(GS) France: Telecom Services Iliad, Bouygues, Orange...

Competitive pressure continues…
We argue that the French market structure of four fixed and mobile
network owner competitors is the least attractive in Europe as laid out in
our note “Iliad’s gain is others’ loss” published in 2011. December brought
three updates highlighting incremental competition in mobile and fixed
that reinforced our view that the market is set to continue to decline for the
next five years. We lower our French forecasts for all players as a result.

…but growing potential for market consolidation
We raise our probability of French consolidation (from 4 to 3 players) to
50% from 25%. As competitive pressure is not abating, we believe operator
desire to consolidate is growing and that the French authorities are more
open to consolidation. We assume market repair would benefit all players,
as it would raise them from fourth quartile to average in our structural
framework, implying a rise in the long-term growth outlook from -1%
CAGR to flat. For the consolidators, we identify €4-7 bn of cost synergies.
We now reflect these benefits, probability-weighted, in our valuations.

Orange: Off CL but retain Sell; 12m target price to €8 from €7.5
We forecast French/group EBITDA CAGR of -8%/-4% (2013-15) vs. company
targets of stability. French consolidation would raise Orange from fourth
worst to average in our structural quality framework implying a stable
growth outlook. A greater probability of French consolidation offsets our
2%/1% lower 2014/15 EBITDA forecasts, raising our price target, reducing
downside. We remove Orange from the Conviction List but argue the share
price over-estimates consolidation benefits and reiterate our Sell rating.

Iliad: Up to Buy and onto CL; 12m target price to €238 from €201
The shares have underperformed by 30% over the last six months and in
our view Iliad is now the cheapest growth stock in the sector. We expect
ongoing share take in fixed and mobile supported by Iliad’s clear cost
advantage. By 2017 we forecast Iliad revenues to be growing at 6% (vs.
sector ex-growth). But Iliad trades on 12x 2017E EV/NOPAT, in-line with the
sector. We also argue Iliad could be a material beneficiary of consolidation.

Bouygues: Up to Buy; 12m target price to €36.0 from €30.9
Like Iliad, we believe Bouygues could be a key beneficiary of consolidation.

>>> Praxair Inc Signs Long-Term Contract and Expands Enclave Supply in South Kor

Praxair Inc Signs Long-Term Contract and Expands Enclave Supply in South Korea
- Has signed a long-term contract with Taewoong Steel Co. LTD to supply high-purity oxygen to the companys steel mill facility in Busan, Korea. Praxair will construct a new 180 tons per day air separation plant and pipeline in the Mieum Foreign Industrial Zone in Busan that will serve Taewoong, as well as new and other existing customers. The plant is expected to start up in 2016.

(WSJ.DE) Hapag-Lloyd plans after merger IPO in Frankfurt


The container shipping company Hapag-Lloyd will in Frankfurt on the stock exchange, as soon as the signatures under the merger agreement with the Chilean CSAV competitors are dried. The report with the intention of familiar people. A binding contract should be in the next two months in the bag, the report said.

The audit was on the way, said one of the informants. If everything goes smoothly, the deal could be to early March in the bag. Then an IPO would be nothing in the way

The Tui subsidiary had previously stated, a Memorandum of Understanding with the Compania Sud Americana de Vapores VAPORES.SN -4.09% to have signed for a merger. Thus, Hapag plans two capital a total of 740 million euros. The Chileans wish to participate in the first round of capital with 259 million euros, which is to go on the stage within 100 days after completion of the merger. In return, the companies get from Chile shares of Hapag-Lloyd, which it would come to a total holding of 34 percent in the German company. The second capital increase with a volume of 370 million euros is to take place with the IPO of Hapag-Lloyd. The Communication of CSAV any indication about the stock market is made ​​in Hapag-Lloyd IPO plans.

Merger would create the fourth largest shipping company
The merger of Hapag-Lloyd with the Chilean competitors would create the fourth largest container shipping shipping company in the world. A merger could bring the much-needed synergy effects that can make good use of both companies in the face of a suffering from overcapacity market.

A merger could trigger much-needed synergy effects that can make good use of both companies in the face of a suffering from overcapacity market. The Chileans quantify the synergies of the combination even annually around 300 million.

The consolidation pressure in the container shipping industry is high. Freight rates have fallen significantly and the global economy growing at a slower pace than expected. The upcoming Alliance of shipping companies Maersk, MSC and CMA CGM will make it even harder for the two smaller competitors. The three industry giants want to share from Shanghai to Rotterdam and to the U.S. west coast ships and port capacity.

