Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- KPTI +29.6%, SITO +17.3%, TLRD +14.2%, SFS +11.6%, FIVN +11.1%, HIIQ +10.8%, HIVE +10.2%, ATSG +9.5%, TGB +8.9%, BCOR +8.5%, DATA +8.4%, FORM +8.4%, WTI +8.4%, AIRG +8.2%, AOSL +8%, FIT +7.4%, XPO +6.6%, PCOM +6.4%, ARWR +5.8%, RAIL +5.6%, GNCA +5.6%, TVIA +5.4%,EBIO +5.4%, PIP +5%, SQ +5%, LGCY +4.9%, GTN +4.8%, GMED +4.7%,EMKR +4.7%, NVDQ +4.6%, HDSN +4.4%, BRKR +3.4%, HSBC +3.4%, HK +3%, OSUR +3%, HMHC +3%, VVUS +2.9%, ARRS +2.8%, SRI +2.6%, EXTR +2.4%, MFC +2.3%, EZPW +2.3%, MTDR +2.2%, ALB +2.2%, HZN +2.1%,LHCG +2.1%, ICPT +2.1%, OMF +2%, CLVS +1.9%, COT +1.8%, GPN +1.8%,GLUU +1.6%, INCY +1.6%, WPX +1.5%, CLR +1.4%, RDS.A +1.4%, TWO +1.3%, IO +1.2%, AGI +1.2%, PRU +1.1%, AIG +1.1%, STMP +1.1%, JCAP +1%, .
Other news:
- APHB +20.8% (still checking; light volume)
- SCON +14.6% (10% owner Director Kopp disclosed the purchase of 200K shares )
- MNKD +12% (Mannkind and One Drop enter into a collaborative agreement)
- CLSN +8.2% (announces updated date from its Phase Ib dose escalating clinical trial combining GEN-1 with the standard of care)
- RXDX +6.5% (prices 12.5 million share common stock offering at $6.15/share; gross proceeds expected to be $76.9 mln)
- KPTI +5.4% (Karyopharm Therapeutics and Anivive Lifesciences sign exclusive global license agreement for verdinexor; KPTI to receive $1 mln upfront payment and eligible to receive up to $43.5 mln in future milestones, plus royalties )
- SGMO +5.4% (granted orphan designation by the FDA for its compound for the treatment of hemophilia A)
- CTRV +5% (announces it is developing a second-generation formulation of TXL)
Analyst comments:
- FSLR +2.5% (upgraded to Buy from Neutral at BofA/Merrill )
- EMES +0.8% (upgraded to Buy from Hold at Stifel )
- JWN +0.8% (upgraded to Overweight from Neutral at Atlantic Equities)
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- SRC -12.7%, ENTL -11.3%, FTK -11%, COMM -10.3%, CAKE -7.6%, GKOS -6.6%, RUBI -6.3%, AVP -5.8%, MITL -5.4%, BEAT -5.1%, ANDE -5%, CBL -4.4%, OUT -4%, RICE -4%, BCRX -4%, CTL -3.9%, CERS -3.8%, NUS -3.8%,LB -3.4%, EYES -3.1%, FMSA -3.1%, LPI -2.9%, PXD -2.8%, IAC -2.8%,GOGO -2.8%, GSAT -2.8%, DDD -2.4%, LVLT -2.4%, MD -2.2%, AGIO -2.1%,TSLA -1.9%, RIG -1.9%, AUY -1.9%, CRIS -1.9%, CAR -1.8%, PBF -1.7%,RYN -1.6%, DNKN -1.5%, MUR -1.3%, WMGI -1.2%, GTE -1.2%, ZUMZ -1.1%, MUX -1.1%, SSRI -1%, CNQ -1%, HII -1%, RFP -1%, FB -0.9%, ACHN -0.9%, QRVO -0.8%, TCAP -0.8%, OXY -0.8%, KHC -0.7%
Select metals/mining stocks trading lower:
- VALE -1.7%, HMY -1.4%, AKS -1.2%, ABX -1.1%, NEM -1%, SLW -1%, X-0.9%, CLF -0.8%
Select oil/gas related names showing early weakness:
- MRO -1.5%, SDRL -1.9%, HES -1.8%, WLL -1.8%, CHK -1.1%, PBR -1.1%,NE -0.9%, OAS -0.9%, HAL -0.8%
Other news:
- BPMX -30.6% (phase 2b clinical trial evaluating BPX-01)
- WINT -22.1% (to delist from the NASDAQ, will suspend trading in the Company's shares at the open of business on Friday, May 5, 2017)
- PETX -12.9% (prices registered direct offering of 5 mln shares at $5.25/share)
- LNTH -8.9% ( commences 3 mln common stock offering by its existing stockholders )
- GDDY -3.8% (announces public offering of 24,000,000 shares of Class A common stock; expects to repurchase, from the selling stockholders, an aggregate of $275 million of limited liability company units of Desert Newco)
- CVNA -2.6% (continued weakness)
- AMAG -1.5% (commences $250 mln offering of Convertible Senior Notes due 2022 )
- HNR -1.4% (Harvest Natural confirms payment of of $5.75 per share dividend to be completed May 4, termination of trading, and time of dissolution)
- MCRN -1.1% (prices 12 mln share common stock offering by certain selling stockholders at $17.20 per share)
- HUBS -1% ( to offer $300 mln aggregate principal amount of Convertible Senior Notes due 2022, in a private offering)
