(BFW) Bostik May Be Adhesives M&A Opportunity for Henkel: Bernstein

Bostik May Be Adhesives M&A Opportunity for Henkel: Bernstein
2014-09-10 13:47:46.791 GMT


By Chiara Remondini
Sept. 10 (Bloomberg) -- Bernstein says acquisition of
Bostik at right price would be “big positive” for Henkel, be
very well received by investors, according to note.
* Bernstein (outperform) notes Bostik attractive as Henkel
already world’s largest adhesives co., has indicated
willingness to undertake major M&A
* Estimates Bostik is 4th player in global adhesives market
with share of ~3% (2013 rev. EU1.5b; estimates 2013 Ebit of
EU225m based on avg. of adhesives peer Ebit margins of ~15%)
* Bernstein sees significant possible positives from deal:
* Increase size of adhesives business by 19%, says its
view on Adhesives industry is “fundamentally positive”
* Complementary product portfolio, significant synergies
* Deal may be financially very attractive, re-leverage
Henkel’s balance sheet: price of EU3b with up to EU2b of
debt would still result in net debt to Ebitda of 0.7x
* Earnings accretive, says EPS ests. may “easily increase by
mid-to-high single-digits” in deal
* Notes as possible “limited” negatives: higher exposure to
Adhesives away from HPC, enhancing cyclical risk; antitrust
issues; Henkel may overpay if there is interest for business
* NOTE yday: Total considering sale of Bostik adhesives unit:
Reuters
* NOTE July 3: Henkel still had ~EU5b for deals after June
spree
* NOTE: Henkel generated ~50% of 2013 rev. from its Adhesives
Technologies business: Bloomberg data; further details on
business here


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To contact the reporter on this story:
Chiara Remondini in Milan at +39-02-8064-4241 or
cremondini@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: MGCD -9.7%, KKD -5.2%, URBN -2%, (Thus far during the third quarter of fiscal 2015, comparable Retail segment net sales are low single-digit negative), CBSO -1.8%, CRDS -1.7%, MANU -0.7%.

Other news: AU -11.9% (to explore the possibility of restructuring co into simpler and more focused entities), RSH -10.6% (cont weakness following Wedbush target cut to $0), AHH -5.7% (announces public offering of 5 mln shares of common stock), WBAI -5.4% (Muddy waters follow up from Value Walk), ACT -2.8% ( negative vote from the FDA's Cardiovascular and Renal Drugs Advisory Committee regarding NDA for nebivolol/valsartan for the treatment of hypertension), SCOK -2.8% (modestly pulling back after yesterday's advance), AVB -2.4% (announces offering of 4.5 mln shares of common stock), GFI -1.8% (may be in sympathy with AU), EQY -1.6% (announced 3.825 mln share public offering of common stock), STM -1.5% (potentially related to Apple (AAPL) event), TI-1.4% (América Movil (AMX) and Telefonica (TEF) among cos that are close to bid for Telecom Italia's (TI) Brazil operations, according to reports), ARMH -1.1% (potentially related to Apple (AAPL) event).

Analyst comments: GTAT -6.4% (downgraded to Neutral from Buy at Goldman), BYD -3.4% (downgraded to Equal-Weight from Overweight at Morgan Stanley), MBLY -2.8% (downgraded to Hold from Buy at Deutsche Bank on valuation), EBAY -1.3% (downgraded to Neutral from Overweight at Piper Jaffray), SAVE -1.2% (downgraded to Mkt Perform from Outperform at Cowen), TIF -0.8% (downgraded to Neutral from Outperform at Credit Suisse), AAPL -0.6% (downgraded to Sector Perform from Outperform at Pacific Crest).

>>> US Gapping Up

Gapping up
In reaction to strong earnings/guidance: MNDL +10.2%, LMNR +8.1%, DIOD +6.8%, PANW +5.3%, LE +5%, UNIS +4.6%, PPHM +3.2%, PDLI +3.1%, SIRI +1.1%, IHT +1%, SAIC +0.5%.

