Gapping up
In reaction to strong earnings/guidance:
- MNK +12.7%, PEGA +9.3%, THC +7.5%, PANW +6.3%, DDS +4.9%, VSI +4.7%, TOL +3.7%, DISCA +1.3%, MGLN +1.1%, LL +1.1%, AES +1%, IPI +0.8%.
M&A news:
- MSCC +1.2% (Nearing a deal to be acquired by Microchip (MCHP), according to the WSJ),
- MCHP +0.7% (See Above).
Select cyber security related names showing strength following PANW report:
- CYBR +1.6%, FEYE +0.7%, VMW +0.3%.
Other news:
- DPW +8.9% (announces California finance lending license issued to subsidiary),
- HCA +4.9% (following THC results),
- TTS +4.9% (higher after several Directors disclosed insider purchases),
- SELB +4.4% (initiated with Buy/$30 tgt at Mizuho),
- DBVT +3.8% (light volume after announcing 'positive' prelim results from Phase II study of Viaskin Milk in milk-allergic patients; Company will assess next steps on any potential protocol changes with regulatory authorities),
- UVXY +3.3% (ProShare Capital Management announces that the investment objective of UVXY & SVXY will change effective as of close of business on February 27),
- NXTD +2.2% (after closing up ~25% on the day),
- QCOM +1.4% (Qualcomm calls Broadcom comments 'misleading'; Qualcomm has no intention of delaying the annual meeting),
- DISCA +1.3% (following SNI earnings and ahead of its own earnings release tomorrow before the open; receives U.S. Department of Justice clearance to acquire Scripps Networks Interactive).
Analyst comments:
- ABIO +20.1% (Initiated with a Buy at Ascendiant Capital Mkts),
- ECYT +5.9% (Upgraded to Outperform from Market Perform at Cowen),
- SELB +4.4% (Initiated with a Buy at Mizuho),
- EXAS +2.9% (Upgraded to Outperform from Neutral at Robert W. Baird),
- CMG +2.1% (Upgraded to Outperform from Neutral at Robert W. Baird),
- WGO +1.8% (Upgraded to Outperform from Market Perform at BMO Capital Markets),
- MMYT +1.8% (upgraded to Overweight at J.P. Morgan),
- RUSHA +1.2% (upgraded to Buy at Buckingham),
- QRVO +0.9% (Initiated with a Overweight at Piper Jaffray).
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Early premarket gappersGapping up:
- MNK +12.7%, DPW +8.9%, HCA +4.9%, VSI +4.7%, SELB +4.4%, DBVT +3.8%, TOL +3.7%, UVXY +3.3%, NXTD +2.2%, CYBR +1.6%, QCOM +1.4%, DISCA +1.3%, MSCC +1.2%, MGLN +1.1%, LL +1.1%, AES +1%, FEYE +0.7%.
Gapping down:
- AKRX -33.9%, NSPR -22%, TYME -17.5%, SN -9.6%, SRNE -5.1%, FMS -4.2%, PRGO -3.9%, WTW -1.4%, ZSAN -1%, PFE -0.7%, CRI -0.6%.
AutoZone misses by $0.39, reports revs in-line
- Reports Q2 (Feb) earnings of $8.47 per share, excluding non-recurring items, $0.39 worse than the Capital IQ Consensus of $8.86; revenues rose 5.4% year/year to $2.41 bln vs the $2.39 bln Capital IQ Consensus.
- For the quarter, gross profit, as a percentage of sales, was 52.9% (versus 52.7% for the same period last year). The increase in gross margin was attributable to lower distribution costs (17 bps) and higher merchandise margins.
- Domestic same store sales, or sales for stores open at least one year, increased 2.2% for the quarter
Sempra Energy beats by $0.12, beats on revs; reaffirms FY18 EPS guidance
- Reports Q4 (Dec) earnings of $1.54 per share, excluding non-recurring items, $0.12 better than the Capital IQ Consensus of $1.42; revenues rose 3.3% year/year to $2.96 bln vs the $2.82 bln Capital IQ Consensus.
- Co reaffirms guidance for FY18, sees EPS of $5.30-5.80 vs. $5.51 Capital IQ Consensus Estimate.
- "In 2017, we produced outstanding financial and operating results, while making significant investments to fuel our future growth," said Debra L. Reed, chairman, president and CEO of Sempra Energy. "Our proposal to acquire a majority stake in Oncor continues to gain positive momentum and we expect state regulators to complete their review within the next month. Our California utilities are executing on their robust capital programs to reinforce their systems and filed their General Rate Case applications for 2019. Additionally, both SDG&E and Sempra LNG & Midstream recently resolved key business issues, resulting in better visibility going forward.