Analyst comments:
- FIZZ -5.8% (initiated with a Sell at Maxim Group; tgt $33)
- GRMN -1.5% (downgraded to Underweight from Neutral at JP Morgan)
- TSCO -1% (downgraded to Perform from Outperform at Oppenheimer)
Wal-Mart seeks anti-corruption certification, in talks with regulators
Wal-Mart Stores Inc (WMT.N) said on Wednesday it was considering getting certified under a new international program that could help companies defend themselves against isolated cases of corruption or poor business practices.
The International Organization for Standardization (ISO) developed the so-called anti-corruption compliance program and Wal-Mart is hoping to be the first U.S. company to get certified under it, said Jay Jorgensen, Wal-Mart's executive vice president and global chief ethics and compliance officer.
"We have begun looking for a company that would certify us," Jorgensen told the Thomson Reuters Financial and Risk Summit in New York.
The ISO is the world's largest developer and publisher of international standards.
Jorgensen added that Wal-Mart was interested in seeing the program develop in the United States, with the government laying out its own anti-corruption compliance framework or adopting ISO standards to help protect companies that follow it and defend themselves if something goes wrong.
Jorgensen also shared a recent development in which federal agencies have contacted the Bentonville, Arkansas-based retailer about compliance programs.
"Over the past couple of months ... some of the federal agencies have reached out to say 'hey do you have any feedback for us, anything we are doing is unreasonable?,'" Jorgensen said.
Wal-Mart has given feedback to federal agencies and will continue doing so and the company would also be open to speaking with state regulators about compliance, he said.
Jorgensen cited an example of how a broken baby shampoo bottle in California is treated as hazardous waste that retailers have to dispose off through an incinerator.
"We would love it if California would say 'hey we would like some feedback," Jorgensen said.
Jorgensen, who joined Wal-Mart in 2012, has been instrumental in revamping Wal-Mart's compliance systems around the world and building a dedicated ethics and compliance team. That team has a staff of over 2,300, including over 500 in the United States and over 1,800 in international markets.
Since 2013, Wal-Mart has invested more than $141 million in global ethics and compliance systems, Jorgensen said.
More recently, Wal-Mart has created licensing teams that monitor the more than 56,000 licenses and permits Wal-Mart needs to operate in global markets using a centralized licensing system that reduces the error of wrongdoing and increases transparency, he said.
Wal-Mart's ethics and compliance system came into focus after a New York Times report in 2012 found Wal-Mart had engaged in a multi-year bribery campaign to build its Wal-Mart de Mexico business.
This was followed by an investigation by the U.S. Department of Justice into potential misconduct by Wal-Mart, including violations of the Foreign Corrupt Practices Act in some overseas markets including China, Brazil, India and Mexico.
In October, Wal-Mart rebuffed a proposal by U.S. prosecutors to pay at least $600 million to settle a corruption probe into the company's practices in markets including Mexico, India and China.
So far Wal-Mart has spent about $800 million on legal fees and an internal investigation into the alleged payments and to revamp its compliance systems around the world.
Kellogg beats by $0.07, reports revs in-line, reaffirms guidance for "currency neutral" EPS, Operating Profit, and Cash Flow
- Reports Q1 (Mar) earnings of $1.06 per share, $0.07 better than the Capital IQ Consensus of $0.99; revenues fell 4.2% year/year to $3.25 bln vs the $3.28 bln Capital IQ Consensus.
