Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- SNCR -15.9%, LPSN -15.2%, FSC -13.4%, MTRX -10.6%, MB -10.5%, QLYS -9.1%, TWTR -8.9%, IRBT -8.8%, BGC -8%, VSTO -7.6%, SON -7.5%, OII -7%
- MXL -6.9%, LQDT -6.8%, GLUU -6%, STRL -5.8%, (sees Q4 net loss of $5.5-6.5 mln and revs of $165-170 mln vs. $157.25 mln two analyst estimate; says results are 'very disappointing')
- ECHO -5.3%, COTY -5.2%, ENSG -5%, TYL -4.8%, CDE -4.2%, TBI -3.6%, KS -3.4%, ENTA -3.3%, UHAL -3%, MC -3%, SNN -2.9%, FSFR -2.8%, FISV -2.6%
- PPC -2.1%, KO -2.1%, GLAD -1.7%, AGTC -1.5%, MAS -1.5%, CTL -1.4%, PDS -1.3%, DTE -1.2%, REGN -1.2%, JE -1%, CX -0.6%, SEE -0.5%
Other news:
- SRRA -9.1% (to offer shares of its common stock in an underwritten public offering; size not disclosed)
- CREE -5.5% (CFIUS informed Infineon and Cree that the Wolfspeed transaction poses a risk to the national security of the United States)
- AMGN -1.4% (Regeneron Pharma confirms appeals court grants stay of permanent injunction for Praluent (alirocumab) during appeals process)
- REGN -1.2% (Regeneron Pharma confirms appeals court grants stay of permanent injunction for Praluent (alirocumab) during appeals process)
- TM -1.2% (traded ~2% lower in Japan overnight)
- HLI -1.1% (prices offering of 8 mln shares of common stock by co and selling shareholders at $29.25 per share)
- FSLR -1% (awarded module supply contract for the 140 megawatt DC Sun Metals Solar Farm in North Queensland)
- PYPL -0.9% (discloses that it has received subpoenas from the DOJ seeking the production of certain information related to the company's historical anti-money laundering program)
- KR -0.9% (WFM sympathy)
Analyst comments:
- SLW -1% (downgraded to Neutral from Buy at Goldman)
- FCX -1% (resumed with a Neutral at JP Morgan)
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- SKYS +65.8%, (thinly traded), OSUR +23.4%, AVNW +15.9%, (thinly traded), TZOO +11.6%, PAYC +11%,ZEN +10.1%, MPAA +9.8%, CLF +9.8%, PCMI +9.5%
- IMPV +9.3%, (also agrees to sell its Skyfence technology and service to Forcepoint, financial details not disclosed; acquires the assets of Camouflage Software)
- WSTL +8.4%, FLT +7.8%, PRLB +6.5%, SCSS +6.2%, MDSO +6.1%, LLNW +5.4%, CXW +5.2%, LIVE +4.4%, ARRY +3.5%, ALNY +3.4%, RLGT +3.4%
- VIA +3%, CMP +2.9%, FONR +2.7%, AOSL +2.5%, GPRE +2.2%, CVS +2.2%, MFC +2%, EFX +1.9%, TU +1.9%, CETX +1.9%, FORM +1.6%, CMI +1.6%
- PTN +1.4%, WWE +1.4%, BGCP +1.3%, ROP +1.2%, RAI +1.1%, PSEC +1%, TOT +1%, RMR +0.9%,OHI +0.8%, CRAY +0.8%, AFG +0.7%, YUM +0.6%, PRU +0.5%
M&A news:
- JAGX +69% (Jaguar Animal Health to merge with Napo Pharmaceuticals)
- NOK +1.4% (to acquire Comptel for EUR 347 mln)
Other news:
- ETRM +17.8% (publication of three-year data from the Company's VBLOC DM2 Study of vBloc Neurometabolic Therapy)
- AQMS +16.1% (announces that Johnson Controls (JCI) finalized an agreement covering North America, China and Europe for its technology)
- RELV +14.7% (thinly traded; announced that CardioSentials heart health supplement has earned a U.S. patent)
- ACOR +12.3% (announces 'positive' Phase 3 data of CVT-301 'showing a statistically significant improvement in motor function in people with Parkinson's disease experiencing OFF periods)
- VKTX +11.7% (announces 'positive' initial results from a proof-of-concept study of VK2809)
- PPHM +9.9% (announces the publication of positive proof-of-concept data for a novel exosome-based cancer detection platform)
- BANC +5.6% (Banc of California appoints Richard Lashley, co-founder of 6.9% holder PL Capital Advisors, to the Board and approves certain enhancements to corporate governance policies)
- URRE +3.8% (announces its Special meeting not convened, nor adjourned to later date; RCF debt to be repaid from treasury)
- STB +3.2% ( awarded new record $187 million contract )
- SNY +2.3% (Regeneron Pharma confirms appeals court grants stay of permanent injunction for Praluent (alirocumab) during appeals process)
- TSLA +2.1% (Reuters details that Tesla (TSLA) plans to pause factory production in California to prepare for Model 3)
- XGTI +2.1% (prices offering of 1.75 mln shares of common stocks and warrants of up to 1.3 mln shares at $2.00 per share)
- ETP +1.7% (received US Army Corps of Engineers easement to construct N Dakota pipeline (as expected - see Feb 7 comments); Dakota Access has now received all federal authorizations necessary to proceed)
- BP +1.1% (in sympathy with TOT earnings)
- RDS.A +1.1% (in sympathy with TOT earnings)
- DECK +0.9% (following late move higher on Marcato active stake disclosure)
- BA +0.8% (confirms that Singapore Airlines has commited to purchase 20 777-9s and 19 787-10 Dreamliners)
Analyst comments:
- RMBS +2.8% (upgraded to Overweight from Neutral at JP Morgan)
- FNV +0.7% (upgraded to Neutral from Sell at Goldman)
- ALV +0.6% (upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts)
Twitter on Conference Call; stock trading at $16.90
- 2017 Focus- easier on-boarding and easier ways to tweet; starting to see this in the results; recently launched explore tab which makes it easier to organize.
