Gapping down
In reaction to disappointing earnings/guidance:
- ZFGN -27.2% (also suspends IND filing plans for ZGN-1258 based on nonclinical finding in long-term toxicology studies), ADT -13.7%, FRTA -6.5%, PETQ -5.5%, KRO -4.9%, KRO -4.8%, VHI -3.7%
M&A news:
- FFIV -2.5% (to acquire NGINX for a total enterprise value of approx. $670 mln; downgraded to Neutral from Overweight at JP Morgan)
Other news:
- TGLS -9.3% (commences underwritten follow-on public offering of 8 mln ordinary shares)
- EPRT -3.5% (announces public offering of 10.6 mln shares of common stock)
- ATUS -2.8% (attributed to block trade pricing)
- HLNE -1.5% (commences public offering of 1,449,303 shares of Class A common stock to be sold by Hamilton Lane and a selling stockholder)
Analyst comments:
- HPE -3.4% (downgraded to Sell from Neutral at UBS)
- UNFI -3% (downgraded to Underweight from Equal Weight at Barclays)
- BA -2.2% (downgraded to Hold from Buy at Edward Jones)
- TSLA -1.6% (target lowered to $260 from $283 at Morgan Stanley)
- MNST -1.2% (downgraded to Market Perform from Outperform at BMO Capital Markets)
- KO -0.6% (downgraded to Hold from Buy at HSBC Securities)
Gapping up
In reaction to strong earnings/guidance:
- SFIX +28.1%, OXFD +13.5%, FANH +12.2%, MOMO +9.1%, NOG +8.5%, INSW +6.6%, AVD +5.3%, IPI +4.4%, CDMO +2.4%, DFRG +1.5%, COUP +0.5%, .
Other news:
- AKBA +35% (reports positive top-line results from two pivotal Phase 3 studies of Vadadustat)
- OPTT +21% (signs signs master service contract with a leading offshore oil and gas operatormaster service contract with a leading offshore oil and gas operator)
- CRCM +1.3% (modestly rebounding from 12.5% decline; announced certain changes to its processes for approving and managing individual caregiver profiles in its consumer marketplace)
- STMP +1% (approves new share repurchase plan of up to $60 mln of stock)
- ETM +1% (Chairman Emeritus disclosed the purchase of 100K shares)
Analyst comments:
- TELL +4.5% (initiated with a Buy at BTIG Research)
- ETN +1.2% (upgraded to Overweight from Sector Weight at KeyBanc Capital Markets)
- AVYA +1% (initiated with Buy at Guggenheim)
- DBX +0.7% (added to US 1 List at BofA/Merrill)
Early premarket gappersGapping up:
- SFIX +24.5%, OXFD +23.3%, OXFD +13.5%, MOMO +9.6%, MOMO +9.6%, CDMO +9.2%, NOG +7.7%, FANH +5.4%, AVD +5.3%, CRCM +1.3%, STMP +1.2%, AVYA +1%, ETM +1%
Gapping down:
- ZFGN -24.1%, ADT -12.9%, TGLS -9.3%, FRTA -6.5%, PETQ -5.5%, KRO -4.8%, FFIV -3.8%, VHI -3.7%, EPRT -3.5%, ATUS -2.3%, HLNE -1.5%
Regulators fear Deutsche Bank could bungle Commerzbank merger
Supervisor of German lender worries it lacks ‘ruthless brutality’ to cut costs
European banking regulators are concerned that Deutsche Bank lacks the “ruthless brutality” needed to do a successful merger with Commerzbank and would only approve a deal only if implementation plans were “credible and viable”.
Germany’s largest lender is in talks about a potential takeover of its main domestic rival, while some shareholders, its own chairman and the German government have been arguing in favour of a quick tie-up.
A tie-up with Commerzbank would create the eurozone’s second-largest lender with €1.9tn in assets.
The potential deal would require the approval of the European Central Bank, Bundesbank and Germany’s banking watchdog BaFin. But officials at Deutsche Bank’s regulators told the Financial Times that their biggest concern was whether a failed integration would leave them with an even bigger problem to sort out.
