Gapping down
In reaction to disappointing earnings/guidance:
- TME -7.1%, FDX -6.7%, WPRT -5.3%, AIR -5.1%, FNV -0.9%
Other news:
- ENTA -6.5% (attributed to block trade pricing)
- NOMD -3.8% (prices underwritten public offering of 17,391,305 of its ordinary shares at a public offering price of $20.00 per share)
- NSTG -3.6% (rebounding from 11% decline)
- UPS -2.6% (following FDX results)
- VIAB -2% (released statement on AT&T-DirecTV - says AT&T's 'unwillingness to engage in constructive conversations' could force a disruption in service)
- DERM -1.6% (prices underwritten public offering of 9,811,321 shares of its common stock at a price to the public of $13.25 per share)
- UBS -1.5% (CEO at conference says Q1 was 'one of the worst environments' in recent years)
- XPO -1% (following FDX results)
- CDAY -0.7% (prices upsized underwritten secondary public offering of 13 mln shares of common stock at a public offering price of $50.50 per share)
- INVH -0.6% (prices secondary offering of 43 mln shares of common stock at $23.30 per share)
Analyst comments:
- COOP -4.7% (upgraded to Mkt Outperform from Mkt Perform at JMP Securities)
- SNE -2.5% (downgraded to Hold from Buy at Jefferies)
- MNST -2.1% (downgraded to Neutral at Goldman and removed from Conviction Buy List)
Gapping up
In reaction to strong earnings/guidance:
- NVRO +21.2% (appoints D. Keith Grossman to the position of CEO, effective today; suspends 2019 revenue guidance), SMAR +10.7%, SCS +6.4%, GIS +5.2%
M&A news:
- SSP +5% (to acquire eight television stations in seven markets from the Nexstar Media Group (NXST) transaction with Tribune Media (TRCO) for $580 mln)
Other news:
- LXRX +9% (ahead of PDUFA date for sotagliflozin in type 1 diabetes in the U.S. on March 22)
- ZEAL +5.3% (Zealand Pharma and Alexion Pharmaceuticals (ALXN) announce collaboration to discover and develop novel peptide therapies for complement-mediated diseases
- FOLD +4% (issued two U.S. patents for ATB200)
- TORC +2.9% (prices offering of 7.2 mln shares of common stock at $6.95 per share)
- SAGE +2.8% (prices 4.5 mln shares of common stock at $23.00 per share)
- AMD +1.9% (continued strength on Google partnership news)
- AMX +1.7% (submits dividend, buyback program proposal for Annual Ordinary General Shareholders Meeting)
Analyst comments:
- CREE +3% (upgraded to Mkt Outperform from Mkt Perform at JMP Securities)
- VOD +1.1% (upgraded to Outperform from Neutral at Macquarie)
- ENDP +0.7% (initiated with Buy at SunTrust)
- AMRX +0.6% (initiated with Buy at SunTrust)
- ANET +0.5% (upgraded to Hold from Sell at Deutsche Bank)
- DLTR +0.5% (upgraded to Outperform at Telsey Advisory Group)
Why Germany’s unloved stock market can play catch-up
A weaker euro may help German stocks close the performance gap with rivals
German equities have been beaten up for more than a year. The seemingly endless travails of Deutsche Bank and the latest blow to chemicals group Bayer highlight the cracks in some of the country’s best-known corporate names. But Swiss bank UBS, for one, believes it may finally be time to give Germany a break.
Since the start of 2018, German stocks have been comfortably the worst performing in Europe, lagging major markets in the rest of the region by about 9 per cent, the bank notes. That means stocks from this supposed eurozone economic powerhouse, which led the rest of the continent in the immediate aftermath of the financial crisis, have trailed even behind those of the Brexit-hobbled UK.
Before unloading industrial quantities of Schadenfreude, it is worth bearing in mind that UK stocks are supported by the long spell of Brexit-induced sterling weakness, which flatters the overseas revenues of some FTSE 100 blue-chips. Nonetheless, the scale of the German market’s woes is impressive.
The heavy skew towards cars, technology and materials has proven to be a heavy drag, and earnings have suffered more than the rest of Europe for 20 months, eroding half of Germany’s outperformance since 2008 in a little over a year.
Several factors suggest, to UBS at least, that it is potentially time for a turn. One is the weaker euro. Earlier this month, the European Central Bank effectively kicked any expectations for a switch to higher benchmark interest rates well into the future. It also sparked off a new programme of cheap loans for banks to help smooth over an economic rough patch. That sent the euro falling sharply and is not an obvious recipe for a strong recovery over the coming months — “a tailwind”, UBS said, for German corporate earnings.
