>>> Grainger beats by $0.19, reports revs in-line

Grainger beats by $0.19, reports revs in-line
  • Reports Q3 (Sep) earnings of $4.19 per share, $0.19 better than the S&P Capital IQ Consensus of $4.00; revenues rose 7.4% year/year to $2.83 bln vs the $2.84 bln S&P Capital IQ Consensus.
  • Sales increased 7.4 percent in the 2018 third quarter versus the 2017 third quarter, driven by a 7 percentage point increase from volume and 1 percentage point increase in price, partially offset by a 1 percentage point decline from foreign exchange and the impact of hurricanes.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • JELD -13.3% (lowers Q3 adj EBITDA guidance with downside sales guidance; also announces promotion of John Linker to CFO, effective November 8), DPZ -5.6%, BLK -3.5%, PANW -1.8% (names Amit Singh as president effective Nov 1; reaffirms Q1 guidance for EPS of $1.04-1.06 vs. $1.06 S&P Capital IQ Consensus and revs of $625 -635 mln vs. $632.46 mln consensus), JNJ -0.5%

Other news:

  • IGC -16.5% (files for $100 mln mixed securities shelf offering)
  • CRMD -11% (files for approx 15 mln share common stock offering by selling stockholders issuable upon the exercise of warrants)
  • TWLO -3.3% (Twilio to acquire SendGrid in an all-stock transaction valued at approximately $2 billion)
  • ACRS -2.3% (Aclaris Therapeutics to acquire worldwide rights to RHOFADE from Allergan Sales; purchase price includes upfront cash payment of $65 mln), .

Analyst comments:

  • AMRX -1.8% (downgraded to Hold from Buy at SunTrust)
  • PF -0.4% (downgraded to Hold from Buy at Jefferies)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • ADBE +6.1% (reaffirms Q4 guidance; sees FY19 rev up 20%), PLUG +3.2% (raises FY18 revenue guidance) CRY +3% (light volume; sees Q3 revenue above consensus), MS +2.9%, JBHT +1.5%, UNH +1.4%, OMC +1.1%, DVN +1.1%, GS +1.1%, INFY +0.9%

Other news:

  • HQCL +14.6% (enters definitive agreement going-private transaction implying equity value of approximately $825 million)
  • SEND +13.2% (Twilio to acquire SendGrid in an all-stock transaction valued at approximately $2 billion)
  • GORO +6.1% (reports Q3 production; reaffirms FY18 production)
  • ULBI +4% (thinly traded; awarded $8.3 million communications radio contract)
  • CGC +3.9% (continues strength; also confirmed earnings release date will be Nov 14)
  • AAP +2% (Advance Auto & Wal-Mart (WMT) announce plans to launch automotive specialty store on Walmart.com)
  • WERN +1.6% (following JBHT earnings/guidance)
  • CRM +1.4% (following ADBE guidance)
  • NVS +1.1% (5-year data in psoriatic arthritis and ankylosing spondylitis reinforces Cosenty)
  • SNY +0.8% (announces two pivotal Phase 3 placebo-controlled trials evaluating Dupixent in adults with inadequately-controlled chronic rhinosinusitis with nasal polyps met all primary and secondary endpoints) . 

Analyst comments:

  • TLRY +6.3% (initiated with a Buy at The Benchmark Company)
  • RACE +4.4% (added to US 1 List at BofA/Merrill)
  • FTCH +4.2% (initiated with a Outperform at Wells Fargo; initiated with a Buy at Deutsche Bank, among others)
  • SYMC +3.6% (upgraded to Market Perform from Underperform at Cowen)
  • CGNX +3.4% (upgraded to Buy at Needham)
  • ESPR +2.4% (initiated with a Buy at BTIG Research; tgt $82)
  • LVS +2.1% (upgraded to Buy from Hold at HSBC Securities)
  • YMAB +1.9% (initiated with a Buy at BofA/Merrill)
  • CBRL +1.3% (upgraded to Outperform at Telsey Advisory Group)
  • IFF +1.1% (upgraded to Buy from Hold at Deutsche Bank)
  • PYPL +1% (added to US 1 List at BofA/Merrill)

FT : A dollar rally few are prepared to call time on

A dollar rally few are prepared to call time on
US currency is expected to maintain its momentum but medium-term risks remain

Buoyed by the strong US economy, the Federal Reserve’s rate increases and lacklustre growth elsewhere, the dollar has rediscovered its momentum over the past six months. And analysts believe that the rally has further to run for now.