“You have to employ ruthless brutality to be really successful,” said a senior supervisor of the bank, adding: “Should the deal fail, we would have regulatory issues that we are keen to avoid.”
Deutsche Bank’s management board gave chief executive Christian Sewing a mandate last month to engage in informal talks with Commerzbank.
Mr Sewing said last year that Deutsche Bank needed 18 months of internal restructuring before it would be ready to engage in mergers and acquisitions.
The supervisor said that a credible strategy to implement the deal quickly would be “one of the core issues” when deciding whether to approve a deal.
Two other people familiar with the watchdogs’ internal discussions confirmed the supervisors’ concerns over execution risks. The ECB, Bundesbank and BaFin declined to comment.
Deutsche Bank regulators’ are preparing to closely monitor the implementation of a merger in regular meetings with senior bank management in an attempt to make sure that the execution remains on track.
“There would be man-marking by the regulators,” said the supervisor, referring to a defensive strategy in football where defenders are assigned to closely follow a specific player of the opposing team.
Regulators would insist on an ambitious execution time table and monitor its implementation in regular meetings with the lender’s management.
Analysts, investors and regulators are convinced that the success of a merger hinges on ambitious cost-cutting in Germany, the lenders’ highly regulated home market with powerful trade unions.
Analysts estimate that 20,000 jobs, if not more, could be chopped. “This would be a bloodbath,” another senior Deutsche Bank regulator said. Service sector union Verdi, which has representatives in both supervisory boards, is opposing a merger.
“The execution risk [is] the biggest unknown,” Kian Abouhossein, analyst with JPMorgan, wrote in a recent note to clients.
He warned that even without a merger, Deutsche Bank was “already having lots on its plate” as it needed to turn round its ailing investment bank, restructure its German retail business and deliver on its pledge to cut overall costs by €1bn this year.
Investors and analysts said Deutsche Bank’s bungled 2010 takeover of German retail rival Postbank was a cautionary tale.
Almost a decade later, after spending several billions on integrating costs and several strategic U-turns, Deutsche Bank is still working on integrating Postbank, saying full synergies will only be realised by 2022.
Stuart Graham, founder of Autonomous Research, calls the Postbank acquisition “another disappointing deal”.
Regulators are concerned that the margin of error for Deutsche Bank in executing a merger with Commerzbank would be very thin.
“The credibility of such a transaction hinges on quick and consistent implementation,” said the supervisor, adding that the required restructuring needed to be “radical” and the implementation plan needed to be “credible and viable”.
The supervisor warned that even relatively minor delays could lead to widespread disillusionment among investors, which could dent the bank’s share price and inflate its refinancing costs.
Trade Gate Pre-Market Indications :
DAX:
Continental (CON TH) +1.1%
May Strikes New Brexit Deal, Asks Parliament to Vote for It
Daimler (DAI TH) +1%
Deutsche Bank (DBK TH) +1%
Bayer (BAYN TH) +1%
BASF (BAS TH) +0.9%
Munich Re (MUV2 TH) -0.2%
Munich Re Tailwinds Subsiding, Bankhaus Lampe Cuts to Hold
EON (EOAN TH) -0.4%
MDAX:
Siltronic (WAF TH) +1.8%
Deutsche Wohnen (DWNI TH) +1.2%
1&1 Drillisch (DRI TH) +1.2%
Schaeffler (SHA TH) +1.1%
Commerzbank (CBK TH) +0.8%
Deutsche-Commerzbank Deal Approval Rests on Implementation: FT
ProSieben (PSM TH) +0.7%
Zalando (ZAL TH) -1.8%
Zalando’s Strategy is Sensible, But Stock Lacks Upside: Citi
SDAX:
Wacker Neuson (WAC TH) +5.9%
Wacker Neuson Proposes Special Div Payout EU0.50/Shr
Kloeckner (KCO TH) +3.4%
Kloeckner Keeps Div Stable As Optimization Boosts 2018 Ebitda
Nordex (NDX1 TH) +2.7%
Nordex Wins Projects Totaling Over 108 MW in Greece
Medigene (MDG1 TH) +2.2%
Corestate (CCAP TH) +1.7%
Corestate at Non-Deal Roadshow Hosted By Berenberg Today
Aumann (AAG TH) +0.9%
News Corp calls for break up of Google
Australia’s competition watchdog is examining the dominance of technology platforms
Rupert Murdoch’s News Corp has called on Australia’s competition watchdog to break-up Google, arguing the US company’s dominance of online search and advertising technologies is damaging consumers, advertisers and news publishers.
