(Makor) TECH VIEW RWE GY (29.26 last) - buy this breakout, target 37 over time

Summary:

The bullish H&S pattern is triggered today with the move above 29 This pattern argues for a move towards 37 over time We believe that current level still offer an attractive risk/reward to enter a long position On February 4th we went long from 27.31 (+7.2% now) with a target of 36.5 and then amended our stop to our enter level

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>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: VDSI +7.2%, (thinly traded), NVMI +4.5%, HOLI +3.5%, BHP +2.5%, BMRN +0.9% (ALSO confirms FDA approval for VIMIZIM (elosulfase alfa) for the treatment of patients with Morquio A syndrome).

M&A news: FRX +36.6% and ACT +15.7% (Actavis to acquire Forest Laboratories for ~$25 bln or $89.48/share in cash/equity), CHDX (Chindex to be acquired by TPG and Fosun Pharma for $19.50 per share in cash ).

Select financial related names showing strength: BCS +3.2%, CS +2.4% ( initiated with a Buy at Jefferies), NBG +1.8%, HSBC +1.2% (Barron's profiles positive view on HSBC), CVS +1% (ticking higher following positive mention in Barron's ), DB +1% ( initiated with a Buy at Jefferies).

Select metals/mining stocks trading higher: BBL +2.1%, IAG +1.7%, ABX +1.7%, EGO +1%.

Solar names modestly higher: JKS +2.2%, SPWR +0.9%, FSLR +0.8%

Other news: PRAN +24.1% ( meets primary endpoint in Phase 2 REACH2HD clinical study of PBT2 for treating Huntington disease; preliminary evidence suggests PBT2 250mg reduced atrophy of brain tissue in areas affected in Huntington disease, seen in a pilot imaging sub-study ), MSTX +9.9% (Provides Additional Results From Nonclinical Heart Failure Study; Statistically significant and durable reductions in troponin and NT-proBNP), CHTP +9.9% ( issues statement regarding postponement of NORTHERA NDA PDUFA action date due to severe weather ), CAJ +3.9% (announces plan to acquire up to 18 mln of its common shares), TSLA +3.9% (Apple dealmaker Adrian Perica has met with TSLA's Elon Musk last year, according to reports), PSTI +3.5% (receives 3D cell expansion patent in Australia), VMEM +3.4% ( Announces Distribution Agreement with SYNNEX ), SINA +2.1% (Alibaba considering buying additional stake in Sina Microblog, according to Marbridge ), EPL +2% (Barron's profiles positive view), SNE +1.7% (Sony has sold 5.3 mln PS4 units, outperforming full year targets, according to reports), DDD +1.6% ( Digitimes discusses that 3D printing market may reach 6 mln units by 2018 ), UN +1.6% and DEO +0.9%(still checking), AAL +1.3% (American Airlines modestly higher following positive mention in Barron's), USG +0.7% (Berkshire Hathaway lifts stakes), SUNE +0.6% (SunEdison announces confidential submission of draft registration statement by Yieldco Vehicle ), MOS +0.5% (reaches agreement to purchase 8.2 mln additional class A shares).

Analyst comments: AIXG +9.9% (upgraded to Overweight from Neutral at JP Morgan), DEG +5.3% (upgraded to Overweight from Equal Weight at Morgan Stanley), BBRY +5.1% (upgraded to Mkt Perform at FBR Capital with $10 tgt), ATHN +1.9% (athenahealth upgraded to Outperform from Neutral at RW Baird ), LULU +1.7% (upgraded to Outperform from Perform at Oppenheimer), SEM +1.5% (upgraded to Outperform at Robert W. Baird), YELP +0.7% (initiated with a Neutral at Sun Trust Rbsn Humphrey; tgt $100)

WSJ : European Auto Recovery Gains Pace

European Auto Recovery Gains Pace
January Demand Rebounds in Countries Hit Hardest by Debt Crisis

BERLIN—The recovery of the European auto industry gained pace in January as car makers throughout the 28-nation bloc posted gains and demand rebounded in countries hit hardest by the euro-zone debt crisis.

New car registrations, which mirror sales, rose to 935,640 vehicles in January, up 5.5% from the same month a year earlier, according to the Association of European Automobile Manufacturers, known as ACEA.

