>>> US After Hours Summary: IIVI +24.5%, GDOT +7.4% up big on earn

After Hours Summary: IIVI +24.5%, GDOT +7.4% up big on earnings; NVAX +40% a big mover on COVID funding; EB -11.7%, DIOD -7.4%, JCOM -5.6% weak on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: IIVI +24.5%, BHF +14.1%, FBM +8.6%, GWPH +8.1%, PSEC +8%, GDOT +7.4%, MESA +7.4%, ENSG +4.9%, ERI +4.3%, GO +3.6%, KWR +3.5%, DDOG +3.4%, BE +2.7%, SPG +2.6%, CZR +2.4%, AMCR +2%, ECPG +1.3%, RPAY +1.3%, HHC +1.2%, CDLX +0.6%, IPAR +0.3%

Companies trading higher in after hours in reaction to news: CBAY +110.9% (provides corporate update; independent panel concludes there was no evidence of seladelpar-induced liver injury in Phase 2b NASH study), NVAX +40% (announces COVID funding of up to $388 mln from CEPI to advance vaccine development; also reports Q1 earnings), IVR +7.6% (provides update on dividend payment, portfolio), MYOK +3.2% ($450 mln stock offering), AB +1% (reports month-end assets under management), ABT +0.7% (President Trump says increase in testing is possible due to ABT and TMO testing), TSLA +0.3% (CEO Elon Musk tweets that co "is restarting production today against Alameda County rules")

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: EB -11.7%, CSOD -7.7% (also names new CEO), DIOD -7.4%, SUN -7.1%, INO -5.8%, JCOM -5.6%, AIMT -5.3% (also co says pandemic has paused the commercial launch of PALFORZIA), TME -5.2%, HALO -4.9%, AEE -4.8%, PLYA -4.3%, TLRY -4.3%, SGMO -4%, XLRN -3.9%, FATE -3.8%, MIME -3.5%, HTZ -3.5%, AMBC -3.3%, OMER -2.9%, EZPW -2.7%, RETA -2.6%, TXG -2.6%, SGMS -2.5%, GSKY -2.3%, AMN -2.2%, FSCT -1.8%, ET -1.7%, CABO -1.1%, CBT -0.3%, G -0.3%, KAMN -0.3%, AFG -0.2%, DRH -0.2%, FOE -0.2%, LTHM -0.2%, NHI -0.2%, ETH -0.1%, LOGI -0.1%, MBI -0.1%, NSA -0.1%

Companies trading lower in after hours in reaction to news: GNFT -47% (announces results from interim analysis of RESOLVE-IT Phase 3 trial; trial did not meet primary endpoint), STRO -15.9% (announces stock offering; size not disclosed), AXLA -10.4% (files for 11 mln share common stock offering), SQNS -7.1% (launches ADS offering; size not disclosed), AKBA -6.6% ($100 mln stock offering), CHEF -4.4% ($75 mln stock offering), QTWO -4.3% (launches follow-on offering of $275 mln of its common shares), PING -3.2% (launches offering of 8.5 mln shares by selling stockholders), BLK -2.2% (commences public secondary offering; announces intended $1.1 bln stock repurchase), LXP -1.5% (public offering of 15 mln shares)

FT : KKR to invest $750m in cosmetics maker Coty

KKR to invest $750m in cosmetics maker Coty
PE firm takes step towards buying majority stake in group’s beauty and haircare unit

KKR has agreed to inject $750m into debt-laden cosmetics maker Coty in the first step towards a broader deal that would see the US private equity group buy a majority stake in the company’s professional beauty and haircare division. 

The companies on Monday announced a “strategic partnership” that sets out a path to a deal that must be finalised in talks between the two companies and Coty’s majority owner, the investment vehicle JAB. 

The plan is the latest in a string of moves by Coty and its backers at JAB to turn round the company, whose biggest brands such as CoverGirl have lost favour with consumers who are flocking to new, often celebrity-driven rivals.

Coty is much smaller than cosmetics leaders L'Oréal and Estée Lauder and, given its heavy debts, operational problems and constantly rotating cast of executives, it has been unable to keep up with rapid changes in the market.

The announcement on Monday set out a plan in which Coty’s professional beauty division, which includes Wella, Clairol, OPI and ghd brands, would be spun out into a separate company. KKR would own a 60 per cent stake and Coty 40 per cent of the new business, which would have an enterprise value of $4.3bn, the companies said. Coty said this transaction would result in $3bn in cash payments flowing back to it. 

If the transactions are completed, a total of $4bn in cash payments will be made to Coty, which will be used to cut its $8.1bn debt load in half. KKR would also emerge as Coty’s second-biggest shareholder with an up to 17 per cent stake and two board seats.

Last October, Coty launched the auction of its beauty and haircare division, hoping to raise about $8bn, people close to the process said at the time. Unilever and Henkel, as well as private equity firms, were weighing bids just as the Covid-19 pandemic hit, shutting down hair and beauty salons and upending equity and debt markets. 

