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Global Stocks Trending in the News for May 28th, 2019

May 28, 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.  
  • 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
  • Constellation Brands (STZ) was downgraded at Morgan Stanley today to equal weight from overweight.   Constellation Brands saw its price target cut to $220 from $230 at the same time.  The risk-reward for the stock has tilted away from its favor at this point and better options exist at this point.  Constellation Brands is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Consumer Staples Global Top Stock Ideas.  
  • Fiat Chrysler (BIT:FCA) is in talks with Renault (ENTXPA:RNO) to merge operations.  Both companies have struggled recently and combining the two would create the world’s third largest manufacturer of automobiles.  The proposed deal has generally been well received by the market, with most agreeing each needed to make a move to short up their respective positions.  Fiat Chrysler is not rated in our Global Top Stock Ideas.  Renault Group is rated “Unattractive” in our European Large-Cap 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.  
  • 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.
  • 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    
  • 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

  • Alibaba (BABA) was added to Stifel’s “Stifel Select List” with analysts there calling it cheap after the recent pullback.  Stifel said Alibaba “is even cheaper on earnings from the company’s core marketplace-based businesses.”  Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.
  • Apple (AAPL) is launching a $199 iPod touch this week.  The new iPod features better performance using its A10 fusion chip.  The improved performance allows for immersive augmented reality and group facetime.  Apple is rated “Attractive” in our US Large-Cap and “Top Buy” in our US Information Technology Global Top Stock Ideas    
  • 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
  • Global Payments (GPN) has agreed to acquired Total Systems Services (TSS) in a deal valued at $21.5 billion.  Total Systems holders will receive 0.8101 shares of Global Payments, with Global Payments holders holding 52% of the new company.  This is the third large merger in the payments industry this year.  The deal will combine the country’s largest merchant processor with the largest issuer processor.  Global Payments is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.  Total System Services is rated “Attractive” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas        
  • HP Enterprise (HPE) shares traded notably higher after the company announced free cash flow in the fiscal second quarter that exceeded analyst expectations. According to analysts, HP Enterprise’s free cash flow in the fiscal second quarter set the company on pace to surpass its initial FY2019 guidance for free cash flow between $1.4 billion and $1.6 billion. The strong free cash flow overshadowed some revenue weakness in the company according to analysts. HP Enterprise is rated “Top Short” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Lions Gate Entertainment (LFG.A) shares slid by nearly 10% and the most intraday in more than a year after the company reported profit and sales that trailed analyst expectations. Lions Gate generated adjusted earnings of $0.11 in the fiscal first quarter that was 50% of consensus of $0.22/share. Lions Gate’s revenue of $913.7 million also trailed consensus of $936.0 million. Lions Gate is rated “Attractive” in our US SMID-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 removed 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
  • Momo (MOMO) reported first quarter revenue and earnings that beat consensus.  Momo reported first quarter revenue of $554.7 million, beating consensus of $517.5 million.  First quarter adjusted EPS of 62 cents, beating 54 cents consensus.  Momo posted 114.4 million monthly active users.   Momo gave full year revenue guidance of 4 billion to 4.1 billion yuan.  Momo is rated “Attractive” in our China All-Cap Global Top Stock Ideas.
  • Roku (ROKU) was downgraded to equal-weight from overweight at Stephen inc.  Roku saw its price target cut to $84 at the same time.  Stephens sees 12% downside for Roku from its present level.  Roku’s average price target is $78.33.  Roku is rated “Top Short” in our US Large-Cap 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.
  • Splunk Inc. (SPLK) shares fell after analysts said the company’s strong earnings and revenue in the first quarter were overshadowed by a reduced cash flow outlook and deaccelerated customer acquisitions. The reduced outlook for Splunk initiated a slew of analyst price cuts for the stock. According to analysts, Splunk’s current mix shift in bookings and shorter contracts are dragging down its operating cash flow. Splunk is rated “Unattractive” in our US Large-Cap and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Total System Services Inc. (TSS) shares soared following reports that Global Payments Inc. (GPN) is nearing an all-stock deal to acquire the payments company for roughly $20 billion. The companies may announce the acquisition as early as Tuesday, according to unnamed sources cited by Bloomberg. Total System Services Inc. is rated “Attractive” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas. Global Payments Inc. is rated “Neutral” in our US Large-Cap and “Attractive” in our US Information Technology Global Top Stock Ideas.

 

 

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Global Financials Stocks Trending in the News

  • Centene (CNC) now has Third Point as a major shareholder.  Activist investor Third Point has a position worth $300 million, according to Bloomberg report.    The report adds that Third Point thinks that Centene should explore a sale of itself.  There are 2 other activist funds with positions in Centene that support the Third Point position.  Centene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas 

Global Industrials Stocks Trending in the News

  • Avianca Holdings SA (BVC: PFAVH) shares soared following reports that United Continental Holdings (UAL) is seeking to oust the former’s chairman and largest shareholder, German Efromovich. The news shortly follows a joint venture agreed to by the two companies just six months ago. Efromovich reportedly received a $456 million loan from United Continental, using his majority stake in Avianca as collateral -- the loan recently defaulted and United Continental is pursuing legal action. Avianca is not rated in our Global Top Stock Ideas. Continental is rated “Attractive” in our US Large-Cap and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Boeing Co. (BA) is facing a Securities and Exchange Commission (SEC) probe relating to whether it properly disclosed issues related to its grounded 737 Max jetliner. The probe will specifically investigate in Boeing was appropriately forthcoming in making shareholders aware of material problems with its plane model. Boeing is rated “Top Short” in our US Large-Cap and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Lockheed Martin (LMT) got good news from both Japan and Poland as both want to buy F-35 fighter planes.  Japan wants to buy 105 F-35s, a move highlighted by President Trump while visiting Japan this weekend.  Poland also indicated a desire to acquire 32 F-35s to replace aging Soviet planes.  Lockheed Martin is rated “Attractive” in our US Large-Cap and “Attractive” 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 Health Care Stocks Trending in the News

  • Centene (CNC) now has Third Point as a major shareholder.  Activist investor Third Point has a position worth $300 million, according to Bloomberg report.    The report adds that Third Point thinks that Centene should explore a sale of itself.  There are 2 other activist funds with positions in Centene that support the Third Point position.  Centene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas 
  • Pfizer (PFE) was initiated at Goldman Sachs with a buy rating.  Goldman writes that the convergence of large-cap pharma with the biotech sector is in its later stages.  Goldman expects Pfizer and other large-cap players do bolt-on deals and not mega-deals going forward.  Goldman is positive on the pharma sector overall.  Pfizer is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas
  • Teva Pharmaceuticals (TEVA) was downgraded to neutral from buy at UBS.  Teva saw its price target cut to $23 from $31 at the same time.  UBS sees heightened litigation risk with its price-fixing and opioid cases, saying to will likely take years for both to play out, weighing on the stock in the meantime.  Teva 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