Research Calls
- Upgrades:
- Diamondrock Hospitality (DRH) upgraded to Outperform from In-line at Evercore ISI
- Enviva (EVA) upgraded to Strong Buy from Outperform at Raymond James; tgt $80
- EOG Resources (EOG) upgraded to Buy from Neutral at Goldman; tgt raised to $143
- GN Store Nord (GGNDF) upgraded to Outperform from Neutral at Credit Suisse
- Jamf Holding (JAMF) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $28
- Juniper Networks (JNPR) upgraded to Neutral from Underweight at Piper Sandler; tgt raised to $29
- Owens Corning (OC) upgraded to Buy from Underperform at BofA Securities; tgt raised to $95
- PotlatchDeltic (PCH) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $55
- Target (TGT) upgraded to Buy from Hold at Jefferies; tgt raised to $185
- Xylem (XYL) upgraded to Outperform from Market Perform at Cowen; tgt raised to $105
- Downgrades:
- ACM Research (ACMR) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $9
- Carvana (CVNA) downgraded to Neutral from Outperform at Wedbush; tgt lowered to $15
- Cleveland-Cliffs (CLF) downgraded to Underperform from Neutral at Exane BNP Paribas; tgt $14.30
- Descartes (DSGX) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $60
- Global Payments (GPN) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $115
- Hayward Holdings (HAYW) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $8
- Hewlett Packard Enterprise (HPE) downgraded to Neutral from Outperform at KGI Securities; tgt $13
- Intel (INTC) downgraded to Underperform from Neutral at KGI Securities; tgt $13
- Int'l Paper (IP) downgraded to Sell from Hold at Deutsche Bank; tgt lowered to $29
- Masco (MAS) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $46
- Mohawk (MHK) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $100
- NGM Biopharmaceuticals (NGM) downgraded to Neutral from Buy at Goldman; tgt lowered to $4
- NGM Biopharmaceuticals (NGM) downgraded to Outperform from Strong Buy at Raymond James; tgt lowered to $4
- NXP Semi (NXPI) downgraded to Neutral from Outperform at KGI Securities; tgt $155
- Packaging Corp (PKG) downgraded to Sell from Hold at Deutsche Bank; tgt lowered to $104
- Pegasystems (PEGA) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $25
- Palomar Holdings (PLMR) downgraded to Mkt Perform from Mkt Outperform at JMP Securities
- PDC Energy (PDCE) downgraded to Neutral from Buy at Goldman; tgt $74
- Resolute Forest Products (RFP) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt $23
- RingCentral (RNG) downgraded to Neutral from Buy at BTIG Research
- RPM Inc (RPM) downgraded to Neutral from Buy at UBS; tgt lowered to $101
- Sunstone Hotel (SHO) downgraded to In-line from Outperform at Evercore ISI
- Syneos Health (SYNH) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $53
- WalkMe Ltd. (WKME) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $9
- Others:
- Abbott Labs (ABT) initiated with an Overweight at Barclays; tgt $118
- Baxter (BAX) initiated with an Overweight at Barclays; tgt $64
- Bentley Systems (BSY) initiated with a Buy at Rosenblatt; tgt $37
- Boston Scientific (BSX) initiated with an Overweight at Barclays; tgt $49
- Church & Dwight (CHD) initiated with an In-line at Evercore ISI
- Clorox (CLX) initiated with an Underperform at Evercore ISI
- Dexcom (DXCM) initiated with an Equal Weight at Barclays; tgt $103
- Edwards Lifesciences (EW) initiated with an Overweight at Barclays; tgt $96
- Esquire Financial (ESQ) initiated with an Outperform at Keefe Bruyette; tgt $53
- Exelixis (EXEL) initiated with a Mkt Outperform at JMP Securities; tgt $26
- Globus Medical (GMED) initiated with an Overweight at Barclays; tgt $69
- Insulet (PODD) initiated with an Equal Weight at Barclays; tgt $238
- Intuitive Surgical (ISRG) initiated with an Overweight at Barclays; tgt $235
- Johnson & Johnson (JNJ) initiated with an Equal Weight at Barclays; tgt $175
- Keros Therapeutics (KROS) initiated with a Buy at Truist; tgt $100
- Kimberly-Clark (KMB) initiated with an In-line at Evercore ISI