The media group’s Australian division said in a submission to the Australian Competition and Consumer Commission’s digital platforms inquiry on Tuesday that it should recommend to Canberra that Alphabet, Google’s parent company, be forced to divest its search function from the rest of its business units.
“Google leverages its market power in both general search services and ad tech services to the detriment of consumers, advertisers and news publishers. To remedy these harms, Google could either sell Google Search, or retain Google Search and divest the rest of its businesses to a third party,” said News Corp.
The proposed remedy is one of a series of recommendations made by News Corp, which has been lobbying governments across the world to take tougher regulatory action against digital giants such as Google and Facebook.
US and UK lawmakers are already targeting Facebook over its sharing of personal data, and last year the EU fined Google a record €4.3bn for abusing the dominant position of its Android mobile phone operating system. Last week Senator Elizabeth Warren pledged to break up technology giants Facebook, Google and Amazon if she is elected president next year.
The ACCC inquiry is one of the world’s first studies of the impact of digital platforms on the advertising and news industries, and the tech industry fears it could influence other jurisdictions to step up scrutiny. A preliminary report in December proposed reforms to the news referral, advertising and social media markets, which the technology industry warns would hurt competition, consumers and innovation. But it stopped short of recommending divestment.
Asian stocks climbed Tuesday as a technology-led rebound in U.S. equities spread to the region. The pound surged on optimism about a revised Brexit plan.
Most benchmarks in the region rose though gains were pared as the session progressed, particularly in China. European and U.S. futures pointed higher after the S&P 500 and Nasdaq 100 indexes surged Monday, helped by news of a merger in the technology sector, an upgrade to Apple Inc., and signs of stabilization in American retail sales. Crude oil advanced after Saudi Arabia extended deeper-than-agreed production cuts into a second month. The yen dipped and Treasury yields ticked higher with risk assets back in favor. The dollar edged lower.
US after Hours SFIX +26%, ADT -10%, KRO -4%, PETQ -3% among the earnings/guidance movers
Nikkei +1.79% Hang Seng +1.29% CSI +0.65% Shnaghai +1.08% Shenzen +1.66%
Eur$ 1.1258 CNH 6.7237 CNY 6.7155 JPY 111.32 GBP 1.3204 CHF 1.0110 RUB 65.85 TRY 5.44 WTI$ 56.97 +0.32%
S&P +0.23% EuroStoxx +0.52% FTSE +0.10% Dax +0.67% SMI +0.27%
Macro :
- U.S. Is Engaging With Allies to Ensure Telecom Networks Security
- Algeria’s Bouteflika Bows to Protesters in Ruling Out Fifth Term
Keep an eye on :
- ADYEN NA : Adyen EU1.5b Shrs Are Said Offered via JP Morgan, Morgan Stanley
- ARJON SS : Arjo Still Sees Organic Sales Growth of Some 3% This Year
- ARYN SW : Aryzta First Half Revenue Meets Estimates
- ATC NA : Altice USA 13.5m Shrs Are Said Offered at $21.35-21.50/Shr
- BAVA DC : Bavarian Nordic’s MVA-BN Vaccine Gets 3-Month FDA Review Delay
