After Hours Summary: AMBA +8.6%, BGFV +5.3%, LYFT +4.5% jump on earnings/guidance; BGS -7.4%, FUBO -7.2%, GO -4.3%, ROST -3.1% falls on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: MRVI +18.7%, AMBA +8.6%, BGFV +5.3% (also increases dividend), LYFT +4.5% (raises 1Q21 adjusted EBITDA forecast), QTRX +1.8%, VEEV +1.4%, BOX +1.2%, DAR +0.4%
Companies trading higher in after hours in reaction to news: CAP +8.5% (enters into business combination agreement with Dorma), SRNE +5.8% (receives FDA clearance to proceed with Phase 1 study of STI-2099), EBON +3.3% (stock offering), PAYA +2.7% (Point72 Asset Management discloses 5.5% stake), APPS +1.8% (acquires Triapodi (d/b/a Appreciate)), KAR +1.2% (new CEO), VSTA +0.4% (acquires Sociedade Educacional), ACEL +0.3% (to acquire Century Gaming for $140 mln), AMGN +0.2% (announces publication of data from Phase 3 study evaluating BLINCYTO), MRK +0.2% (confirms it will support production of JNJ vaccine; receives BARDA funding for expanded manufacturing capacity), THS +0.1% (reaches agreement with JANA Partners to appoint two independent directors), PSB +0.1% (new CEO), WELL +0.1% (exits relationship with GEN; ProMedica and Welltower announce two transactions to expand partnership)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: BGS -7.4%, FUBO -7.2%, GO -4.3%, ROST -3.1% (also reinstates dividend), RVMD -3.1% (also files for mixed securities shelf offering), JWN -2.3%, URBN -2.3%, HPE -0.1%, ANTM -0.1% (reaffirms full year 2021 guidance)
Companies trading lower in after hours in reaction to news: ARNA -6.9% (topline results from Phase 2b CAPTIVATE clinical trial; Olorinab did not meet the primary efficacy endpoint), SSYS -6.3% (stock offering; also files for mixed securities shelf offering), MGY -5.9% (stock offering), REAL -4.2% (convertible notes offering), FVRR -3.9% (stock offering; also files for mixed securities shelf offering), DGII -2.9% (stock offering), ATHM -2.9% (files for ADS offering), NRIX -2.5% (stock offering), PLXP -1.8% (stock offering), ORC -1.8% (stock offering), ESTC -1.7% (announces new capabilities and updates across its Elastic Cloud), ABNB -1.4% (convertible notes offering), ICE -0.3% (CFO to retire), BDTX -0.3% (announces pre-clinical data presentations)
Closing Stock Market SummaryThe S&P 500 declined 0.8% on Tuesday, retracing some of yesterday's rally, as the market struggled to attract follow-through buyers. The Dow Jones Industrial Average declined 0.5%, while the Nasdaq Composite (-1.7%) and Russell 2000 (-1.9%) fell more than 1.5%.
Most of the 11 S&P 500 sectors wavered between gains and losses today, but ten of them closed in negative territory amid a weak finish. The information technology (-1.6%) and consumer discretionary (-1.3%) sectors were influential laggards throughout the session, while the materials sector (+0.6%) was the one sector that closed higher. The Philadelphia Semiconductor Index fell 3.1%.
The disappointing price action in Zoom Video (ZM 372.79, -36.87, -9.0%) following its better-than-expected earnings report and upbeat guidance was cited as a profit-taking influence for the technology/growth stocks. ZM shares dropped 9% after starting the day higher by more than 7%. C3.ai (AI 98.50, -22.55, -18.6%), a smaller growth stock, dropped 19% after earnings.
Target (TGT 173.49, -12.60, -6.8%) had similar price action to Zoom, with shares giving up an early 4% gain and closing lower by 7% despite reporting strong quarterly results.
Other headwinds for the market included technical resistance at the 3900 level for the S&P 500, media reports continuing to highlight emerging coronavirus variants, and their potential resistance to vaccines, and China's top banking regulator warning about elevated valuations of global equity markets.
The Covid-variant reports might have overshadowed news that businesses in Texas will open at 100% capacity and that indoor dining in Chicago will expand to 50% capacity from 40%. Regrading valuations, Fed Governor Brainard (FOMC voter) acknowledged that are some signs of stretched asset valuations, but she didn't think they are broad-based.
Ms. Brainard added that last week's slide in Treasuries caught her eye and that conditions for tapering bond purchases will not be met for "some time." Longer-dated Treasury yields continued to pull back from last week's levels.
The 10-yr yield decreased three basis points to 1.42%, while the 2-yr yield was unchanged at 0.12%. The U.S. Dollar Index decreased 0.3% to 90.77. WTI crude futures decreased 1.2%, or $0.75, to $59.79/bbl.