- Medtronic (MDT) initiated with an Equal Weight at Barclays; tgt $90
- NuVasive (NUVA) initiated with an Overweight at Barclays; tgt $53
- NVR (NVR) resumed with a Buy at BofA Securities; tgt $4900
- PropTech Investment Corporation II (PTIC) initiated with a Buy at DA Davidson; tgt $12
- Simon Properties (SPG) initiated with a Peer Perform at Wolfe Research
- Stryker (SYK) initiated with an Overweight at Barclays; tgt $239
- Tandem Diabetes Care (TNDM) initiated with an Overweight at Barclays; tgt $75
- The Trade Desk (TTD) initiated with an Equal-Weight at Morgan Stanley; tgt $60
- UiPath (PATH) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $15
- Zimmer Biomet (ZBH) initiated with an Underweight at Barclays; tgt $104
Gapping down
In reaction to earnings/guidance:
- CONN -20.7% (guidance; CEO steps down), SI -12.4%, SFBS -5.6%, HAS -4%, MRTN -2.5%, MLI -2.1%, SBNY -2%, GMAB -0.7% (guidance)
Other news:
- AMYT -5.9% (COMP adopts positive opinion on Orphan Disease Designation for Mycapssa for the treatment of Acromegaly)
- SILK -3.7% (commences $100 mln share offering; also issues guidance)
- HPK -2.3% (announces increase to the company's borrowing base)
- MREO -2.2% (updated operating plan to maximize shareholder value; targets 40% reduction in headcount and significant expense reductions as company continues to guide lead programs through upcoming value creating milestones)
- AZTA -1.5% (COO resigned)
- HA -1.1% (agreement with Mokulele)
Analyst comments:
- HAYW -1.8% (downgraded to Underperform from Neutral at BofA Securities)
- ACMR -1% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
- SHO -1% (downgraded to In-line from Outperform at Evercore ISI)
- IP -0.9% (downgraded to Sell from Hold at Deutsche Bank)
Gapping up
In reaction to earnings/guidance:
- FUBO +15.3% (guidance), STT +3.2%, GS +2.5%, MAIN +2.3% (guidance), XPO +1.7% (guidance), JNJ +1.7%
Other news:
- AKUS +85.3% (Lilly (LLY) to acquire Akouos in transaction valued at ~$487 mln plus a contingent value right for an aggregate amount up to ~ $610 mln)
- AVEO +39.7% (to be acquired by LG Chem for $15.00 per share in cash)
- IAG +7.5% (sells interest in Rosebel Gold Mines to Zijin Mining for cash consideration of $360 mln)
- AR +5.6% (joining S&P MidCap 400)
- MFA +5.6% (reports certain financial measures)
- XAIR +5% (announces positive data)
- NTCO +4.7% (to initiate a comparative study for either an IPO of Aesop or a spin-off to separate Aesop from Natura)
- NFLX +2.1% (rolls out profile transfer)
- TRQ +2.1% (Q3 production)
- EXC +2% (names new CFO)
- JPM +1.9% (investment banking chief to retire according to Reuters)
- JWN +1.9% (CFO to step down; reaffirms guidance)
Analyst comments:
- JAMF +4.8% (upgraded to Overweight from Equal Weight at Barclays)
- DRH +3.1% (upgraded to Outperform from In-line at Evercore ISI)
Lanvin Group Lowers Valuation Ahead of December IPO
The Fosun International Ltd.-owned luxury fashion company adjusts its pre-money equity valuation from $1.25 billion to $1 billion.
SHANGHAI — Ahead of its December IPO, Lanvin Group revealed its 2022 interim results and an updated company valuation in a recent amendment to its registration statement with the SEC.
Heading into a roadshow in Hong Kong, South Korea and the U.S., the Fosun International Ltd.-owned luxury fashion company lowered its pre-money equity valuation from $1.25 billion to $1 billion. Group revenue grew 73 percent on a year-to-year basis to 202 million euros in the first half of 2022. The company is on track to achieve profitability in 2024.
The 20 percent cut is due to “challenges in the global stock market and the currency market,” said Joann Cheng, chairman and chief executive officer of Lanvin Group, in an exclusive interview with WWD.
“Eleven percent of the adjustment was due to the shifts in the currency market, especially the euro and U.S. dollar exchange rate. Nine percent of the adjustment reflects this year’s global economic changes and the performance of our reference peer group,” Cheng said.