But Coty and its backers at JAB pushed ahead with the auction, and with the KKR plan are betting they have found a way to pull off a deal. KKR will first inject $750m in preferred equity into Coty and a further $250m if the two sides finalise the agreement to sell the professional beauty unit. 

Coty will pay a 9 per cent coupon to KKR under the terms of the preferred equity, which can be converted into common shares when Coty’s stock price reaches $6.24. If exercised, KKR will own as much as 17 per cent of Coty’s shares and all other shareholders will be diluted.

Upon its conversion, JAB’s stake of about 60 per cent would be reduced but it would continue to own a majority stake in Coty. Shares in Coty fell 5.5 per cent to $4.92 just before midday in New York. 

Peter Harf, JAB managing partner and chairman of Coty, welcomed the arrival of KKR: “Their investment and partnership will be instrumental to strengthening Coty’s balance sheet and helping the company to achieve long-term growth in shareholder value.”

Credit Suisse and Antonio Weiss, the former Lazard banker and US Treasury official, advised Coty on the deal.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • ON -9.8%, XHR -7%, UAA -4.1%, MAR -2.8%, PK -1.7%, CLR -0.5%

Other news:

  • PENN -6.7% (announces public offering of common stock and convertible senior notes due 2026)
  • AKTS -5.4% (files for $150 mln mixed securities shelf offering)
  • YETI -4.6% (commences secondary offering of of 15 mln shares of common stock by certain of its stockholders)
  • PTGX -4.5% (commences underwritten public offering of 5,000,000 shares of its common stock)
  • UAL -4.2% (decided not to proceed with $2.25 bln notes offering)
  • BBBY -2.5% (provides further update on COVID-19 response; expects majority of its stores to remain closed until at least May 30)
  • OYST -2.4% (reports ONSET-2 Phase 3 trial of OC-01 nasal spray met primary endpoint)
  • DBI -1.7% (files mixed securities shelf offering)
  • NWL -1.3% (files mixed securities shelf offering)
  • RUTH -1.1% (files for $75 mln mixed securities shelf offering)
  • SLCA -0.9% (to suspend dividend until further notice)
  • ARCT -0.8% (files for $200 mln mixed securities shelf offering)

Analyst comments:

  • RDFN -6.1% (downgraded to Neutral from Positive at Susquehanna)
  • MOS -3.4% (downgraded to Underperform from Buy at BofA/Merrill)
  • YELP -3.3% (downgraded to Market Perform from Outperform at BMO Capital Markets)
  • CTVA -3% (downgraded to Underperform from Neutral at BofA/Merrill)
  • LYFT -2.7% (downgraded to Hold from Buy at Stifel)
  • ICD -2.6% (downgraded to Neutral from Buy at B. Riley FBR)
  • CF -2.3% (downgraded to Underperform from Buy at BofA/Merrill)
  • NTR -2.3% (downgraded to Underperform from Buy at BofA/Merrill)
  • CAG -1.6% (downgraded to Hold from Buy at SunTrust)
  • MNST -1.2% (downgraded to Neutral from Buy at Citigroup)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • COTY +14.4%, AVYA +13.1%, CAH +9.2%, ORA +9.1%, UNVR +9%, AN +8.8%, CEVA +7.7%, BLUE +6.9%, GIS +1.9%, ICPT +1.7%, GOGO +1.4%, TLYS +0.8%

M&A news:

  • AMC +60.2% (Amazon (AMZN) potentially in discussions to acquire AMC, according to Daily Mail )

Other news:

  • MYOK +71.9% (reports Phase 3 EXPLORER clinical trial of Mavacamten met all primary and all secondary endpoints)
  • QDEL +16.6% (receives Emergency Authorization from the FDA for rapid antigen COVID-19 diagnostic assay)
  • PLX +11.9% (reports Phase III BRIDGE open-label, switch-over clinical trial met main objectives for safety and efficacy)
  • MYGN +6.7% (receives FDA approval for myChoice CDx as companion diagnostic for Lynparza)

Analyst comments:

  • DBD +3.7% (upgraded to Neutral from Underweight at JP Morgan)
  • COLD +1.4% (upgraded to Buy from Neutral at BofA/Merrill)
  • SABR +1.4% (upgraded to Outperform from Mkt Perform at Bernstein)
  • CVA +1.1% (upgraded to Hold from Sell at Stifel)

FT : OK, Zoomer

OK, Zoomer
Why I fear young people will lose their future earnings potential as well as their shirts on stocks

I saw that phrase in a recent Bank of America report on economic implications from Covid-19. It was the headline for a section on why the pandemic will permanently reshape an entire generation of young consumers. Like the “Greatest Generation” and the Boomers themselves, both of which were shaped by the chief economic events of their time, consumers who’ve come of age in the post-corona era will have unique challenges but also opportunities.

Millennials and their younger “Gen Z” peers are in some ways perfectly positioned for the age of remote work and simpler living. They are digital natives who live and breathe streaming, social media, ecommerce and such. They are well-positioned to sell themselves to employers and start businesses in the new and much more digital era.