- Comparable operating profit increased 0.5% to $518 mln.
- Outlook: Company reaffirms guidance for currency neutral operating profit, EPS, and cash flow. For EPS, company still expects to generate growth of 8-10% off a 2016 base that excludes after-tax $0.02 from deconsolidated Venezuela results, to $4.03-$4.09. Capital IQ Consensus is for EPS of $3.93. Still expects comparable operating profit to grow 7-9% y/y. Co also affirms cash flow guidance of $1.6-$1.7 bln.
- Commentary: "While our Latin America and Asia-Pacific regions and parts of our North America region performed largely as expected, our U.S. Morning Foods, U.S. Snacks, and Europe region got off to a soft start to the year. It was in these businesses that we saw a meaningfully lower-than-trend net sales and operating profit performance. While this weighed down overall results, as previously indicated, many of their underlying negative factors were largely concentrated in Q1
Apache misses by $0.07 (48.80)
- Reports Q1 (Mar) earnings of $0.08 per share, excluding non-recurring items, $0.07 worse than the Capital IQ Consensus of $0.15.
- Delivered first-quarter production of 481,000 barrels of oil equivalent (Boe) per day and adjusted production of 398,000 Boe per day, which excludes Egypt noncontrolling interest, Egypt tax barrels and 1,100 Boe per day of divested volumes;
- Announcing delivery of first gas at Alpine High midstream, two months ahead of schedule. As a result, raising North American production guidance to 256,000 to 264,000 Boe per day for full-year 2017.
-
2017 outlook and plan update
- Apache's 2017 capital expenditures are tracking in line with its guidance of $3.1 billion. LOE is tracking below plan, and the company is reducing full-year 2017 LOE guidance range to $8.25 to $8.75 per Boe.
- Updated its 2017 North American production guidance to 256,000 to 264,000 Boe per day.
Cheniere Energy reports Q1 (Mar) results, beats on revs (45.66)
- Reports Q1 (Mar) earnings of $0.23 per share, includes items, may not be comparable to the Capital IQ Consensus of ($0.51); revenues rose 1655.1% year/year to $1.21 bln vs the $0.66 bln Capital IQ Consensus
- The YoY increase in net income was primarily due to increased income from operations and decreased derivative loss, partially offset by increased interest expense and loss on early extinguishment of debt
- During the three months ended March 31, 2017, a total of 43 LNG cargoes were loaded from the SPL Project, seven of which were commissioning cargoes\
- Total revenue rose generally as a result of the commencement of operations at the SPL Project in May 2016 upon the substantial completion of Train 1, followed by the substantial completion of Trains 2 and 3 in September 2016 and March 2017, respectively. LNG revenues in the first quarter of 2017 exceeded $1 billion
SPL Project:
- Through Cheniere Partners, we are developing up to six Trains at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the "SPL Project")
CCL Project:
- "We are developing up to three Trains near Corpus Christi, Texas. Each Train is expected to have a nominal production capacity, which is prior to adjusting for planned maintenance, production reliability, and potential overdesign, of ~4.5 mtpa of LNG. Trains 1 and 2 are under construction, and Train 3 is being commercialized and has all necessary regulatory approvals in place."
