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Global Stocks Trending in the News for April 17th, 2019

Apr 17, 2019

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Global Consumer Stocks Trending in the News

  • Amazon (AMZN) CEO Jeff Bezos argues against those who complain of its market power in the company’s annual letter to shareholders.  Critics complain that Amazon earns 50 cents of every dollar spent online in the US and the power it wields is immense.  For many sellers who originally viewed Amazon as a partner now see them as a competitor.  Many sellers complain that Amazon now sells products similar to theirs, at prices that undercut them in spots on the site that are more prominent than theirs.  Most sellers on Amazon are loathed to invite regulations but at least seem willing to listen to proposals.  Amazon is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Domino’s Pizza (DPZ) was upgraded to overweight from equal-weight at Morgan Stanley.  Morgan raised Domino’s price target to $283 from $268 as well.  Morgan thinks concern over decelerating US trends “are overdone.”  Investors are pricing in same-store-sales growth of only 2-3% and Morgan believes this is too bearish given its experience and the fact that Domino’s in the “best in class operator.”   Morgan writes that Domino’s has a “superior consumer value proposition” as it upgrades the stock.  Domino’s Pizza is rated “Attractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • JBS SA (BOVESPA: JBSS3) shares jumped after Morgan Stanley upgraded the stock from equal-weight to overweight and boosted its price target for the stock from 14.00 reais/share to 20.50 reais/share. Morgan Stanley believes that the rally in the world’s largest meat producer has just begun and is far from over. Morgan Stanley analyst Rafael Shin wrote in a report that, “African swine fever has sparked a rally across global protein stocks, but it’s not too late to buy in.” JBS SA is rated “Attractive” in our Brazil All-Cap Global Top Stock Ideas.
  • Pepsi (PEP) reported first quarter results that beat expectations on strength in sales of its drinks and snacks.  Pepsi’s first quarter adjusted EPS of 97 cents beat the 91 cents consensus.  First quarter revenue of $12.9 billion beat consensus slightly.  Snacks saw a jump of over 5% in revenue.  Pepsi said it would continue strong advertising to maintain the momentum.  Pepsi is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Zalando (DB:ZAL) unexpectedly posted a profit in the first quarter, beating analysts expectations for a loss.  Zalando posted a slight profit in the quarter while consensus was for a loss of 10 million euros.  Zalando has pledged to vastly increase its size over the next 5 years as it seeks to become a major European retailer, more profitable than the others in Europe.  Zalando has risen 84% over the last 12 months with investors seeming to believe they can deliver.  Zalando is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  

Global Information Technology and Communication Services Stocks Trending in the News

