>>> US Gapping down

Gapping down
In reaction to earnings/guidance:
  • IAS -28.1%, DDD -17.8%, LPRO -17.1%, INGN -16.4%, LMND -15.8%, EB -11.7%, TMCI -11.3%, PAYO -11.2%, RXRX -10.8%, SAM -10.1% (also CEO to retire, names new CEO), LAZR -10%, URBN -9.7%, GDOT -9.6%, BMBL -9.5% (also to reduce global workforce), DY -9.5%, PRCT -9%, WRBY -8.6%, KTB -8.6%, PGNY -7.6%, XNCR -7.2%, SPCE -6.8%, JBI -6.7%, PDCO -6.6%, ARRY -6.2%, PCVX -6.1%, NRDY -5.9%, BLD -5.8%, OPK -5.7%, JAMF -5%, RKLB -4.5% (also introduces its family of spacecraft buses), ALHC -4.5%, MASI -4.4%, AGL -4.3%, SUPN -4.2%, CLCO -4.2%, PARR -3.9% (also CEO to retire, names new CEO), NXST -3.9%, TKO -3.8%, CYTK -3.7%, PRKS -3.7%, ACAD -3.3%, BECN -3.2% (also authorizes new $500 mln share repurchase program), HURN -3.1%, RDFN -3.1%, IPAR -2.7% (also increases dividend), ZETA -2.5%, BIDU -2.1%, RYAN -1.4% (also declares special dividend, initiates regular dividend), KVYO -1.4%, SHOO -1.4%, MYGN -1.3%, VTRS -1.3%
Other news:
  • RYAM -15% (signs MoU to explore e-fuels with Verso Energy)
  • MDRX -3.9% (to Participate in TD Cowen Annual Health Care Conference; expects that its shares of common stock will be quoted on an over-the-counter market with its existing ticker symbol (MDRX))
  • EVER -3.3% (files $150 mln mixed shelf securities offering)
  • PWP -2.6% (prices offering of 5.0 mln shares of common stock at $12.00 per share)
  • BROS -2.3% (prices secondary offering of 8.0 mln shares of common stock at $29.05 per share)
  • SHC -2% (stock offering; also stock offering by selling shareholders)
  • IRBT -1.8% (files mixed shelf securities offering)
  • VKTX -1.6% ($350 mln stock offering)
  • ITRI -1.1% (files mixed shelf securities offering)
Analyst comments:
  • ENFN -4.1% (downgraded to Sell from Neutral at Goldman)
  • VSTS -2.1% (downgraded to Underweight from Equal Weight at Barclays)
  • CLF -2% (downgraded to Underperform from Neutral at Exane BNP Paribas)
  • AEP -1.2% (downgraded to Equal Weight from Overweight at Barclays)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:
  • BYND +62.2%, LFST +27%, FLYW +21.9%, BAND +20.2%, ACMR +15.7%, VTEX +13.2%, LTH +11.5%, GTLS +11%, COCO +9.3%, VIPS +8.7%, CPNG +8.3%, YOU +8.3%, AMBA +7.9%, CRDO +7.4%, UHS +7.3%, AAP +6.6%, BGS +6.5%, FSLR +6.4%, GO +5.8%, EDIT +5.5%, CHE +5.3%, HMY +5.3%, RVLV +5.2%, EBAY +5% (also increases dividend and authorizes additional $2 bln stock repurchase program), IQ +4.9%, DQ +4.7%, OSUR +4.6%, TBLA +4.6%, AVDX +4.6%, IMAX +4.5%, FARO +4.5%, GOGL +4.5%, ALC +4.3%, ADT +4.3%, A +4%, AXON +3.9%, LNW +3.5%, DIN +3.5%, MTUS +3.4% (also announces US Army funding), EME +3.4%, DAR +3.2%, CIVI +3% (also to repurchase shares from NGP Tap Rock), DCI +2.7%, PR +2.6%, LMAT +2.5%, DIBS +2.2%, SQSP +2.1%, FLGT +2%, RSG +1.9%, CRC +1.8%, GLPI +1.8% (also increases dividend), ASTE +1.8%, SRCL +1.8%, VRDN +1.7%, GNL +1.5%, GERN +1.4%, TGTX +1.4%, OVV +1.3%, MDGL +1.3%, KURA +1.1%, FOLD +1%
Other news:
  • JANX +3.5% ($175 mln stock offering)
  • PRGS +2% (prices offering of $400.0 million of 3.50% Convertible Senior Notes due 2030)
  • SLGN +1.8% (increases dividend)
  • CRC +1.8% (provides operations update)
Analyst comments:
  • RVLV +4.9% (upgraded to Outperform from Mkt Perform at Raymond James)
  • TREE +2.1% (upgraded to Outperform from Mkt Perform at Keefe Bruyette)
  • CEG +1.4% (upgraded to Overweight from Sector Weight at KeyBanc Capital Markets)

