(KeplerCheuvreux) AlcatelLucent - Buy - Shifting into growth mode

* Shifting into growth mode
While the shares delivered a disappointing return in 2014, we see good buying opportunities as the transformation story looks increasingly credible, valuation is undemanding and upside is significant (+50%).

* From restructuring to growth
After having efficiently executed the first stage of the Shift Plan (refocusing, restructuring and refinancing), Alcatel-Lucent is now ready to move on to the next phase based on innovation, transformation and growth, which is set to
create significant value for shareholders in the medium term.

* Sales gradually accelerating mid-single-digit
Despite uncertain short-term demand in the US (mainly at AT&T), the global market outlook is encouraging for 2015 (potentially up by mid-single digits), driven by positive conditions in China and Europe. We see a bright outlook in core networking (sales up 10% LFL), due to strong momentum in IP routing (market share gains in the edge and the core) and a clear recovery in IP transport (100G ramp-up and new investment cycle in submarine). While the market is still sceptical about the EUR7bn revenue target in core networking for 2015, management remains confident, and there is upside risk in the coming quarters. With a resilient top line in access in 2015 (flattish LFL), group sales could accelerate to +4% LFL (vs. -1% LFL in 2014E).

*Margins well on track to climb to 8% in 2015
The cost-cutting plan is progressing fast (already EUR645m savings at end- Q3), and the company looks well on track to reach EUR950m savings in 2015, while structural actions to improve gross margins are already paying off (in wireless, managed services and IP Platforms) and gross margins are set to continue to climb toward 34% in 2015 (vs. 33.3% in 2014E). All in all, clean operating margin could jump to 5% in 2014 (up 300bp) and 8% in 2015.

* Back to positive FCF in 2015
Management did a great job of improving long-term cash generation through large cost-cutting actions and a significant reduction in financial charges and pension costs. The group looks well on track to see positive FCF in 2015 and could finally generate FCF through the cycle and on a sustained basis, allowing for a material rerating in the coming months.

* Attractive transformation story, significant upside
We keep our Buy rating and update our TP from EUR4.4 to EUR4.3, as the transformation story looks increasingly credible, valuation is undemanding, and upside (+50%) is significant, while the potential sale of the wireless business could create further value (FV close to EUR5).

(GS) France : Telecom Services

Rising M&A optionality boosts Altice (CL Buy), Numericable (Buy)

* French consolidation increasingly likely in 2015
We continue to see a 60% probability of industry consolidation in France given ongoing competitive and convergence pressures. We note that Altice’s CEO stated recently that “we see ourselves as a natural buyer (in France)” (Reuters, November 20, 2014), and we believe the completion of Numericable’s merger with SFR provides Altice with the opportunity to participate in further industry consolidation in 2015.

* Updating our M&A analysis to reflect new ownership of SFR
We believe a number of M&A outcomes are possible in France, and we do not take a view on the likelihood of any particular transaction. We update our analysis of the potential synergies available from various combinations to reflect SFR’s new ownership: given Altice’s strong track record for turnarounds, we estimate that if it takes a lead in consolidation it can achieve a €2-5 bn NPV of further cost-cutting savings above our previous estimate, raising the NPV of potential synergies achievable to €9-16 bn.

* Numericable (Buy): Raise PT to €50 given potential consolidation
Our scenario analysis suggests that taking an active role in French consolidation could be 31%-87% accretive to Numericable’s 2018E FCF, albeit with increased balance-sheet risk. Alternatively, we believe Numericable could improve revenue growth (vs. our base-case forecast of a -2% 2014-18 CAGR) as a passive beneficiary from consolidation.

* Altice (CL Buy): M&A optionality rising, raise PT to €87
In addition to the potential upside we see to Numericable’s FCF, highly accretive M&A in France could further accelerate Altice’s wider M&A ambitions, which are underpinned by its strong cost-cutting track record. In our ‘blue sky’ scenario, we estimate Altice’s M&A capacity could increase from c.€10-20 bn to €20-30 bn, with FCF exceeding €3 bn by 2021. While there is a wide range of potential outcomes from pursuing such a strategy, we increase our target multiple for Altice to better reflect this optionality.