After a weak 2017 and starting the year on the back foot, the dollar has strengthened more than 5 per cent against many of its peers since April. In trade-weighted terms, its gains have been even stronger.

While emerging markets have had some respite in recent weeks, the effect of dollar strength on EM has been ugly. JPMorgan Chase’s EM currency index has tumbled 12 per cent since April, with equity markets, as measured by the MSCI Emerging Markets Index, surrendering more than 16 per cent.

The dollar’s surge — and why it might take a few, final strides higher — boiled down to “US exceptionalism,” said Daniel Hui, a global currency strategist at JPMorgan.

On most measures, the US economy is still outperforming the rest of the world, while the outlook elsewhere looks much dimmer. The IMF this month lowered its forecasts for global economic growth for this year and next, following a downward revision for the euro area and many emerging markets.



Given the robust pace of US economic growth, the Fed has continued to tighten monetary policy. At its September meeting, Fed chairman Jay Powell teed up another rate increase in December, the eighth this cycle, and the median interest rate forecast by the Fed’s policymakers signalled an additional three rises in 2019.

While the Bank of Japan has recently tweaked its monetary policy, and the European Central Bank plans to end its bond-buying programme by the end of the year, neither have indicated they will follow with interest rate increases any time soon. For Daragh Maher, head of US foreign-exchange strategy at HSBC, the dollar’s rally feeds on this divergence, as higher rates suck in capital from abroad.

“Many central banks around the world have delayed or pared back expectations of when interest rate hikes will begin and how high rates may go,” he said. “Whereas in the US, the Fed is likely to continue defying the market’s dovishness and hike beyond the ‘neutral rate’.”

Investors remain sanguine about this risk. According to Fed funds futures, which are contracts investors use to bet on interest rates, the implied odds of three rate increases or more in 2019 is relatively low, at roughly 25 per cent. In fact, almost 40 per cent believe the Fed will only lift rates once more next year — or stay pat entirely.



Emerging markets currencies have regained some tentative stability lately, but the outlook clouds quite dramatically if the Fed commits to faster interest rate increases.

“Emerging markets are very vulnerable to the Fed,” said Stephen Jen of Eurizon SLJ Capital, a hedge fund. “The cheap capital that pushed in after those years of quantitative easing was never loyal. The stronger the US economy, the quicker dollars are sucked out.”

Moreover, those dollars often end up on American shores. With the deepest pool of safe assets for foreigners, the US serves as a haven during periods of economic and financial distress. Add to that the large “structural short” of dollars around the world, given the greenback’s role as the global funding currency, and dollar strength should beget even more of the same, argued Calvin Tse of Citigroup.

The dollar’s recent vim is not immutable, however. Analysts warn that the medium-term outlook is looking murkier with several impediments that could trip up or reverse the rally.

One concern is that the Trump administration’s fiscal stimulus is beginning to wear off. The IMF might have trimmed its global growth outlook, but its US forecast also took a hit, and more investors are now talking about a coming economic inflection point.

The hangover could be larger and come faster than many expected, warned George Saravelos of Deutsche Bank.


US tax reform resulted in offshore corporate cash piles being repatriated, which companies then used to buy back a record amount of their own shares — a move that Mr Saravelos called “one of the largest risk transfers in the history of financial markets”. Pension funds, which had been overweight equities, then rotated into long-dated US bonds, providing something akin to quantitative easing. But the impact is now fading.

“It’s a one-off deployment of cash,” Mr Saravelos said. “We saw a large increase in short-term inflows from it, but if you look at the medium-term drivers of the balance of payments, there is no rise in M&A or portfolio inflows.”

The dollar could also come under pressure if the US economy slows enough for the Fed to hit pause. Any indication of a rebound in European growth or a boost in Chinese domestic demand stemming from efforts to restimulate the economy could also cut the dollar’s rally short.

Stretched investor positioning also looks like a risk. Net long positions for leveraged funds now total almost $27bn, according to CFTC data. That is not a record high, but it remains quite steep.