- Product changes and marketing big driver for DAU; changes making and relaunching; Seeing strong growth in Q1 for DAUs.
- Made a big bet in Live Streaming in 2016.
- Majority of revenue remains branded advertising; Will continue to invest in this area.
- Why unable to monetize?:
- Looked at a number of different ways of analyzing the business; organizational impact as well as fundamental trends;
- Reorganization salesforce at the end of Q3; Performance of those accounts that changed hands are consolidated versus performance of those spending to standpoint that were not affected and there is no difference in the trend so there's no quantitative analysis that shows had an organizational impact due to the restructuring; Doesn't appear to have any impact our revenue performance or outlook that said similar to the fourth quarter
- Implied range of revenue that's quite wide and there's a number changing factors; continue to focus on EBITDA and EBITDA margin as opposed to a narrow range of revenue.
- Haven't been able to leverage the more attractive ROI potential of acceleration and the double-digit growth in inventory.
- Audience and engagement growth were sitting down to branded advertiser showing them the positive trends taking them to the increased inventory the higher scale the greater growth all of which can lead to better ROI; will get better allocation over the next 6 to 12 months; in addition to that trend it's important to understand that in the quarter did see audience and engagement growth were sitting down to branded advertiser showing them the positive trends taking them to the increased inventory
- Did see an acceleration in the competitive environment for branded advertising since mid-January.
- Taking a step back and looking at simplify product and putting resources behind those products think have the greatest probability of success that can deliver the best long-term growth potential and that leverage competitive advantages; may cause them to be deemphasized products increasing revenue
- NFL exceeded revenue and profitability expectations for TWTR and partners
UK House of Lords could face backlash over Brexit bill
Parliament’s upper chamber is unlikely to block Britain’s exit but bill amendments are expected
Alastair Campbell calls it potentially “the best double whammy of all time”: the unelected House of Lords could block Brexit and, in doing so, trigger its own abolition.
The suggestion from Tony Blair’s former spokesman would delight some progressives. In reality, neither outcome is likely.
The Lords, the upper chamber of the British parliament, lacks the political legitimacy to thwart the result of the EU referendum and the will of the House of Commons, which backed Theresa May’s Brexit bill by a majority of 372.
Even if it did so, the Tory party would be reluctant to pursue dramatic constitutional reform, given its conservative outlook and other priorities.
But there remains a question over whether the Lords will try to amend the bill to constrain Mrs May. Debates start on February 20, and are expected to last till early March, in keeping with the prime minister’s pledge to trigger Article 50, the formal EU exit clause, by the end of that month.
“Our role is to review and amend legislation, not to kill it,” says Paul Strasburger, a Liberal Democrat peer. “There is definitely an appetite for improving this bill.”
One possible amendment would be to give EU nationals the right to remain in the UK, regardless of how other EU states treat UK migrants. A similar clause was rejected in the Commons, but by relatively narrow margin of 42 votes.
Another sticking point could be to define more tightly what happens if parliament eventually votes against the final Brexit deal, and whether Mrs May would then have to resume negotiations with the EU or whether the UK would simply crash out of the bloc with no deal.
The government’s position is that if parliament votes no, the UK will simply leave the EU and trade on WTO terms with the bloc.
“We’re being offered Hobson’s choice — this deal or no deal. And no deal is going over a cliff,” said Lord Strasburger. “There is appetite to change the choice that parliament has.”
Unlike in the Commons, the government does not have a majority in the Lords, and can be defeated by a combination of Labour, Liberal Democrat and crossbench peers.
The Lords has recently defied the government on issues such as tax credits and universities reform. On Thursday peers criticised the Home Office’s decision to scrap a scheme to accept unaccompanied child refugees.
The Brexit bill is higher profile and therefore potentially harder for peers to intervene over. “I hope they’ll scrutinise it, but I also hope they’ll send it back unamended,” said Brexit secretary David Davis. “I expect [the House of Lords] to do patriotic duty”.