“The new valuation will help us deliver significant upside potential and long-term value for both current Primavera Capital Acquisition Corp. shareholders and future shareholders of Lanvin Group,” she added. “Our outlook for the business remains unchanged.”
Lanvin Group also confirmed Meritz Securities Co. Ltd., a South Korea-based financial services conglomerate, as its latest investor. Meritz has committed $50 million in a private placement and is considering an additional investment of up to $15 million via a PIPE subscription, or private investment in public equity, as Lanvin Group continues the de-SPAC process before going public, a mandatory last step in which a listed SPAC successfully merges with a private company.
“Meritz’s decision to join our strategic ecosystem shows a global investor’s confidence in our growth potential,” Cheng commented. “As South Korea becomes an increasingly important luxury market, it also means some potential cooperation opportunities with them down the line.”
The owner of Lanvin, Sergio Rossi, Wolford, St. John and Caruso highlighted results for Lanvin and Wolford in the interim report. For Lanvin, global sales in the first half grew 117 percent to 64 million euros compared to the same time last year. Wolford, the biggest brand in terms of sales in 2021, saw its revenue grow 29 percent year-over-year to 54 million euros.
“We have seen all our group brands use different strategies to grow and achieve our goals,” Cheng said. “Lanvin has been expanding into footwear and leather goods categories while growing its online distribution. The brand will continue its retail expansion with a Tokyo store set to open in the next few months.
“Wolford’s unique fabrication has helped the brand grow via product lines. The W athleisure collection has shown tremendous growth,” she continued. “Sergio Rossi, a brand we acquired last year, has continued to expand its retail presence online and offline, utilizing more localized marketing initiatives to gain popularity on platforms like Xiaohongshu.”
Key markets continued to show growth momentum. Group revenue grew 91 percent year-over-year in the first half of 2022 in the European market and 58 percent year-over-year in the North American market during the same period.
Cheng said the U.S. market, the biggest for the group, has shown “strong growth momentum” after recovering from the pandemic. America accounts for about 15 percent of group sales. “There is still a lot of room for growth, aside from the brand St. Johns, we expect the market to grow by at least 10 percent,” Cheng said.
The Greater China market grew 32 percent in the first half, while sales in the rest of Asia grew 194 percent year-over-year. The Great China market currently makes up around 14 percent of group sales, which includes 10 percent from mainland China. Cheng expects the Greater China market to grow by around 28 percent.
As for future acquisition targets, Cheng said the group is looking at “new luxury” brands that target Gen Z shoppers or brands with a “relatively new business model and a strong online presence,” Cheng said. “It’s still early stages in the selection process. We want to focus on the completion of the IPO first,” she said.
Early premarket gappers
- Gapping up:
- AVEO +37.3%, FUBO +9.9%, XAIR +5%, NTCO +4.7%, AR +4.1%, MFA +3.9%, VALE +3.1%, IAG +2.8%, TRQ +2.1%, BTG +1.7%, NFLX +1.6%, JWN +1.6%, BA +1.5%, KIND +1.4%, BBWI +1.4%, JNJ +1.4%, JPM +1.3%, INTC +1%, RNGR +1%, EXC +0.9%, ELS +0.8%
- Gapping down:
- IDYA -5%, SILK -2.5%, MRTN -2.5%, HPK -2.3%, MATX -1.8%, AZTA -1.5%, HA -1.1%, SFBS -1%, CWT -0.7%, GILD -0.6%, RIO -0.6%, CBSH -0.6%, LOCO -0.5%
European telecoms groups await M&A green light
ECJ view on whether Brussels was right to block O2-Three merger will be ‘a moment’ for dealmakers
As European telecoms executives champ at the bit to do more deals, they will be closely watching Luxembourg this week for a crucial decision that could unleash a wave of activity across the sector.
Advocate general at the EU Court of Justice Juliane Kokott will on Thursday deliver her opinion on whether Brussels made the right decision in blocking the proposed merger of the UK businesses of Telefónica’s O2 and CK Hutchison’s Three in 2016.
While harking back to a deal that collapsed six years ago, her verdict will be carefully monitored by France’s Orange and Spain’s MasMovil, who earlier this year announced they are in exclusive talks to combine their Spanish businesses.
