>>> Europe : Brokers Upgrades & Downgrades - 21st of June 2017

>>> Up
*Arcadis Raised to Buy at ING
*Capita Raised to Buy at HSBC, PT GBP8.20
*Eiffage Raised to Buy at Goldman, PT EU96
*Compass Raised to Buy at HSBC, PT GBP18.50
*Elior Group Raised to Buy at HSBC, PT EU30
*Weatherford Raised to Overweight at Barclays

>>> Down
*Aena Cut to Sell at Goldman, PT EU179
*B&M European Cut to Equal-weight at Morgan Stanley, PT 350p
*BP Cut to Underperform at Macquarie
*Centamin Cut to Equal-weight at Morgan Stanley, PT 170p
*Chevron Cut to Neutral at Macquarie
*Christian Dior Cut to Hold at HSBC, PT EU259
*Edenred Cut to Hold at HSBC, PT EU24.40
*Eni Cut to Neutral at Macquarie
*LVMH Cut to Hold at HSBC, PT EU246
*Philips Cut to Neutral at Natixis
*Repsol Cut to Neutral at Macquarie
*Shell Cut to Neutral at Macquarie
*Shell Cut to Reduce at AlphaValue
*Schlumberger Cut to Equal-weight at Barclays
*Soco Cut to Underperform at Macquarie
*Sodexo Cut to Reduce at HSBC, PT EU110
*Zurich Ins. Cut to Neutral at MainFirst, PT CHF300

>>> Initiation
*888 New Overweight at JPMorgan, PT 320p
*Akzo Nobel Reinstated Neutral at Goldman, PT EU85
*Autogrill New Buy at HSBC, PT EU13.10
*Autoliv New Neutral at Guggenheim, PT $102
*Ladbrokes Coral New Overweight at JPMorgan, PT 133p
*Paddy Power New Neutral at JPMorgan, PT 8,420p
*William Hill New Neutral at JPMorgan, PT 260p

>>> Call

>>> Asian Update

Asia Mid-Session Market Update: China A-Shares included in MSCI; Toshiba finalizes preferred bidder selection for chip unit

***US Session Highlights***
- (US) Treasury Sec Mnuchin: Confirms Tax receipts are running little lower than expected - CNBC
- (US) Fed’s Rosengren (moderate, non-voter): Low rate environment likely to persist into the future; likely to make fighting recessions tougher - comments from Amsterdam
- (US) Q1 CURRENT ACCOUNT: -$116.8B V -$123.6BE
- (US) May Philadelphia Fed Non-Manufacturing General Regional Business Conditions: 33.6 v 25.6 prior
- Lower energy prices took their toll on stocks as the main indices all but wiped out yesterday's gains. More hawkish comments from various Fed officials also gave investors less confidence in pushing prices higher. Today's worst performer in S&P was Energy, down 1.3%, best sector was Health Care gaining 0.3%

***US markets on close: Dow -0.3%, S&P500 -0.7%, Nasdaq -0.8%***
- Best Sector in S&P500: Health Care
- Worst Sector in S&P500: Energy / Consumer Discretionary
- Biggest gainers: REGN +5.0%; ALXN +2.5%; LEN +2.1%
- Biggest losers: FTR -7.6%; CMG -7.3%; OKE -5.4%
- At the close: VIX 10.9 (+0.5pts); Treasuries: 2-yr 1.35% (+1bps), 10-yr 2.15% (-4bps), 30-yr 2.74% (-5bps)

***US movers afterhours***
- LZB Reports Q4 $0.57 v $0.46e, Rev $412.7M v $401Me; authorizes share repurchase for up to 6M shares (12.3% of shares outstanding); +12.6% afterhours
- RHT Reports Q1 $0.56 v $0.52e, Rev $676.8M v $647Me; Guides Q2 ~$0.67 v $0.65e, Rev $695-702M v $677Me ; +10.1% afterhours
- ADBE Reports Q2 $1.02 v $0.94e, Rev $1.77B v $1.73Be; Guides Q3 ~$1.00 v $0.95e, R$1.82B v $1.8Be; +3.6% afterhours

***Politics***
- (US) Republican candidate Karen Handel to win special congressional House election in Georgia 6th district, allowing Republic part to keep its seat
- (BR) Brazil federal police said to have found evidence that President Temer received bribes - press

