From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 02/01/18 14:37:13
Subject: >>> Dax _ quick chart - first gap 13016/13062 filled testimg 100d MA after breakbreaking 50d MA
PayPal: Color on Qtr- Shares down on EBAY news, Analysts on Hold (85.32)
- Stifel Research notes, although PYPL's 4Q17 results couldn't have been much better and guidance appears conservative, a significant reduction in the company's future relationship with its largest customer (eBay) has resulted in a sharp sell-off (down ~11% after hours). While firm is tempted to buy the dip given what at first glance looks a severe overreaction (est low to mid-single digit rev/EPS impact in 2021), it is concerned that this could reignite the seemingly forgotten debate around PYPL's competitive positioning, especially relative to the card networks. With PYPL shares still trading at an almost 10% premium to V/MA (27x vs 25x 2019 EPS) even post the after hours sell-off, firm remains on the sidelines as it believes shares will struggle to garner a significant premium to the card networks in light of recent events. As such, maintaining Hold rating although target price increases to $79 (from $77).
- Needham Research notes PayPal delivered a strong quarter to close out 2017 with solid core payment volumes and customer adds driving upside results. PYPL also provided updates on its initiatives around expanding consumer choice and announced that it has signed a term sheet with EBAY to make PYPL available as a way to pay on EBAY through July 2023. While trends in the company's core payment business remains strong, the pending sale of the credit portfolio to Synchrony causes a reduction in valuable spread income in 2H18. While PYPL expects to redeploy this into more lucrative payment initiatives in time, this serves as a near-term headwind. With shares trading at 31x FY19 EPS estimate, firm views the valuation as full. Accordingly, maintain Hold rating.
Shares down approx 8% in pre-market trade; Up 5 points off after hour lows.
Gapping down
In reaction to disappointing earnings/guidance:
- EGOV -17.5%, ASX -14.4%, OMI -11.3%, PYPL -7.7%, RL -7.3%, NVO -5.1%, MUR -4.7%, APU -4.2%, SYMC -3.7%, UPS -3.5%, BABA -3.3%, VOD -3.2%, HSY -3%, TSCO -2.8%, APTV -2.2%, CTXS -1.9%, NOW -1.9%, BSX -1.6%, LAZ -1.5%, CRS -1.2%, BAX -1.1%, QCOM -1%, (also expands its global patent cross-license agreement with Samsung covering mobile devices and infrastructure equipment), RDS.A -1%, MSFT -0.9%, DWDP -0.9%, MO -0.7%, PH -0.7%
Other news:
- ONCS -14.4% (commences common stock offering)
- RIOT -6.9% (confirms its Annual Meeting was adjourned for a second time to achieve a quorum on the proposals to be approved -- under Nevada law, a new record date is required to be set)
- DPW -5.3% (ongoing volatility)
- NVTR -4.6% (commences common stock offering)
- GNBC -2.7% (to offer 3 mln shares of common stock in secondary offering by selling shareholders)
Analyst comments:
- CMG -2.3% (downgraded to Sell from Neutral at UBS)
- ESRX -1.6% (downgraded to Underperform from Mkt Perform at Bernstein)
- NVDA -1.5% (removed from Conviction Buy List at Goldman)
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- QNST +12.5%, KEM +12%, QRVO +11.9%, OTEX +11.5%, EBAY +10.3%, NOK +9.6%, TUES +6.9%, ST +6.7%, VRTX +6.2%, (selects VX-659 and VX-445, two next-generation correctors for phase 3 development as part of two different triple combination regimens ), QGEN +4.5%, (also to acquire STAT-Dx), T +3.7%, USG +3.5%, MKSI +3.4%, ESIO +2.5%, FB +2.5%, NOG +2.5%, MPC +2.4%, ALGT +2%, X +1.9%, VLO +1.8%, DGX +1.6%, UN +1.3%, MA +1.3%, AME +1%, TWX +0.9%
Other news:
- LTBR +25.7% (awarded key patents in Europe and China for innovative metallic fuel design that each extend through 2034)
- ZN +18% ( launches new $5 per share Unit Program of limited duration during the month of February)
- SNDX +6.4% (announces clinical collaboration with AstraZeneca)
- VRTX +6.2% (reports Phase 2 data showed mean absolute improvements in ppFEV1 of up to 13.3 and 13.8 percentage points for VX-659 and VX-445)
- P +3.1% (announced organizational restructuring that shifts resources to focus on ad-tech and audience development efforts)
- GPRO +1.3% (GoPro rolls out enhanced subscription service)
- SGEN +1% (prices 11,538,461 common stock offering at $52.00/share)
- TEVA +0.8% (discloses entry into settlement agreement and mutual releases with Allergan)
Analyst comments:
- WLL +2.5% (upgraded to Neutral from Sell at Goldman)
- PBR +2.5% (upgraded to Neutral from Sell at Goldman)
- TTWO +2.4% (initiated with a Overweight at Morgan Stanley)
- STO +1.3% (upgraded to Neutral from Sell at Goldman)
MasterCard beats by $0.02, beats on revs (169.00)
- Reports Q4 (Dec) earnings of $1.14 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $1.12; revenues rose 20.2% year/year to $3.31 bln vs the $3.25 bln Capital IQ Consensus; 18% on a currency-neutral basis, driven by the impact of the following factors:
- An increase in switched transactions of 17%, to 17.7 billion;
- An increase in cross-border volumes of 17% on a local currency basis;
- A 13% increase in gross dollar volume, on a local currency basis, to $1.4 trillion; and
- Acquisitions, primarily Vocalink, contributed 3 percentage points to this growth.