Early premarket gappers
Gapping up:
- KPTI +29.6%, KPTI +29.6%, SITO +17.3%, APHB +15.2%, SCON +14.6%, SFS+11.6%, FIVN +11.1%, HIIQ +10.8%, TLRD +10%, ATSG +9.5%, TGB +8.9%,FORM +8.4%, AIRG +8.2%, FIT +8.1%, AOSL +8%, WTI +7.4%, DATA +7.3%,PCOM +6.4%, GTE +6.1%, ARWR +5.8%, RAIL +5.6%, TVIA +5.4%, HIVE+5.1%, SQ +4.7%, EMKR +4.7%, NVDQ +4.6%, HDSN +4.4%, ABC +4%, BRKR+3.4%, PIP +3.3%, GPL +3.3%, HSBC +3.3%, HK +3%, OSUR +3%, HMHC+3%, VVUS +2.9%, CF +2.9%, CHK +2.9%, ARRS +2.8%, WPX +2.6%, SRI+2.6%, AVP +2.6%, RDS.A +2.4%, MFC +2.3%, EZPW +2.3%, STMP +2.2%,ALB +2.2%, HZN +2.1%, LHCG +2.1%, OMF +2%, COT +1.8%, SSRI +1.6%,ABMD +1.6%, CLR +1.4%, AIG +1.4%, TWO +1.3%, IO +1.2%, AGI +1.2%,PRU +1.1%, LB +1.1%, EXTR +1%, LGCY +1%, JCAP +1%, RIG +0.9%, LNC+0.9%, BIVV +0.9%, LNC +0.9%, OHI +0.8%, SWM +0.8%, MTDR +0.8%, LQ+0.8%, ABCD +0.8%, CCE +0.8%
Gapping down:
- BPMX -28.2%, WINT -27%, LNTH -10.9%, SRC -10%, EBIO -8.1%, CAKE-7.6%, CAR -6%, GKOS -5.5%, MITL -5.4%, ENTL -5.1%, BEAT -5.1%, ANDE-5%, CBL -4.4%, PETX -4%, BCRX -4%, OUT -3.9%, CTL -3.9%, CERS -3.8%,NUS -3.8%, PXD -3.8%, RICE -3.7%, HUBS -3.3%, EYES -3.1%, DDD -3%, LPI-2.9%, GOGO -2.9%, RUBI -2.8%, IAC -2.8%, CVNA -2.6%, GDDY -2.5%,QRVO -2.5%, LVLT -2.4%, AGIO -2.1%, TSLA -1.8%, KHC -1.6%, RYN-1.6%, AMAG -1.5%, HNR -1.5%, DNKN -1.5%, MASI -1.4%, MUR -1.3%,WMGI -1.2%, ZUMZ -1.1%, SUN -1.1%
UK Retail
The New CEO Cycle
(PDF: 35 Pages)
Europe
Industry View In-Line
Geoff Ruddell, Edouard Aubin, Amy Curry, Francois Halconruy
May 3, 2017
In 2008 we identified a pattern to the performance of UK retailers following the arrival of a new CEO. We show here that the theory has continued to play out since then, which suggests that Debenhams and M&S could be about to perform well, but that it may be time to take profits in Morrisons.
Several years ago we published analysis showing that there was a well established pattern for new CEOs in the retail sector. Back in May 2008 we published a report that looked at the 12 instances over the previous 10 years when FTSE 350 retailers had appointed 'outsiders' as CEO. We identified a clear pattern, with the shares rarely outperforming in the first few months after the CEO's arrival, or over the very long term. We found, however, that there was usually a 'sweet spot', generally between months 6-30 after the CEO arrived, where the shares tended to perform well.
In this report we have updated the analysis, which suggests that the pattern continues to hold true. We look here at what has happened in the nine years since our original report. We show that there have been a further 10 instances where FTSE 350 retailers have made external CEO hires and that the pattern we identified back in 2008 has continued to prove a pretty good guide to relative performance.
It suggests that Debenhams could be a very interesting investment over the next year or two...
In this context we think it worth highlighting, despite the underwhelming response to its new CEO's strategy update, that Debenhams is now entering the phase that our analysis suggests may lead to significant share price outperformance. We view Debenhams as too high risk a situation (albeit one offering potentially high reward)for us to rate it at Overweight, but our 60p price target offers c15% upside....that M&S could be about to outperform significantly… Steve Rowe is not an outsider at M&S; however, we think he has the kind of mandate for change usually associated only with external appointees, so we think our theory could be applicable here too. If it proves correct, M&S shares should perform strongly over the next year or so. We remain Overweight, with a 460p price target.
...and that it may be time to take profits in Morrisons… On the other hand, however, our theory suggests that Morrisons' period of outperformance could soon come to an end. We continue to rate Morrisons at Underweight, with a 170p price target, and believe that the improved operating performance witnessed in recent quarters is likely to prove shortlived.
While we do not suggest readers abandon bottom-up analysis and valuation considerations, and invest solely on the basis of this 'New CEO cycle' theory, we do think that it would be unwise to simply ignore a pattern that has been repeated so consistently over the last 20 years.
Authors
Morgan Stanley & Co. International plc
Geoff Ruddell
+44 20 7425-8954 EMAIL
Morgan Stanley & Co. International plc
Edouard Aubin
+44 20 7425-3160 EMAIL
Morgan Stanley & Co. International plc
Amy Curry
+44 20 7425-6623 EMAIL
Morgan Stanley & Co. International plc
Francois Halconruy
+44 20 7425-5207 EMAIL
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