Gapping down
In reaction to disappointing earnings/guidance:
- IVAC -17.6%, CGNX -16.2%, TPR -7.2%, AXGN -7%, I -6.7%, RCII -6%, SHOP -6%, SMG -5%, FLWS -3.5%, RIG -3%, INCY -2.8%, INST -2.6%, SBAC -1.7%, IIVI -1.6%, PFE -1.4%, RDC -1.2%, AMRC -0.8%
Other news:
- KLXI -8% (sells ASG business to Boeing (BA); to spin-off its ESG Business to KLX shareholders)
- XPER -3.6% (light volume -- ahead of earnings on Thursday)
- WSR -2% (9.6% shareholder KBS files proxy materials with letter to shareholders)
- FR -1.8% (commenced underwritten public offering of 4.8 million shares of common stock)
- ABTX 0% (Allegiance Bancshares to merge with Post Oak Bancshares)
Analyst comments:
- CRON -3.5% (downgraded to Sell from Hold at Canaccord Genuity)
- BTI -2% (downgraded to Neutral from Overweight at Piper Jaffray)
Gapping up
In reaction to strong earnings/guidance:
- INGN +24%, NTRI +12.1%, ELVT +9.9%, EFII +9.4%, QTNA +8.1%, THC +5.7%, HLIT +5.5%, ALSN +4.6%, MTZ +4.5%, IDTI +4%, FDP +3.8%, AKAM +3.6%, UAA +3.6%, APTI +3.4%, ADM +3.1%, TNET +2.6%, KAI +2.4%, WCG +2.4%, HEP +2.4%, AEIS +2%, NBIX +1.8%, EDGE +1.8%, MX +1.6%, WLL +1.5%, ETN +1.3%, MRK +1.1%, VRNS +1%, EMR +0.9%, JCI +0.9%, AET +0.5%
Other news:
- KPTI +26.1% (Karyopharm Therapeutics reports 'positive' top-line results from the Phase 2b STORM study evaluating the Company's lead, oral Selective Inhibitor of Nuclear Export (SINE) compound selinexor in heavily pretreated patients with refractory multiple myeloma)
- HCA +4% (ticking higher following THC results)
- KL +1% (identifies potential new source of gold production in Northern Australia)
Analyst comments:
- ROKU +1.4% (initiated with a Overweight at KeyBanc Capital Mkts)
- CTXS +1.2% (added to Conviction Buy List at Goldman)
Early premarket gappersGapping up:
- INGN +25.2%, KPTI +24.8%, EFII +14.7%, NTRI +12.1%, ELVT +9.9%, QTNA +8.1%, THC +5.7%, ALSN +4.6%, MTZ +4.5%, AKAM +4.1%, HCA +4%, IDTI +4%, FDP +3.8%, APTI +3.4%, TNET +2.6%, WCG +2.4%, AEIS +2%, NBIX +1.8%, MX +1.6%, HLIT +1.4%, WLL +1.2%, VRNS +1%
Gapping down:
- IVAC -16%, CGNX -15.7%, AXGN -7%, RCII -6%, XPER -3.6%, RIG -3%, INST -2.6%, WSR -2%, SBAC -1.7%, AMRC -0.8%, TXRH -0.5%, COMM -0.5%
Next Hurdle for T-Mobile-Sprint Merger: Trump Administration
The would-be partners have some new arguments to sway regulators, including more choices for wireless phone service from cable companies
It took months of discussions spanning three continents and four public company boards before T-Mobile US Inc. TMUS -6.22% and Sprint Corp. S -13.69% signed the merger agreement that had eluded them for years.
Now comes the hard part.
The country’s No. 3 and No. 4 wireless carriers by subscribers must convince U.S. regulators and antitrust enforcers that their $26 billion union won’t hurt industry competition. It is a tough hurdle to clear. The companies aborted their last merger attempt in 2014 after government officials told executives they weren’t likely to approve the deal.
The market’s initial reaction showed investors’ worries about the risk of another thwarted merger, even under a Republican administration. Sprint shares fell 14% to $5.61 Monday, a discount to the price implied by the all-stock deal. Based on T-Mobile’s share price, which fell 6.2% on Monday, Sprint holders would get stock worth $6.21 for each Sprint share.