The rise in January marks the fifth-consecutive monthly increase in demand after six years of declining sales, but ACEA said it was the second-lowest number of cars sold in the month of January since the group began collecting EU-wide data in 2003.

"Most EU markets posted growth, as did all the major ones, from 7.6% in the U.K. and Spain, to 7.2% in Germany, 3.2% in Italy and 0.5% in France," ACEA said in its monthly release.

Europe's weak economic recovery may also be beginning to unleash pent-up demand in some of the region's hardest-hit economies and benefiting car makers. Car sales rose 33% in Ireland, 32% in Portugal, 15% in Greece, and 7.6% in Spain, some of the countries worst affected by the euro crisis.

Doubts remain about how strong the recovery in car demand will be. With unemployment still high in many countries, some European governments have provided incentives to boost demand for new cars while dealers have been wooing car buyers with discounts and inexpensive financing. The sales data may also be inflated by a high rate of short-term registrations of unsold cars by the dealers themselves.

Allan Rushforth, chief operating officer at Hyundai Motor Europe, said that the January figures showed the industry had left the trough and was on the road to recovery, but he remained skeptical about the turnaround.

"The question is how much of that recovery is organic and how much is the result of actions taken by governments and car makers," he said.



Registrations at Hyundai, which in recent years has been one of the fastest-growing car suppliers in Europe, fell 5.9% to 30,047 cars in January.

Industry analysts remain guarded too about the strength of the upturn.

"Whilst clearly a positive month it was perhaps not as strong as might have been expected and at this point we don't want to get too carried away," auto analysts at ISI Group said, citing an 2.8% decline in registrations on a comparable basis month on month. Fewer discounts and incentives in some markets may have contributed to that decline, ISI said.

Rebates and cheap financing stimulated sales in Germany in January, while a scrapping premium in Spain underpinned sales there, said Ernst & Young analyst Peter Fuss.

In contrast, car sales continued to decline in Austria, Belgium, Cyprus, Estonia and the Netherlands.

Volkswagen AG VOW3.XE -0.67% , Europe's largest car maker by sales, sold 237,538 cars in January, up 8.9% from a year earlier. PSA Group, which makes the Peugot and Citroën brands, sold 109,257 vehicles, up 7.4%. Renault RNO.FR +0.08% group sales jumped 13% to 86,452 cars in January.

Among the major non-European manufacturers, GM car sales fell 5.3% to 64,687 vehicles in January despite a 9.1% rise in sales of GM's Chevrolet brand. Toyota Motor Co sales rose 17% to 44,321 cars.

Mazda Motor Corp. was the fastest-growing car maker in Europe in January, with sales surging 35% to 13,417 vehicles.

>>> Coca-Cola reports EPS in-line, misses on revs --> -1.23% Pre Market

Coca-Cola reports EPS in-line, misses on revs
Reports Q4 (Dec) adj. earnings of $0.46 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.46; revenues fell 3.6% year/year to $11.04 bln vs the $11.31 bln consensus.
  • Excluding the impact of structural changes, comparable currency neutral net revenues grew 4% in the quarter, reflecting an increase in concentrate sales and positive price/mix. Structural changes that impacted net revenues were primarily the deconsolidation of bottling operations in the Philippines and Brazil. Reported operating income decreased 4%, reflecting a 6% currency headwind, a 4% unfavorable impact due to the structural changes referenced above, as well as the effect of items impacting comparability. Excluding the impact of structural changes, comparable currency neutral operating income increased 6%. Items impacting comparability reduced fourth quarter 2013 operating income by $278 million and reduced fourth quarter 2012 operating income by $300 million.
  • The Coca-Cola Company reported worldwide volume growth of 2% for the full year and 1% for Q4. While economic, political and environmental conditions across various regions impacted consumer spending and overall nonalcoholic ready-to-drink (NARTD) beverage industry performance during the year, we grew global value share in NARTD beverages, with volume and value share gains in core sparkling and still beverages for the year, supported by the strongest portfolio of brands in the industry.