M&A news: IMPV +2.8% (Imperva, TIBX, TDC among possible takeover targets by HP (HPQ), according to reports), EXPR +1.2% (Barron's mentions name as M&A target), FDO +0.3% (Dollar General (DG) commences cash tender offer to acquire FDO at $80 per share).

Select EU bell weather names showing strength: BP +1.7%, ING +1.2%, DB +0.9%, RDS.A +0.9%, ALU +0.6%.

Select Biotech stocks trading higher: MNOV +13.3%, NPSP +13% (following FDA briefing docs), TKMR +3.2%, SPPI +2.4%, ACHN +1%.

Other news: DRL +12.4% (announces the sale of ~$430 mln in assets), PVCT +7.5% (still checking), BDBD +6.8% (favorable commentary on Tuesday's Mad Money), SUPN +6.2% (Orchard Hill Capital Management files amended 13D; request that the Board hires a strategic advisor to consider selling the Company), BWEN +4.1% (announced $14 million in new tower orders from a U.S. wind turbine manufacturer), RADA +3.9% (cont momentum), SUNE +3.6% (Google (GOOG) executes $145 million investment in SunEdison and TerraForm Power's (TERP) largest solar plant in North America), GPRO +3% (still checking), CLF +1.8% (amended revolving credit facility to allow for $200 mln share repurchase program), FEYE +1.5% (in sympathy with PANW earnings), LTM +1.2% (favorable commentary on Tuesday's Mad Money), TFSL +1.1% (authorizes the purchase of up to 10,000,000 shares of the Company's outstanding common stock), THOR +1.1% (announced start of Heartmate III U.S. clinical trial) CRM +1% (signs agreement to establish new european data centre in France; selects Interxion (INXN) as service provider), HAIN +1% (favorable commentary on Tuesday's Mad Money), TSL +1% (to supply 70MW high efficiency modules to a large-scale solar power project in Chile), KFRC +1% (announces increase to board share buyback authorization by $70 mln).

Analyst comments: TWTR +2.7% (upgraded to Buy from Neutral at UBS), LB +0.9% (upgraded to Outperform from Neutral at Credit Suisse), COH +0.8% (upgraded to Overweight from Neutral at Atlantic Equities), TPLM +0.8% (upgraded to Buy from Accumulate at KLR Group)

>>> Apple Colors on yesterday announcment --> -0.50% Pre Open - 1mil sh

Apple: Analyst color on new product launches (97.99 )
  • Mizuho notes that Apple introduced its payment technology enabling easy, contact-less payments, with enhanced security relative to traditional use of credit cards. Apple Pay works with the top bank issuers that handle >80% of cc volume, and will be available in the US in 10/14. They do expect Apple Pay to gain some traction, but there are multiple new technologies trying to penetrate the market and it remains to be seen how successful each of them will be. The firm raised its AAPL target to $110 from $105. Buy Rating maintained.
  • Cowen said Apple Watch, while, for now, not available until early '15 and somewhat limited by a necessary iPhone tether, represents both a big new vertical and contains an important technology "trojan horse". In addition to sapphire glass, new S1 processor contains a MEMS-based force touch controller that effectively creates a 3rd dimension to the display - a key development they think proliferates across product line and opens opportunities in areas like new keyboards, gaming, etc. Lastly, rather than fighting an uphill battle to make money in payments. Outperform Rating maintained.
  • Oppenheimer says AAPL proved itself again to be the master with the introduction of a new payment solution, "Apple Pay," and a watch (a physical dial called "Digital Crown"). While both should add incremental revenue over time, they greatly broaden the ecosystem and improve the human experience. They see this driving a faster refresh cycle for all product classes including the all-important one, the iPhone. They say as expected, iPhone 6 features faster CPU/GPU power and longer battery life. It continues to improve image-capturing capabilities with better image signal processing without upgrading its cameras to higher pixel count.
  • Briefing Note: AAPL shares are trading are little pre-market, while GT Advanced Technologies (GTAT) shares are trading lower by 9%. Investors were disappointed as there was no mention of sapphire screens in the iPhone. However, the sapphire screens will be in the Apple Watch. (see 15:08 from yesterday for complete follow up to event). In addition, GTAT received downgrades from Goldman and Piper Jaffray.
  • Apple tgt raised to $116 from $110 at Barclays; Overweight
  • Apple downgraded to Sector Perform from Outperform at Pacific Crest
  • Apple (AAPL 97.99) target raised to $110 from $105 at Mizuho
  • AAPL supplier stocks include: IDTI, QCOM, SNDK, SWKS, NUAN, BRCM, CRUS, TQNT, AVGO, GTAT, SNE, STM, NTE, NXPI and LPL

