>>> Europe : Brokers Upgrades & Downgrades - 24th of February 20

>>> Up
*Aurubis Raised to Outperform at Credit Suisse
*NH Hotel Group Raised to Buy at SocGen, PT EU5.40
*Vallourec Raised to Reduce at AlphaValue
*Vopak Raised to Buy at ABN Amro Bank, PT EU45

>>> Down
*ALM BRAND Cut to Hold at SEB Equities, PT DKK62
*Brenntag Cut to Hold at Berenberg, PT EU56
*Drax Cut to Underweight at Morgan Stanley, PT 325p
*Fresenius Medical Cut to Hold at SocGen, PT EU86
*Genmab Cut to Hold at SEB Equities, PT DKK1500
*Lavendon Group Cut to Hold at Panmure Gordon & Co, PT 270p
*Nordex Cut to Underweight at Barclays
*Nordex Cut to Underperform at Macquarie
*Peugeot Cut to Equal-Weight at Barclays
*ProSieben Cut to Neutral at Macquarie, PT EU40
*Salzgitter Cut to Underperform at Credit Suisse, PT EU35
*Starbreeze Cut to Hold at SEB Equities, PT SEK19
*Swatch Cut to Sell at Berenberg, PT CHF295
*Swedbank Cut to Hold at Jefferies, PT SEK235
*Tomra Cut to Sell at Fondsfinans, PT NOK80
*Tomra Cut to Hold at Arctic Securities, PT NOK100
*Zurich Ins. Cut to Underperform at Jefferies, PT CHF236

>>> Initiation
*Banco Popular Rated New Sell at SocGen, PT EU0.62
*Bankia Rated New Sell at SocGen, PT EU0.79
*Bankinter Rated New Buy at SocGen, PT EU8.40
*BBVA Rated New Sell at SocGen
*CaixaBank Rated New Buy at SocGen, PT EU4
*Sabadell Rated New Buy at SocGen, PT EU1.77
*Santander Rated New Buy at SocGen

>>> US After Hours Summary: RH +16%, OLED +12%, AAOI +12% higher f

After Hours Summary: RH +16%, OLED +12%, AAOI +12% higher following earnings/guidance, INCY +4% on S&P500 addition news... ACIA -16%, ZOES -10%, HPE -6.5%, SPLK -6% following earnings/guidance, optical names lower with ACIA

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RH +15.5% (guides Q4 EPS and revenues above consensus; authorizes a $300 mln common share repurchase program), OLED +12.4%, AAOI +11.6%, MTZ +9.3%, INWK +5.1%, SB +3.6%, JWN +3.1%, PACD +3.1%, BJRI +2.5%, EBS +2.4%, DYN +2.4%, STMP +2%, AL +1.9%, MELI +1.8%, BIDU +1.1%, HLF +1% (also plans to form a JV w/ Tasly Holding Group)

Companies trading higher in after hours in reaction to news: AXDX +29.3% (FDA allows marketing of the PhenoTest BC Kit, performed on the Pheno System), INCY +4.1% (to join S&P 500), CXW +3.7% and GEO +1.3%  (DOJ memo indicated a reversal in prior decision that would have phased out private prisons), NUS +3% (will replace Equity One in the S&P MidCap 400), CONE +2.8% (will replace CLARCOR in the S&P MidCap 400), BATS +2.2% / CBOE +0.7% (higher following S&P index change announcement - CBOE to join S&P 500 after acquiring BATS)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ACIA -16.4%, ZOES -10%, ACHC -8.9%, ALDR -8.7%, HPE -6.5%, SPLK -6.3%, BGS -6.2%, CECO -5.7%, ASPN -5.1%, BNFT -4.8%, NCMI -3.5%, ACHN -3.5%, LGND -3.2%, PEGA -2.2%, IMAX -2.1% (light volume), CENX -2.1%, SWN -1.8%, NVRO -1.3%

Companies trading lower in after hours in reaction to news: NAO -12.2% (commences public offering), HCLP -6.6% (acquires Permian Basin Sand facility and remaining interest in Augusta facility for a total consideration of $415 mln; commences a primary public offering of 20,500,000 common units representing limited partnership interests in the Partnership), PFGC -3.1% (commences 10 mln common stock offering by selling stockholders), NVLS -2.4% (announces its Phase 2 trial evaluating cavosonstat at a dose of 400 mg in adult patients with CF who were being treated w/ Kalydeco did not meet its primary endpoint), NVDA -1.8% (continued weakness), CELG -1.2% (President and COO to retire effective June 30, 2017; co has promoted Scott Smith to President and COO)

