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Global Stocks Trending in the News for May 10th, 2019

May 10, 2019

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Global Consumer Stocks Trending in the News

  • Amazon (AMZN) is being accused of violating kids’ privacy right with its smart speakers.  A child advocacy group filed a complaint with federal authorities complaining that Amazon records conversations of kids on its Echo Dot Kids devices.  The complaint alleges that Amazon records the conversations and then stores them in the cloud, even after parents delete it.   The complaint states the actions violates federal online privacy rules.  Amazon is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • American Eagle (AEO) was downgraded by both RBC Capital and Wedbush.  RBC Capital cut American Eagle to neutral from buy while Wedbush cut to sector perform from outperform.  In both cases the downgrade was based on valuation.  American Eagles has had an impressive string of results and at this point trades at 14x forward earnings.  That valuation captures most of the anticipated improvements, both downgrades highlight.  American Eagle is rated “Unattractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Anheuser-Busch InBev (BUD) formally filed for an IPO for its Hong Kong unit.  Anheuser-Busch is targeting a $70 billion valuation and stated in its filing that it is the largest beer company in Asia Pacific.  The IPO is being targeted for July and the unit is called Budweiser Brewing Company APAC Ltd.  Anheuser-Busch InBev is rated "Neutral" in our European Large-Cap Global Top Stock Ideas
  • Booking (BKNG) reported first quarter adjusted EPS that missed consensus and cut full year EPS guidance.  Booking posted first quarter EPS of $11.17, behind $11.32 consensus.  Booking cut second quarter adjusted EPS guidance to $22.25 to $22.60, below consensus of $22.68.  Booking is rated “Attractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Care.com (CARE) announced that is it overhauling its business model and adding in-depth background checks for the caregivers who post on its site.  Care.com has 33 million members and will pay a third-party provider to check criminal histories of caregivers as well as verify their key personal data.  The changes come after the WSJ did a report about problems with caregivers on Care.com.  Care.com is rated “Neutral” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Edgewell Personal Care (EPC) shares fell by more than 16% after the company surprised investors with the acquisition of Harry’s, a personal shaving startup. According to Citi analyst Wendy Nicholson, the strong quarterly financial results posted by Edgewell were overshadowed by the unexpected acquisition of Harry’s. “The multiple EPC is paying is unclear,” said Herzog, who added, “but strategically, the deal makes sense as EPC has been playing from behind on e-commerce and the combination immediately increases EPC’s scale and capabilities.” Edgewell Personal Care is rated “Attractive” in our US SMID-Cap and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Etsy (ETSY) shares slid by double-digits, the most in 2 years, after the online retailer announced softer-than-expected sales in the first quarter. Etsy generated sales of $170.7 million during the first quarter that fell short of analyst expectations for $169.3 million in revenue. Several analysts are calling the selloff of Etsy overblown. Etsy is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Magna International (TSX: MG) shares fell the most intraday since January after the Canadian car-parts manufacturer pulled-back its earnings outlook, citing a slowdown in the global automotive industry and higher-than-expected costs in developing automated driving systems. Magna now sees net income in FY2019 between $1.9 billion and $2.1 billion, roughly $200 million lower than previously offered guidance. Magna International is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.
  • Office Depot (ODP) suffered a 2-notch downgrade from Bank of America Merrill Lynch, cutting it to underperform from buy.  Office Depot’s price target was cut to $2 from $4.  Merrill Lynch has been bullish on the stock and was anticipating a turnaround.  Office Depot disappointed recently with results and this left Merrill doubting if a turnaround will ever come.  Office Depot is rated “Neutral” in our US SMID-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas 