The deal would leave the U.S. with three national wireless network operators, a scenario that Obama administration regulators opposed. Antitrust experts have debated whether a stronger third player would drive more competition than a market with two giants— AT&T Inc. and Verizon Communications Inc. —and two smaller rivals, T-Mobile and Sprint, that have been driving down prices in recent years.
The would-be partners said they don’t expect the proposed transaction to close until next year. It is subject to review by both the Federal Communications Commission, the country’s main telecom regulator, and antitrust officials atthe Justice Department. State officials will also vet the deal.
Sprint and T-Mobile do have some new arguments they lacked a few years ago. For one, they point out that there are more choices for wireless phone service. Cable companies like Comcast Corp. and Altice USA Inc. now sell their customers cellphone plans that compete for wireless customers, though they still rely on Sprint and Verizon to run their cellular network.
To make their case for the combination, the companies also highlighted plans to speed the rollout of fifth-generation, or 5G, networks in the U.S. and pledged to create U.S. jobs, two themes that align with Trump administration goals.
“We think the rise in the government interest in creating an attractive investment climate for 5G deployment improves the odds for the deal’s approval,” New Street Research analyst Blair Levin wrote in a recent note to clients.
That argument could factor into the FCC’s review because the agency is allowed to consider a deal’s public-interest merits rather than focusing solely on its competitive effects, according to former FCC commissioner Robert McDowell, a partner at law firm Cooley LLP, which has advised T-Mobile on the merger.
The five-member FCC has three Republicans and is now led by a GOP chairman, Ajit Pai, who has relaxed some regulations on the industry.
“They realize that the clock is ticking and if they’re ever going to get the deal approved, they need it now,” Mr. McDowell said of the companies.
There are other signs Mr. Pai could hear out the chief executives’ arguments when they visit Washington this week. The FCC’s annual report last year found the wireless market had “effective competition” for the first time since 2009, a move that could help clear a path for the companies.
Neither the race with China to deploy 5G nor U.S. jobs would be relevant in a Justice Department antitrust review, in which the government studies whether a deal would lead to higher prices or otherwise harm competition.
AT&T declined to comment, while Verizon said it is focused on building its network “not just a proposal that may or may not happen in the next couple of years.”
In that regard, the merger review will provide another major test for the Trump administration and its Justice Department’s antitrust chief, Makan Delrahim. Mr. Delrahim has been more aggressive on enforcement than officials in other recent Republican administrations, suing to block AT&T’s planned acquisition of Time Warner Inc.
“The odds of approval are not great but neither are the costs of trying,” Mr. Levin said. “Meanwhile, the benefits are great. So we think it is worth the companies’ time and effort to try.”
FT - As merger mania rages, executives sing showtunes and bankers dance till the music stops
Apple earnings: the 4 most important numbers
Tuesday’s results have taken on a significance beyond the usual quarterly update
Apple’s earnings report after the closing bell on Tuesday has taken on a significance beyond the usual quarterly update. It may prove to be a referendum on what kind of company shareholders want Apple to be — or, at least, what kind of investors hold Apple stock these days. Will investors focus, as they have historically done, on iPhone sales? Or will they look past potential disappointment there to a massive return of capital?
Here are the numbers that investors of all stripes will be watching for:
IPHONE SALES
Smartphone suppliers have sent a strong signal that growth in the number of phones being sold is slowing around the world, even in supposed growth markets such as China and India. This threw Apple investors into what one analyst, Daniel Ives at GBH Insights, called “full panic mode”.
But remember that when it comes to Apple there is an important distinction between unit volumes and revenues.
Depending on how you look at it, the decision to launch the most expensive iPhone ever at just the moment demand was petering out was a terrible misreading of the market or a genius move to buoy up revenues, even if it came at the expense of volumes.
Most analysts are expecting Apple to say it sold about 52m to 53m iPhones in the quarter ended March 30, up 2 to 4 per cent year on year, bringing total revenues to roughly $61bn.
Many on Wall Street have been trimming their estimates in recent weeks, however. Barclays, for instance, now expects Apple to sell only 48m iPhones in the quarter.
The iPhone’s average selling price (ASP) should give some clues as to which model is selling better. Morgan Stanley pegs the analyst consensus at an ASP of $741 but believes that “could be aggressive” if iPhone X sales have indeed waned.