Investors did not receive any economic data of note on Tuesday. Looking ahead to Wednesday, investors will receive the ISM Non-Manufacturing Index for February, the ADP Employment Change report for February, the final IHS Markit Services PMI for February, the Fed's Beige Book for March, and the weekly MBA Mortgage Applications Index.
- Russell 2000 +13.0% YTD
- Nasdaq Composite +3.7% YTD
- S&P 500 +3.0% YTD
- Dow Jones Industrial Average +2.6% YTD
Danone begins search for new chief in effort to placate activists
Emmanuel Faber will stay on as chairman despite investors calling for his departure
Danone has sought to calm an acrimonious public fight with activist shareholders by agreeing to split the chairman and chief executive roles now both held by Emmanuel Faber.
But the French consumer foods group stopped short of removing Faber altogether, as the activists had demanded, and instead decided to allow the embattled executive to remain as chairman once a new chief executive has been found.
“The separation will be effective upon the appointment of a new CEO,” said the company in a statement on Monday night after an extraordinary board meeting.
“The process to recruit a new CEO has been launched and, once complete, Emmanuel Faber will focus on his role as non-executive chairman.”
The board of directors also backed Faber’s turnround plan announced in October that includes asset sales, job cuts and a reorganisation of the company on more geographic lines rather than by category.
It remains to be seen whether the moves will quell the rebellion led by activist Blue Bell Capital and US fund Artisan Partners, which says it is Danone’s third-biggest shareholder.
The funds had not only called for Faber’s departure but also opposed the planned reorganisation he has championed, saying it would be unnecessarily disruptive at a time when Danone’s business was already reeling from the Covid-19 pandemic.
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Artisan said: “We note the latest developments and will respond in due course.” Blue Bell Capital declined to comment.
Danone shares initially rose on Tuesday but then fell 0.5 per cent in morning trading in Paris, compared with a largely flat blue-chip CAC 40 index.
Jefferies analyst Martin Deboo welcomed the announcement but pointed out how Faber’s continued presence as chairman would “constrain the latitude” of what a new chief executive could do.
Bernstein’s Bruno Monteyne was more blunt: “This is not a clean break. It leads to one of two options: either a CEO-in-name-only who executes the chairman’s plans, or a repeat of this tense stand-off with shareholders a few years from now.”
The dissident shareholders had criticised Danone for what they cast as a prolonged period of underperformance compared with larger rivals Nestlé and Unilever in terms of total shareholder returns. They have also criticised Danone for underinvesting in its brands to boost short-term profitability.
Faber, who has been at the helm since 2014, has defended Danone’s record and promised that his strategic overhaul would ignite a period of stronger growth.
Danone’s businesses in dairy and yoghurt, baby formula and bottled water have been hit hard during the pandemic. In bottled water alone, the group lost almost €1bn, or one-fifth, of revenue and €340m, or half, of operating profit last year.
In addition to the search for a chief executive, the board announced several other changes to “continue strengthening Danone’s governance”.
The most notable was a new lead independent director, a position of particular power that is supposed to provide key oversight of management. In December, Danone had said Gilles Schnepp, former chief executive of French industrial group Legrand, would join the board and be nominated as lead independent director.
But now it has changed course, saying Schnepp would instead share the role of “vice-chairman” alongside Cecile Cabanis, the former finance chief. Jean-Michel Severino, a board member since 2011, will be lead independent director and head the governance committee.
That change was interpreted by two people familiar with the board as a victory for Faber, since it elevates his loyal ally Severino while potentially neutralising Schnepp as a credible alternative. The fact that Cabanis will stay on the board as vice-chairman is also a rebuke to the activists, who had called for her departure so as to ensure that the board was not dominated by former executives.
In the statement, Faber welcomed the changes. “I am pleased we took the governance arrangements that will allow us to anticipate the next phase of development of the truly unique company [that] Danone is.”
