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Global Stocks Trending in the News for May 24th, 2019

May 24, 2019

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Global Consumer Stocks Trending in the News

  • Amazon (AMZN) shares could be worth $3,000 according to a new report from Piper Jaffray.  Amazon could reach that level in two to three years, which would be a 65% rise from current levels, the report notes.  Amazon could reach this level without any acquisition and at that level, its market cap would approach $1.5 trillion.  Amazon is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Big Lots (BIG) was downgraded to neutral from overweight at Piper Jaffray.  Big Lots’ price target was slashed to $31 from $44 as well.   Big Lots imports 21% of the merchandise it sells from China and the ongoing tariffs will hurt profitability.  Big Lots is rated “Neutral” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Best Buy (BBY) reported first quarter earnings and same store sales that beat consensus.  Best Buy reported first quarter same stores sales growth of 1.1%, beating 0.9%.  First quarter adjusted EPS of $1.02 beat consensus of 87 cents.  Revenue in the first quarter was $9.14 billion matching consensus.  Best Buy provided second quarter EPS guidance of $0.95 to $1.00 on revenue of $9.5 billion to $ 9.6 billion.  Best Buy is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Casino (ENXTPA:CO) and parent company Rallye (ENXTPA:RAL) were placed under credit protection as both struggle under an enormous debt load.  Credit protection is a feature of French law allowing a company 6 months to present a restructuring plan.  Shares of both were suspended Thursday as the news was published and will resume trading Friday.  Casino is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  Rallye is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas
  • Chipotle (CMG) was downgraded to underperform from market perform at BMO Capital Markets.  Chipotle saw its price target cut to $620 from $675 at the same time.  Fear over African Swine Fever was cited in the downgrade.  Chipotle is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Foot Locker (FL) reported first quarter adjusted earnings and same store sales that missed consensus.  Foot Locker first quarter adjusted EPS of $1.53 trailed consensus of $1.60.  Same store sales grew 4.6%, also trailing consensus of 5.5%.  Foot Locker first quarter revenue of $2.08 billion came in line with $2.11 billion consensus.  Foot Locker is rated “Attractive” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • L Brands (LB) reported first quarter earnings that beat consensus.  L Brands reported first quarter EPS of 14 cents, beating consensus of $0.  Net sales of $2.63 billion beat consensus of $2.56 billion.  Flat sales growth in the first quarter beat an expected drop of 1.2%.  L Brands provided EPS guidance for the second quarter of 15-20 cents and for the year of $2.30 to $2.60.  L Brands is rated “Top Short” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Natura (NATU3) was placed on “negative watch” by Fitch ratings after announcing it will acquire Avon Products (AVP).  Avon Products came to a final agreement with Brazil’s Natura (NATU3) that will see it acquired in a deal valued at more than $2 billion.  Fitch is concerned that the combined entity will be very exposed to the declining direct sales business.  Natura previously acquired The Body Shoppe chain.  Natura is rated “Attractive” in our Brazil All-Cap Global Top Stock Ideas.
  • Nissan Motor (TSE:7201) had its credit rating cut by Moody’s.  Nissan’s rating was cut to A3 from A2, with Moody’s cited dropping profit and margins over the last 2 years.  The downgrade comes in the wake of Nissan being placed in credit watch in February.  Nissan is suffering from slumping sales in the US and recently cut its guidance for the year.  Nissan Motor Co. is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.
  • Target (TGT) was upgraded to overweight from neutral by JP Morgan.  Target saw its price target hiked to $100 from $81.  In the upgrade report, JP Morgan notes the shares are undervalued, saying Target deserves a best in class valuation.  Target has been delivering strong performance and JP Morgan expects that to continue.  Target is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Tesla (TSLA) shares continue to slide as the downgrades pile up.  Earlier in the week, Morgan Stanley gave a bear case scenario for Tesla that included a $10 price target.  Its previous bear case target was $97.  A number of other brokers have downgraded or written negative comments since, and the stock is down over 7% just this week.  Weak demand, saturated market, insufficient capital and a flood of competing models about to hit the market are among the concerns cited.  Tesla is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Twitter (TWTR) has banned well-known anti-Trump members Brian and Ed Krassenstein.  Twitter permanently banned both of them, saying they operated fake accounts and paid for fake interactions.  A Twitter spokesman said “Twitter rules apply to everyone” adding that the allegations are grounds for the ban.  Twitter is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas    
  • Vivendi (ENXTPA:VIV) has been trying to sell a minority stake in its Universal Music Group for some time and is now focused on strategic buyers, Bloomberg reports.  The report says private buyers, Vivendi’s initial focus, have balked and the foot-dragging by Vivendi and the rich price being sought for a minority stake.  Despite talks and pitches, Vivendi still had no hired any bankers or advisers for the deal, so some question how serious Vivendi is.  Vivendi is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Yum! Brands (YUM) is planning a large expansion of its Taco Bell unit in India as it seeks new avenues of growth.  Taco Bell will add 600 location over the next decade.  Yum Brands has 35 Taco Bells in India today.   The expansion in India will help Taco Bell grow from 7,500 location today to 9,000 by 2022.  Yum Brands is rated “Unattractive” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  