Their proposed €19.6bn joint venture is likely to be the first of several attempts in the coming months to streamline what the industry argues is a fragmented market in Europe — but first the companies will have to convince EU regulators that a reduction in players will not harm consumers.
“This merger will be a test case for the industry,” said a person who has advised on telecoms deals in the past in Brussels. “We are at a moment.”
A final judgment by the ECJ is expected sometime next year and, while it is not bound by the advocate general’s opinion, in most cases it follows their recommendations.
Karen Egan, an analyst at Enders Analysis, said that the ECJ ruling next year is “going to be absolutely critical for European mergers”, adding that regulators’ view on the Orange-MasMovil deal is “more uncertain than the companies are portraying to the market”.
Depending on the outcome, the ECJ’s view may also improve the chances of a proposed merger between Vodafone and Three in the UK, which would create the biggest mobile operator in the country and is also regarded as a litmus test of investor appetite for consolidation.
“The decision next week is very important in our view here,” said an executive from Hong Kong conglomerate CK Hutchison.
At the heart of whether the Orange-MasMovil deal in Spain will be permitted is a long-running debate between operators and regulators over whether reducing the number of players in a market from four to three will harm consumers.
Defenders of the deal argue that like the rest of the continent the Spanish market has become fiercely competitive and a merger will lead to synergies, enabling the combined group to save on costs and invest in the country’s infrastructure — which will eventually benefit customers.
Telecoms executives have long argued that consolidation is the only viable way for Europe to keep up with the rapid pace of development in infrastructure seen in China and North America, both of which have three main mobile operators.
“If operators generate no cash flow, they simply can’t invest,” said Meinrad Spenger, founder and chief executive of MasMovil, in an interview with the Financial Times, adding that finding synergies between operators would be crucial to ensure investment. “Europe cannot afford to lose more speed in 5G development.”
But EU officials have pushed back against the premise that consolidation is necessary for innovation. Competition commissioner Margrethe Vestager argued recently that it is competition rather than mergers that leads to investment. She added that although there was no “magic number” in mind when it came to players in a country, regulators “get nervous” when the pool of operators shrinks. The cost of living crisis and surging inflation mean that any perception of anti-competitive practices and the risk of higher consumer prices are especially undesirable.
Those familiar with the thinking of regulators say the default has been to be sceptical about these deals. “The house view has been that a reduction of one competitor in the market — from four to three — is anti-competitive and therefore I need to prohibit it,” said a person with knowledge of the EU’s competition division. “This has been the dogma up to now.”
But others find this view outdated.
“Whether you’ve got three players desperately trying to fill their networks, or four, isn’t that different in terms of competitive intensity,” said Egan, pointing to markets such as Australia, Austria and Germany that have three players in mobile and yet still have prices below the OECD average.
The Orange-MasMovil tie-up is not the only one that will be faced with deep scrutiny. Last July, Brussels launched an in-depth probe into Orange’s acquisition of a stake in Belgian peer VOO over concerns that the transaction may hurt competition. “We will look at this deal very cautiously,” said a person with knowledge of the upcoming probe.
Those in the industry expect the Orange-MasMovil transaction will receive the same level of scrutiny.
MasMovil argues that a move from four to three mobile players is less relevant as a concern for the Spanish market as there are more companies that combine fixed and mobile services and that offer mobile services without owning the network infrastructure than “any other comparable market in Europe”.
“The merger of two operators would not significantly change the structure of the Spanish telecom market,” said Spenger.
Still, any clearance of the deal is likely to come with requirements for the two companies to sell some assets to create more competition. EU officials are already discussing the deal with the companies before it is officially submitted for consideration by the end of the year, said people with knowledge of the probe.
Elsewhere, a top 15 investor in Vodafone said that the British regulator Ofcom has made some statements to the effect that “the benefit to the consumer has not been apparent” for its proposed deal with CK Hutchison. They added: “I don’t think regulators will be a pushover, there will have to be some quite big concessions and promises made.”
Patek Philippe’s new Nautilus watch finally surfaces
The source of much horological hype, the 5811 timepiece has some very subtle modifications — and one bigger change
The wait is over. White smoke has issued from the chimney. At last, there is a successor to Patek Philippe’s fabled Ref 5711 Nautilus, the watch that more than any other has come to symbolise the craze for luxury steel sports bracelet watches.