* Orange (CL Buy) and Iliad (Buy) remain key beneficiaries
Our CL Buy-thesis on Orange is predicated on self-help via cost cutting and the current stabilizing French market. Consolidation could bring lower churn and/or better growth, despite the likely loss of wholesale revenues.

(BFW) Altice Free to Consolidate French Telco Market in 2015: Goldman

Following completion of Numericable/SFR merger, Altice can participate in further French telco M&A, which could be very accretive for co., Goldman says.
  • Goldman: French M&A could accelerate co.’s wider M&A plans; increase its deal capacity to EU20b-EU30b (from EU10b-EU20b)
    • Given its strong track record of co. turnarounds, Altice could achieve synergies with an NPV of EU9b-EU16b if it took the lead in consolidation
    • Raises PT by 16% to EU87 (41% upside) and reiterates conviction buy rating
    • Nov 20: Altice CEO said co. is most natural buyer of Bouygues Telecom and would be open to discussing deal after closure of SFR purchase
  • Goldman still sees 60% probability of consolidation in the French mkt; reiterates conviction buys on Numericable and Orange and reiterates buy on Iliad
  • Separately, Barclays says French M&A will likely be pushed out until at least 2H ’15
    • Says Numericable is focused on delivering SFR synergies and Iliad/Bouygues Telecom can’t agree on price
Altice Free to Consolidate French Telco Market in 2015: Goldman
2015-01-13 07:55:28.222 GMT


By Sam Chambers
(Bloomberg) -- Following completion of Numericable/SFR
merger, Altice can participate in further French telco M&A,
which could be very accretive for co., Goldman says.
* Goldman: French M&A could accelerate co.’s wider M&A plans;
increase its deal capacity to EU20b-EU30b (from EU10b-EU20b)
* Given its strong track record of co. turnarounds, Altice
could achieve synergies with an NPV of EU9b-EU16b if it
took the lead in consolidation
* Raises PT by 16% to EU87 (41% upside) and reiterates
conviction buy rating
* Nov 20: Altice CEO said co. is most natural buyer of
Bouygues Telecom and would be open to discussing deal
after closure of SFR purchase
* Nov 20: Altice CEO said co. is most natural buyer of
Bouygues Telecom and would be open to discussing deal
after closure of SFR purchase</li></ul>
* Goldman still sees 60% probability of consolidation in the
French mkt; reiterates conviction buys on Numericable and
Orange and reiterates buy on Iliad
* Separately, Barclays says French M&A will likely be pushed
out until at least 2H ’15
* Says Numericable is focused on delivering SFR synergies
and Iliad/Bouygues Telecom can’t agree on price
* Says Numericable is focused on delivering SFR synergies
and Iliad/Bouygues Telecom can’t agree on price</li></ul>
* NOTE: French wireless mkt share breakdown here


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Sam Chambers in London at +44-20-3525-2021 or
schambers7@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net

WSJ : Oil Extends Selloff on UAE Minister’s Comments

Oil Extends Selloff on UAE Minister’s Comments
Nymex Crude Oil Futures Drop Below $45 Per Barrel

Oil prices fell in Asian trade Tuesday after bearish comments by United Arab Emirates’ oil minister that pushed the U.S. oil benchmark below the $45 a barrel mark.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $44.95 a barrel at 0640 GMT, down $1.12 in the Globex electronic session. February Brent crude on London’s ICE Futures exchange fell $1.36 to $46.07 a barrel.

The Organization of the Petroleum Exporting Countries will maintain its decision to keep output unchanged regardless of current oil prices, the United Arab Emirates’ oil minister said Tuesday. He said producers outside the group need to be rational and adjust their output according to the market.

“(OPEC) cannot continue protecting a certain price. That is not the only aim of OPEC,” Suhail Mohamed Faraj al-Mazrouei said at an energy event in Abu Dhabi organized by Gulf Intelligence.