Guides Medium-term pretax $44-47B, ROTCE ~17% - ahead of analyst day
- Guides FY18 NII $54-55B +7% y/y and 3% CAGR going forward, market dependent, Adj Expense <$62B
- Guides FY18 Net consumer card charge-offs 3.25-3.50%, core loan growth 6-7% y/y
- Longer-term NII growth will be driven mostly by balance sheet growth and mix
- Up to 300bps potential benefit toFirmwide ROTCE from tax reform over medium term
Italy Is Having an Election. Most Italians Are Too Depressed to Care.
In a measure of his desperation, his dream employer is the dilapidated steel mill that dominates life in this fading city on the Ionian Sea. The complex has been blamed for a cancer cluster in the surrounding community. Yet to Mr. Vagali, it beckons like a portal to another life, one that means moving out of his parents’ apartment.
Except the plant isn’t hiring. “You either know somebody, or you don’t get in,” he said bitterly. “There’s nothing here for me.”
All of which helps explain why Mr. Vagali and much of the Italian electorate is either indifferent or contemptuous of the national election campaign that, on March 4, will determine who runs Europe’s fourth-largest economy.
The country’s bleak prospects have improved in recent years, but not enough to meaningfully lift its citizens’ fortunes. Many companies are growing without hiring. What jobs have been created are largely temporary and part time.
Nearly 30 percent of voters are undecided, according to polls. The unpredictability of the outcome amid economic unhappiness has enhanced the chances that the result could generate financial tumult in Italy and threaten a fresh shock for Europe.
Anti-establishment parties are drawing support from the economically distressed — especially the populist Five Star movement, which is leading in many polls. Given that Five Star has previously called for Italy to ditch the euro currency, if it were to triumph it would present European leaders with a fresh challenge to the continent’s cohesion.
Most analysts doubt Five Star can gain enough seats in the legislature to form a government. But there is a remote possibility that the party could forge a coalition with the right-wing Northern League, an alliance that could rattle financial markets, prompting investors to demand higher interest rates for loans to Italy.
“It would increase uncertainty,” said Mujtaba Rahman, the London-based managing director for Europe at the risk consultancy Eurasia Group. “The markets could be spooked.”
The more likely outcome is a coalition led by a rehabilitated Silvio Berlusconi and his Forza Italia party, following his years of disgrace for tax evasion and reports of sex-filled bacchanals. If Mr. Berlusconi emerges from the wilderness to become an Italian kingmaker, that too could roil Europe, given that he has previously scoffed at European rules limiting deficit spending.
One might expect Italy to be in a more optimistic mood. The economy is expanding, albeit slowly, following a decade of crisis. Companies are tentatively hiring. A slow-motion banking disaster has largely been contained, as growth has limited bad loans while the most rickety institutions have been bailed out and restructured.
Still, more than 32 percent of Italians under 25 remain unemployed, while the overall jobless rate is 11 percent. Even after three years of modest growth, the Italian economy remains slightly smaller than it was in early 2004, after accounting for rising prices.
“The general perception is actually very gloomy,” said Nicola Borri, a finance professor at Luiss, a university in Rome. “The recession was particularly bad. A lot of people lost their jobs. A lot of people lost their savings.”
Young Italians see the political class as having failed to refashion an ossified economy in which the elite maintain beach houses, fancy cars and extravagant wardrobes, while everyone else grapples with stagnation. They denounce the still-cozy world of banking in which insiders steer money to politically connected firms while would-be entrepreneurs struggle to secure capital.
They also resent paying taxes to finance comfortable pensions, certain that such funds will be exhausted when they reach their senior years given Italy’s monumental public debt.
“Voting is useless,” Mr. Vagali said as he stood outside the gates of the steel mill. “Nothing changes.”
Here in the south of Italy, the hardship is especially intense, reflecting a decisive geographic divide.
Northern Italy has Milan, with its financial center and high fashion, and industrial enclaves that make cars. The rugged beauty of the south, where vineyards and olive groves spread across verdant land, has seen scant material gains. Industry is minimal, and livelihoods are challenging.
There has been some progress. Here in Puglia, the region that forms Italy’s heel, fortunes have improved in recent years. The regional unemployment rate has dropped below 18 percent, from nearly 20 percent in 2016. Exports from Puglia grew nearly 9 percent last year, with pharmaceuticals, agricultural machinery and food leading the charge.
The trouble for Italy — as for much of the world — is that rising company fortunes no longer produce many jobs.
In a vast rectangular plant outside Bari, Puglia’s capital, Francesco Divella, 70, presides over the pasta-making business that bears his family name.
