our US Industrials Global Top Stock Ideas
- Equifax (EFX) and Fair Isaac Corp (FICO) announced they will work together to sell consumer data to banks. Fair Isaac is the creator of the widely used FICO score for credit scores. Both companies already sell data to banks, but this initiative will see each other’s salespeople offering the other’s products together with their own. Equifax has the data while Fair Isaac has the software to analyze it. Banks are looking to make more loans and the firms will offer their combined services to help banks in that expansion. Equifax is rated “Neutral” in our US Large-Cap and “Unattractive” in our US Industrials Global Top Stock Ideas. Fair Isaac is rated “Top Buy” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
- Hawaiian Airlines (HA) saw its price target cut at Imperial Capital to $36 from $40. Its outperform rating was maintained for Hawaiian Airlines. The entrance of Southwest Airlines (LUV) into the Hawaiian market is the main reason for the lower price target. While Hawaiian Airlines has adjusted prices lower in anticipation of Southwest there is still expected to be intense pricing competition near-term. Imperial expects 2019 is “likely to represent trough earnings.” Hawaiian Airlines is rated “Neutral” in our US SMID-Cap and “Neutral” in our US Industrials Global Top Stock Ideas. Southwest Airlines Southwest Airlines
- Southwest Airlines (LUV) will see a USD$150 million hit to its first quarter results due to the grounding of the 737 Max. Southwest is the largest operator of 737 aircraft with 34 aircraft. The USD$150 million hit is in addition to the USD$60 million hit from the US government shutdown earlier. Southwest has also suffered from bad weather in the quarter. Southwest is rated “Neutral” in our US Large-Cap and “Attractive” in our US Industrials Global Top Stock Ideas.
- ZF Friedrichshafen (known simply as ZF), of Germany, announced it will acquire Wabco (WBC) of the US in a USD$7 billion deal. ZF is paying USD$136.50 per share for Wabco, a 6.5% discount to yesterday’s close. Wabco shares have risen recently on news of talks with ZF. ZF is a private company. ZF acquired TRW in 2015, thrusting it into the global club of giant auto parts manufacturers. Wabco is not rated in our Global Top Stock Ideas.
Global Financials Stocks Trending in the News
- Deutsche Bank (DB:DBK) may raise 3-10 billion euros in fresh equity as part a of deal with Commerzbank (DB:CBK), FT reports. Deutsche Bank responded to the report saying, “it’s much too early at this stage of the credible assessment to know if there is any capital need at all.” FT reports that the German government wants Deutsche to raise as much capital as it needs to avoid returning to the market for more after any deal closes. Deutsche Bank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Commerzbank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
- Swedbank AB (OM: SWED A) is facing a money laundering scandal that has grown more serious this week as US authorities are now investigating the Swedish bank for potentially providing false information. According to a report by SVT, convicted felon and former Trump campaign chairman Paul Manafort are among those to have received suspicious payment through Swedbank. Swedbank is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
Global Commodities & Energy Stocks Trending in the News
- Saudi Aramco will acquire a 70% stake in Saudi Basic Industries Corporation (SASE: 2010), according to an email statement. Saudi Aramco will pay shareholders 123.40 riyals/share, equaling 259.13bn riyals for the 70% stake (USD$69.1bn). Saudi Aramco has no plans to acquire the remaining 30% of shares. Saudi Basic Industries Corporation is not rated in our Global Top Stock Ideas.
- Vale (VALE) Vale reported fourth quarter iron output of 101 million tons, well within its guidance. Vale had deferred some sales to the first quarter, so sales should exceed production then; the full effect of the shutdown will be felt only second quarter. Ramping production will be slow as inspections continue. Both Santander and BTG reiterate buy ratings in the wake of the production news. Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.
Global Healthcare Stocks Trending in the News
- Centene Corp (CNC) announced it will acquire WellCare Health Plans (WCG) in a USD$17 billion deal. WellCare shareholders will receive 3.83 shares of Centene plus USD$120 per share in cash, giving WellCare a total enterprise value of USD$305.39 per share. Once the deal closes Centene shareholders will own 71% of the combined company. Centene will find the deal with over USD$8 billion in borrowing. Centene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas. WellCare is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
Global REITs Trending in the New
- CBL & Associates (CBL) shares fell to historical lows after the REIT announced the suspension of its dividend in the companies upcoming third and fourth quarters. SBL & Associates cited a 2016 class action lawsuit, which will require a USD$90mm settlement, as reasoning for the dividend suspension. CBL & Associates is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.