Oil prices had lost around 5% on Monday alone, extending the selloff that has gripped oil markets since mid-2014, as sell-side analysts slashed price forecasts and warned of a prolonged glut in global oil markets that will extend well into 2015.

“Investors are so afraid right now they will just react to any negative news,” economist Vyanne Lai at National Australia Bank said by phone. She said in the current environment where volatility is high, investors aren't getting any direction to indicate markets could get stronger and it is a futile exercise to try and pick a price bottom.

“We’re left in a vacuum in terms of what would move fundamentals at this stage. It will remain a more sentiment-driven market, and so far sentiment is on the downside,” Ms. Lai said.

Strong trade data from China, the world’s second-largest oil consumer, failed to boost sentiment. China’s December exports rose by a faster-than-expected 9.7% on the back of stronger overseas demand, a small bright spot in the country’s slowing economy.

Its oil imports for the month hit record highs. China imported 30.37 million metric tons of crude oil in December, equivalent to 7.2 million barrels a day, preliminary data from the General Administration of Customs showed Tuesday. This was 13% higher than a year earlier, and topped a record high in January 2014 of 28.16 million tons of imported oil.

“This was largely expected given the surge in Chinese buying as prices have fallen, with imports expected to remain very strong in January and February,” analyst Ivan Szpakowski at Citi Research said.

But while China posted a 9.7% growth in oil imports in 2014, Mr. Szpakowski expects net imports to grow at a slower 3% for 2015 due to fewer new refineries being built this year.

Later Tuesday, the U.S. Energy Department will publish its monthly oil market report and any major revisions to global oil demand or supply projections could move oil prices.

Nymex reformulated gasoline blendstock for February—the benchmark gasoline contract—fell 130 points to $1.2615 a gallon, while February diesel traded at $1.6341, 200 points lower.

ICE gasoil for February changed hands at $461.75 a metric ton, down $9.75 from Monday’s settlement.

>>> What to look at today - 13th of January

Dow-0,54% S&P-0,81% Nasdaq-0,84% Russell-0,47%
US Market start second week of the year on a weak note, S&P was not able to retest its 50d MA, the energy sector (-2.8%) was the weakest performer with crude oil contributing to the pressure after Goldman Sachs lowered its short-term forecast for the commodity. WTI crude ended the pit session on its low, down 4.9% at $46.07/bbl. Tech Stocks were also underpressure with all big names closing lower...Cybersecurity was the only pocket of relative strenght after Pres. Obama commnets (FEYE +4,8%), countercyclical consumer staples (-0.3%) and utilities (-0.3%) outperformed while the telecom services sector (+0.6%) spent the day in the green...volume were in line with average with 760mil shares traded...US After Hours : Higher :HEAR +11.9%, XENT +10.9%, PCYC +10.7%, BEBE +7.7%, SNX +5.4%, HXL +4.1%, TLYS +3.4%, CNV +2.4%, AA +1.2%...Lower : ECOM -28%, BGFV -8.3%, WWW -7.9%, LMNR -4.6%, GG -0.5%, VMI -0.2%...China released December trade balance today at a surplus of $49.6B, slightly higher than consensus of $49.0B surplus. China December adjusted exports grew at 6.6% y/y, while adjusted imports shrank 6.2% y/y. Overall in 2014, China's trade growth was at 3.4% y/y, missed official target of 7.5%. China Customs Bureau official said weak 2014 trade growth due to slow global recovery, also forecasted 2015 trade growth to be higher than 2014.Japan released November adjusted current account figure at surplus of ¥915B, beating consensus of ¥693B, also marked 7th consecutive surplus.
Nikkei -0.64% Hang Seng +0.47% Shanghai -0.33%

RUB $63.88 RUB €75.88 WTI $45 (-2.32% traded down to 44.88) Brent $46.11 (-2.78% traded down to 46.08)

Eur$1.1832 S&P 2024.5 +0.11% EuroStoxx -0.23% Dax -0.07% SMI -0.11%

Macro :
- Italy President Napolitano to Resign Tomorrow, Corriere Says
- Fed's Williams says June rate rise is 'reasonable'; notes wage and price data are still soft
- China’s Dec. Exports Rise 9.9% Y/y in Yuan Value
- Catalonia to Request EU6.3B From Central Government: Expansion