Viraj Patel at ING estimated that a large adjustment or clearing out of these positions could result in a 5 per cent drop in the US currency. “The dollar’s rally is really getting uncomfortable now,” he said, even if few are prepared to call time on it yet.

>>> DJ Uber Proposals Value Company at $120 Billion in a Possible IPO

DJ Uber Proposals Value Company at $120 Billion in a Possible IPO
By Liz Hoffman, Greg Bensinger and Maureen Farrell
Uber Technologies Inc. recently received proposals from Wall Street banks valuing the ride-hailing company at as much as $120 billion in an initial public offering that could take place early next year, according to people familiar with the matter.
That eye-popping figure is nearly double Uber's valuation in a fundraising round just two months ago and more than General Motors Co., Ford Motor Co. and Chrysler Fiat Automobiles NV are worth combined.
Goldman Sachs Group Inc. and Morgan Stanley last month delivered the valuation proposals to Uber, the people said. These documents, which typically advise on how to position shares to potential investors, are a common step before banks are formally hired to underwrite IPOs.
The bank presentations show Uber gathering momentum toward an IPO that is among the most hotly anticipated on Wall Street and Silicon Valley and could come sooner than expected as the new-issue market sizzles. Founded in 2009 and sustained by an ample supply of private capital, Uber is seen as a bellwether for a crop of highly valued startups that have delayed tapping the public markets.

WSJ : Babies’ Sleep Linked to Lower Obesity Risks Years Later

Babies’ Sleep Linked to Lower Obesity Risks Years Later
Newborns whose parents were taught to help them sleep better were less likely to be overweight in childhood, researchers found

Combating high childhood obesity rates is a vexing problem: Diets and other interventions often don’t work, and when they do the effects aren’t long-lasting.

Now, some researchers are attacking the problem at the newborn stage with an unlikely target: sleep.

Newborns whose parents received advice and hands-on education about sleep had about half the risk of developing obesity by ages 3½ and 5, compared with children whose parents didn’t get the sleep instruction, according to a study published in the American Journal of Clinical Nutrition in August.

“It really does look quite promising in this context, and it should be investigated further because it was a very brief intervention and it has these really quite incredible long-term effects,” says Rachael W. Taylor, director of the Edgar Diabetes and Obesity Research Centre at the University of Otago, New Zealand, and first author on the study.

The findings are similar to those in a Pennsylvania study published in JAMA medical journal in August, which focused on education for new parents that included sleep as one component.

In the New Zealand study, the researchers recruited about 800 women in the later stages of pregnancy and divided them into four groups. In one group, expectant parents attended education sessions on strategies to help babies fall asleep on their own. Nurses made home visits three weeks after the babies were born. “They were really trying to promote getting the babies to learn to settle themselves to sleep,” says Dr. Taylor. “This was very much to prevent sleep problems from developing in the first place.”

The families were offered more help at 6 months of age but only about a quarter said they needed it.

For a second group, nurses educated parents on nutrition and physical activity—but not sleep—before the babies were born and until they were 18 months old.

A third group of parents got education on both sleep and nutrition. A fourth group was the control group and received only government health visits that are standard in New Zealand.


By the ages of 2 and 3½, the babies whose parents had the sleep instruction either alone or in combination with nutrition education had half the risk of obesity as the other groups. By age 5, the effect was slightly stronger.

One unexplained surprise: The children of parents who received instruction on nutrition had higher obesity rates by age 5 than the control group. That could mean there is no benefit to additional nutritional counseling when some of that is covered in standard care, Dr. Taylor says.

Another surprise: the researchers didn’t see a change in sleep duration between the four groups, so they aren’t sure what to attribute the lower obesity rates to. “The main evidence in the observational literature linking sleep and obesity is sleep duration,” Dr. Taylor says. But sleep duration is difficult to measure accurately in young children, she notes. For this study, the researchers had babies wear accelerometers to detect motion and also used questionnaires for the parents.

The questionnaires showed the parents who received the instruction on sleep used more positive parenting strategies, such as smiling and praise, which Dr. Taylor speculates could play a part in lowering the babies’ obesity rates. Such findings were published in May in the journal Child Care in Practice.

One limitation of the New Zealand study: About a third of parents did not complete the five-year assessment.

Its findings are similar to those in the recent JAMA study. In that trial, about half of 279 first-time mothers in Pennsylvania received home visits from nurses four times over the course of a year for education on babies’ feeding, sleep, play and emotional regulation.