Optical stocks lower following Acacia Communications (ACIA) earnings/guidance: IIVI -3.7%, OCLR -1.2%, IPHI -0.9%, LITE -0.9%, INFN -0.7%, NPTN -0.5%

>>> Asian Update

Asia Mid-Session Market Update: Australia miners fall as iron ore prices retreat; RBA Gov hints rates preferred on hold this year

***US Session Highlights***
- (US) Treasury Sec Mnuchin: number one commitment is to growth and passing significant tax reform; 3% GDP is achievable but could take until the end of 2018; reviewing China currency manipulator status
- Moody's: Global economy to maintain momentum; average rate of growth in G-20 countries for both 2017 and 2018 period at 3.0% vs. 2.6% prior year
- (US) INITIAL JOBLESS CLAIMS: 244K V 240KE; CONTINUING CLAIMS: 2.06M V 2.07ME
- (US) Jan Chicago Fed National Activity Index: -0.05 v 0.00e
- (US) Fed's Lockhart (moderate, non-voter): 2 or 3 rate hikes this year are likely

***US markets on close: Dow +0.2%, S&P500 flat, Nasdaq -0.4%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Industrials
- Biggest gainers: FSLR +10.8%, HPQ +8.6%, RIG +7.8%, ENDP +3.9%, EW +3.8%
- Biggest losers: LB -15.8%, NVDA -9.3%, URI -5.6%, HRL -5.4%, URBN -5.2%
- At the close: VIX 11.7 (flat); Treasuries: 2-yr 1.19% (-3bps), 10-yr 2.39% (-3bp), 30-yr 3.02% (-2bps)

***US movers afterhours***
- RH: Guides Q4 $0.68 v $0.65e; R$590M v $589Me; Adds $300M to buyback plan; +16.3% afterhours
- OLED; Reports Q4 $0.55 v $0.39e, R$74.6M v $67.5Me; guides initial FY17 R$230-250M v $239Me; +12.2% afterhours
- AAOI; Reports Q4 $0.84 v $0.69e, R$84.9M v $82.7Me; Guides Q1 non-GAAP $0.80-0.88 v $0.40e; R$87-91M v $74.3M; gross margin 38-40%; +11.6% afterhours
- INCY; +4.1% INCY, CBOE, and REG to be added to S&P500; ENDP demoted to S&P400; NUS (+3.0%), CONE (+2.8%), and DDS (+3.9%) added to S&P400
- CXW; DOJ reportedly reverses position on private prisons to more favorable stance - press; +3.7% afterhours
- JWN; Reports Q4 $1.15 v $1.13e, R$4.24B v $4.37Be; Guides initial FY17 $2.75-3.00 v $3.06e, Rev ~+3-4%; +3.4% afterhours
- BJRI; Reports Q4 $0.55 v $0.40e, R$265.6M v $265Me; SSS -2.2%; +2.5% afterhours
- BIDU; Reports Q4 $1.91 v $0.93e, R$2.62B v $2.51Be (2 est); +1.6% afterhours
- ACHC; Reports Q4 $0.59 ex-items v $0.55e, R$703M v $707Me; +1.6% afterhours
- SPLK; Reports Q4 $0.25 v $0.18e, R$306.5M v $288Me; Guides Q1 R$231-233M v $241Me; -5.9% afterhours
- HPE; Reports Q1 $0.45 v $0.44e; R$11.4B v $12.1Be; cuts FY17 outlook; -6.5% afterhours
- ZOES; Reports Q4 -$0.07 v -$0.06e, R$62.0M v $62.3Me; -10.0% afterhours
- ACIA; Reports Q4 $0.94 v $0.90e, R$142M v $139Me; Guides Q1 $0.63-0.70 v $0.80e, R$108-114M v $140Me; -16.4% afterhours

***Asia Key economic data:***
- (KR) South Korea Feb Consumer Confidence: 94.4 v 93.3 prior
- (SG) Singapore Jan Industrial Production M/M: -6.0% v -2.5%e; Y/Y: 2.2% v 9.5%e