Another could come from a more constructive tone in trade talks between the US and China. Investors see the issue “as one of the biggest downside risks to Europe, and Germany in particular,” the bank said, based on its survey of more than 100 fund managers.
In addition, a pick-up in the economic performance of China would help.
Perhaps ironically, given the ECB’s latest barrage of measures to prop up the economy, the bank also believes the eurozone economy “may be turning” for the better, pointing to a small pick-up in the eurozone’s purchasing managers’ index in February — the first monthly rise in this gauge of corporate health in six months.
Clearly, there is a lot that can go wrong with each of these supportive factors. US-China trade talks are not noted for their easy predictability, for example, and while the weight on the euro is substantial, that could be wiped out by a grim outcome to Brexit talks that hammered the pound, or a change in direction from the dollar. Still, the smell test suggests that Germany may well look unduly unloved and cheap.
Early premarket gappersGapping up:
- SMAR +11.2%, NVRO +10%, LXRX +9%, SCS +6.4%, SAGE +5.6%, AMX +1.7%, AMD +1.2%, ENDP +0.7%, ANET +0.6%, AMRX +0.6%
Gapping down:
- FDX -6.7%, ENTA -6.5%, WPRT -6%, AIR -5.1%, TME -5%, NOMD -3.4%, NSTG -3.1%, UPS -2.1%, VIAB -2%, DERM -1.6%, XPO -1%, FNV -0.9%, INVH -0.7%
Hedge fund Petrus to vote against Medco takeover of Ophir
Activist investor says offer undervalues oil and gas producer
Hedge fund Petrus Advisers said it plans to vote against Indonesian oil group Medco Energi’s recommended takeover of Ophir Energy, because it believes recent newsflow shows the offer undervalues the London-listed explorer and producer.
The fund, which owns 3.94 per cent of Ophir, said that since January’s agreed deal “our satisfaction with the value our board deems as satisfactory has decreased further”. It cited production numbers and a reserves upgrade, announced in results earlier this month.
Medco and Ophir agreed in January to a 55p a share offer, following a month of speculation over a deal. Ophir’s shares on Thursday were trading up 0.9 per cent at 56.1p.
“We are convinced that more value can be created for shareholders if the company monetises the strong cash generation from its South East Asian portfolio and distributes proceeds together with proceeds of any asset sales to shareholders,” the firm said.
A spokesman for Ophir declined to comment.
Google throws down clear challenge to gaming world
New video game streaming service has potential to upend $135bn industry
Google has thrown down a clear challenge to the gaming world: that using the global network of data centres that run its internet empire, it is set to unleash enough raw computing power to blow away the industry’s current way of doing things.
Add YouTube as a shop window — a place where some 200m people a day come to watch gaming-related videos — and the internet giant believes it has some of the most powerful assets on the planet to reshape a $135bn-a-year business.
But as it took the wraps off its first entry into the gaming market, a streaming service called Stadia, the gaps in its armoury were equally telling. There were no actual games it could point to for its first customers to play, and no indication what they would be asked to pay — or, for that matter, what business model it would seek to foist on a games industry wary of the intrusion of giant internet platforms.
That has made Google’s entry into gaming a sign of both the disruptive nature of the cloud revolution that is encroaching on the console games business, and the distance the industry has to go to build out online gaming services for a mass market.
Over the past decade, smartphones and app stores opened up a market for casual forms of gaming, and now account for the largest segment of the market in terms of revenue. That left the market for console and PC games, where the most serious players spend their time, largely untouched.
The gaming industry is now braced for change, similar to the transformation that cloud-delivered services and subscription-based payment have brought to video and music.
Some companies are already developing their own cloud services. Microsoft has outlined a strategy to include cloud-delivered games, while Sony has a similar service for older games on its PlayStation.
Coming fresh to the industry, however, Google is betting that sheer computing power will tip the balance, with few other companies able to give customers a console-like experience with games delivered over a network.
“What we’re doing is at the absolute bleeding edge of networking and computer science,” said Phil Harrison, vice-president in charge of Google’s gaming business. “The fact that it’s games is almost secondary. This is a tremendously hard problem to solve.”
Two other companies likely to follow Google into the cloud-gaming market soon are Amazon and Tencent, said Piers Harding-Rolls, an analyst at IHS Markit. Both operate leading cloud-computing platforms and have investments in the gaming world.
In Amazon’s case, that comes through Twitch, the leading service for watching other people playing games, which the ecommerce company acquired five years ago. Google, by tying its game service to YouTube — where gamers will be able to click on a link to play a game straight from a video and broadcast their triumphs — has stolen a march on its US rival.