(ZH) Europe's Record Rally Leaves Behind Riskier Firms

Europe's Record Rally Leaves Behind Riskier Firms

By Michael Msika, Bloomberg Markets Live reporter and strategist
Investors are piling up bets into the largest stocks by market value but also into the ones with the strongest balance sheets, while leaving more risky companies behind.
The broadening of the rally to other parts of the market doesn’t look like it’s coming just yet. Caution is the name of the game when it comes to corporate fundamentals, with the quality factor leading returns on a long-short basis over the past three months, and the trend extending further in February.

Investors have turned increasingly bullish about European stocks, with their optimism driving the European benchmark to a record high last week. Even so, a Goldman Sachs basket of companies with weaker balance sheets has been underperforming peers with stronger ones at a pace not seen since mid-2022 — a period when US rates went from 1% to more than 3% in about three months.
“These baskets are heavily influenced by interest rates given their sensitivity to rising cost of debt,” say Goldman strategists including Guillaume Jaisson, keeping an underweight on these companies. They add that cost of debt isn’t a problem for the overall market given balance sheets are not stretched overall.
Jaisson notes that some constituents of the basket like BAT, Fresenius, GN Store Nord, Siemens Healthineers and Stora Enso committed to reducing debt during the last earnings season, implying less focus on capex or shareholders’ returns. Meanwhile, Bayer even announced it will cut dividends by 95% to focus on its balance sheet, and others such as Atos have been under pressure following refinancing difficulties.
“We think these companies will remain constrained now that they need to operate in a higher interest rate environment and especially if we see yields move higher,” they say. The caveat is that a pick-up in activity, combined with rate cuts from the major central banks, could create a rotation out of momentum trades and into cyclical assets such as weak balance sheets and small caps.
In the meantime, investors are being selective, widening the gap between what is seen as the healthier sections of the market. In terms of performance themes, the market is back to the things that worked well for most part of the rally, as mega cap, tech and pricing power stocks are performing well.
Sentiment toward riskier parts of the market, which briefly seemed to play catch up and stoked concern about potential “buy everything exuberance,” is once again sobering up and deflating the notion of too much risk is being deployed.
Yet, while sharing a similar view to Goldman’s Jaisson about the continued outperformance of cash-rich companies versus stocks with high refinancing costs, JPMorgan strategists led by Mislav Matejka are more pessimistic about the overall direction of equities. They see some downside ahead, especially as key drivers of resilient corporate profitability are likely to turn weaker.
“In aggregate, and despite a few notable exceptions, corporate profit margins are elevated in a historical context, and appear to be peaking,” they say. Corporates managed to lock in low financing costs ahead of rate hikes but this will normalize over time, as will productivity gains and the currently strong pricing power.
“The historical pattern where profit margins always start to move lower ahead of the next economic downturn is clear,” they say.

WSJ : Atos Says 2023 Earnings Release Rescheduled, Talks for Unit Sale Fall Thro

Atos Says 2023 Earnings Release Rescheduled, Talks for Unit Sale Fall Through

Atos increase; green up pointing triangle rescheduled the release of its 2023 results to allow time to complete an audit of an impairment charge and said talks to sell its Tech Foundations business fell through.

The French IT company said Wednesday that revenue and margin results for last year were in line with guidance. Revenue rose 0.4% to 10.69 billion euros ($11.59 billion) on an organic basis, and the operating margin was 4.4%, up from 3.1% a year earlier.

Net debt was EUR2.23 billion at year-end, down from EUR2.32 billion at the end of June.