***Key economic data***
- (AU) AUSTRALIA MAY SKILLED VACANCIES M/M: 1.2% V +0.9% PRIOR
- (AU) AUSTRALIA MAY WESTPAC LEADING INDEX M/M: 0.0% V -0.1% PRIOR
- (JP) Japan Apr All Industry Activity Index M/M: 2.1% v 1.6%e

***Speakers and Press***
China
- (CN) MSCI plans to add 222 China A Large Cap stocks, representing on a pro forma basis approximately 0.73% of the weight of the MSCI Emerging Markets Index at a 5% partial Inclusion Factor.
- (CN) MSCI CEO: Expects initial inflows from China A-share inclusion to be $17-18B
- (CN) S&P Global chief ratings officer Kraemer: China rating has a negative outlook, signaling that a downgrade is a real possibility

Japan
- (JP) Bank of Japan (BOJ) Apr 27th Policy Meeting Minutes: Momentum toward price goal not firm enough; High chance exports will continue to show solid gains; Risks to economy are skewed to downside.
- (JP) Japan govt (Cabinet office) expected to raise economic assessment in its June report on June 22nd - Nikkei

Australia/New Zealand
- (NZ) According to New Zealand's Home Loan Affordability Reports, typical first home buyers in Auckland need over 7 years to save a 20% downpayment on median wages - NZ press
- (NZ) ANZ economist: Today's dairy auction prices disappointed amid lower participation from China - NZ Press

Korea
- (KR) South Korea FTC chair and Finance Minister to hold a meeting today about the economy - press

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -0.5%, Hang Seng -0.6%, Shanghai Composite +0.2%, ASX200 -1.6%, Kospi -0.6%
- Equity Futures: S&P500 -0.2%; Nasdaq -0.2%, Dax -0.1%, FTSE100 -0.4%

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1125-1.1140; JPY 111.20-111.50; AUD 0.7555-0.7585; NZD 0.7220-0.7245
- Aug Gold +0.4% at 1,247/oz; Aug Crude Oil -0.1% at $43.47/brl; July Copper -0.1% at $2.55/lb
- (CN) PBOC to inject combined CNY40B v CNY10B prior in 7-day reverse repos
- (CN) PBOC SETS YUAN MID POINT AT 6.8193 V 6.8096 PRIOR; Weakest Yuan fix since May 31st and 2nd straight weaker setting
- (KR) Bank of Korea (BOK) sells KRW2.4T in 2-yr monetary stabilization bonds; avg yield 1.63% v 1.58% prior
- (AU) Australia Finance Ministry (AOFM) sells A$800M in 2.75% 2028 bonds; avg yield 2.5124% v 2.4988% prior; bid-to-cover 2.69x v 3.26x prior

***Asia equities notable movers***
Australia
- Yowie Group (YOW) -4.7%; Cuts FY17 Rev growth guidance to 55% from 70%; Guides FY18 Rev +55-70%
- QBE (QBE) -9.8%; Top 3 operating divisions on track to report results in line with budget; Emerging markets experienced much higher than expected claims in Jan-May, H1 combined op ratio may reach 110% (update)
- Retail Food Group (RFG) -10.2%; Cuts FY17 Underlying Net profit growth ~15% y/y (prior 20%)

Japan
- Toshiba (6502) -1.3%; Selects INCJ-led group that includes Bain, SK Hynix, and DBJ as preferred bidder for chip unit sale; Aim to complete chip sale by end of FY17/18 - Japan press
- Kubota (6326) -2.2%; CLSA Cuts 6326.JP to Outperform from Buy

Hong Kong
- Midland Holdings Limited (1200) +6.0%; Announces profit alert: Guides H1 Net profit v loss HK$134M y/y
- UBA Investments Limited (768) +4.6%; Reports FY Net profit HK$4.8M v loss HK$10.2M y/y
- EVA Precision Industrial Holdings (838) +2.4%; Guides H1 Net +170% y/y