Shares in Japanese console makers Sony and Nintendo fell on Wednesday in Tokyo, sliding more than 3 per cent in what analysts said was a knee-jerk reaction rather than a measured assessment of the new threat.
While the services outlined by Google represent a risk to the physical console, it is some way in the future, said Tokyo-based games industry consultant Serkan Toto. The threat cannot properly be assessed until Google fleshes out details on how it will monetise its services and how much it will cost to develop games on its platform, he added.
“I don’t think Nintendo and Sony are going to be shell-shocked,” Mr Toto said. “Two years ago it would have been a shock but I think now everyone knows which way the industry’s ship is heading, Sony and Nintendo especially.”
On an earnings call in February, Hiroki Totoki, Sony’s chief financial officer, said cloud gaming could pose a threat to PlayStation in the next five years. “With a shift to cloud, one extreme end of the debate is that hardware will no longer be necessary,” Mr Totoki said. “But we believe that would take a much longer time horizon.”
Cloud gaming has seen false dawns before. The first US company to try, OnLive, fizzled seven years ago, a victim of patchy streaming technology and a lack of financial staying power.
Google is betting these problems will not be repeated. It boasted that a game running on a single chip in one of its data centres could have the processing power of a powerful supercomputer, at 10 teraflops — as much as the top-of-the-range PlayStation and Xbox consoles combined. That news added nearly 12 per cent to shares of AMD, the company supplying the chips.
Key to the Stadia service, according to Google, are the more than 7,500 nodes, or endpoints, to Google’s cloud computing platform: the closer users are to a node, the lower any lag they will experience in the service. Also, rather than being relying on the public internet “backbone”, the company said it would use thousands of miles of its own fibre-optic cable to carry its traffic as far as a gamer’s ISP, improving quality.
Still, many in the industry question whether Google will be able to match the immediacy of playing a game on a console. David Pucik, an analyst who took part in a trial game-streaming service late last year, described the performance as uneven. But Mr Harrison said Google had made improvements since then and was confident it could deliver games in the latest high-definition standard, 4K, and running at 60 frames a second.
Besides saving customers the cost of buying a new console or high-end PC, backers of cloud services such as Stadia say they will bring new gaming experiences that cannot be matched by current hardware.
Google said, for instance, that multiplayer games would be greatly improved when all users’ gameplay is processed at a single data centre at the same time, making it possible to add thousands of players at a time. Players will also be able to compete against friends who are using hardware from different companies, and a game could be paused on one device and restarted on another, transferring it from a TV screen to a mobile phone.
Yet Google’s lack of games to distribute on Stadia is a serious gap in its plans, said Mr Harding-Rolls, saying that getting access to exclusive content from independent developers will be essential. He says he expects that Google will turn to acquisitions to boost the new, in-house gaming studio it has created.
“A fundamental foundation of Google’s business is that our partners are successful on our platform,” said Mr Harrison. Finding the right formula to win over the games industry will be critical to ensuring a good reception for Stadia at its planned launch before the end of the year.
LAB-GROWN BRAIN USES “TENDRILS” TO GRAB, CONTROL SPINAL CORDS
Mini-Brain
Cambridge scientists say they’ve grown a miniature brain in a petri dish that seizes control of biological material around it.
Unlike previous lab-grown brains, this one actively will send out “tendrils” to connect to a spinal cord removed from a mouse, according to The Guardian — and can then use its new spine to control a mouse muscle attached to it.
It’s…Alive?
The brain, which The Guardian described as a “lentil-sized grey blob of human brain cells,” represents a significant step forward because of its eerie ability to connect to a rudimentary nervous system. Its creators are hoping they’ll be able to use it — and other organoids like it — to study brain and nerve diseases on a small, controlled scale.
“Obviously we’re not just trying to create something for the fun of it,” said study leader Madeline Lancaster in an interview with The Guardian. “We want to use this to model diseases and to understand how these networks are set up in the first place.”
Can It Suffer?
The researchers estimate that the new lab-grown brain has the approximate sophistication of a human fetus that’s developed for between 12 and 16 weeks — but they don’t think there’s cause for ethical concern yet, according to The Guardian. “It’s still a good idea to have that discussion every time we take it a step further,” Lancaster told the newspaper. “But we agree generally that we’re still very far away from that.”
Stocks in Asia were mixed Wednesday as investors adopted a cautious stance ahead of the Federal Reserve decision and further news on U.S.-China trade talks, where negotiators remain at odds. Treasury yields held near recent lows.