Keep an eye on :
- ABI BB : AB InBev Strategy Chief Van Biesbroeck Nets EU7.76m With Options
- AENA IPO : Spain Airport Operator Aena to Hold IPO on Feb 11: Expansion
- AGR AV : Agrana 3Q Net Income EU19.5m vs EU31.4m; Sees FY Ebit Falling
- ALT FP : Altran Targets 2020 Rev. of EU3b: La Lettre de L’Expansion
- SAN SM : Santander draws EUR 500m investment from Soros 
- BELL SW : Bell 2014 Rev. in Line With Est.
- BC IM : Brunello Cucinelli 2014 Net Rev. Rises 10% to EU355.8m
- DAI GY : Daimler CEO Sees 4% Increase of 2015 Global Car Market
- GEBN VX : Geberit Says FY Sales Rise 4.9%, 4Q Sales Growth 1.9%
- KER FP : Kering Completes Gucci Eyewear Partnership Agreement With Safilo
- LISP SW : Lindt 2014 Sales Beat Ests, Sees Ebit Margin Growth in Target
- MEO3 GY : Metro 1Q Sales In Line With Ests., LFL Sales Up 2.1%
- PTC PL : PT Shareholders Approve Suspending Meeting for 10 Days: Union
- PTC PL : Portugal Telecom Shares to Resume Trading, CMVM Says
- ROG VX : Roche Licenses Beta-Lactamase Inhibitor to Meiji, Fedora
- SAF FP : Safran Invests $130m in Carbon Disk Plant in Malaysia
- SAN FP : Sanofi CFO Contamine Says M&A Targets Remain Expensive
- SBO AV : Schoeller-Bleckmann 2014 Prelim. Rev. EU488m vs Est. EU479m
- SN/ LN : Smith & Nephew CEO says Sanofi Job ‘Not on the Agenda’, CEO Doesn’t Believe Big is Beautiful
- SPM IM : Italy Market Watchdog Bans Short Sale on Saipem Tomorrow
- SZU GY : Suedzucker 3Q Sales In Line With Ests., Confirms FY Forecast
- TEMN SW : Temenos 4Q Licensing ‘Very Disappointing‘, Own to Weak Sales
- TIT IM : Telecom Italia CEO to Meet With Brazil Minister Berzoini: Sole
- TKA AV : Telekom Austria Says Interest in Telekom Srbija ‘Very Limited’
- TLW LN : Tullow Oil to Cut Jobs by End of 1Q, Telegraph Says
- UCB BB : UCB Appoints Ismail Kola as Chief Scientific Officer
- VOW3 GY : Lamborghini CEO Says ‘Good Premises’ for 2015 After Record Year

>>> Brokers Upgrades & Downgrades - 13th of January 2015

>>> Up
*ANTOFAGASTA RAISED TO NEUTRAL VS UNDERPERFROM AT CREDIT SUISSE
*BODYCOTE RAISED TO BUY VS UNDERPERFORM AT BOFA
*CAMPARI RAISED TO NEUTRAL VS SELL AT GOLDMAN
*CENTRICA RAISED TO OVERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*COMMERZBANK RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*EMAAR MALLS RAISED TO OVERWEIGHT VS NEUTRAL AT HSBC
*FIRST QUANTUM MINERALS RAISED TO BUY VS NEUTRAL AT CITI
*ITV RAISED TO OUTPERFORM VS MARKET PERFORM AT SANFORD BERNSTEIN
*METSO CUT TO UNDERPERFORM VS NEUTRAL AT BOFA
*OSRAM LICHT RAISED TO NEUTRAL AT JPMORGAN
*REXEL RAISED TO BUY VS NEUTRAL AT BOFA
*SCHNEIDER ELECTRIC RAISED TO BUY VS NEUTRAL AT BOFA, PT EU68
*SKF RAISED TO BUY VS NEUTRAL AT BOFA
*SKY PLC RAISED TO OUTPERFORM AT SANFORD BERNSTEIN
*SMITHS GROUP RAISED TO NEUTRAL VS SELL AT CITI
*SUEZ ENVIRONNEMENT RAISED TO OVERWEIGHT AT MORGAN STANLEY
*TATE & LYLE RAISED TO BUY VS NEUTRAL AT UBS
*VEOLIA RAISED TO OVERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*WARTSILA RAISED TO NEUTRAL VS UNDERPERFORM AT BOFA