Global Information Technology and Communication Services Stocks Trending in the News

  • Facebook (FB) removed a record 2.2 billion fake account in the first quarter of 2019.  For comparison, in the fourth quarter of 2018, Facebook removed just over 1 billion.  The accounts removed are done so as soon as they are created so they are not captured in official new accounts statistics.  Facebook is making a concerted effort to remove fake accounts as it comes under growing criticism.  Facebook is rated “Attractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Hewlett Packard Enterprise (HPE) provided fiscal third quarter EPS guidance that matches consensus.  Fiscal third quarter EPS will be 53 to 56 cents while consensus is 55 cents.  Hewlett Packard Enterprise hiked full year EPS guidance to $2.14 to $2.21, up from $2.12 to $2.22.  Hewlett Packard Enterprise is rated “Top Short” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas
  • Intuit (INTU) reported fiscal third quarter EPD that beat consensus.  Intuit posted fiscal third quarter EPS of %5.55, beating consensus of $5.40.  Third quarter revenue of $3.27 billion just ahead of consensus of $3.23 billion, growing 12% y/y.  Intuit hiked full year adjusted EPS guidance to $6.67 to $6.69, consensus is $6.55.  Intuit is rated “Attractive” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas
  • Microsoft (MSFT) removed Huawei products from its Azure products website.  The move by Microsoft comes a week after the US government moved to ban Huawei from the US tech sector.  Huawei made a number of products for Microsoft’s Azure Stack products and all have been remove from their catalog.  Microsoft has not commented on other moves it will make in relation to the Huawei ban.  Microsoft is rated “Top Buy” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas
  • NetApp (NTAP) reported fiscal fourth quarter adjusted EPS that trailed consensus.  NetApp reported fiscal fourth quarter EPS of $1.22, trailing consensus of $1.26.  NetApp reported fourth quarter revenue of $1.59 billion, also trailing consensus of $1.64 billion.  NetApp hiked its quarterly dividend 20% to 48 cents per share.  NetApp is rated “Attractive” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas
  • Qualcomm (QCOM) violated anti-trust law with its business practices, a federal judge has ruled.  Qualcomm used its dominant market position to charge excessive licensing fees.  “Qualcomm’s practices have strangled competition,” the judge wrote in a ruling that agreed with FTC findings.  Qualcomm charges a percentage of the sale price of the phone, a practice the judge found excessive.  Qualcomm is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Spire Inc (SR) was downgraded today to market perform from outperform at Wells Fargo Securities  Spire saw its price target of $92 maintained.  With Spire’s recent move higher, the risk/reward scenario at these level is not attractive, hence the downgrade.  Any pullback in the stock could be reason to review the rating.  Spire is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Weibo (WB) reported first quarter adjusted EPS that beat consensus.  Weibo posted first adjusted quarter EPS of 56 cents, ahead of 53 cents consensus.  First quarter revenue came in line with consensus at $399.2 million.  Weibo posted first quarter MAUs of 54 million.  Weibo provided second quarter revenue guidance of $427 million to $437 million, a rise of 7-10% on a constant currency basis.  Weibo is rated “Neutral” in our China All-Cap Global Top Stock Ideas

 

 

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We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

Global Financials Stocks Trending in the News

  • China CITIC Bank (SEHK:998) and Baidu (BIDU) are seeking up to 7 billion yuan in private funding in its first round of funding for its digital bank, aiBank.  China CITIC and Baidu launched the online bank in 2015 and are seeking funding to drive growth.  aiBank provides personal loans of up to 300,000 yuan with no collateral.   China CITIC Bank is rated “Neutral” in our China All-Cap Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Boeing’s (BA) 737 Max may not be returning to service as quickly as the industry is expecting.  The acting head of the FAA said he cannot predict when the plane will return to service.  It was assumed the aircraft would return by summer’s end and Boeing has expressed the same hopes.  But the FAA, suffering from a lack of credibility, still needs to convince other global regulators that the plane is air worthy.  Boeing is rated “Top Short” in our US Large-Cap and “Unattractive” in our US Industrials Global Top Stock Ideas
  • Maersk (CPSE:MAERSK B) said its guidance is subject to “considerable uncertainties” in the face of the ongoing trade hostilities.  Maersk said it still expects ebitda of about $5 billion while consensus is $5.5 billion.  Maersk expects its volume growth to be in line with the market at 1-3%.  Maersk said it has seen a decline in volume in the Pacific and said that could worsen with more tariffs.  Maersk is rated “Neutral” in our European 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