Shares pared losses, with Japan finishing higher, while most other markets dipped. Hong Kong and Australia saw modest declines. Europe futures signaled a weak open. A rally in U.S. stocks Tuesday fizzled by the close amid concern China is pushing back on American trade demands. Also stalling was a rally in oil, while iron ore slumped in wake of news about a big Brazilian mine potentially reopening. Two-year Treasury yields remain below the top of the Fed’s policy target range amid expectations of a dovish tone from the central bank, while the dollar ticked higher after three days of losses.
US After Hours SMAR +9%, SCS +7%, TME -6%, AIR -6%, FDX -5% among notable earnings/guidance movers
Nikkei +0.20% Hang Seng -0.33% CSI +0.00% Shanghai -0.04% Shenzen -0.29%
Eur$ 1.1348 CNH6.7141 CNY 6.7127 JPY 111.59 GBP 1.3250 CHF 0.9995 RUB 64.2243 TRY 5.4781 WIT$ 59.07 +0.07%
S&P +0.04% EuroStoxx -0.39% FTSE -0.43% Dax -0.69% SMI -0.28%
Macro :
- May Is Stuck in Fight Over Brexit Delay With Nine Days to Exit
Keep an eye on :
- ABI BB : AB InBev Names Barrington Chairman, Replacing Goudet
- ADS GY : Adidas: Rabe, Uebber Among Candidates for Supervisory Board
- ADO GY : ADO Properties Full Year FFO I Per Share Misses Lowest Estimate
- AGR AV : Agrana Keeps Serbian M&A Plans on Ice on Sugar Slump, APA Says
- BAYN GY : Bayer Loses First Phase of Roundup Trial, Now to Face Liability
- BEZQ IT : Bezeq Unit Write-Down Swells to 1.5b Shekels After ISA Decision
- BP/ LN : BP Exploring Buying Solar Energy to Power Operations in the U.S.
- BPOST BB : Bpost Cuts 2019 Adjusted Ebit Forecast
- CLNX SM : Cellnex Looks to Buy Majority Stake in TDF: Expansion
- CHG LN : PIRC Recommends Oppose Vote on Chemring Pay Report, Policy
- DBK GY : Verdi Chief Says Merger Could Mean 30,000 Job Cuts: Handelsblatt
- DIA SM : DIA Investors to Choose Between Rival Rescue Plans at Tense AGM
- DPW GY : Watch European Logistics Firms After FedEx Cuts Outlook Again
- EDP PL : Elliott Is Said to Continue Push for EDP to Sell Brazil Stake
- FPE GY : Fuchs Petrolub Sees Revenue +2% to +4% While Ebit to Fall (1)
- GSK LN : GSK Dostarlimab Study Could Help Justify Tesaro Price: Jefferies
- GLEN LN : Aeris Makes Offer to Buy CSA Mine From Glencore; Still in Talks
- IPH FP : Innate Pharma: Jan. Cash Position EU257M After AstraZeneca Deal
- INSR NO : Insr Insurance Group Names Hans Petter Madsen CFO
- ISAT LN : Inmarsat Confirms It Received a Bid From Apax Partners-Led Group
- ISAT LN : Apax and Warburg Pincus said to be working on a plan to take co private - Betaville
- KAHL SS : Kappahl Reports Unexpected Second Quarter Profit
- MONC IM : Moncler Holders ECIP M S.A to Offer EU450m Shrs
- NOEJ GY : Norma Full Year Dividend Per Share Misses Estimates
- NEOEN FP : Neoen’s 375-Megawatt Mexico Solar Project Gets Debt Financing
- PWTN SW : Panalpina EGM Battle Heats Up as ISS Advises Rejecting Changes
- RNO FP : Nissan Is Said to Cut China Sales Outlook as Market Sputters
- RNO FP : Ghosn Could Face Tokyo Trial as Soon as This Autumn: Kyodo
- SRG IM : *SNAM: EURO COMMERCIAL PAPER PROGRAM INCREASED TO EU2B
- FTI FP : TechnipFMC Gets Sverdrup Phase 2 Subsea Contract From Equinor
- TEVA IT : Teva To Sell Jerusalem Plant for 171m Shekels, TheMarker Says
- TEP FP : Teleperformance Top Choice in Sector, Upgraded at Morgan Stanley
- DG FP : Vinci Former Group Chairman Serge Michel Dies at 92
- ZO1 GY : Zooplus Postpones EU2 Bln Sales Target as ‘Too Ambitious’, Zooplus Sees 2019 Pretax Loss EU15M To Pretax Profit EU5M