>>> Up
* Befesa PT Raised to 68 euros from 41 euros at Berenberg
* Befesa PT Raised to 68 euros from 41 euros at Berenberg
* Daimler Raised to Reduce at AlphaValue
* Huhtamaki Raised to Hold at Jefferies; PT 38.30 euros
* ICADE Raised to Overweight at Morgan Stanley; PT 69 euros
* I-RES Raised to Buy at Berenberg; PT 1.75 euros
* Kerry Group Raised to Overweight at JPMorgan; PT 120 euros
* Lookers Raised to Buy at Peel Hunt (+)
* Nestle Raised to Buy at AlphaValue
* L'Oreal Raised to Overweight at Morgan Stanley; PT 350 euros
* Prudential Raised to Outperform at RBC; PT 1,800 pence
* Royal Mail Raised to Buy at SocGen; PT 675 pence (+)
* Stellantis NV Raised to Buy at AlphaValue
* Temenos Raised to Overweight at Barclays; PT 150 Swiss francs
* Uniper Raised to Equal-Weight at Barclays; PT 30 euros
* Virbac Raised to Buy at Jefferies; PT 260 euros
* VW Raised to Add at AlphaValue
>>> Down
>>> Down
* ADS Maritime Holding Cut to Hold at Arctic Securities
* CA Immo Cut to Hold at Wood & Company; PT 41 euros
* CA Immo Cut to Hold at Wood & Company; PT 41 euros
* Capital & Regional Cut to Sell at Stifel; PT 42 pence (+)
* Dechra Pharma Cut to Hold at Jefferies; PT 3,740 pence
* Entra Cut to Hold at DNB Markets; PT 195 kroner
* Provident Cut to Sell at Canaccord; PT 264 pence (+)
* Remy Cointreau Cut to Equal-Weight at Barclays; PT 173 euros
* Renalytix AI Cut to Hold at Investec; PT 906 pence (+)
* SIG Combibloc Cut to Neutral at Citi
* Software AG Cut to Underweight at Barclays; PT 31.50 euros
* Software AG Cut to Underweight at Barclays; PT 31.50 euros
* Valora Cut to Market Perform at ZKB; PT 195 Swiss francs (+)
>>> Initiation
* Embracer Group AB Rated New Buy at HSBC; PT 290 kronor
* Grand City Properties Rated New Buy at SocGen; PT 25 euros
* MDxHealth Rated New Outperform at Oppenheimer; PT 2 euros
* Stillfront Rated New Reduce at HSBC; PT 80 kronor
* TAG Immobilien Rated New Buy at SocGen; PT 28.60 euros
* Technip Energies Rated New Neutral at Exane; PT 10.70 euros
* Tritax EuroBox Rated New Buy at Peel Hunt
>>> Call
* Tritax EuroBox Rated New Buy at Peel Hunt
>>> Call
* Danone Management Changes ‘Not a Clean Break,’ Says Bernstein (+)
* Danone’s Changes at the Top Are a ‘Positive,’ Says Stifel (+)
* Flutter’s Strong Beat to Be Taken Positively, Goldman Says (+)
* Huhtamaki Upgraded at Jefferies, Risks ‘Increasingly Known’ (+)
* Lindt’s Results ‘Beyond Our Wildest Dreams,’ Vontobel Says (+)
* Sampo PT Raised, Morgan Stanley Sees Increased Earnings Quality (+)
* Sampo PT Raised, Morgan Stanley Sees Increased Earnings Quality (+)
* Travis Perkins Could See Upgrades on Decent Trading: Jefferies (+)
* TUI’s Stock Rally Misplaced as Vacation Euphoria Fades: Citi (+)
- MorphoSys (MOR TH) +2.9%
- MorphoSys Prelim FY Ebit EU27.4M
-
HelloFresh (HFG TH) +2.5%
- HelloFresh 4Q Revenue Beats Estimates
-
Kion (KGX TH) +2.3%
- Kion Sees 2021 Adjusted Ebit EU720M to EU800M, Est. EU761.4M
-
Rio Tinto (RIO1 TH) +2.1%
- Reflation Bulls Chasing EU Resource Stocks: Double-Top Breakout
- BAT (BMT TH) +1.9%
- Glencore (8GC TH) +1.4%
-
TeamViewer (TMV TH) +1.3%
- TeamViewer acquires U.S. augmented reality software firm Upskill
- Glaxo (GS7 TH) +1%
- IAG (INR TH) +1%
- L’Oreal (LOR TH) +0.9%
- CD Projekt (7CD TH) -0.6%
- VW (VOW3 TH) -0.6%
- ProSieben (PSM TH) -0.7%
-
AstraZeneca (ZEG TH) -0.7%
- One AstraZeneca dose substantially reduced the risk of getting sick with Covid-19 for the elderly, a new study shows.