Full results for 2023 will now be released March 20, instead of Thursday as originally planned, Atos said.

Atos also said negotiations with EP Equity Investment for the potential sale of Tech Foundations ended without an agreement. Atos will continue to consider its strategic options.

WSJ : Swisscom in Advanced Talks to Buy Vodafone’s Italy Unit for $8.7 Bln

Swisscom in Advanced Talks to Buy Vodafone’s Italy Unit for $8.7 Bln

Swisscom said it is in advanced talks to buy Vodafone Group’s Italy business for 8 billion euros ($8.68 billion), weeks after the U.K. group turned down a bid from Xavier Niel’s Iliad Group.

The Swiss telecommunications company said Wednesday that it plans to merge Vodafone Italia with its Italian subsidiary Fastweb, potentially shaking up one of Europe’s largest telecoms markets.

Vodafone separately confirmed the talks. The company said that after speaking with several parties to explore market consolidation in Italy, it believes a deal with Swisscom delivers the best combination of value creation, upfront cash proceeds and transaction certainty for its shareholders.

The talks signal growing appetite for mergers and acquisitions among European telecommunications companies after Orange and MasMovil last week received conditional clearance from European Union antitrust authorities for their EUR18.6 billion merger in Spain. Iliad-backed Frey earlier this week agreed to buy a stake in Swedish telecom company Tele2 from investment company Kinnevik.

For Vodafone, a potential sale would continue a yearslong effort to streamline its portfolio. Last year, the company struck a deal to sell its Spanish business to Zegona Communications for at least EUR4.1 billion.

In late January, French telecommunications company Iliad said Vodafone had rejected a revised proposal to merge their Italian businesses under which Vodafone would have received EUR6.6 billion in cash and EUR2.0 billion of shareholder loans.

Swisscom said its negotiations with Vodafone are for a full acquisition of Vodafone Italia for cash.

Vodafone said Swisscom’s acquisition would be for an enterprise value of EUR8 billion on a debt- and cash-free basis and subject to customary closing adjustments

Swisscom and Vodafone separately said the price on which they agreed is preliminary and that there can be no certainty that any transaction will be completed.

FT : Sam Bankman-Fried pleads for lenient prison sentence after fraud conviction

Sam Bankman-Fried pleads for lenient prison sentence after fraud conviction
FTX founder should face no more than six and a half years behind bars, his lawyers argue ahead of hearing next month

Sam Bankman-Fried deserves to spend just a few years in prison, lawyers for the convicted FTX founder have argued in a last-ditch appeal for clemency, portraying him as a “selfless” and “altruistic” young man who “committed his life to philanthropy”.

The former crypto tycoon, who was found guilty on seven charges of fraud and money laundering last year, is a “first-time, non-violent offender . . . in a matter where victims are poised to recover — were always poised to recover — a hundred cents on the dollar”, they said in a court filing on Tuesday.

Bankman-Fried’s lawyers said an appropriate sentence would range from five and a half to six and a half years. They called a 100-year sentence recommended by probation officers “grotesque” and “barbaric” and said that as a person with autism spectrum disorder, their client was “uniquely vulnerable in a prison population”.

Bankman-Fried was accused of raiding FTX depositors’ accounts to make a series of risky bets, repay loans and buy property, leaving an $8bn hole in the company’s balance sheet when it collapsed into bankruptcy in November 2022, with customers unable to withdraw their funds.

But a team of lawyers including Marc Mukasey, who was hired by Bankman-Fried to help him appeal for a lighter sentence, called for the court to consider how the 31-year-old had been “misunderstood” and wrongly compared to criminals such as Bernard Madoff, who had confessed to operating a massive Ponzi scheme.

They said the “best comparison” to Bankman-Fried was the “junk bond king” Michael Milken, who served just two years after pleading guilty in 1990 to violating US security laws before going on to become a “tremendous force for good in the world” through charitable works.

At the time of FTX’s founding, “Sam, although brilliant, was 28 years old, in the infancy of his business career”, the filing said. “He was making thousands of business decisions a day, for the first time, in an immature and undisciplined cryptocurrency market, surrounded only by a group of similarly inexperienced (albeit very bright) twenty-somethings . . . He was, in essence, flying by the seat of his cargo shorts.”