WSJ : Loud and Clear on Japanese

Loud and Clear on Japanese If anyone doubted whether the world's most hyperactive central bank was losing its nerve, they were set straight on Tuesday. At a routine meeting that markets were expecting to pass uneventfully, the Bank of Japan announced it would double the scope of two special programs meant to spur bank lending, launching the Nikkei up 3%. The move isn't huge in the context of the BOJ's monetary easing program. Citigroup estimates that if fully utilized, the facilities would add around ¥20 trillion ($196 billion) to the central bank's balance sheet, which was already set to nearly double over two years to ¥290 trillion by the end of 2014. And the effectiveness of the programs themselves is questionable. The larger of the two BOJ facilities, which provided funds to banks in proportion to their increase in lending, was only being used at a third of its ¥15 trillion capacity. As banks and corporations are flush with cash already, demand for loans, not supply, is the true constraint on credit growth in Japan. But the psychological effect of telegraphing the bank's aggressiveness is clear and fits the playbook of aggressively proactive Bank of Japan Gov. Haruhiko Kuroda. HSBC economist Izumi Devalier argues that by doubling the programs, and doing so in advance of their expiration at the end of March, the BOJ is "maximizing the announcement effect." It comes just as confidence in the great Abenomics experiment has hit a rough patch. Before Tuesday's rally, the Nikkei Stock Average was down more than 11% this year, and fourth-quarter gross domestic product growth was a tepid 1%. Bank lending has been lukewarm, with outstanding loans up just 2.3% from a year earlier in January. And there's all manner of angst over how April's sales-tax increase will ripple through the economy. With Tuesday's move, Mr. Kuroda signaled he is ready to do still more should the economy falter. The sharp stock market reaction indicates that investors are getting the message loud and clear.

>>> US Early premarket gappers

Early premarket gappers
Gapping up: PRAN +24.1%, FRX +21.8%, CHTP +9.9%, BBRY +5.8%, ACT +5.5%, CAJ +3.9%, PSTI +3.5%, BHP +2.5%, BBL +2.1%, IAG +1.7%, ABX +1.7%, DDD +1.6%, EGO +1%, BMRN +0.9%, DEO +0.9%, USG +0.7%

Gapping down: ASTC -21.8%, LIVE -9.2%, MTL -6.5%, SDRL -3%, IHG -2.9%, KOOL -2.3%, TTM -1.5%, NVO -1.5%, RIG -1%

(BFW) Luxury Watch Sales May Improve, Cartier Rebound, HSBC Says

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Luxury Watch Sales May Improve, Cartier Rebound, HSBC Says 2014-02-18 11:08:48.119 GMT

By Heather Burke Feb. 18 (Bloomberg) -- Luxury watch industry may improve in 2014 with lower inventories, female purchases rising, HSBC says in note. * HSBC: Inventories, Swiss watch exports beginning to stabilize in Greater China, co. comments suggest 2014 high- end watch sales may be better * Richemont’s Cartier watches (~1/3 profits) may rebound this yr, jewelry may continue to expand, Montblanc improve; reiterates overweight, CHF108 PT * Swatch will continue to have growth from middle class expanding, margin growth may be a bit less than Richemont because of Rivoli consolidation * Swatch brand may have strong growth, less profitable than co. avg. * Reiterates neutral, PT raised to CHF630 from CHF610

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

To contact the reporter on this story: Heather Burke in London at +44-20-7673-2044 or hburke2@bloomberg.net

To contact the editor responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net

WSJ : KPN is walking wounded.

KPN is walking wounded.

The Dutch telecoms operator will Wednesday elaborate on plans to stabilize earnings toward the end of this year and return to free cash flow growth in 2015. That follows a torrid two years when earnings before interest, tax, depreciation and amortization fell by more than 40% and free cash flow dropped 80% to just €489 million ($670 million) last year.

KPN still has a fight on its hands.

True, the Dutch company's target to return to free cash flow growth looks manageable. It is set to receive €5 billion from the sale of its German carrier E-Plus to Telefónica Deutschland O2D.XE +0.38% : that will reduce debt so interest expenses should over time fall by two-thirds to €200 million a year, notes Nomura. Capital expenditure should ease this year and KPN will hold a 20.5% stake in Telefónica Deutschland, which is expected to pay dividends.

But resuscitating earnings growth looks challenging. Despite its superior network and bundled offers, KPN is being pummeled in the Dutch wireless market by competition from Swedish rival Tele2 TEL2-B.SK +0.27% and a shift to basic SIM-only offers. KPN's mobile service revenues fell 13% in the fourth quarter compared with an 8% decline in the third.