CAPITAL RETURNS
Three months ago, Apple’s finance chief Luca Maestri said Apple planned to run down the company’s entire net cash balance of $163bn to zero, over time.
That has many analysts expecting as much as $100bn will be returned to shareholders in the form of dividends and share repurchases — though a one-off special dividend is unlikely after Tim Cook said he was “not a fan” of them at Apple’s annual shareholder meeting.
Analysts at Barclays say this has insulated Apple’s share price from a sharper drop, as iPhone fears gather. “We think the market has shrugged off weaker demand in expecting a big payday from Apple,” they wrote in a note on Monday.
Does that mean Apple’s share price is vulnerable if the company is less generous than they hope, or decides to use its repatriated profits for something else, such as an acquisition?
“Our concern is that a weaker iPhone franchise could require the company to allocate more cash to M&A,” Barclays said.
SERVICES AND OTHER PRODUCTS
Apple optimists have tried to point out lately that there is life beyond the iPhone. Although the smartphone typically makes up more than half of Apple’s revenues, the company’s services business is growing steadily, thanks to software sales from the App Store and subscriptions such as Apple Music. Morgan Stanley predicts services revenues grew 28 per cent year on year to $9bn in the quarter.
Apple also launched its $350 smart speaker, HomePod, in the quarter. The signs are that the device has fallen some way short of blockbuster success, as it struggles to compete with the likes of Sonos speakers or Amazon’s Echo. Nonetheless, it could add to the “Other products” line of Apple’s results, which also includes the fast-growing Apple Watch.
Neil Cybart, analyst at Above Avalon, predicts $4.1bn in sales of “Other products”, up 43 per cent year on year.
OUTLOOK
The true test of the iPhone’s enduring appeal will be how well sales are sustained until the next new model arrives in September. Wall Street expects revenues of about $52bn for the current quarter that runs to June 30, based on roughly 42m iPhones sold. However, a growing number of analysts predict Apple could see a year-on-year drop from the same quarter last year, when it reported iPhone sales of 41m.
“We suspect negative news flow should peak with this reset, with supply chain build rates improving soon,” said HSBC.
Aviva announces £600m share buyback
Aviva has announced that it will buy back £600m of shares, a fifth more than it promised at its full year results in March.
The company had promised to return £500m to shareholders, but courted controversy by saying that some of that money could be used to cancel preference shares. That part of the plan was ditched after an outcry from investors, and Aviva yesterday promised to pay £14m to people who had lost out by selling the preference shares in the wake of the announcement.
The buyback of ordinary shares unveiled on Tuesday is part of a plan to deploy £2bn of excess capital this year. Almost half of that will be used for debt reduction, while £600m has been earmarked for bolt on acquisitions.
The shares will be bought in the market by the end of the year and cancelled.
Mark Wilson, Aviva chief executive, said: “Aviva has significant surplus cash and capital and we are deploying £2bn productively in 2018. The £600m buy-back, together with our plan to repay £900m of expensive debt maturing this year and invest in bolt-on acquisitions, will grow Aviva's earnings, strengthen cashflow and improve debt ratios."
Japan’s stocks were mixed, while Australia’s market advanced in a muted session with many major markets shut for holidays. The dollar cemented its recent advance and oil extended an advance above $68 a barrel.