  • YouTube, part of Alphabet’s (GOOGL) Google unit, mistakenly labeled live streaming video of the Notre Dame Cathedral fire with a text box as it were footage of the 9/11 attack.  YouTube algorithms assign text boxes to some video clips on YouTube and the machines made a mistake with the Cathedral fire.  YouTube introduced these text boxes in an effort to dispel conspiracy theories related to many things, including 9/11.  Alphabet is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Electronic Arts (EA), Take-Two Interactive Software (TTWO), and Activision Blizzard (ATVI) shares slipped following a Wire report giving details of Sony’s (TSE: 6758) next PlayStation console. The report details that the upcoming PlayStation console, “won’t be landing in stores anytime in 2019.” The lack of new gaming hardware coming in 2019 is causing analysts to raise concerns that gamers will cool spending habits until new hardware is released in late 2020. Electronic Arts is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas. Take-Two is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas. Activision Blizzard is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.  Sony is rated "Attractive" in our Japan Large-Cap Global Top Stock Ideas. 
  • IBM (IBM) reported first quarter revenue that showed a drop in cloud computing and artificial intelligence revenue.  IBM blamed the drop on foreign exchange headwinds, saying without those revenue in those units grew 12%.  IBM first quarter EPS of $2.25 matched $2.22 consensus.  Revenue of $18.2 billion missed $18.4 billion consensus.  IBM expects to close the acquisition of Red Hat later this year, its largest acquisition ever and one hoped to fuel its growth.  IBM is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas
  • Intel (INTC) said it is not going to continue its efforts to grab a larger share of the mobile handset chip market.  Intel has spent years trying to break into the market and had planned to launch 5G chips in 2020.  But with Apple (AAPL)and Qualcomm (QCOM) resolving their dispute which involves Apple returning to Qualcomm chips, Intel has decided to abandon its efforts to gain share in the space.  Intel said new fifth-generation wireless systems will give it opportunity for growth and it will focus there.  Intel is rated “Unattractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  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.  
  • Netflix (NFLX) reported second quarter guidance with subscriber additions that trailed consensus together with its first quarter results.  Netflix expects to add 5.0 million net subscribers in the coming quarter, well below the 6.09 million consensus.  Netflix reported first quarter adjusted EPS of $0.76 ahead of $0.58 consensus.  First quarter revenue of $4.52 billion matched $4.50 billion consensus.  Netflix added 9.6 million subscribers in the first quarter beating 8.96 million consensus.    Netflix is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Qualcomm (QCOM) and Apple (AAPL) have come to a final agreement to end all litigation between the two companies.  Qualcomm and Apple signed a 6-year supply agreement with a 2-year option to extend.  Qualcomm said the deal will add $2.00 to EPS as deliveries ramp up.  The agreement ends all litigation with contract manufacturers as well.  The deal is effective April 1, 2019.  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.
  • Sprint (S) and T-Mobile (TMUS) have been told by US Justice Department officials that their merger deal is not likely to be approved the way it is presently structured.  The threat to their $26 billion merger is the anti-trust division of the Justice Department.  There is fear the deal could present an unacceptable threat to competition, as they are the #3 and #4 players in the telecom sector.  The proposed merger has been discussed for years as both companies are seeking scale with the merger.  Sprint is rated “Top Short” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  T-Mobile is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • CSX (CSX) reported first quarter EPS of $1.02, beating 91 cents consensus.  CSX first quarter revenue of $3.01 billion matched consensus of $3.0 billion.  CSX had an operating ratio of 59.5% is the first quarter, down from 60.3% in the previous quarter.  CSX does not expect the ratio to remain below 60%.  CSX expects capex of $1.6-$1.7 billion this year as it remains focused on service improvements.  CSX is rated “Attractive” in our US Large-Cap and “Attractive” in our US Industrials Global Top Stock Ideas.   
  • Deutsche Lufthansa AG (DB: LHA) shares slid, dragging down broader travel stocks alongside it, after the German airline reported a loss in its fiscal first quarter due to growing fuel costs. Lufthansa observed an adjusted loss before interest and taxes of 336mm euros in its fiscal first quarter, significantly worse than its earnings of 52mm euros a year earlier. Lufthansa maintained its FY2019 forecast for an adjusted EBIT margin between 6.5% and 8%. Lufthansa is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • JB Hunt (JBHT) reported first quarter EPS of $1.09 matching consensus.  JB Hunt first quarter revenue of $2.09 billion trailing consensus of $2.2 billion.  JB Hunt operating income of $169 million was flat year-on-year due to a number of higher costs.  JB Hunt is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Industrials Global Top Stock Ideas
  • Jet Airways India Ltd. (BSE: 532617) shares fell notably lower after its lenders have refused to bail out the cash-strapped airline, according to reports that cite people familiar with the matter. One of India’s oldest airlines may now be forced to ground its flights as a result. Reports indicate that Jet Airways India executives will meet in Mumbai on Tuesday to assess whether or not they will shut down operations. Jet Airways India is rated “Top Short” in our India All-Cap Global Top Stock Ideas.
  • Kansas City Southern (KSU) reported first quarter adjusted EPS that beat consensus. First quarter EPS of $1.54 beat $1.44 consensus while revenue of $674.8 million came above the $667.7 million consensus.  Kansas City Southern reported an operating ratio of 76.2%, well above the 65.8% reported a year ago.  Volumes fell 1% versus a year ago due to one-time service interruptions.  Kansas City Southern is rated “Neutral” in our US Large-Cap and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Packaging Corp. (PKG) and International Paper (IP) shares slid alongside other US packaging stocks following the release of weaker-than-expected March containerboard industry data points. Box shipments in March fell 3.0% y/y while inventories declined by 47,000 tons. Bank of America Merrill Lynch instituted downgrades for Packaging Corp., International Paper, and WestRock (WRK) as a result. Packaging Corp. is rated “Attractive” in our US Large-Cap Global Top Stock Ideas. International Paper is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. WestRock is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.