Started by his grandfather in 1895, the business today fills six plants, exporting roughly one-third of its wares to 120 countries, including Germany, the United States and Japan.
Since the 1980s, the plant has roughly quadrupled its production, while its work force has less than doubled, reaching 320.
“We are technology oriented,” said Mr. Divella, the chief executive. “We are able to increase production without adding people.”
Inside the factory, enormous machines clatter at high decibels, turning flour and water into sheets of pasta, slicing it into spaghetti, and carrying it into ovens for drying. Sensors looking for trouble along the line provide real-time alerts to computers tucked inside a control room.
The control room was empty on a recent morning, the machinery running itself. Outside, a lone worker patrolled the cavernous plant.
Only in the back of the operation, where pasta is packaged and hoisted into a warehouse, are humans found in numbers. Those tasks are the target for the next phase of automation. Divella just bought a German robotic system that will run self-driving forklifts in its warehouse at night.
Even within its professional ranks, Italy is full of economic insecurity, undermining enthusiasm for the elections.
Less than five years after she graduated from university, Emanuela Muolo, 28, has already given up her dreams of a career in the field she studied, financial law. She first worked an unpaid job at a local law firm, hoping to gain experience. She never secured a paid position, so she shifted her focus to banking, searching throughout Italy for a job while she worked as a restaurant hostess.
Recently, she settled into a full-time position at a job center in Bari, helping unemployed people with their quests for a paycheck. She earns about 1,100 euros a month (about $1,360).
She and her boyfriend have been together for five years. They contemplate marriage and starting a family, but they both live with their parents.
The professional roadblocks she has encountered have left Ms. Muolo confused about the election. Her boyfriend plans to vote for Five Star. She plans to skip the polls.
“It doesn’t feel real,” she said. “Ultimately, we feel far away from Rome.”
In Taranto, Rome’s influence is a visceral force as the Ilva steel mill — one of the largest in Europe — spews toxic dust that blackens the windows of surrounding neighborhoods.
The plant began production in 1964 as a state-owned enterprise, its very existence the result of Rome’s designs on developing the south to create jobs.
Almost immediately, the community began suffering the consequences. Mercury and dioxin seeped into the aquifer, tainting produce and sheep herds, a source of prized cheese. Children coughed up black mucus while succumbing to elevated rates of cancer, according to many studies. Mussels in the bay, once prized, are now eschewed as dangerous.
In 2012, a local magistrate cited health issues in ordering the shutdown of major parts of the plant, by then in private hands. But the central government in Rome used an emergency decree to override that decision to preserve some 20,000 jobs.
The government took control of the plant in 2015, and last year struck a deal to sell it to ArcelorMittal, a global leader in steel, pending an antitrust review.
Meanwhile, the mill remains in operation.
In the Tamburi neighborhood, a grid of crumbling concrete block apartments with laundry billowing from their balconies, residents have grown accustomed to watching young people move away.
“There’s no more jobs around here,” said Ignazio D’Andria, proprietor of a local cafe.
Mr. D’Andria does not plan to vote. “I’ve tried the left,” he said. “I’ve tried the right. Our lives haven’t changed.”
Standing next to the bar, Alessio Peretto grimaces at that attitude. He works at the Ilva plant, and he favors Five Star, given the party’s talk of building a new economy centered on green energy.
“Give them a chance,” he said.
The rest of the crowd inside the cafe was not buying it. They have seen this stretch of southern Italy fester for decades before Rome constructed a catastrophe in the name of jobs. The land is poisoned, people are sick, and now even the jobs are imperiled. To them, the politicians seem like flies landing on a corpse.
Two older men leaned against the wall, hoisting bottles of beer after a day spent cutting slabs of marble in a nearby graveyard.
“In the cemetery, that’s where we find work,” said Antonio Caniello, 69. “Death is the only sure thing.”
Safran: FFP becomes shareholder, tenders Zodiac shares
27 FEB 2018
FFP [FFP:PA] has tendered all its Zodiac Aerospace [ZC:PA] shares to the subsidiary public exchange offer initiated by Safran [SAF:PA] as announced on 7 December 2017. Since the maximum ceiling of the subsidiary offer has been reached, the number of Zodiac Aerospace shares tendered by FFP to the exchange offer has been reduced. FFP received 2,832,492 Safran shares, which are inalienable for a period of 3 years, and EUR 141m. 375,237 Safran ordinary shares have then been bought on the market for an amount of EUR 31m.