The other half were randomly assigned to a control group that had the same number of nurse visits, but focusing on safety.

The researchers looked at the rate of overweight and obese babies at 1, 2 and 3 years of age. The babies in the control group, with only safety instruction, had more-rapid weight gain, a strong predictor of later obesity, says Jennifer Savage, a co-author on the study and director of the Center for Childhood Obesity Research at Penn State University.

Unlike the New Zealand study, in the Pennsylvania study the researchers found that the babies’ sleep duration did increase in the other group, and they had a shorter bedtime routine.

“The whole premise was trying to teach parents responsive parenting skills and have them practice those with the hypothesis being that by being more responsive a child is able to learn to self-regulate,” Dr. Savage says.


Evidence is mounting that sleep could be an effective weapon in fighting obesity, says Jodi A. Mindell, a psychology professor at Saint Joseph’s University in Philadelphia who specializes in children’s sleep.

“This does not mean that you start doing sleep training at two weeks of age,” says Dr. Mindell, who wasn’t involved with the New Zealand study but was a consultant on the Pennsylvania trial. She advises that when babies are 3- to 6-months-old, parents should start instituting bedtime routines, early bedtimes and strategies aimed at getting babies to sleep at bedtime and go back to sleep when they wake up.

While it’s unclear how better sleep leads to lower obesity rates, Dr. Mindell says one theory is that if a baby is waking less throughout the night he or she may be consuming fewer calories in nighttime nursing or bottles. Another potential mechanism is that less disruptive sleep may affect metabolism in the short- and long-term.

The research groups at Penn State and in New Zealand have created a consortium to discuss future studies. “We’re trying to narrow it down to see what are the smallest things that you can do as an intervention—which aspects of sleep interventions are leading to these outcomes,” Dr. Mindell says.

WSJ : Cheaper Humira Copy Goes on Sale in Europe, Widening Gap With U.S.

Cheaper Humira Copy Goes on Sale in Europe, Widening Gap With U.S.
Extra patents on costly biologic drugs in the U.S. have delayed the introduction of less-expensive versions

Cheaper copies of the world’s biggest-selling drug will roll out across Europe this week after a key European patent for Humira expires Tuesday, but U.S. patients and insurers will have to wait to access less-expensive versions of the blockbuster drug.

The reason: a formidable wall of patents built up by Humira-maker AbbVie Inc., that prevents the developers of “biosimilar” versions launching their products in the U.S.

Biosimilars are near-copies of biologic drugs, such as Humira, that are made from living cells in a process that resembles brewing. They are analogous to generic copies of traditional pill-form medicines.

The main U.S. patent for Humira—a drug which is used to treat diseases from rheumatoid arthritis to gut disorders—expired in 2016. But AbbVie has obtained more than 100 additional U.S. patents, a number legal experts describe as exceptional for a single drug. The shelf lives of those patents extend into the 2020s and 2030s.

AbbVie cited these newer patents, which cover manufacturing processes and other aspects of the drug, in lawsuits to block the two biosimilar versions approved in the U.S. Other companies say that has deterred them from bringing biosimilars to market quickly.

Critics, including lawmakers and industry officials, say AbbVie has created a “patent thicket” that abuses the U.S. patent system in order to preserve its profits.

AbbVie says it is protecting investments it made developing an innovative drug. “There’s nothing about our intellectual property around Humira, or the licensing agreements we’ve done ... that’s anything close to gaming the system,” AbbVie Chief Executive Richard Gonzalez said on a conference call with analysts in July.

“We invested a tremendous amount in research and development” to test Humira in a range of diseases and gain regulatory approval for those uses, Mr. Gonzalez said. “And we’ve improved and refined the manufacturing and the formulation of Humira over time, and there’s nothing inappropriate about protecting that investment in innovation,” he added.

Biologic drugs are some of the costliest in the world, and the availability of lower-cost versions as patents expire promises big savings. Humira alone has more than $18 billion in global sales.

In Europe, over 20 biosimilar drugs have gone on sale since the first approval in 2006, in what industry observers say is a more friendly legal environment to challenge patents. In the U.S., where the FDA has approved 12 biosimilar drugs since 2015, only five are available for sale.