>>> US After Hours Summary: LZB +13%, RHT +10%, ADBE +4%, FDX +1% foll

After Hours Summary: LZB +13%, RHT +10%, ADBE +4%, FDX +1% following earnings/guidance, CA +14% on potential M&A deal, GIGA +17% on earnings/strategic alternatives news... Argentina ADRs lower on MSCI news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: GIGA +17% (also announces executive leadership changes and Board's review of strategic alternatives), LZB +13.2% (also increases share purchase authorization), RHT +10%, ADBE +3.7%, KFY +1.4%, FDX +1.1%

Companies trading higher in after hours in reaction to news: CA +14% (CA Tech indicated higher on reports that the company and BMC Software are in M&A related talks), DRAM +12.9% and INWK +9.2% (light volume; still checking), MDR +4% (will replace Medidata in S&P SmallCap 600), VCEL +1.9% (initiated with Buy and $6 tgt at BTIG), NVO +1.3% (confirms received positive vote from FDA Advisory Committee for Victoza; regulatory feedback in the US is expected in Q3 2017), UPS +1.2% (following FDX earnings/guidance)

After Hours Losers:

Companies trading lower in after hours in reaction to news: SGMO -6.7% (commences public offering of shares of its common stock), PSTI -5.3% (previously announced proposed investment plan of $30,000,000 by Innova was terminated), TDOC -2% (to offer $200 million aggregate principal amount of Convertible Senior Notes due 2022 in a private offering)

Argentina ADRs/related names are lower following MSCI news to delay decision on reclassification of MSCI Argentina Index: YPF -10.2%, EDN -10%, BFR -7.1%, GGAL -7%, CRESY -6.5%, PAM -4.4%, TGS -1.5%, TEO -1.3%

>>> US Close Dow -0.29% S&P-0.67% Nasdaq -0.82% Russell -1.07%


Closing Market Summary: Easy Come, Easy Go

In a nutshell, 'easy come, easy go' sums up Tuesday's session as the stock market gave back nearly all of Monday's climb to new record highs. The Nasdaq (-0.8%) and the Dow (-0.3%) settled on opposite sides of the benchmark S&P 500 (-0.7%) while the small-cap Russell 2000 (-1.1%) underperformed.

The major averages opened Tuesday's session modestly lower with the energy sector (-1.3%) showing relative weakness. Crude oil futures plagued the energy group, dropping as low as $42.95 per barrel, as concerns about excess supply, and a deteriorating technical picture, continued to weigh on the commodity. The energy sector retraced some of its early loss, as did crude oil, but the sector still finished at the bottom of the day's leaderboard. WTI crude closed 2.1% lower at a price of $43.53 per barrel.

In general, cyclical sectors struggled amid the day's risk-off tone. Like energy, the consumer discretionary (-1.3%) and industrials (-1.2%) groups finished comfortably behind the benchmark index amid broad weakness. However, homebuilders were a pocked of strength within the consumer discretionary space, pushing the iShares U.S. Home Construction ETF (ITB 34.00, +0.12) higher by 0.4%, after Lennar (LEN 53.87, +1.13) reported better than expected earnings and revenues. In the industrial sector, transports underperformed, evidenced by the 1.8% decrease in the Dow Jones Transportation Average.

The top-weighted technology (-0.8%) and financials (-0.8%) sectors finished just a tick behind the broader market with just a handful of components managing to settle in the green. In the financial space, American Express (AXP 82.51, +0.63) was the top-performer, adding 0.8%. Meanwhile, tech heavyweights Oracle (ORCL 45.84, +0.11) and Adobe Systems (ADBE 140.91, +0.56) outperformed, adding around 0.3% apiece, ahead of their latest earnings reports.

On the countercyclical side, the heavily-weighted health care sector (+0.3%) settled at the top of the day's leaderboard, thanks in large part to the outperformance of the biotechnology industry. The iShares Nasdaq Biotechnology ETF (IBB 303.59, +3.80) increased by 1.3% with names like Regeneron Pharmaceuticals (REGN 495.33, +23.66), Alexion Pharmaceuticals (ALXN 119.05, +2.89), and Biogen (BIIB 266.00, +5.46) leading the charge. 

The lightly-weighted utilities group (+0.1%) also managed to settle in the green, but the remaining defensive-oriented sectors--consumer staples (-0.4%) and telecom services (-1.0%)--finished in the red.