Competitive pressures seem unlikely to ease in the near term. Tele2 reckons there is room to keep lowering prices: the Netherlands is the most expensive market in Europe measured by price per gigabyte of data. Tele2 is also getting closer to the launch of its own 4G network; it has won around 5% of the Dutch consumer wireless market piggybacking on T-Mobile's TMUS +1.29% network and it aims to take a fifth.

That puts more pressure on KPN to find cost savings. A new plan targets more than €300 million in cost and capital expenditure savings annually by 2016. KPN is focusing more on keeping hold of existing customers—a cheaper strategy than attracting new subscribers. Yet it still spent €60 million in the fourth quarter locking in customers with six months left on their contracts into new deals on 4G.

KPN, without E-Plus, is valued on 5.2 times forecast 2015 Ebitda, compared to the sector on 6.1 times based on Citigroup estimates. The discount partly reflects the risk that regulators don't allow the E-Plus sale. But until KPN can show signs of halting the slide in sales and earnings, that looks generous enough.

(Makor) Relative Value: IBM - BUY

Albert, our analyst is publishing this report today...I have been pushing the stock for few weeks...still like the story, momentum is really changing and IBM could be one of the big name of 2014...have a look to this report

Relative Value: IBM - the fundamental case

BUY February 18, 2014

IBM is successfully transforming itself into a software and service business with focus on high growth markets. IBM is expanding (organically and via acquisitions) into high value software and service businesses and high growth markets (BRICS and Africa) while systematically exiting underperforming hardware business (latest being x86 server business). By 2015, IBM expects to generate ~30% of its revenues from high growth markets while around 90% of its pre-tax profits from software and service businesses. By 2015, IBM aims to grow its operating EPS to $20 from $11.67 in 2010. In the latest results release (FY2013), IBM reiterated that it is on course to achieve this target. The ongoing transformation has not affected IBM's market position. IBM continues to maintain its leadership positions (according to Gartner Magic Quadrants) in various software and service segments. In addition, it also has a patent leadership in the world with over 6,400 patents vs Samsung's 5,000 patents. Relative valuation screens suggest a mixed picture on IBM's valuations. EV/FY2 Sales vs Operating margin (FY2) screen (R-square: 0.95) suggests a slight overvaluation while PBR vs ROC screen (R-square: 0.83) suggests a slight undervaluation. Oracle remains in the undervaluation territory on both these screens. The operating profit growth (3-year forward CAGR) vs FY2 PE screen is not that meaningful; however, it can be observed from the chart that low growth players (such as CSCO, MSFT) trades at better PE multiples than IBM. A sum-of-part valuation suggests a target price of $166 a share, which is around 6% below the current price. However, we note that this does not capture the value of the patent portfolio at IBM.

In addition, we note that long-term relative charts of IBM PE vs S&P500 PE and IBM PE vs PE of key peers (MSFT, INTC, ORCL, and CSCO) are all heading towards record low levels, particularly so in the case of IBM PE vs S&P500 PE, in which the ratio is near its lowest point since 1994. Hence, on a long-term PE relative valuation basis, IBM looks significantly undervalued. Similarly, the relative dividend yield of IBM vs S&P500 is at its highest level since 1994.

Given the likely multiple expansion due to a higher software content, IBM's growth targets and share repurchases, we derive a NAV for IBM of about $210-$220/share.

FULL REPORT ATTACHED

(BFW) Spain Plans to Back Tax on Financial Transactions, Pais Reports

Spain Plans to Back Tax on Financial Transactions, Pais Reports
2014-02-18 09:43:51.989 GMT


By Manuel Baigorri
     Feb. 18 (Bloomberg) -- Spanish govt plans to support a tax
on financial transactions at today’s finance ministers’ meeting
with certain limitations, El Pais reports, citing people it
didn’t identify.
  * Spain wants tax on financial transactions to only apply to
    purchase of shares in biggest publicly traded companies, the
    newspaper says
  * Spain to oppose extending tax to other financial
    transactions such as derivatives as it could affect to the
    country’s debt position, El Pais says
  * Link to story in Spanish: http://tinyurl.com/o7tq35e


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

To contact the reporter on this story:
Manuel Baigorri in Madrid at +34-91-7009647 or
mbaigorri@bloomberg.net

To contact the editor responsible for this story:
Aaron Kirchfeld at +44-20-3525-8830 or
akirchfeld@bloomberg.net