The filing added that since the conclusion of Bankman-Fried’s trial, FTX’s bankruptcy proceedings had shown “the company was solvent at the time of the bankruptcy petition” and since creditors could expect to recoup their deposits, “the harm to customers, lenders, and investors is zero”.

Mukasey, who is known for his impassioned courtroom speeches, scored a concession for another client in recent months, after a New York judge sentenced Trevor Milton, the founder of electric and hydrogen-powered truckmaker Nikola who had been convicted of fraud, to four years in prison — significantly short of the 11 years sought by government prosecutors.

Bankman-Fried’s lawyers previously vowed to appeal against the verdict, but his counsel have not lodged such an appeal to date. The government must make its sentencing recommendations by the middle of next month. The sentencing hearing is set for March 28.

Caroline Ellison, Gary Wang and Nishad Singh — three of Bankman-Fried’s closest colleagues at FTX who pleaded guilty and agreed to testify against him at trial — are set to be sentenced at a later date.

FT : Vodafone in talks to sell Italian business to Swisscom

Vodafone in talks to sell Italian business to Swisscom
UK telecoms group says deal would value Italy arm at €8bn

Vodafone said it was in talks to sell its Italian arm to Swisscom in a deal that would value the business at €8bn.

The London-listed telecoms group said on Wednesday that a sale to Swisscom would deliver “the best combination of value creation, upfront cash proceeds and transaction certainty for Vodafone shareholders”.

The disclosure of the negotiations with Swisscom comes weeks after Vodafone rejected an offer for the Italian business from French billionaire Xavier Niel’s telecoms company, Iliad.

In a separate statement, Swisscom said that it intended to merge Vodafone Italia with Fastweb, its subsidiary in Italy. Both companies said there was no certainty that any transaction would be agreed.

A disposal of the Italian business would be the first major step by Vodafone’s new chief executive Margherita Della Valle towards meeting a pledge to simplify the company and exit markets where it lacks scale.

The deal would value the Italian business at €8bn on an enterprise basis and that Swisscom would pay cash.

>>> Stoxx 600 Pre-Market Indications

  • Thyssenkrupp (TKA TH) +1%
  • Mercedes (MBG TH) +0.9%
    • Mercedes Raised at Jefferies on Credible Cash Distribution Plan
  • Evotec SE (EVT TH) +0.9%
  • Sanofi (SNW TH) +0.7%
    • BioSpace: GSK, Sanofi Exit Nigerian Market Amid Lingering Foreign Exchange Crisis
  • Enel (ENL TH) -1.1%
  • NIBE Industrier (NJB TH) -1.1%
  • Telefonica (TNE5 TH) -1.3%
  • UCB (UNC TH) -2.2%
    • UCB FY Adjusted Ebitda Beats Estimates
  • Reckitt (3RB TH) -2.5%
    • *RECKITT 4Q LIKE-FOR-LIKE SALES -1.2%, EST. +1.75%
  • Lanxess (LXS TH) -4.4%
    • Lanxess Sees EU413m Goodwill Impairment, Envalior Devaluation
  • ASMI (AVS TH) -6.7%
    • ASMI 1Q Revenue Forecast Misses Estimates

>>> TradeGate Pre-Market Indications

DAX:
  • Mercedes (MBG TH) +0.9%
    • Mercedes Raised at Jefferies on Credible Cash Distribution Plan
MDAX:
  • SMA Solar (S92 TH) +1.5%
  • Thyssenkrupp (TKA TH) +1.4%
  • Evotec SE (EVT TH) +1.4%
  • Hensoldt (HAG TH) +1.3%
  • Lanxess (LXS TH) -4.6%
    • Lanxess Sees EU413m Goodwill Impairment, Envalior Devaluation
SDAX:
  • AUTO1 (AG1 TH) +11%
    • AUTO1 Sees 2024 Units Sold 610,000 to 665,000
  • Adesso SE (ADN1 TH) +4.7%
  • Kloeckner (KCO TH) +1.8%
  • flatexDEGIRO (FTK TH) +1.4%
    • FlatexDEGIRO’s 2024 Outlook Needs Further Clarity: Street Wrap
  • Duerr (DUE TH) +1.1%
    • Duerr Raised to Buy at Quirin Privatbank AG; PT 29 euros