“Europe has a much more robust and effective and time-tested means to challenge the validity of patents,” said Robert Cerwinski, a New York-based intellectual property lawyer specializing in pharmaceuticals at Goodwin Procter LLC. “So the companies were able to challenge AbbVie patents in the so-called patent thicket earlier and more effectively than in the U.S.”

AbbVie said in a statement that it welcomes the introduction of biosimilars in Europe but patients who are stable on their existing drugs shouldn’t be switched to another product for nonmedical reasons.


Amgen Inc. and Novartis AG plan to start selling their biosimilar versions of Humira—Amgevita and Hyrimoz respectively—on Tuesday as soon as the European patent expires. Samsung Bioepis Ltd. and Mylan NV are expected to start selling their versions soon after.

Companies haven’t revealed pricing for the Humira biosimilars, but they’re expected to sell at a 10% to 25% discount to Humira’s $10,000 to $22,000 annual price tag in Europe’s biggest drug markets, according to Alexandra Annis, an analyst at health-care-market intelligence firm GlobalData.

Since Humira generates an estimated $4 billion in annual sales in Europe, its second-biggest market after the U.S., the discounted prices should yield hundreds of millions of dollars in annual savings for the continent’s health systems.

England’s National Health Service, which currently spends more than £400 million ($526 million) a year on Humira, says it hopes to save at least £150 million a year by 2021 by switching to biosimilars.

But in the U.S., extra patents have pushed biosimilar developers to delay bringing their products to market until the next decade.

Amgen and Boehringer Ingelheim GmbH developed the two Humira biosimilars approved in U.S., but they haven’t so far gone on sale. Amgen settled litigation with AbbVie and agreed to wait until 2023 to launch its version. Boehringer Ingelheim says it plans to introduce a biosimilar Humira in the U.S. before 2023, but it hasn’t specified a date while it defends itself against a patent-infringement lawsuit brought by AbbVie.

At least three more AbbVie rivals-—Samsung Bioepis, Mylan and Novartis AG—have agreed in legal settlements with AbbVie not to sell their coming biosimilars in the U.S. until 2023.

For now, AbbVie has a U.S. monopoly on a drug whose price has risen to more than $60,000 annually for some patients in the 15 years since it launched, and which racked up more than $12 billion in U.S. sales last year.

Slow approval of biosimilars, as well as limited uptake once such drugs do go on sale in the U.S., is costing the American health-care system an estimated $15 billion-$18 billion a year in missed savings, according to Gary Stibel, founder and CEO of the New England Consulting Group.

A decade ago, the best-selling non-biologic drugs in the U.S. had an average of five patents each, according to Lisa Larrimore Ouellette, a law professor at Stanford University. Now, the 12 top-selling drugs in the U.S., many of which are biologics, have an average of 71 patents per drug, according to a recent study from I-MAK, a group that files legal challenges against the validity of brand-name drug patents.


Some elected and appointed officials have raised questions about patents as impediments.

FDA Commissioner Scott Gottlieb in July criticized “patent thickets” for brand-name biologic drugs “that are purely designed to deter the entry of approved biosimilars,” saying they’ve thwarted competition. He didn’t identify companies he believes are doing so.

AbbVie in particular has attracted sharp criticism over its patenting activities. In December 2017, Sen. Susan Collins (R-Maine), said AbbVie’s patents have “blocked competitors from coming to the market” and called for ways to counter such practices.

“It’s billions of dollars that this costs the U.S. health-care system,” said Dennis Lanfear, chief executive of Coherus Biosciences, which has pushed back its planned U.S. launch date for a Humira biosimilar to 2022 from 2018 because of AbbVie’s patents. “The market would be served if there was more competition.”

>>> Domino's Pizza beats by $0.20, reports revs in-line; Q3 comps +6.3%

Domino's Pizza beats by $0.20, reports revs in-line; Q3 comps +6.3%
  • Reports Q3 (Sep) earnings of $1.95 per share, $0.20 better than the S&P Capital IQ Consensus of $1.75; revenues rose 22.1% year/year to $786 mln vs the $789.1 mln S&P Capital IQ Consensus.
  • Domestic same store sales grew 6.3% during the quarter versus the year-ago period, continuing the positive sales momentum in the Company's domestic business. The international division also posted positive results, with same store sales growth of 3.3% during the quarter.