After Hours Summary: Rubicon Project (RUBI), NeoPhotonics (NPTN) slip in extended trading following light guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: PIP +27.5%, ARNA +21.8%, AXAS +12.7%, RST +12.2%, CLDX +3%, SLD +2.9%, FOGO +2.6%.
Companies trading higher in after hours in reaction to news: TCON +11.1% (Announced that it entered into a Common Stock Purchase Agreement of up to $21 mln with Aspire Capital), AI +3.6% (Affirmed an unchanged quarterly dividend of $0.625/share), KITE +1.3% (Highlighted the publication of results in the Journal of Clinical Oncology from a National Cancer Institute study of anti-CD19 chimeric antigen receptor T-cell therapy in patients with relapsed/refractory non-Hodgkin lymphoma), TWO +1.1% (Increased its quarterly dividend to $0.25/share from $0.24/share), USO +1% (Following API draw).
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: RUBI -23.7%, NPTN -12.1%, FTD -7.7%, AKAO -7.5%, EVRI -7.4%, OHAI -6.1%, CNXR -5.8%, INFI -5.1%, TRTN -3.1%.
Companies trading lower in after hours in reaction to news: NMM -12% (Agreed to sell approximately 47.6 mln common units in a registered direct offering at $2.10/unit), IMUC -8.1% (Confirmed that its Annual Report on Form 10-K for the year ended December 31, 2016 contained an audit opinion from its independent registered public accounting firm that included a going concern emphasis of matter paragraph), ENDP -1.2% (Continued weakness following late day selloff on negative Advisory Committee vote).
Closing Market Summary: Oil Influences Stocks Lower on TuesdayCrude oil was a persuasive force in the stock market on Tuesday, leading the major averages into negative territory after OPEC's latest Monthly Oil Market Report (MOMR) showed some concerning production figures out of Saudi Arabia. The S&P 500 and the Nasdaq lost 0.3% apiece while the Dow (-0.2%) held up modestly better.
The energy sector (-1.1%) closed at the bottom of the day's leaderboard as WTI crude suffered from a wave of selling pressure in response to an increase in production out of Saudi Arabia in the month of February. However, Saudi officials did make follow-up comments to the report, saying that the uptick in production went into domestic storage, not international markets. The claim helped the energy component regain some of its early loss in the afternoon session, but WTI crude still closed the day lower by 1.5% at $47.69/bbl.
Finishing near the energy sector, the industrials (-0.9%) and materials (-0.8%) groups struggled to keep pace with the broader market as political uncertainty regarding President Trump's proposed budget, which is expected to include $1 trillion for infrastructure spending, looms in Washington.
Elsewhere in the nation's capitol, House Republicans' proposed replacement of the Affordable Care Act was being met with increased resistance after the Congressional Budget Office (CBO) released its research report on Monday evening. Details of the report aside, it is clear that passing the bill may prove to be challenging for GOP leaders, which could delay the tax reform that investors have been counting on. Despite all the noise, the health care sector (-0.3%) finished in line with the broader market.
At the top of the day's leaderboard was the consumer discretionary space (unch) with retailers representing a pocket of strength; the SPDR S&P Retail ETF (XRT 41.91, +0.03) finished the day higher by 0.1%. The rate-sensitive utilities (-0.1%) and real estate (-0.2%) groups also outperformed as increased buying interest in the Treasury market left interest rates lower. The benchmark 10-yr yield closed three basis points lower at 2.59%.
The start of the week has been slow but investors will need to have their heads on a swivel tomorrow as they will be hit with a slew of economic reports, the latest EIA crude oil inventory report, and, most notably, the FOMC's official rate decision.
Today's lone economic report, February PPI, came in hotter than expected:
- February producer prices increased 0.3%, which is above the consensus of 0.1%. Core producer prices increased 0.3% while the consensus expected an increase of 0.2%.
- The key takeaway from the report is that inflation at the producer level is picking up and is feeding concerns about a potential pass-through effect to consumers.
Tomorrow's economic data will include the weekly MBA Mortgage Applications Index at 7:00 ET, February CPI (consensus 0.1%), February Retail Sales (consensus 0.1%), and March Empire Manufacturing (consensus 14.5) at 8:30 ET, January Business Inventories (consensus 0.3%) and March NAHB Housing Market Index (consensus 65) at 10:00 ET, and the FOMC Rate Decision at 14:00 ET.
WAF GY - Wacker Chemie intends to cut its stake in Siltronic, will continue to hold more than a 30% stake - Have begun accelerated bookbuilding process
RWE Dampens Speculation of Innogy Sale
Germany's largest energy producer has dismissed speculation that a French rival could buy its promising green-energy subsidiary Innogy. Investors shrugged off the denial and sent shares surging.
Engie is not interested in Innogy
The French group does not wish to buy a minority stake in the subsidiary specialized in renewable energies of its German competitor RWE.