CSAV is number 16 of the world's shipping, Hapag-Lloyd ranks fifth. Both lines go well together: Hapag-Lloyd has a strong presence in the ship transportation between Europe and Asia and North America, CSAV has placed the emphasis on connections to and from Latin America. There, the shipping company is the largest shipping company by far.

Hapag-Lloyd looks at numerous failed attempts
Both lines were added in early December in Miami talks after Hapag-Lloyd had failed in 2013 with the attempt to merge with the local competitors Hamburg Süd. The Anbandelung with Neptune Orient Lines N03.SG -0.47% from Singapore in 2008 had remained without success.

The largest shareholder of Hapag-Lloyd is the city of Hamburg, also holds the tourism group TUI TUI1.XE +1.99% accounted for 22 percent. TUI AG would like to say this but, also, an IPO the company was called on this in the interview.

The Chilean shipping company CSAV is controlled by the Luksic family She is one of the richest families in the country, which mixes together in the shipping, mining, finance and beverage industry. A merged company would come up with an annual turnover of about € 9 billion.

The Hamburg shipping company is probably one of the few in the industry that were profitable in the past year on the road. In the third quarter of Hapag-Lloyd drove a net income of 16.6 million euros, compared to 45.6 million in the previous year. CSAV, however, recorded in the three months a loss of 46.7 million dollars. The year before, the Chilean shipping company had still achieved an increase of $ 55.8 million.

Contact the author redaktion@wallstreetjournal.de

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: ZHNE -19.5%, PSO -7.2%, HRC -5.7%, QSII -3.3%, NOK -2.6%, EGHT -1.9%, (light volume), SNDK -1.9%, (SanDisk downgraded to Hold from Buy at Needham ), TER -1.4%, (light volume), URI -1.3%, WDC -1.2%, MCD -0.4%.

China internet names lower: DANG -4.5%, CYOU -3.1%, YY -2.4%, YOKU -2.3%, SINA -1.8%, BIDU -1.7% (partners with Jingdong for hardware development open platform, according to Marbridge ), QIHU -1.5% (planning to adjust revs sharing policies to attract small and medium-sized game developers , according to Marbridge ), RENN -1.2%

Other news: CBLI -15.9% (announces that BARDA has terminated negotiations related to the co's proposal for further development of Entolimod as a medical radiation countermeasure), XLRN -9.3% (prices 2.4 mln shares of common stock at $50.00 per share), BRSS -5.3% (announces offering of 3.75 mln shares by selling shareholder), EBS -5.2% (announces proposed offering of $200 million convertible senior notes ), INFI -4.4% (still checking), NQ -4.3% (continued weakness following yesterday's cautious Dealbook story), PETX -4% (is commencing an underwritten registered public offering of 5.5 mln shares of its common stock that includes 1 mln by holders), AEO -3.6% (names Jay Schottenstein Interim CEO succeeding Robert Hanson, who is leaving the Company; downgraded to Hold at Stifel; Replacing CEO), TKC -3.3% (still checking), HPP -3.2% ( commences public offering of 8.25 mln shares of common stock), DSCO -2.8% (files for 4.66 mln share common stock offering by selling shareholders ), CLNY -2.5% (announces public offering of $200 mln convertible senior notes), BBRY -2% (following NOK results), EXEL -1.7% (plans to offer 10 mln shares of its common stock in an overnight underwritten public offering), ASML -1.2% (still checking), NKTR -0.8% (prices 8.5 mln shares of common stock at $12.75 per share).

Analyst comments: PBF -2.1% (downgraded to Mkt Perform from Outperform at Raymond James ), GOL -1.6% (downgraded to Market Perform from Outperform at Raymond James), CRM -0.9% (downgraded to Hold from Buy at Deutsche Bank), HFC -0.4% (downgraded to Market Perform from Outperform at Raymond James), DKS -0.1% (downgraded to Equal-Weight from Overweight at Morgan Stanley)