 

 

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Global Financials Stocks Trending in the News

  • Bank of America (BAC) reported solid first quarter, with increased income from its consumer unit being offset by lower trading volume.  Net interest income climbed 9.7% in the quarter while trading revenue fell 13%.  Net interest margin rose to 2.51% from 2.42% a year ago.  Consumer loans rose 5% as Bank of America’s CFO said the bank sees no signs of a recession in the near future.  Bank of America is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Bank of New York Mellon (BK) reported first quarter earnings that missed consensus.  Bank of New York Mellon’s first quarter EPS of 96 cents trailed the 96 cents expectation.  First quarter net interest margin of 1.20% missed expectation of 1.26%.  Bank of New York Mellon reported $1.8 trillion in assets under management with $34.5 trillion of assets under administration.  First quarter common equity tier 1 ratio of 11%.  Bank of New York Mellon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • BlackRock (BLK) reported first quarter EPS of $6.61, handily beating consensus of $6.13.  BlackRock saw assets under management rose to $6.52 trillion.  BlackRock saw inflows in the quarter, reversing the outflow challenges it saw last year among its institutional clients.  Institutional inflows were $29.1 billion in the quarter while its iShares ETFs saw $81 billion in inflows.  BlackRock is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Charles Schwab (SCHW) reported first quarter EPS of 69 cents beating 66 cents consensus.  First quarter revenue of $2.72 billion beat consensus of $2.68 billion.  Charles Schwab reported a return on equity in the first quarter of 20%.  Charles Schwab has 3.59 trillion client assets in accounts, 11.8 million active brokerage accounts with 418k revenue trades per day.  Charles Schwab is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • Comerica (CMA) reported first quarter results that beat consensus.  Comerica reported first quarter adjusted EPS of $2.08, beating consensus of $1.93.  Comerica’s NIM on a tax-equivalent basis was 3.79% with an efficiency ratio of 50.8%.  Comerica provided guidance of 2-4% loan growth, 1-2% deposit growth and a 3% decline in non-interest expenses.  Comerica is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • First Horizon (FHN) shares edged higher after announcing fiscal first quarter adjusted EPS that was in line with analyst expectations. First Horizon generated an adjusted EPS of USD$0.35 in its most recent quarter while it reported a net interest margin of 3.31%, slightly missing consensus for 3.40%. First Horizon expects current net interest margin levels to hold through FY2019. First Horizon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Goldman Sachs (GS) had its price target cut to a market-low of $170 at Societe Generale as it reiterates its sell rating.  Goldman Sachs “almost completely lost out on the recent bull market rally,” SocGen notes in its report.  Goldman suffers from a litany of challenges and SocGen believes Goldman has been late to address all of them.  Flat earnings and a focus on less profitable areas have left Goldman in a terrible spot with a clouded future, SocGen highlights.  Goldman Sachs is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Interactive Brokers (IBKR) reported first quarter adjusted EPS of $0.64 ahead of $0.60 consensus.  First quarter revenue of $558 million beat $505 million consensus, increasing 5.9% y/y.  Interactive Brokers increased declared a $0.10 quarterly dividend, matching consensus.  Interactive Brokers saw a 13% jump in net interest income to $29 million.  Interactive Brokers is rated “Top Short” in our US Large-Cap Global Top Stock Ideas
  • Morgan Stanley (MS) reported first quarter results that came above consensus.  Morgan Stanley reported first quarter EPS of $1.33, beating consensus of $1.16.  Morgan Stanley delivered $3.73 billion in trading revenue, a touch above consensus.  Like other banks, stock trading revenues was lower as was fixed income trading revenue, though the latter beat consensus.  Morgan Stanley called its results “solid” and described it as “well positioned” to serve its clients, though highlighted the “risks to the global environment remain.”  Morgan Stanley is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas
  • Progressive (PRG) reported first quarter results that handily beat expectations.  First quarter EPS of $1.83 was well above the $1.36 consensus.  Progressive first quarter net premiums earned was $8.46 billion while net premiums written was $9.24 billion.  Progressive’s combined ratio was 88.8% in the first quarter.  Personal policies in force grew 11% in the quarter.  Progressive is rated “Attractive” in our US Large-Cap Global Top Stock Ideas