>>> US Early premarket gappers

Early premarket gappers
Gapping up: MNOV +15.7%, MNDL +8.4%, UNIS +7.5%, DIOD +6.8%, SUNE +5.6%, LMNR +5.5%, PANW +5.3%, PDLI +4.3%, PPHM +3.2%, TWTR +2.9%, GCI +1.9%, EGO +1.6%, WB +1.4%, DB +1.4%, BP +1.4%, ING +1.2%, MANU +1.2%, TFSL +1.1%, THOR +1.1%, RDS.A +1.1%, SIRI +1.1%, GPRO +1%, IHT +1%

Gapping down: MGCD -9.7%, GTAT -9.6%, KKD -5.5%, AHH -5.2%, MBLY -3.1%, SCOK -3%, AVB -2.2%, EXAS -2%, CRDS -1.7%, DANG -1.4%, SAVE -1.4%, EQY -1.3%, URBN -1.3%, ARMH -1.2%, STM -1%

>>> Palo Alto Networks: Color on Quarter

Palo Alto Networks: Color on Quarter

  • FBR Capital raises their PANW tgt to $105 from $90 on higher estimates; they applaud the company's solid F4Q results/F1Q guidance and believe that robust secular trends will add more fuel to PANW's growth engine heading into FY15. Palo Alto is clearly firing on all cylinders in the field despite intense competition from other vendors in the network security market, and they expect it to benefit from the rapidly growing next-generation firewall (NGFW) market with strong subscription/support attach rates and cross-sell opportunities with Cyvera.
  • Needham raises their PANW tgt to $110 from $95; Q4 was an exceptionally strong year-end quarter, with revenue, billings and guidance for F1Q all above consensus. The standout metric of the quarter was billings growth of +64% y/y, best in the last six quarters, and a signal of acceleration. In their field discussions, it is clear to them the spending urgency on network security (breach and APT in particular) is top-of-the-list in IT, and PANW appears to be a major beneficiary. Guidance, although above the Street, likely remains conservative.
  • Northland Capital raises their PANW tgt to $110 from $95 Growth rates across Palo Alto's key metrics accelerated in a robust F4Q; strong firewall growth should aid FTNT, CHKP.
  • Oppenheimer raises their PANW tgt to $100 from $90. PANW reported strong 4Q14 results across all geographies, product lines, and verticals with most metrics (revenue, billings, deferred revenue) beating expectations nicely. The strong performance was driven by: 1.) Strong demand and attach rates for Wildfire (APT solution); 2.) High-end appliance seeing continued uptake; 3.) Internal investments paying dividends (S&M); and 4.) VM series appliances gaining further traction.
  • Topeka Capital Markets raises their PANW tgt to $100 from $98 following a spectacular 4QFY14 earnings report. While numbers were very strong across the board, the most stunning number was the 64% YoY billings growth which compared to 46% YoY growth in 3QFY14 and was the fastest growth since 2QFY13. Once again, data center appliances and security subscriptions led the way.
  • Dougherty & Company raises their PANW tgt to $115 from $95; they believe PANW has a highly differentiated platform which has disrupted the traditional security suppliers, and the co continues to innovate ahead of the competitive landscape. The results indicate the co has the ability to capture share, grow revenue ahead of TAM and competitive landscape, and acquire customers at a rapid clip (plus 1000 new adds for eleven consecutive quarters).
  • Piper Jaffray: tgt to $110 from $100
  • PANW is trading at a new all time high in the premarket above $93/share.