And they’ll need to, because they are more exposed to long-term decreases in earning power than any other group. Economic research shows that when you start your working career during a period of high unemployment and compressed wages, you never recoup the losses fully. Zoomers, as they may now be called, will be at increased risk for poverty and retirement insecurity.

Which may be why some are frantically trying to play the stock market. I was slightly suspicious when my 13-year-old son asked me if he could open a brokerage account last week because “Mom, you want to buy the dip!” (um, no, not this one — see my latest column on that score).

But I was downright alarmed by this Financial Times piece on how millennials are moving into “gamified investing”, using investing apps to trade stocks at high velocity. Robinhood, a no-fee digital trading platform, added 3m users in 2020 — half of whom were first-time investors. E-trade added 363,000 in retail investors in the first quarter of this year. 

According to Axios, these young people are driven by both a glut of free time and a sense that they will miss out on their one chance to get rich quick by buying stocks that appear cheap.

But check out this Deutsche Bank chart on 12-month forward-looking price/earnings ratios, which tell a different story, my Padawan apprentices. The Federal Reserve is driving this market. As more and more companies start to go under (J Crew and Neiman Marcus are just the beginning), I think we may see another dip:


My fear — we are about to see Zoomers lose both their earnings potential in labour markets and, now, their shirts in the stock market. Yet more fodder for generational political wars over a shrinking pie.

Ed, how do you imagine that will play out after November? 

> >> Europe : Brokers Upgrades & Downgrades - 11th of May 2020 V2(+)

>>> Up
* Amadeus Raised to Buy at UBS; PT 46 euros
* Bechtle PT Raised to 160 euros at Bankhaus Metzler (+)
* Boohoo Raised to Outperform at Bernstein; PT 415 pence
* Bpost Raised to Buy at MainFirst; PT 8.50 euros
* Carnival Raised to Buy at HSBC; PT $15.90
* Carnival Plc Raised to Buy at HSBC; PT 1,280 pence
* DNO Raised to Buy at SpareBank; PT 7 kroner (+)
* Equinor Raised to Hold at Norne Securities; PT 150 kroner (+)
* GBL Raised to Hold at HSBC; PT 76 euros
* Geberit Raised to Buy at Kepler Cheuvreux; PT 490 Swiss francs
* Idorsia Raised to Outperform at Credit Suisse (+)
* LondonMetric Raised to Equal-Weight at Morgan Stanley
* Ontex Raised to Overweight at Barclays; PT 18.70 euros
* TP ICAP Raised to Hold at Shore Capital (+)

>>> Down
* Air France-KLM Cut to Underperform at Davy (+)
* Archer Cut to Hold at Arctic Securities; PT 2 kroner
* Austrian Post Cut to Hold at MainFirst; PT 34.50 euros
* BayWa Cut to Reduce at Oddo BHF; PT 24 euros (+)
* Bravida Cut to Hold at Handelsbanken; PT 85 kronor
* Cairo Comm Cut to Hold at Kepler Cheuvreux; PT 1.50 euros
* Colonial Cut to Equal-Weight at Morgan Stanley
* Dignity Cut to Hold at Investec; PT 260 pence (+)
* Faes Farma Cut to Hold at Grupo Santander; PT 4.26 euros (+)
* H&M Cut to Sell at Goldman; PT 115 kronor
* Hammerson Cut to Underweight at Morgan Stanley
* Next Cut to Neutral at Goldman; PT 5,300 pence
* Pandox Cut to Equal-Weight at Morgan Stanley
* PostNL Cut to Hold at MainFirst; PT 1.50 euros
* Rheinmetall Cut to Neutral at Oddo BHF (+)
* Rizzoli Corriere Cut to Reduce at Kepler Cheuvreux
* Sofina Cut to Hold at Kepler Cheuvreux; PT 226 euros
* Spire Healthcare Cut to Sector Perform at RBC; PT 100 pence
* Storebrand Cut to Reduce at Kepler Cheuvreux; PT 41 kroner
* Telefonica Cut to Neutral at New Street Research; PT 6.50 euros (+)
* Unibail Cut to Reduce at AlphaValue
* Unieuro Cut to Hold at Alantra Capital; PT 8 euros (+)
* Weir Cut to Hold at HSBC; PT 985 pence

>>> Initiation
* Gecina Resumed Equal-Weight at Morgan Stanley
* Ipsen Reinstated Hold at Kepler Cheuvreux; PT 70 euros

>>> Call
* Boohoo a ‘Clear Winner’ in Post-Coronavirus World: Bernstein (+)
* German Residential, Logistics Compelling, Avoid Retail REITs: MS
* Ocado Outperformance Benefits Tech Platform the Most: Berenberg
* Retailers H&M and Next Are Both Downgraded at Goldman Sachs (+)
* Spire Healthcare Downgraded at RBC on ‘Substantial’ Uncertainty
* Valeo at Risk as Suppliers’ 1Q Beats Won’t Last Into 2Q: Citi
* Wacker EPS Outlook, PT Raised as UBS Sees Solid Free Cash Flow (+)