U.S. Treasuries moved higher in a curve-flattening trade on Tuesday with the 2-yr (1.35%) and 10-yr (2.16%) yields slipping one basis point and three basis points, respectively. Meanwhile, in the currency market, the U.S. Dollar Index (97.43, +0.20) registered its second-consecutive win, climbing 0.2%.

The greenback showed notable strength against the British pound (1.2630), adding 0.9%, following dovish remarks from Bank of England Governor Mark Carney, who said that the BoE should not rush to hike interest rates.

It's also worth noting that Fed Vice Chair Stanley Fischer (FOMC voter) and Boston Fed President Eric Rosengren (non-FOMC voter) both commented on the potential downside of keeping interest rates too low for too long. Mr. Fischer focused on the risks to the housing market while Mr. Rosengren discussed the effects on the overall financial system.

Tuesday's lone economic report--first quarter Current Account Balance--came in better than expected, showing a deficit of $116.8 billion (consensus -$123.4 billion). The fourth quarter deficit was revised to $114.0 billion from $112.4 billion.

On Wednesday, investors will receive the weekly MBA Mortgage Applications Index and May Existing Homes Sales (consensus 5.52 million). The two reports will be released at 7:00 ET and 10:00 ET, respectively. 

  • Nasdaq Composite +15.0% YTD
  • S&P 500 +8.9% YTD
  • Dow Jones Industrial Average +8.6% YTD
  • Russell 2000 +3.4% YTD

FT : Global pharma sales forecasts cut amid pricing pressures

Global pharma sales forecasts cut amid pricing pressures
EvaluatePharma lowers projections for next 5 years by $400bn

Global sales projections for the pharmaceuticals industry have been cut by a closely watched forecaster amid signs rampant drug price inflation in the US is starting to ease after years of public pressure.
EvaluatePharma on Tuesday said it was the first time in a decade that it had cut its global revenue forecast for drugmakers, as it removed about $390bn of sales from its model for the period between 2017 and 2022.
“The continued political and public scrutiny over pricing of both the industry’s new and old drugs is not going to go away and we are starting to feel the impact now,” said Antonio Iervolino, head of forecasting at Evaluate.
Drugmakers have found it increasingly difficult to convince health insurers and the US government to pay premium prices for their products, as evidenced by the lacklustre sales of novel heart medicines such as Amgen’s Repatha, Sanofi’s Praluent and Novartis’s Entresto.

Some pharmaceutical groups, including AbbVie, Allergan, Novo Nordisk and Sanofihave pledged to limit annual price increases in response to public pressure over the soaring cost of medicines.
However, the response has not been uniform: this month Pfizer raised the list priceof more than 90 medicines, taking the typical annual increase to 20 per cent.
Mr Iervolino said the rising cost of discovering and bringing a new drug to market — which now runs to about $4bn over 10 years — would put “additional pressure on the productivity of the industry and its longer-term sustainability”.
The report is the latest sign that drug price inflation is abating after years of public pressure that escalated in 2014 following the case of Martin Shkreli, whose company bought a decades-old medicine for cancer and Aids patients and then promptly raised the price from $13.50 to $750 a pill.
Janet Yellen, chair of the Federal Reserve, last week singled out drug prices as one of the factors in a series of weaker inflation readings for the US, while a recent report from SSR, the research group, suggested that prices fell in the first quarter when taking discounts and rebates into account.
The list price of branded prescription drugs increased 6.5 per cent in the first quarter of the year, according to SSR, compared with 10.9 per cent in the same period of 2016. Net prices after discounts fell 1.2 per cent versus inflation of 4.1 per cent in the first quarter of last year.
However, many patients will feel as though the cost of medicines is still rising, because the amount they must personally pay “out of pocket” is linked to the list price of drugs and does not factor in discounts.
The forecast comes as Washington sharpens its focus on drug prices amid fierce debate among Republicans, who control the levers of power, over how to reform the US healthcare system.
Many in the industry are expecting President Donald Trump to issue an executive order on drug prices in the near future following a White House meeting of administration officials to discuss the issue.
The White House said: “Last Friday, a meeting took place as part of the ongoing discussions to reduce the burden of the high cost of drug prescriptions and unleash a wave of innovation to develop cures and treatments for patients.”