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: NFLX +16.9%, LOGI +15%, FFIV +11.5%, FUEL +10.2% (files registration statement for proposed follow-on offering; 2 mln shares being sold by Rocket Fuel, 3 mln shares being sold by selling stockholders), NTCT +8.9%, DEG +8.8%, FIO +5.1%, PLCM +4.1% (light volume; discloses workforce reduction of ~6%), TZOO +4.1% ( also announced that its board of directors has authorized the repurchase of up to 500,000 of the company's outstanding common shares), VLO +4%, ABC +3.9%, CCI +3.7%, FBC +3.5%(light volume), BAX +3.2%, EBAY +2.5% (also announced buyback and Icahn proposes to spin-off PayPal; downgraded to Hold at Stifel, downgraded to Neutral from Positive at Susquehanna), MTG +2.4%, LUV +2%, VAR+1.5% (also upgraded at Cantor), ACAT +1.4%, CY +1.3% (light volume), UNP +1.1%, BGG +0.7% (light volume), SYK +0.5%.

M&A news: ARIA +6.6% (reports indicate potential LLY interest), NAV +0.8% ( said to explore possible sale of MWM engine unit, according to reports), IBM +0.4% (Lenovo confirms plans to acquire IBM's x86 Server Business).

Financial related names showing strength: IRE +2.8%, DB +2%, BCS +1.4%, SAN +1.1%.

Select metals/mining stocks trading higher: GOLD +2.2%, SLV +1.7%, GDX +1.3%, AU +1.2%, GG +1.2%, ABX +1.1% (announces agreement to divest Kanowna in Australia for A$75 mln), SLW +1.1%, GLD +0.8%, EGO +0.4%.

A few European drug names are trading higher: NVS +1.5%, SNY +1.1%, AZN +0.3%

European telecom names higher: ORAN +1.9%, TI +1.4%, PT +1.1%

Other news: CRMB +17.5% (completed $5 mln senior secured credit facility), HXM +6.9% (following ~50% move higher yesterday), PSTI +5.9% (cell manufacturing facility marks major milestone with German regulatory approval of new scaled-up 3D manufacturing process), FRO +5.6% (still checking), CTIC +4.7% (continued strength), KOOL +4.6% (continued strength), CIE +3.9% (in partnership with the National Concessionaire Sonangol and the Block 21 partners announces the first discovery in the Syn-rift interval in the Bicuar #1A Pre-salt deepwater exploratory well offshore Angola), KERX +3.8% (prices 6.9 mln shares of common stock at $14.50 per share), ACOR +1.9% (Eagle Asset Management discloses 5.12% passive stake in 13G filing ), TXMD +1.6% (announces issuance of U.S. patent covering natural combination hormone replacement formulations and therapies, including TX 12-001-HR), ALV +1.2% (still checking), RVBD +0.9% / VMW +0.5% (following FFIV results), JAZZ +0.8% (announces minimum tender condition exceeded during initial offering period for Gentium S.p.A. shares; provides financing update ), REGI +0.7% (acquires renewable chemical technology developer LS9 for a purchase price of up to $61.5 mln), RDS.A +0.7% (may delay drilling in the Arctic , according to reports), AMZN +0.5% (boosted by EBAY and NFLX results/news), TSLA +0.4% (plans to sell Model S in China for 50% more than the price in the US, according to reports), HITK +0.4% (Receives Final Approval for Bromfenac Ophthalmic Solution, 0.09%),SPLK +0.3% (prices follow-on offering of 6 mln shares of common stock at $81.00 per share, initiated with a Buy at Deutsche Bank).

Analyst comments: TS +4.9% (upgraded to Outperform at Mediobanca and to Buy at Equita), NSC +1.5% (Norfolk Southern upgraded to Overweight from Neutral at JPMorgan, upgraded to Buy from Neutral at BofA/Merrill), RMBS +1.3% (upgraded to Buy from Neutral at Citigroup), DATA +1.1% ( initiated with a Buy at Deutsche Bank), MSFT +1% (Microsoft upgraded to Buy from Hold at Deutsche Bank), LNCO +0.5% (upgraded to Outperform at Robert W. Baird; shareholder base solidifying ahead of catalyst), PANW +0.3% ( initiated with a Buy at Deutsche Bank), WWE +0.3% (initiated with a Buy at The Benchmark Company),

>>> Johnson Controls reports EPS in-line, beats on revs; guides Q2 EPS in-line;

--> JCI Flat Pre-Market - very low volume

Johnson Controls reports EPS in-line, beats on revs; guides Q2 EPS in-line; reaffirms FY14 EPS guidance 