- These increases were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes.
- Total operating expenses increased 28%. Excluding special items, total adjusted operating expenses increased 15% on a currency-neutral basis. This includes an 8 percentage point impact from acquisitions, primarily Vocalink. The remainder is mostly related to continued investments in strategic initiatives.
- Gives January metrics and updates outlook on the call at 9:0
Time Warner beats by $0.16, beats on revs (being acquired by AT&T (T))
- Reports Q4 (Dec) earnings of $1.60 per share, $0.16 better than the Capital IQ Consensus of $1.44; revenues rose 9.1% year/year to $8.61 bln vs the $8.41 bln Capital IQ Consensus.
- Turner and Home Box Office's Subscription revenues increased 13% and 11%, respectively
- Operating Income grew 5% to $7.9 billion and Adjusted Operating Income grew 7% to $8.2 billion
- 2018 Full-Year Business Outlook
- Expects its 2018 full-year Adjusted Operating Income to increase in the high single-digits, based on current foreign exchange rates.
- The outlook for 2018 Adjusted Operating Income does not include the impact of any future merger or unplanned restructuring and severance charges, the impact from future sales and acquisitions of operating assets or the impact of taxes on such items. These items may occur from time to time due to management decisions and changing business circumstances. The outlook also does not include the costs associated with the pending acquisition by AT&T Inc. (including retention, restructuring and severance costs associated with the transaction).
- Chairman and Chief Executive Officer Jeff Bewkes said: "We had another very successful year in 2017, achieving our financial goals thanks to the great creative and programming excellence across Time Warner. All three of our operating divisions increased revenue and profits while also investing to capitalize on the growing demand for the most creative and compelling content as well as new ways to deliver it to audiences worldwide. Warner Bros. had its best year ever at the global box office with its films grossing over $5 billion in box office receipts, led by hits like Wonder Woman, It and Dunkirk, which received eight Academy Award nominations, including for Best Picture. Warner Bros. also remains the #1 supplier of television shows for the broadcast networks, and saw continued growth in games with franchise releases Middle-earth: Shadow of War and Injustice 2.
Facebook Color on Quarter
- Stifel reiterates $195 tgt, reiterates Hold. Firm notes that they feel like they would need advanced degrees in human psychology and epistemology to fully understand the current situation at Facebook. The financial results on the surface were strong, with reported revenue up by 47% y/y and ahead of expectations. Below the surface, time spent is declining and Facebook is suggesting that the reduction is by design, but how do they really know this is true? In fact, U.S. and Canada DAUs were down for the first time since Facebook began reporting the metric. U.S. and Canada MAUs were flat. U.S and Canada engagement (DAU/MAU) declined by 42bps q/q. Overall engagement was down by 30bps q/q. So what is the truth? They think the right answer may be somewhere between the Facebook management "it's all by design" narrative and the counter thesis of core Facebook fatigue. There is good here, there is bad here -- we are on the sidelines.
- Needham reiterates $215 tgt, reiterates Buy. Firm notes that FB over-delivered financial metrics, reporting 4Q17 revenue of $13.0B (up 47% y/y and 5% above their estimate) and EPS of $2.21 (excludes 1x taxes), up 83% y/y and 18% above their estimate. 89% of 4Q17 revenue came from mobile. FB's CEO focused on Facebook.com's pivot toward "creating more meaningful interactions," with a goal of improving "societal happiness and wellness." He attributed 5% lower time spent in 4Q17 to newsfeed changes. FB remains our top pick in 2018 because: 1) as "meaningful interactions" replace "passive viewing" the attention paid to ads (ie, conversion rates) should rise, adding to FB's pricing power; 2) time spent should rise if FB's goals are met; 3) regulation risk falls in an election year as fake news declines; 4) auction prices are set by demand, so CPMs rise faster than ad units fall.
Shares of Facebook are trading up 2.2% at $190.96/share in pre-market trade
Microsoft: Color On Quarter (95.01)
* BMO stays at Outperform, raises PT to $107 from $100. The firm believes that MSFT remains a core long-term hol* ding for many different investment styles
* Stifel maintains Buy rating, up PT to $105 from $92. Overall, the firm is pleased to see continued, solid execution and believe Microsoft is well-positioned across major secular themes. This, coupled with a favorable IT/macro environment and expense discipline, should enable Microsoft to deliver accelerating operating profit and FCF generation in coming quarters.
MSFT is currently trading slightly lower around the 94.22 level this morning, after initially dropping as low as 92 yesterday afternoon.