>>> Down
*ABB CUT TO NEUTRAL VS BUY AT BOFA
*AIRBUS CUT TO NEUTRAL VS BUY AT BOFAML
*ATLAS COPCO CUT TO NEUTRAL VS BUY AT BOFA
*BANCO POPULAR CUT TO UNDERWEIGHT VS EQUALWEIGHT: MORGAN STANLEY
*BOUYGUES CUT TO NEUTRAL VS BUY AT GOLDMAN
*COBHAM CUT TO HOLD VS BUY AT LIBERUM
*DANONE CUT TO NEUTRAL VS BUY AT NOMURA
*HUSQVARNA CUT TO HOLD VS BUY AT DNB
*KAZ MINERALS CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
*MILLICOM CUT TO NEUTRAL VS BUY AT GOLDMAN
*ROLLS-ROYCE CUT TO SELL VS HOLD AT SOCIETE GENERALE
*SES CUT TO NEUTRAL VS BUY AT GOLDMAN
*SIEMENS CUT TO NEUTRAL VS BUY AT BOFA
*WEIR GROUP CUT TO UNDERPERFORM VS NEUTRAL AT BOFA

>>> PT Changes


>>> Initiation
*FIAT CHRYSLER REINSTATED OVERWEIGHT AT BARCLAYS, PT EU11.5
*LSE REINSTATED OVERWEIGHT AT BARCLAYS, PT 2,550P
*TULLOW OIL RATED NEW UNDERPERFORM AT JEFFERIES, PT 345P

>>> Call
>> Stock
*DIA ADDED TO JPMORGAN ANALYST FOCUS LIST, RATES UNDERWEIGHT
*MEDIASET, SYNERGIE ADDED TO JPMORGAN RADAR; CAPE, PACE REMOVED

FT Lex : Tiffany & Co: luxury of time

Tiffany & Co: luxury of time
Is it enough to be international and high-end?

When Tiffany is doing well, its luxury products and global presence make it tricky to use its results to draw conclusions about other US retailers. Those other US retailers better hope that the analogy remains tenuous.
In 2014, Tiffany shares rallied over 60 per cent. Strong results in the US and resilience in Asia and Europe led it to raise earnings guidance twice, despite the underlying weakness of the US consumer. But at the outset of fourth-quarter earnings season on Monday, the jewellery group said that holiday earnings were weak, and that 2015 was unlikely to sparkle — earnings growth may only reach mid-single digits. Investors in other US retailers may shrug, but plenty of other US companies may soon be cribbing the text of Tiffany’s warning.

Nearly half of Tiffany’s sales come from abroad — primarily in Asia, Japan (a separate segment), and Europe. Currency translation lowered sales growth in Japan and Europe by 13 per cent and 8 per cent, respectively. Stripping that out, sales in Europe were up a healthy 9 per cent while Japan was down 3 per cent. The recent rally in the dollar is expected to sting US multinationals as fourth-quarter results come out. One way to counteract dollar appreciation would be for Tiffany to raise international prices, but economic weakness may preclude that.
Tiffany’s US holiday sales were off 1 per cent. US results earlier in 2014 were strong: both prices and unit sales rose, and Tiffany’s gross margin reached nearly 60 per cent in the third quarter. A significant portion of US sales are to foreign tourists and some of the domestic weakness could stem from greenback-poorer visitors.
The 2014 Tiffany rally rested on the long-term global growth opportunity and its enduring brand. The current sell-off (the shares were down 14 per cent on Monday) then may present a buying opportunity. Yet it still trades at over 20 times 2015 earnings, a juicy number for a fashion company — no matter how international or prestigious.