Reports Q1 (Dec) earnings of $0.69 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.69; revenues rose 4.7% year/year to $10.91 bln vs the $10.76 bln consensus.
Automotive Experience revenues in the fiscal first quarter of 2014 were $5.8 billion, up 10% compared to the 2013 quarter, reflecting higher automotive production in all geographic regions. Automotive industry production in the quarter increased 5% in North America, 2% in Europe and 14% in China. Seating and Interiors sales increased at a double digit rate, while Electronics sales were up 7%. Revenues in China, which are primarily related to Seating and generated through non-consolidated joint ventures, increased 33% to $1.9 billion.
Automotive Experience segment income was $232 million, more than double the $101 million reported in the first quarter of 2013. The increase was primarily led by improvements in the company's Seating business, with segment income of $176 million in the current quarter, compared with $85 million last year. The Automotive Experience improvement was a result of the higher global production levels, benefits from cost reduction initiatives and improved operational performance in the company's metals and mechanisms business.
Co issues in-line guidance for Q2, sees EPS of $0.64-0.66 vs. $0.66 Capital IQ Consensus Estimate.

Co reaffirms guidance for FY14, sees EPS of $3.15-3.30 vs. $3.27 Capital IQ Consensus Estimate; FCF of $1.6 billion and segment margin improvements in all three of its businesses for the full 2014 fiscal year.

"The significant improvement in profitability resulted from our focus on execution and cost discipline. We also benefitted from the higher levels of global automotive production," said Alex Molinaroli, Johnson Controls chairman and chief executive officer. "While Building Efficiency revenues were lower than last year, there are early indications of improving global commercial buildings markets, which should positively impact the business later in the year. The results in the quarter are consistent with the expectations we disclosed at our analyst day in December."

>>> Baxter beats by $0.01, beats on revs; guides Q1 EPS below consensus; guides

--> +1.8% Pre-Mkt - very low volume

Baxter beats by $0.01, beats on revs; guides Q1 EPS below consensus; guides FY14 EPS above consensus; guides for Q1 and FY14 revs excluding F/X impacts 

Reports Q4 (Dec) earnings of $1.26 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $1.25; revenues rose 16.4% year/year to $4.37 bln vs the $4.25 bln consensus.
Co issues guidance for Q1, sees EPS of $1.06-1.09, excluding non-recurring items, vs. $1.14 Capital IQ Consensus Estimate; sees Q1 revs of +13-14% ex F/X calc to ~$3.90-3.93 bln, may not be comparable to $3.98 bln Capital IQ Consensus Estimate.
Co issues guidance for FY14, sees EPS of $5.05-5.25, excluding non-recurring items, vs. $5.01 Capital IQ Consensus Estimate; sees FY14 revs of +9-10% ex F/X to ~$16.63-16.78 bn, may not be comparable to $16.69 bln Capital IQ Consensus Estimate.
Worldwide sales totaled $4.4 billion and increased 16 percent from prior-year levels. Excluding the contribution of Gambro revenues in the quarter, Baxter's sales increased 5 percent to $4.0 billion (or 6 percent excluding the impact of foreign currency). Sales within the United States totaled $1.8 billion and advanced 13 percent, and international sales of $2.6 billion increased 19 percent (or 20 percent excluding the impact of foreign currency).

>>> US Early premarket gappers

Early premarket gappers

Gapping up: CRMB +17.5%, NFLX +16.3%, LOGI +15%, FFIV +11.5%, FUEL +10.2%, DEG +8.8%, HXM +6.9%, ARIA +6.6%, PSTI +5.9%, FRO +5.6%, TS +5.1%, PLCM +4.1%, EBAY +4%, VLO +4%, CIE +3.9%, KERX +3.8%, CCI +3.7%, FBC +3.5%, IRE +2.8%, JCP +2.2%, DB +2%, ACOR +1.9%, FIO +1.9%, SLV +1.7%, TXMD +1.6%, ACAT +1.4%, GDX +1.3%, ALV +1.2%,AU +1.2%, ABX +1.1%, SLW +1.1%, RVBD +0.9%, NAV +0.8%, JAZZ +0.8%

Gapping down: ZHNE -17.1%, PSO -7.2%, BRSS -5.3%, EBS -5.2%, XLRN -4.8%, PETX -4%, AEO -3.6%, TKC -3.3%, HPP -3.2%, DSCO -2.8%, NOK -2.6%, CLNY -2.5%, WDC -2%, EGHT -1.9%, EXEL -1.7%, TER -1.4%, URI -1.3%