  • Revlon Inc. (REV) shares edged higher after the Chief Financial Officer Victoria Dolan told investors on a conference call that the company is considering refinancing its debt in early 2020 due to FY2019 results. “We’re constantly looking at the markets, talking to our banks to understand what is going to be required and what those rates would look like,” said CFO Dolan. Revlon is rated “Neutral” in our US SMID-Cap and “Top Short” in our US Consumer Staples Global Top Stock Ideas.
  • Roku Inc. (ROKU) shares surged to an all-time high after the video streaming platform announced first quarter revenue and a FY2019 outlook that was ahead of analyst expectations. From their December low, Roku shares are up nearly 200%. The first quarter financials prompted a slew of Street analysts to raise their price targets for Roku shares. Roku is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • Tapestry Inc. (TPR) shares soared by double-digits after the company announced profits during the fiscal third quarter that beat analyst estimates, driven by strong performance in its Coach brand. Tapestry observed global same store sales of 1% during the fiscal third quarter at Coach, although the company’s Kate Spade brand observed a comparable sales decline of 3% in the quarter. The strong results suggest that weak financial posted by Tapestry in the prior quarter were a one-off event, according to Bloomberg. Tapestry is rated “Attractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Tenneco Inc. (TEN) shares fell by the most intraday in almost a decade after the company hit a triple-whammy with its first quarter earnings release. Tenneco reported quarterly financials that trailed analyst estimates, cut back its FY2019 guidance, and announced a spin-off of its aftermarket auto parts business. Tenneco lost more than a third of its total market value initially on the news. Tenneco is rated “Attractive” in our US SMID-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • The Stars Group (TSX: TSGI) shares soared by nearly 25% after Twenty-First Century Fox (TFCF.A) announced a $236 million investment in the provider of sports betting services. According to analyst Daria Fomina, “the agreement will likely be taken positively by the market despite the dilution effect of new shares.” Investors see the new deal with Fox as a great way for the Stars Group to rapidly expand its user base. The Stars Group is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas. Fox is not rated in our Global Top Stock Ideas.
  • Tenneco (TEN) reported first quarter earnings that missed consensus by a huge margin.  Tenneco posted a first quarter loss of 53 cents per share while consensus was for earnings of $1.04.  Revenue of $4.84 billion matched consensus.  Tenneco announced the delay of the spinoff of its aftermarket parts business.  Tenneco cut guidance for second quarter revenue to $4.45 billion to $4.55 billion, below $4.65 billion consensus.  Tenneco is rated “Attractive” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Walmart (WMT) published a report on the earnings of its employees to rebut criticism that they are underpaid.  The average salary for a Walmart manager is $175,000 per year while full time employees earn on average $25,000 per year or $14.28 per hour.  Walmart has been expanding benefits and hiking pay both to rebut critics and better position itself in the extremely tight labor market that exists right now.  Walmart is rated “Attractive” in our US Large-Cap and “Attractive” in our US Consumer Staples Global Top Stock Ideas.  
  • Wendy’s (WEN) reported first quarter adjusted earnings that beat consensus.  Wendy’s first quarter adjusted EPS of 14 cents beat consensus of 12 cents.  First quarter revenue of $408.6 million beat consensus of $398.9 million.  Wendy’s reported same store sales of 1.3%, a touch below consensus of 1.4%.  Wendy’s is rated “Neutral” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Wynn Resorts (WYNN) reported first quarter adjusted EPS that slightly beat and net revenue that slightly trailed consensus.  First quarter net revenue of $1.65 billion trailed $1.67 billion expectation.  Adjusted EPS of $1.61 came ahead of $1.58 consensus.  Wynn said it expects its Encore Boston Harbor project to open mid-2019.  Wynn Resorts is rated “Unattractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  