- Siemens (SIE TH) -0.7%
- Varta (VAR1 TH) -0.7%
- MTU Aero (MTX TH) -0.9%
-
Shell (R6C TH) -1.3%
- Watch European Energy Shares as Brent Falls Again Ahead of OPEC+
-
TUI (TUI1 TH) -1.4%
- TUI’s Stock Rally Misplaced as Vacation Euphoria Fades: Citi
-
Nokia (NOA3 TH) -1.6%
- Nokia Removal From Euro Stoxx 50 Puts Pressure on Stock: OP
DAX:
- Beiersdorf (BEI TH) +0.6%
- Infineon (IFX TH) +0.3%
- Infineon to Replace Nokia in Euro Stoxx 50 Index: Qontigo
- Daimler (DAI TH) -0.3%
- VW and BMW’s Car-Charging Venture Plots Europe Network Expansion
- Allianz (ALV TH) -0.4%
- VW (VOW3 TH) -0.5%
- Covestro (1COV TH) -0.5%
- Deutsche Post (DPW TH) -0.6%
MDAX:
- MorphoSys (MOR TH) +3.6%
- MorphoSys Prelim FY Ebit EU27.4M
- HelloFresh (HFG TH) +2.5%
- HelloFresh 4Q Revenue Beats Estimates
- Lufthansa (LHA TH) +0.8%
- Commerzbank (CBK TH) +0.7%
- Siemens Energy (ENR TH) +0.6%
- Varta (VAR1 TH) -0.3%
- ProSieben (PSM TH) -0.4%
- Airbus (AIR TH) -0.4%
- Aroundtown (AT1 TH) -0.5%
- Software AG (SOW TH) -3.2%
- Software AG Cut to Underweight at Barclays; PT 31.50 euros
SDAX:
- Hornbach Baumarkt (HBM TH) +2%
- Global Fashion Group (GFG TH) +1.9%
- ADVA Optical (ADV TH) +1.8%
- Encavis (CAP TH) +1.3%
- DIC Asset (DIC TH) +0.8%
- Deutsche Euroshop (DEQ TH) -0.4%
- Borussia Dortmund (BVB TH) -0.6%
Royal Caribbean CFO to Bolster Liquidity, Could Pay Down Debt After Share Sale
The cruise operator is offering 16.94 million shares at $91 apiece
Royal Caribbean Group’s finance chief plans to use the proceeds from a $1.5 billion share sale to boost the cruise operator’s liquidity and, potentially, to reduce its debt, which ballooned during the pandemic.
The Miami-based company, which is nearing the first anniversary since it stopped sailings in North America, said Monday it has launched an equity offering of 16.94 million shares at $91 apiece. The sale is expected to close Wednesday and provide Royal Caribbean with additional funds, Chief Financial Officer Jason Liberty said.
“We are always evaluating and opportunistic about accessing the capital markets. We saw an opportunity here,” Mr. Liberty said.
The fresh capital could help the company pay down its debt, Mr. Liberty added, noting that “last year, we took on a lot of debt.”
Royal Caribbean’s net debt rose more than 42% to $16.45 billion in 2020 from the prior year, according to S&P Global Ratings, a data provider and ratings firm. The cruise operator, which ended 2020 with about $4.4 billion in cash, expects to burn through between $250 million and $290 million a month during the hiatus, Mr. Liberty said. Royal Caribbean last week reported a net loss of $5.8 billion for 2020, compared with net income of $1.9 billion in 2019.
Royal Caribbean has suspended sailings on most of its ships through at least April 30. Its peers Carnival Corp.’s Carnival Cruise Line and Norwegian Cruise Line Holdings Ltd. have scrapped U.S. sailings through the end of May. Mr. Liberty declined to comment on whether Royal Caribbean would extend its sailing suspension.
The timing for resuming U.S. voyages ultimately depends on obtaining a permit from the U.S. Centers for Disease Control and Prevention, which requires operators to conduct mock sailings and apply for permits at least 60 days before offering passenger cruises. Mr. Liberty said Royal Caribbean is in touch with the CDC, but declined to comment further.
A CDC spokesman last week said no cruise operator has held mock voyages or applied for a permit, as the CDC has yet to publish technical instructions for agreements between cruise operators and port and local health authorities.
Canada recently extended its cruise ban by a year to February 2022. Royal Caribbean is currently considering if and how it could offer travel to Alaska and New England despite the Canadian ban, Mr. Liberty said.
Mr. Liberty will see some more cash coming in when the company’s sale of its Azamara business closes. Royal Caribbean in January said it had agreed to sell the cruise line to private-equity firm Sycamore Partners for $201 million in cash. “Every dollar counts,” Mr. Liberty said about the transaction.
He declined to comment on how much Royal Caribbean would need to spend on health and safety measures once it resumes the majority of its operations. “The range is too extreme to provide an estimate for it,” Mr. Liberty said. Competitor Norwegian has said it has put aside about $300 million for health and safety efforts.
Royal Caribbean’s equity offering was received positively by S&P. The ratings firm said the stock sale would provide the cruise operator with “a liquidity cushion to support its ongoing cash burn while operations remain suspended and as they gradually resume.”
The proceeds also could help Royal Caribbean reduce its leverage levels, S&P said.
S&P last week downgraded its issuer-credit rating on Royal Caribbean further below investment-grade. Mr. Liberty said Royal Caribbean wants to return to an investment-grade rating, but didn’t provide a specific timeline for that.