Futures on the FTSE 100 edged higher with S&P 500 Index contracts. Banks led gains in Australia after recent declines, while Japan’s Topix index inched lower. Markets are closed in China, Hong Kong, Singapore, India, South Korea, Taiwan, Indonesia, Malaysia, Thailand, Philippines, Vietnam, and much of Europe, though not in the U.K. The greenback preserved gains ahead of the Federal Open Market Committee meeting and the U.S. employment data due Friday. US After Hours INGN +24.5%, NTRI +12% higher, while CGNX -16%, AXGN -7%, RIG -3% lower following earnings/guidance
Nikkei +0.18% Hang Seng closed CSI closed Shanghai Closed Shenzen Closed
Eur$ 1.2060 CNH 6.3172 CNY 6.3322 JPY 109.44 GBP 1.3747 CHF 0.9920 RUB 62.9772 WTI$ 68.64 +0.10%
S&P +0.14% EuroStoxx Closed FTSE +0.08% SMI Closed Dax Closed
Macro :
- *NETANYAHU SAYS IRAN HAD SECRET PLAN TO BUILD NUCLEAR WEAPONS
- Billionaire Lemann Says He’s a ‘Dinosaur’ Keeping Up With Tech
- Pharma : *TRUMP TO DELIVER SPEECH ON DRUG PRICING MAY 8, OFFICIAL SAYS
- Trump Delays Imposing Tariffs, RBA Holds: Macro Squawk Wrap
Keep an eye on :
- ADS GY : Under Armour Options Setup Into 1Q Earnings Implies an 11% Move
- AGN US : Allergan Slides as Street Fears Management Will Do Nothing
- AIR FP : Boeing to Buy Aerospace Parts Distributor KLX for $4.25B
- AV/ LN : Aviva to Start GBP600m Share Buybacks, Will Run Until Year-End
- BARC LN : Grimstone Is Said to Rule Himself Out for Barclays Chairman: Sky
- BP/ LN : BP First Quarter Adjusted Net Beats Highest Estimate
- CARLB DC : Carlsberg First Quarter Revenue Meets Estimates
- CCFS LN : Elliott Selling 10% Stake in Charter Court Financial: Term
- CHAR LN : Chariot Oil & Gas Downgraded to Add at Peel Hunt; PT 12 Pence
- CHG LN : Chemring CEO Flowers to Retire, Ord to Replace Him as of July 1
- CNCT LN : Connect Group First Half Revenue GBP766.5 Mln
- 1COV GY : Covestro could acquire in plastics processing segment, New CEO Comment- Rheinische Post
- DSV DC : DSV FY Adjusted Operating Profit View Midpoint Meets Est.
- DVMT US : Dell Refuses to Comment on VMware Strategic Options
- SMDS LN : DS Smith Says Trading in Line, Volume Growth Strong
- FB US : WhatsApp Founder Jan Koum Says He’s Leaving Company in Post
- FSLR US : First Solar Plunges Most In 18 Months, Erasing Earnings Gains
- GLEN LN : Glencore Agriculture Ordered by CFTC to Pay $2 Million Penalty
- JLT LN : Jardine Lloyd Thompson Says Made Positive Start to Year
- JPR LN : Johnston Press CEO Ashley Highfield Quits for ‘Family Reasons’
- JE/ LN : Just Eat First Quarter Revenue GBP177.4 Mln
- NG/ LN : National Grid Agrees Deal to Sell Remaining 25% of Cadent Gas
- NOVN SW : Novartis Says Data on Eylea Rival Support Quarterly Dosing
- PLUS LN : Plus500 Revenues and Profits Rise to Records in 1Q
- ROCK DC : Rockwool Prelim. 1Q Sales EU603m; Boosts Yr Ebit Margin Outlook
- RPS LN : RPS Says 1Q Profitability Slightly Above Management Expectations
- SAF GY : SAF-Holland: Purchase of York Will Add EU33M in Sales
- GLE FP : Hubert Preschez Is Said to Join HSBC France From SocGen: Echos
- UCB BB : UCB Granted FDA Orphan Drug Status for Rozanolixizumab
- VM/ LN : Virgin Money First Quarter Net Mortgage Lending GBP200 Mln
After Hours Summary: INGN +24.5%, NTRI +12% higher, while CGNX -16%, AXGN -7%, RIG -3% lower following earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: INGN +24.5%, EFII +14.8%, NTRI +11.9%, QTNA +8.1%, THC +5.7%, MX +4.8%, ALSN +4.6%, IDTI +4.4%, MTZ +4%, ELVT +3.5%, AKAM +2.8%, VRNS +1.8%
Companies trading higher in after hours in reaction to news: KPTI +27.3% (reports 'positive' top-line results from the Phase 2b STORM study evaluating the Company's lead, oral Selective Inhibitor of Nuclear Export compound selinexor in heavily pretreated patients with refractory multiple myeloma), HCA +4% (ticking higher following THC results)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: CGNX -15.7%, IVAC -15.3%, AXGN -7%, RIG -3%
Companies trading lower in after hours in reaction to news: XPER -3.6% (light volume -- ahead of earnings on Thursday), WSR -2% (9.6% shareholder KBS files proxy materials with letter to shareholders), FR -1.8% (commenced underwritten public offering of 4.8 million shares of common stock)
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