***Asia Session Notable Observations, Speakers and Press***
- Asian equity markets are down modestly for the 2nd straight day; Selling is the heaviest in the high-beta space, particularly materials and miners, as Dalian iron ore prces plunge over 5% from recent multi-year highs. Wall St sentiment has also turned more cautious as funds flowed to high-dividend / safehaven Utilities and Healthcare sectors as well as US Treasuries. Materials names were also hit in the US session, as Copper prices fell sharply.
- USD majors traded in very tight ranges in the absence of meaningful economic data; Notable speaker commentary was also limited to RBA Gov Lowe, who said that while global economy is on a firmer footing, he would rather have lower AUD than higher. In terms of policy, Lowe said the current rates are consistent with meeting CPI target, and that the market pricing of rates remaining on hold in 2017 seems reasonable.

China:
- (CN) PBoC official calls for asset management supervision improvement - Chinese press
- (CN) China govt said to prioritize restructuring in steel, coal, and power industries - Chinese press
- (CN) China has no reason to raise interest rates in the short term - Chinese press

Australia/New Zealand:
- (AU) RBA Gov Lowe: Would like AUD to be lower; Global economy is on a firmer footing, much more positive - press

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.5%, Hang Seng -0.4%, Shanghai Composite -0.3%, ASX200 -0.8%, Kospi -0.7%
- Equity Futures: S&P500 -0.1%; Nasdaq -0.2%; Dax -0.1%; FTSE100 -0.1%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0570-1.0585; JPY 112.60-112.95; AUD 0.7700-0.7720; NZD 0.7210-0.7235
- Apr Gold flat at $1,251/oz; Apr Crude Oil +0.1% at $54.48/brl; Mar Copper +0.7% at $2.66/lb
- USD/CNY (CN) PBOC SETS YUAN MID POINT AT 6.8655 V 6.8695 PRIOR
- (CN) PBOC to inject combined CN30YB v CNY50B prior in 7-day, 14-day and 28-day reverse repos
- (CN) China MoF sells 3-month bonds at 2.534%

***Asia equities / Notables / movers by sector***
- Consumer discretionary: 1970.HK IMAX China Holding +3.2% (FY16 result); MRN.AU Macquarie Media -4.8%; SUL.AU Super Retail +6.5% (guidance); CTD.AU Corporate Travel Mgmt +1.3% (guidance); CAB.AU Cabcharge Australia +7.2% (H1 result); BBG.AU Billabong -1.6% (H1 result); MGC.AU Murray Goulburn -5.9% (H1 result)
- Consumer staples: 2689.HK Nine Dragons Paper Holding -4.1% (H1 result); BAL.AU Bellamy's Australia -3.6% (H1 result); AHY.AU Asaleo Care +10.4% (Credit Suisse raises rating)
- Financials: 1299.HK AIA Group -0.8%, 123.HK Yuexiu Property -0.8% (FY16 result); PRO.AU Prophecy International Holdings -9.2% (H1 result); CHC.AU Charter Hall Group +4.7% (H1 result); PEP.AU Pepper Group -4.9% (H1 result)
- Industrials: MQA.AU Macquarie Atlas -2.1% (Completes placement); IPL.AU Incitec Pivot -4.2% (CEO to step down); AHG.AU Automotive Holdings -4.4% (H1 result)
- Technology: 6502.JP Toshiba Corporation +3.5% (update on chip sale); MYO.AU MYOB -7.7% (Majority holder Bain placed stake); NXT.AU +12.3% (H1 result); 2018.HK AAC Technologies Holdings -5.2%; WPP.AU WPP AUNZ +5.5% (FY16 result)
- Materials: 5711.JP Mitsubishi Materials -4.4%; BHP BHP.AU -2.8%, Rio Tinto RIO.AU -4.1%, Fortescue FMG.AU -3.2% (Iron Ore prices fall over 5%)