- CIR IM : Compagnie Industriali Riunite to Be Incorporated in COFIDE
- CBG LN : Close Brothers 1H Adjusted Operating Profit GBP138.8 Mln
- COF IM : De Benedetti to Merge CIR Into Cofide
- CBK GY : Deutsche-Commerzbank Deal Approval Rests on Implementation: FT
- BBHK GY : Deutsche Balaton Plans Bid for Easy Software
- DBK GY : N.Y. AG Opens Civil Probe of Trump Organization Projects: NYT(1)
- EZJ LN : *EASYJET COULD DROP OUT FROM ALITALIA DEAL NEGOTIATIONS: STAMPA
- EDP PL : EDP Full Year Net Income 3.8% Below Estimates
- EQNR NO : Equinor Could Spend About 15%-20% of Capex on Renewables by 2030
- ENG SM : Enagas to Invest $590M for Indirect 11% Stake in Tallgrass
- ENX FP : Euronext Extends Oslo Bors Offer Acceptance Period Until April 1
- FME GY : Fresenius Medical Care to Implement Share Buyback Programme
- GALE SW : Galenica Full Year Dividend Per Share Beats Estimates
- GEBN SW : Geberit Full Year Ebitda CHF868 Mln
- ICEAIR IR : Icelandair Group Enters $80M Loan Agreement
- IF IM : IFIS Top Investor Chooses Banca Finint Chief as CEO
- IRV LN : Interserve Confirms Deleveraging Talks With Coltrane, Lenders
- KCO GY : Kloeckner Keeps Div Stable As Optimization Boosts 2018 Ebitda
- LOOMB SS : Latour, Melker Schorling Sold All Class A Shares in Loomis
- MT IM : Maire Tecnimont Granted Several Awards for About $360m
- M5Z GY : Manz Full Year Revenue Up 12% to EU296.9m, Ebit Loss EU3.4m
- MUV2 GY : Munich Re Tailwinds Subsiding, Bankhaus Lampe Cuts to Hold
- NDX1 GY : Nordex Wins Projects Totaling Over 108 MW in Greece
- OOUT LN : Ocean Outdoor Said to Buy Two Advertising Firms in Netherlands
- PDG LN : Pendragon Full Year Adjusted Pretax Profit 3.2% Below Estimates
- RNO FP : Nanterre Prosecutor to Probe Ghosn’s Versailles Wedding: AFP
- RNO FP : Ghosn ‘Disappointed’ by Denial of Request to Join Nissan Meeting
- SAGA LN : Saga Exploring Sale of Titan, Destinology Travel Brands: Sky
- SAN FP : Regeneron, Sanofi Drug Wins Expanded FDA Approval in Adolescents
- TEF SM : Telefonica Needs Imminent De-Gearing, Cut to Hold: Berenberg
- GLE FP : SocGen Cuts CEO Oudea’s Bonus 19% After Trading Revenue Slump
- SPIE FP : Spie Sees 2.5%-4.5% FY Rev. Growth, Ebita Margin at Least 6%
- TAMN SW : Tamedia Profit Drops Amid ‘Sharp Downturn’ in Print Advertising
- TTR1 GY : Technotrans Sees 2019 Ebit EU17.5 Mln To EU19.0 Mln
- TIT IM : ISS Recommends Vote Against Vivendi in Telecom Italia Fight
- TOD IM : Tod's Full Year Dividend Per Share Misses Estimates, Tod’s Results Unconvincing, Competition Intensifying, RBC Says
- UCB BB : UCB Says 52-Week Cimzia Study in NR-AxSpA Meets Endpoints
- UN01 GY : Uniper 2018 Ebit at Lower End of Forecast, Dividend Raised
- DG FP : Commissioner Recommends Toulouse Airport Sale Cancellation: AFP
- VIV FP : Vivendi Says Elliott Not Working for TIM Shareholders’ Benefit
- VOD LN : Vodafone May Layoff 1,130 Workers in Italy, Union Official Says
- VOW GY : Volkswagen 2018 Numbers Show Margin Decline
- WAC GY : Wacker Neuson Proposes Special Div Payout EU0.50/Shr
- WPP LN : WPP Adds Microsoft U.K. Chief Cindy Rose to Board, Times Reports
- ZAL GY : Zalando’s Strategy is Sensible, But Stock Lacks Upside: Citi
- FHZN SW : Zurich Airport Full Year Revenue Meets Estimates