FFP intends to participate in Safran’s governance through a joint company whose purpose will be to represent FFP and the Fonds Stratégique de Participations (FSP), acting in concert vis-à-vis Safran, on the Board of Directors of the new group. The candidacy of that company, which is called F&P and will be represented by its Chairman Mr Robert Peugeot, will be submitted for the approval of the next Annual General Meeting of Safran shareholders on 25 May 2018.
Mr Peugeot said: “Having actively contributed to the merger between Zodiac Aerospace and Safran, we are delighted to become shareholders of one of the main French players in the global aviation industry, whose medium-term prospects are attractive. We look forward to making a contribution to the development of the new group on Safran’s Board of Directors.”
FFP is an investment company listed on Euronext, majority-owned by Etablissements Peugeot Frères and managed by Robert Peugeot. FFP is one of the leading shareholders of Peugeot SA and pursues a minority shareholdings and long-term investment policy. FFP holds participations in listed companies (SEB, ORPEA, LISI, DKSH or SPIE), non-listed companies (Tikehau Capital Advisors or Total-Eren), co-investments (IHS or JAB Holdings) and private equity funds.
German cities have right to ban diesel cars, court rules
Decision may have wide-reaching consequences in Europe’s biggest auto market
Germany’s top administrative court has ruled that German cities have the right to ban diesel cars, in a move that could have far-reaching consequences for the owners of some 12m vehicles in Europe’s largest auto market.
The issue of diesel emissions has risen to the top of the political agenda ever since Volkswagen was found to have cheated on emissions tests in the US. Attention has been focused on diesel emissions of nitrogen oxide (NOx) which can cause respiratory disease. Some 70 German cities have NOx levels which exceed EU limits.
The case originated in a suit by the environmental group DUH, which had taken the cities of Stuttgart and Düsseldorf to court to force them to implement driving bans. After the states of Baden-Wuerttemberg and North Rhine-Westphalia appealed against the bans, the case was referred to the federal administrative court in Leipzig, which today ruled they were legal.
SeaWorld Entertainment misses by $0.05, beats on revs (15.74)
- Reports Q4 (Dec) loss of $0.24 per share, $0.05 worse than the Capital IQ Consensus of ($0.19); revenues fell 0.8% year/year to $265.5 mln vs the $258.97 mln Capital IQ Consensus.
- Hosted approximately 4.26 million guests
- Fourth quarter attendance was down 2.7% from the prior year fourth quarter compared to full year 2017 attendance which was down 5.5% from prior year.
- Year-to-date 2018 trends are positive when compared to the prior year period with increases in season pass sales and total attendance, led by significant increases in both metrics at SeaWorld San Diego.
- Some New Rides for 2018:
- SeaWorld Orlando: Infinity Falls a river rapids raft ride with the highest vertical drop for a ride of its type in the U.S. and Inside Look, an event taking guests behind the scenes to provide a better understanding of the Company's veterinary care and animal rescue operations.
- SeaWorld San Diego: Electric Eel a triple-launch steel coaster that will be the tallest and fastest coaster in San Diego with speeds of more than 60 miles per hour; Sesame Parade, the first Sesame parade on the West Coast; and Inside Look.
- SeaWorld Orlando: Infinity Falls a river rapids raft ride with the highest vertical drop for a ride of its type in the U.S. and Inside Look, an event taking guests behind the scenes to provide a better understanding of the Company's veterinary care and animal rescue operations.
Sorrento Therapeutics concludes that the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017 should no longer be relied upon (8.85)
On February 26, 2018, the Audit Committee of the Board, after discussion with the Company's independent registered public accounting firm, concluded that the Company's unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017 should no longer be relied upon as a result of the conclusion by the Audit Committee that an other-than-temporary impairment in value had occurred in the Company's equity method investment in Immunotherapy NANTibody, LLC for the three and nine months ended September 30, 2017.
- In February 2018, NANTibody notified the Company that in July 2017 NANTibody acquired assets from a party related to its 60% owner, NantCell, Inc., for approximately $90 million cash. As a result, the Company reassessed the recoverability of its equity method investment in NANTibody and, on February 26, 2018, the Company and Audit Committee concluded that a previously unrecorded other-than-temporary impairment in value had occurred in its equity method investment in NANTibody as of September 30, 2017. The resulting impact on the Company's 40% equity interest in NANTibody is a $36.0 million impairment on equity method investment in the Company's condensed consolidated statement of operations for the three and nine months ended September 30, 2017. This impairment expense will not result in cash expenditures in past or future periods.
- The Company will restate its unaudited condensed consolidated financial statements and other financial information contained in its Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2017, filed with the Securities and Exchange Commission on November 9, 2017, to reflect the impact of the impairment in the value of the Company's equity investment in NANTibody by filing an amendment to the Form 10-Q on or about February 26, 2018.