Reuters Quorum Health probing disclosures ahead of 2016 spin-off: sources

Quorum Health probing disclosures ahead of 2016 spin-off: sources


Hospital operator Quorum Health Corp (QHC.N) is investigating whether it provided adequate disclosure to investors prior to its spin-off last year, according to a letter seen by Reuters and a person familiar with the matter.
Quorum has retained attorney Robert Varian from Orrick Herrington & Sutcliffe LLP as independent counsel to be part of its board's probe into how its separation from Community Health Systems Inc (CYH.N) was handled in April 2016, according to the letter and the person familiar with the matter.
The letter was sent to Quorum's board by one of its investors earlier this month. It included a reference to earlier correspondence in which Quorum indicated to the investor that it was starting an internal probe and requested more information.
The investigation comes after the investor, Texas-based hedge fund Q Investments LP, wrote to Quorum's board last October, alleging that debt-laden Community Health Systems duped Quorum investors.
Quorum's stock fell as much as 80 percent in the months after the spin-off, and have since bounced back slightly, giving it a market value of $240 million. The company also had total debt of $1.24 billion as of the end of September.
"We believe Community Health was desperate to raise cash, and they saw an easy path to do so by stuffing new investors in Quorum with inflated guidance and concealing costs within what they knew was a disintegrating business," according to the letter from last October, which was also seen by Reuters.
Q Investments called on the company to launch an investigation in the October letter.
Brentwood, Tennessee-based Quorum owns or leases 36 hospitals. The company's Chief Financial Officer Michael Culotta did not return calls on Thursday seeking comment.
Community Health Systems spokeswoman Tomi Galin did not return a call and email seeking comment.
The spin-off allowed Community Health to focus on its largest markets. As part of the separation, Quorum borrowed $1.2 billion to pay a dividend to its former parent.

Four months later, Quorum cut its earnings guidance, citing high costs and weak sales, sending its stock into free-fall.
Q Investments, which was a top 10 Quorum shareholder at the time of the spin-off and has since reduced its position, has said that Community Health likely knew about the costs and failed to properly disclose them. The hedge fund is also a Quorum bond holder.
Community Health has been looking to turn its business around by selling some of its assets in the past few months to ease its debt load of more than $15 billion.

>>> Medtronic would consider move back to US if tax laws changed

Medtronic would consider move back to US if tax laws changed - exec
23 FEB 2017
Medtronic (NYSE:MDT), the global medical products company that redomiciled to Ireland with the purchase of Covidien in 2014, would consider moving its corporate headquarters back to the US if the US tax rate is cut significantly, a senior Medtronic executive told this news service.
Mike Coyle, executive vice president of Medtronic's cardiac and vascular division, was speaking after he made a presentation at the RBC Capital Markets Healthcare Conference in New York on Thursday.
The current US corporate tax rate is currently at 35%, among the highest in the world. But elected officials including President Donald Trump and many members of Congress have advocated cutting the rate to the mid-teens level to spur economic growth and attract investment. Congress is expected to take up tax reform this year in what is expected to be a long and arduous effort.
Medtronic, long based in Minneapolis, completed the USD 49.9bn purchase of medical devices maker Covidien in 2015 in a cash-and-stock deal and moved its corporate headquarters to Ireland, where the lowest corporate tax rate is 12.5%, with the highest up to 25%.
Coyle said it remains unclear what US tax changes would be forthcoming under Trump and the GOP-controlled Congress. But a lower tax rate “could be” an incentive to move back to the US but he said “it would have to be a pretty important tax benefit” for the company to consider it. “We would never say never about anything.”
Coyle added that relocating Medtronic's corporate headquarters to the US would have benefits from an operational standpoint.
“Obviously we have a significant R&D presence in the US,” he said. A corporate move “would allow us to move some of our operations closer to our product development.”
Medtronic, which currently has an effective tax rate of 17%, was among the largest “inversions” of a US-based company in recent years, although the company argued at the time that the purchase was largely strategic in nature and not simply for tax savings.
However, the move, along with that of Pfizer’s (NYSE:PFE) attempt to buy Allergan (NYSE:AGN) in 2015 and Abbvie’s (NYSE:ABBV) attempt to buy the UK’s Shire (NASDAQ:SHPG) in 2014, prompted the US Treasury in 2016 to issue new rules thwarting inversions, which effectively ended the trend among large companies.
Trump, along with his now senior advisor Carl Icahn, campaigned in opposition to corporate inversions last year.