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • RS -6.6%, CMG -2.4%, (reaffirms/clarifies guidance for certain financial and operating results for Q2/FY17)
Other news:
  • AVXS -5.6% ( to offer up to $200 million of shares of its common stock in an underwritten public offering)
  • FDUS -3.1% ( commences public offering of 1.5 mln shares of its common stock)
  • GLPG -2.4% (provides and update for its R&D program)
  • NEOS -1.6% (co received FDA approval for Cotempla XR-ODT )
  • BT -1.2% (Orange completes the sale of BT (BT) shares)
  • BCS -0.9% (Serious Fraud Office issues charges against Barclays regarding capital raisings in 2008)
Analyst comments:
  • CSOD -1.7% (downgraded to Underweight from Equal Weight at Barclays)
  • ADP -1.5% (downgraded to Neutral at Goldman; Removed from Conviction Buy List)
  • PAYX -1.1% (downgraded to Neutral from Buy at Goldman)
  • ON -1.1% (downgraded to Sector Weight from Overweight at Pacific Crest)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • LEN +3.8%, SFUN +0.8%
M&A news:
  • PRXL +4% (to be acquired by Pamplona Capital Management for $88.10/share), .
Other news:
  • LPCN +32.8% ( announces LPCN 1021 achieved primary endpoints confirming the efficacy of twice daily oral administration andgenerally met the pre-specified per dose secondary endpoints for twice daily oral administration)
  • ENPH +19.1% (Enphase Energy enters into a Master License Agreement with Flextronics Industrial)
  • BLCM +5.4% (continued strength)
  • CFMS +4.7% (confirms it has received FDA 510(k) clearance of its primary iTotal Hip replacement system)
  • EYEG +3.9% (indicated higher after Armistice Capital discloses 9.9% passive stake)
  • TSLA +3.6% (reports nearing deal for China production plant)
  • MRVL +3.1% (continued strength)
  • DDD +2.3% (continued strength)
  • AMD +2.1% (continued strength)
  • ALXN +1.6% (CEO disclosed the purchase of 10K shares at avg price of $116.72/share)
  • NVS +1.4% (reports Phase III study for RTH258 achieved the primary efficacy endpoint)
Analyst comments:
  • VSLR +5.7% (upgraded to Buy from Neutral at Goldman)
  • MRVL +3.1% (upgraded to Overweight from Sector Weight at Pacific Crest )
  • FOSL +3% (upgraded to Neutral from Underperform at Buckingham Research)
  • AVY +2.2% (upgraded to Buy from Neutral at BofA/Merrill)
  • NVDA +0.8% (upgraded to Sector Weight from Underweight at Pacific Crest)
  • KIM +0.7% (upgraded to Neutral from Sell at Goldman)
  • COST +0.7% (upgraded to Buy from Neutral at Northcoast)

>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • LPCN +25.9%, ENPH +17.8%, PRXL +8.1%, BLCM +7.4%, NEOS +5.6%,EYEG +3.9%, LEN +3.9%, TSLA +2.9%, DDD +2.3%, MRVL +2.1%, CFMS+2%, AMD +2%, ALXN +1.4%, NVS +1.4%, MU +0.8%, NVDA +0.8%,LMT +0.6%
Gapping down:
  • RS -6.6%, AVXS -5.6%, GLPG -2.7%, FDUS -2.6%, REGN -2.5%, CMG-2.2%, CLVS -1%, BT -1%, BCS -0.9%, TDOC -0.8%, VRX -0.5

Reuters - Paris Airshow - Lufthansa CEO sees record summer

AIRSHOW-Lufthansa CEO sees record summer - Reuters

20-Jun-2017 13:22:36

PARIS, June 20 (Reuters) - Lufthansa LHAG.DE is expecting a record summer driven by strong premium demand, good traffic from North America and the booming German economy, the group's chief executive said on Tuesday.

"Even though we are growing 15 percent, our seat load factor is going up and that's why I'm so optimistic for this summer to be a record summer," Carsten Spohr told Reuters at the Paris Airshow.

Lufthansa shares were up 0.6 percent at 1117 GMT, outperforming the wider German DAX .GDAXI index, up 0.2 percent.