The soufflé drops down. This morning, Bloomberg said that Enogie was eyeing Innogy, a company specializing in renewable energies, 77% owned by RWE. The German group reiterated its desire to maintain long-term control (51%) of its subsidiary while recognizing that it was "free to sell shares" by staying above that threshold. Chairman Rolf Martin Schmitz added that he "regularly reviewed the strategic options" of his subsidiary.
For his part, Engie declined to comment. But in the entourage of the group, one sweeps the possibility of becoming shareholder of Innogy. "RWE is looking for a partner to recover money," says a relative of Engie, "but we do not have the interest of being a minority of a large company already controlled." At the end of February, at the presentation of the annual results, CEO Isabelle Kocher said she preferred internal growth but did not exclude "targeted acquisitions" and not large operations.
"We want to control our companies"
"We have always said that we are not interested in financial participations," said another source close to the group. "We want to control our companies." The president of RWE added on Tuesday morning that Inogy enjoyed a "very stable profitability". The renewable energy subsidiary will pay this year 800 million euros of dividend to its shareholders, of which nearly 700 million for RWE.
The purchase of the entirety of Innogy is also unlikely. It would still cost 20 billion euros while Enge is worth 30 billion euros on the stock market. And it would be difficult for him to incur heavy debt while the group still bears 25 billion euros of debts. Especially since the former GDF Suez has set at 2 billion euros its envelope dedicated to acquisitions ...
However, in the long term, RWE may well give up control of Innogy, where part of the capital has already been listed on the stock market in 2015. A sign that development in renewable energies is not a priority. "The shareholders of RWE want to consolidate the market of thermal power plants in Europe, decrypts a good connoisseur of the file, by which they need money and they will be able to sell Innogy". A last, more consensual option would be to set foot at Innogy with an option on a futures takeover. This solution would allow RWE to benefit from the dividends of its subsidiary for a few years. And to Engie to save time to finalize these 15 billion euros of divestitures and find room for financial maneuvers.
Engie n’est pas intéressé par Innogy
Le groupe français ne souhaite pas racheter une part minoritaire dans la filiale spécialisée dans les énergise renouvelables de son concurrent allemand RWE.
Le soufflé retombe. Ce matin, Bloomberg affirmait qu’Engie lorgnait Innogy, société spécialisée dans les énergies renouvelables, détenue à 77% par RWE. Le groupe allemand a réitéré sa volonté de conserver à long terme le contrôle (51%) de sa filiale tout en reconnaissant qu’il était "libre de vendre des parts" en restant au-dessus de ce seuil. Son président Rolf Martin Schmitz a ajouté qu’il "examinait régulièrement les options stratégiques" de sa filiale.
De son côté, Engie s’est refusé à tout commentaire. Mais dans l’entourage du groupe, on balaie la possibilité de devenir actionnaire d’Innogy. "RWE cherche un partenaire pour récupérer de l’argent, explique un proche d’Engie. Mais nous n’avons pas intérêt à être minoritaire d’une grande société déjà contrôlée". Fin février, lors de la présentation des résultats annuels, la directrice générale Isabelle Kocher avait indiqué qu’elle préférait la croissance interne mais qu’elle n’excluait pas des "acquisitions ciblées" et non de grosses opérations.
"Nous avons toujours dit que nous n’étions pas intéressés par les participations financières, tranche une autre source proche du groupe. Nous souhaitons contrôler nos sociétés". Le président de RWE a ajouté ce mardi matin qu’Innogy bénéficiait d’une "rentabilité très stable". La filiale d’énergie renouvelables va verser cette année 800 millions d’euros de dividende à ses actionnaires dont près de 700 millions pour RWE.
Le rachat de la totalité d’Innogy est par ailleurs peu probable. Il coûterait tout de même 20 milliards d’euros alors qu’Engie vaut 30 milliards d’euros en Bourse. Et il lui serait difficile de s’endetter lourdement alors que le groupe supporte encore 25 milliards d’euros de dettes. D’autant que l’ancien GDF Suez a fixé à 2 milliards d’euros son enveloppe dédiée aux acquisitions…
Pour autant, à long terme, RWE pourrait bien céder le contrôle d’Innogy dont une partie du capital a déjà été introduit en Bourse en 2015. Un signe que le développement dans les énergies renouvelables n’est pas prioritaires. "Les actionnaires de RWE veulent consolider le marché des centrales thermiques en Europe, décrypte un bon connaisseur du dossier. Pour cela, il leur faut de l’argent et ils pourront vendre Innogy". Une dernière option, plus consensuelle, consisterait à mettre un pied chez Innogy avec une option sur une prise de contrôle à terme. Cette solution permettrait à RWE de profiter des dividendes de sa filiale pendant quelques années. Et à Engie de gagner du temps pour finaliser ces 15 milliards d’euros de cessions et retrouver des marges de manœuvres financières.