>>> US Notable post-earnings movers

Notable post-earnings movers
  • Post-earnings gainers: RH +13.9%,, OLED +11.9%, AAOI +8.4%, SB +7.3%, TPC +7.3%, BJRI +6.5%, HTGC +4.3%, JWN +3.4%, AL +2.1%, MELI +2.1%, BIDU +1.8%
  • Post-earnings losers: ACIA -17.9%, ALDR -8.7%, ZOES -8.6%, LGND -7.6%, BGS -7.2%, SPLK -7%, HPE -6.4%, ACHC -6.4%, CECO -5.7%, AVHI -4.5%, NCMI -3.5%, NVRO -2.9%, PEGA -2.9%, ASPN -2.7%, SWN -2.5

>>> Baidu.com beats by $0.85, misses on revs; guides Q1 revs below consensus (1

Baidu.com beats by $0.85, misses on revs; guides Q1 revs below consensus (184.64 -1.37)
  • Reports Q4 (Dec) earnings of $1.91 per share, $0.85 better than the Capital IQ Consensus of $1.06; rev -2.6% to $2.62 bln vs. $2.66 bln consensus.
  • Mobile search monthly active users (MAUs) were 665 million for the month of December 2016, an increase of 2% year-over-year Mobile maps MAUs were 341 million for the month of December 2016, an increase of 13% year-over-year Gross merchandise value[2] (GMV)for Transaction Services totaled RMB18.1 billion ($2.6 billion) for the fourth quarter of 2016, an increase of 23% year-over-year Baidu Wallet activated accounts reached 100 million at the end of December 2016, an increase of 88% year-over-year.
  • Co issues downside guidance for Q1, sees Q1 revs of $2.374-2.453 bln vs. $2.49 bln Capital IQ Consensus Estimate.
  • Board changes: Dr. Qi Lu, Baidu's Group President and Chief Operating Officer, has been appointed as a director and the vice chairman of the board of directors of the Company. Mr. Greg Penner, who has served as a board member since July 2004, will step down from the board and all the committees on the board. Mr. Yuanqing Yang has been appointed as a member of the audit committee and as a member of the corporate governance and nominating committee of the board of directors of the Company.

>>> Gap reports in-line with preannouncement; guides FY18 EPS just below consens

ap reports in-line with preannouncement; guides FY18 EPS just below consensus, revs in-line (23.97 -0.90)
  • Reports Q4 (Jan) earnings of $0.51 per share, in-line with the Capital IQ Consensus of $0.51; revenues rose 1.0% year/year to $4.43 bln vs the $4.39 bln Capital IQ Consensus. The company's fourth quarter fiscal year 2016 comparable sales were up 2 percent compared with a decline of 7 percent last year.
  • Preannounced EPS $0.50-0.51 vs. $0.45 consensus; rev $4.43 bln vs. $4.4 bln consensus on Feb 6.
  • Co issues guidance for FY18, sees EPS of $1.95-2.05, excluding non-recurring items, vs. $2.06 Capital IQ Consensus Estimate; sees FY18 revs of flat to slightly down from $15.5 bln vs. $15.43 bln Capital IQ Consensus Estimate. The company also noted that comparable sales for fiscal year 2017 are expected to be flat to up slightly. Net sales are expected to be slightly below this range driven by an expected negative impact from foreign currency fluctuations year-over-year. The company noted that it expects its reported diluted earnings per share for the first half of fiscal year 2017 to be down in the high single digits when compared with the adjusted diluted earnings per share for the first half of fiscal year 2016.

>>> Herbalife beats by $0.03, beats on revs; guides Q1 EPS below two analyst est

Herbalife beats by $0.03, beats on revs; guides Q1 EPS below two analyst estimate; guides FY17 EPS below two analyst estimate, reaffirms FY17 revs guidance
  • Reports Q4 (Dec) earnings of $1.00 per share, $0.03 better than the two analyst estimate of $0.97; revenues fell 4.8% year/year to $1.04 bln vs the $1.03 bln single analyst estimate.
  • Guided Q4 volume at low end of -1.5% to +2.5% guidance, rev below previous guidance of down 2.5% to +1.5% due to FX headwind, reaffirmed EPS $0.80-1.00 on January 20.
  • Co issues downside guidance for Q1, sees EPS of $0.75-0.95, excluding non-recurring items, vs. $1.29 two analyst; sales down 5-9%; volume down 1-5%.
  • Co issues guidance for FY17, sees EPS of $3.65-4.05, excluding non-recurring items, vs. $5.00 two analyst estimate; sees FY17 revs of +0.3-3.3% to ~$4.62-4.64 bln vs. $4.55 bln two analyst est; volume up 2-5%.
  • Company announces board approval of a new 3 year $1.5 billion share buyback program.