Global Information Technology and Communication Services Stocks Trending in the News

  • Alphabet’s (GOOGL) Google is struggling to convert its music customers to paying customers.  Google’s YouTube was revamped about a year ago and its YouTube Music service is a paid subscription that Google is trying to convert its free users to.  More people listen to music on YouTube than any other streaming service.  Users, however, have grown accustomed to its free price and have been resistant to signing up for paid subscriptions.  Alphabet cited this as part of the reason for its $1 billion revenue miss.  Alphabet is rated “Top Buy” in our US Large-Cap and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Intel (INTC) provided updated guidance to investors that was not well received.  Intel said it expects revenue growth in the low single digits over the next 3 years.  Intel expects EPS to grow in line with revenue during the same period.  Intel expects its PC revenue to be flat or fall while data center revenue will grow in the high single digits.  Intel is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Roku (ROKU) share rose strongly after reporting revenue that beat consensus.  Roku first quarter revenue of $206.7 million beat consensus of $189.9 million.  Roku saw $19.06 average revenue per user with 29.1 million active users.  Roku gave 2019 revenue guidance of $1.03 billion to $1.05 billion, above consensus of $1.02 billion.  Roku is rated “Top Short” in our US Large-Cap Global Top Stock Ideas
  • Symantec (SYMC) CEO Greg Cark unexpectedly quit, sending shares of Symantec tumbling.  No specific reason was given but Symantec has struggled to make its enterprise security business grow, the unit is the majority of Symantec’s revenue.  Starboard Value LP, the activist hedge fund, bought 5% of the company and has stated its intention to shake up management of the company.  Richard Hill will take over as interim CEO.  Symantec also cut revenue guidance for the rest of the year.  Symantec is rated “Attractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Trade Desk (TTD) shares plunged by double-digits despite the company reported adjusted earnings in the first quarter of $0.49/share that crushed the average analyst adjusted EPS estimate of $0.26. Trade Desk expects revenue in the upcoming quarter of $154 million that is only slightly ahead of consensus of $153.4 million. Trade Desk also upped its FY2019 revenue guidance from at least $637 million to at least $645 million. Trade Desk is rated “Neutral” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Uber (UBER) placed its IPO at $45 per share, near the low end of the price range.  The price range was $44 to $50.  The IPO is raising $8.1 billion for Uber and values the company at about $82 billion.  Uber’s IPO makes it the highest valued IPO since Alibaba (BABA) in 2014.  Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.  Uber is not yet rated in our Global Top Stock Ideas.
  • Walt Disney (DIS) reported fiscal second quarter adjusted earnings and revenue that beat consensus.  Disney first quarter adjusted EPS of $1.61 beat consensus of $1.58.  Fiscal second quarter revenue of $14.92 billion beat $14.54 billion expectations.  Disney saw media networks operating income grow to $2.19 billion from $1.3 billion q/q.  Disney CEO Robert Iger said he was “very pleased” with fiscal second quarter results.  Walt Disney is rated “Attractive” 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) convinced federal regulators that new pilot training for the new 737 Max, when introduced, was kept to a minimum, ex-employees allege.  Boeing convinced regulators the new version of the plane only required Level B training, which is a couple of hours on an iPad, and no time in a simulator.  Boeing wanted to limit the need for Level D training-which include extensive simulator time-so airlines could deploy the plane more quickly.  Boeing engineers convinced the FAA official in charge-someone with limited flight time-that the Level B training was sufficient.  Critics allege this may have contributed to the 737 Max crashed.  Boeing is rated “Top Short” in our US Large-Cap and “Unattractive” in our US Consumer Staples Global Top Stock Ideas.  

 

 

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Global Financials Stocks Trending in the News

  • Tradeweb (TW) reported first post-IPO results that came a touch above consensus.  Tradeweb reported first quarter adjusted EPS of 23 cents, ahead of 22 cents consensus.  First quarter revenue of $186.8 million was a touch more than $186.0 million consensus.  Tradeweb declared its first quarterly dividend of 8 cents per share.  Tradeweb saw a 34% growth in volume versus a year ago.  Tradeweb is not rated in our Global Top Stock Ideas.

Global Commodities & Energy Stocks Trending in the News

  • Chevron (CVX) is walking away from its $33 billion bid to acquire Anadarko Petroleum (APC).  Chevron will collect its $1 billion breakup fee after Occidental Petroleum (OXY) beat it in the competition for Anadarko.  Chevron is five times larger than Occidental.  Chevron will use the breakup fee to increase share buyback by 25%.  Anadarko Petroleum is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.  Occidental Petroleum is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  Chevron is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Duke Energy (DUK) reported first quarter results that came in line with consensus.  Duke Energy first quarter EPS of $1.24 matched consensus of $1.24.  Duke reported first quarter operating revenue of $6.16 billion, trailing $6.31 billion consensus.  Duke Energy provided full year EPS guidance of $4.80 to $5.20 while consensus is presently $4.94.  Duke Energy is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • Exelon (EXC) confirmed it is moving forward with closing the Three Mile Island nuclear power plant in Pennsylvania.  Exelon is making the move given that a bill to provide subsidies to keep them open has not moved forward in Pennsylvania’s legislature.  Exelon confirmed previously announced plans.  The plant will be closed by September 30th of this year.  Exelon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas

Global Health Care Stocks Trending in the News

  • Becton Dickinson (BDX) reported fiscal second quarter results that came in line while guidance trailed.   Becton Dickinson fiscal second quarter EPS of $2.59 came a touch ahead of $2.58 consensus.  Revenue of $4.20 billion trailed $4.23 billion expectation.  Becton Dickinson cut full year EPS guidance to $11.65 to $11.75, from $12.05 to $12.15;  and below present consensus of $12.07.  Becton Dickinson is rated “Unattractive” in our US Large-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