In the watch world, the Nautilus enjoys a fame akin to that of the Birkin bag. Designed for Patek Philippe by Gérald Genta almost 50 years ago, in 1976, the Nautilus was a new Patek for a new customer. Until then the Swiss watchmaker had been known primarily as a maker of gold dress watches and complications. The Nautilus reached out to the younger generation. “The Nautilus was a link between a party guy, a gentleman and a sporty guy, a mix of all of that,” explains Thierry Stern, president of Patek Philippe, talking to me on the phone from Geneva.
Prima facie, the most noticeable thing about the new Ref 5811 is that it is barely distinguishable from the watch it replaces. Even side by side with its predecessor, anyone who isn’t a Patek obsessive will have difficulty playing this horological game of spot the difference.
At 41mm the case is a millimetre wider. Executed in a deeper blue, the gradient dial darkens and intensifies towards its edge, subtly enhancing the play of light over the face. The date window now features a pleasing delicate frame in white gold, and there is a return to the original two-piece case construction of the 1976 original, rather than the three-piece case construction that was introduced in 2006. It is in effect invisible to the naked eye: at 8.2mm in height the watch is an entire tenth of a millimetre slimmer.
Otherwise, the familiar styling signatures remain intact: the porthole-like case, the interplay of brushed and polished metal, and the smooth, seductive, supple-yet-strong integrated bracelet. “It’s like the Porsche 911,” explains Stern. “They change it slowly, but they’re always improving.”
Talking of improvements, the clasp is a dream. Heretical though it may sound to Patek fundamentalists, this did need improvement. The 5711 used to be secured by a little flip lock and the only way of adjusting the bracelet for hot weather wear was to take it to an authorised Patek dealer and have them insert another link or remove one link and add a slightly larger “one-and-a-half” sized link. Now there is an adjustable and lockable integrated extension system with which the wearer can add up to four millimetres. But the very fact that I succumbed to transports of delight about the bracelet closure reveals just how unbroken and not in need of fixing the original design is. “There was no real need to do anything else,” says Stern.
What really makes the Ref 5811, or to give it its full designation the 5811/G different is that it is not made of steel. The ‘G’, for gris, indicates white gold. Unless you know what you are looking at and feel the difference in the hand, white gold could be mistaken for steel (or for that matter platinum) except when it comes to the price: the last official retail price for the steel 5711 was £26,687, while the white gold 5811/G is £56,190. But in the crazy world of the Nautilus, where until recently steel 5711s have been selling for over £100,000 on the secondary market, the opportunity to purchase the watch at full price is tantamount to receiving a huge discount, with speculators rather than the brand or its retailers benefiting from its popularity.
The white gold 5811/G retails at £56,190
“The most difficult part was having the courage to stop the 5711 and make a new one in white gold. I didn’t want to overproduce the 5711 in steel. First because it was steel, and I cannot only sell steel . . . otherwise I’m broke,” Stern exaggerates for humorous effect. “Secondly, like every piece, it has a start, and it has an end and I saw that it was time to make a new one, to protect the owners of the 5711. To protect the value, I had to stop it. I didn’t have a choice.”
I ask him whether he thinks that a brand owned by a group would have decided to stop producing a best-selling model because it was too popular. “No, never,” comes the robust response. “I’ll not worry about stopping an iconic watch, because I can make a new one.”
Are there plans for a steel 5811? “I don’t think so. I have to be vigilant,” he explains. “There are some major decisions for me to take. How far would I like to go with Patek Phillipe? Should I go up to 100,000 pieces? Or should I stay at 60,000 pieces? Or maybe . . .” he smiles mischievously, pauses, and adds provocatively “[up] to half a million?”
Too many steel watches and “the average price would be too low”. He is against charging a premium for steel just because secondary market prices are high (a limited edition Tiffany blue dial 5711, the first of the series, sold at auction for $6.5mn, around 120 times more than its retail price). “I could, but I will never do that. A steel watch has to be at a steel price, and that’s deeply inside me. I have to be very, very cautious with the steel quantity. I have a certain percentage, and I will not exceed that. If I want to create new steel watches, I have to stop some other steel watches,” he says of the retirement of the 5711.
“Now I have space to create something different in steel.” And smoke signals from Patek HQ indicate it will not be a Nautilus.