Global Commodities & Energy Stocks Trending in the News

  • Entergy (ETR) has agreed to a post-shutdown sale of its 3 nuclear power plants Indian Point 1, 2 and 3 to Holtec International for decommissioning.  Entergy had committed to close the plants after NY State Governor Andrew Cuomo insisted on their closure.  The 3 plants provide 30% of metro New York City’s power.  With the closure, Entergy will have retired all of its nuclear power plants.  Entergy is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas
  • McDermott International (MDR) shares soared by double-digits after the company said the Train 1 of its Cameron liquefied natural gas project in Louisiana reached its final commissioning stage. As a part of its final commissioning stage, McDermott International will begin to introduce a pipeline feed of gas into the Train 1 of its export facility for liquefied natural gas. McDermott International is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Abbott Labs (ABT) reported first quarter results that came generally in line with consensus.  Abbott reported first quarter EPS from continuing operations of 63 cents, beating 61 cents consensus.   Net sales of $7.54 billion came in line with $7.48 billion consensus.  Abbott’s Freestyle Libre diabetes treatment grew 70% fueling the strong growth of its Diabetes Care unit.  Abbott provided second quarter EPS guidance of 79-81 cents while expecting full year EPS to be in the range of $3.15-$3.25.  Abbott Labs is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • HCA (HCA) could suffer after Jefferies warned on the name.  “Investors should be a bit more cautious around HCA from here and through 2020,” Jefferies wrote in a note to clients.  The comments were made after seeing HCA run 33% over the last 33%, the best performer in the sector.  HCA is among the most owned hospital stocks and with the growing talk of a single-payer system they could see weakness near-term.  HCA is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Johnson & Johnson (JNJ) reported first quarter adjusted EPS of $2.10 ahead of $2.04 consensus.  First quarter revenue of $20.02 billion beat $19.61 billion consensus.  Its OptumRx unit saw a 10.6% growth in revenue to $17.6 billion.  Johnson & Johnson increased full year EPS guidance to $8.53-$8.63 up from $8.50-$8.65; present consensus is $8.59.    Johnson & Johnson is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • UnitedHealth Group (UNH) reported first quarter adjusted EPS of $3.73 ahead of $3.60 consensus.  First quarter revenue of $60.31 billion beat $59.7 billion consensus.  UnitedHealth’s medical care ratio was 82% in the first quarter.  Its OptumRx unit saw a 10.6% growth in revenue to $17.6 billion.  UnitedHealth increased full year EPS guidance to $14.50-$14.75, up from $14.40-$14.65; present consensus is $14.65.  UnitedHealth Group is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas
  • Vale (VALE) announced it will be restarting its massive Brucutu mine over the next 72 hours, sending iron ore lower.  The market had been concerned about a potential shortage of iron ore given other disruptions of Australian supplies.  A local judge in Brazil has ruled Vale may resume the use of 3 tailings dams at the mine that had prevented its use.  Vale expect a “complete return” of the mine and its 30 million tons of annual capacity by Monday.  Iron ore future fell 3% on the news.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.
  • WaVe Life Sciences (WVE) shares lost as much of a third of their value, falling to the lowest levels since November 2017, after announcing the results from an early clinical trial of its experimental therapy, suvodirsen, for treating Duchenne muscular dystrophy. Despite the negative interpretation by investors, Leerink analyst Mani Foroohar defended the stock in a note to clients, saying, “We believe that due to differences in chemistry between the compound, comparisons of doses between drugs is not an appropriate proxy of potential efficacy.” WaVe Life Sciences is not rated in our 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