Any amendments that are made would then have to be discussed by the Commons, where their fate would depend on the government’s willingness to compromise or on moderate Conservative MPs rebelling. If the Commons voted against the amendments, the Lords would be likely to cede.
On Wednesday night a government source warned about the consequences if the upper chamber stopped the bill. “The Lords will face an overwhelming public call to be abolished if they now try and frustrate this bill — they must get and deliver the will of the British people,” he said.
But a spokesman for Theresa May struck a more neutral note on Thursday. “We fully respect the important role that the House of Lords plays, it has an important constitutional role to play in debating and scrutinising legislation and it will now proceed,” he said.
Early premarket gappers
Gapping up: SKYS +75.8%, JAGX +44.1%, AVNW +15.9%, OSUR+15.8%, RELV +14.7%, PAYC +10.5%, ZEN +10.1%, IMPV +9.6%,PCMI +9.1%, WSTL +8.4%, FLT +8.2%, PRLB +6.7%, SCSS +6.2%,MDSO +6.1%, LLNW +5.4%, IAG +4.9%, TSLA +3.8%, CXW +3.5%,RLGT +3.4%, STB +3.2%, VIA +3%, CMP +2.9%, EFX +2.5%, AOSL+2.5%, GPRE +2.2%, CVS +1.9%, TU +1.9%, NVO +1.8%, SNY +1.7%,SNY +1.7%, NOK +1.6%, FORM +1.6%, AZN +1.4%, GSK +1.4%, BA+1.3%, BP +1.3%, VOD +1.2%, AU +1.2%, TOT +1.2%, DECK +1.1%,SAN +1.1%, HMY +1.1%, CLF +1.1%, RAI +1.1%, ALNY +1%, RMR+0.9%, PSEC +0.8%, CRAY +0.8%, OHI +0.7%, AFG +0.7%, YUM+0.6%, RDS.A +0.5%
Gapping down: LPSN -15.2%, TWTR -10.8%, MTRX -10.6%, MB-10.5%, SNCR -10.3%, IRBT -9.9%, BGC -8%, QLYS -7.1%, SRRA -7%,OII -7%, CREE -5.7%, STRL -5.6%, FSC -5.5%, ECHO -5.3%, CDE-5.2%, LQDT -5.2%, ENSG -5%, TYL -4.8%, VSTO -4.8%, MXL -4.1%,GLUU -3.6%, TBI -3.6%, KS -3.4%, ENTA -3.3%, UHAL -3%, MC -3%,FISV -2.6%, SNN -2.5%, REGN -2.1%, FCX -2.1%, PPC -2.1%, REGN-2.1%, AMGN -1.9%, BANC -1.9%, GLAD -1.7%, AGTC -1.5%, WFM-1.4%, CTL -1.4%, PDS -1.3%, MCHP -1.1%, FSLR -1%, JE -1%, PYPL-0.9%, KR -0.9%, DNKN -0.9%
Gapping down: LPSN -15.2%, TWTR -10.8%, MTRX -10.6%, MB-10.5%, SNCR -10.3%, IRBT -9.9%, BGC -8%, QLYS -7.1%, SRRA -7%,OII -7%, CREE -5.7%, STRL -5.6%, FSC -5.5%, ECHO -5.3%, CDE-5.2%, LQDT -5.2%, ENSG -5%, TYL -4.8%, VSTO -4.8%, MXL -4.1%,GLUU -3.6%, TBI -3.6%, KS -3.4%, ENTA -3.3%, UHAL -3%, MC -3%,FISV -2.6%, SNN -2.5%, REGN -2.1%, FCX -2.1%, PPC -2.1%, REGN-2.1%, AMGN -1.9%, BANC -1.9%, GLAD -1.7%, AGTC -1.5%, WFM-1.4%, CTL -1.4%, PDS -1.3%, MCHP -1.1%, FSLR -1%, JE -1%, PYPL-0.9%, KR -0.9%, DNKN -0.9%
--> no premarket indication for now 42.25 / 44 no trades
Viacom beats by $0.20, beats on revs; presents new strategic plan, including focus on six priority flagship brands and deeper integration of Paramount Pictures
- Reports Q1 (Dec) earnings of $1.04 per share, $0.20 better than the Capital IQ Consensus of $0.84; revenues rose 2.5% year/year to $3.23 bln vs the $3.19 bln Capital IQ Consensus. This increase reflects improved theatrical revenues, a return to growth in domestic affiliate revenues, continued strength internationally and ancillary revenue growth. Operating income declined 16% to $706 million, and adjusted operating income declined 11% to $748 million.
- Today Viacom also provided an update on the Company's strategic priorities following a comprehensive review of its operations and performance. Going forward, Viacom will be focused on a five-point plan to:
- Put the full power of Viacom behind six flagship brands: BET, Comedy Central, MTV, Nickelodeon, Nick Jr. and Paramount
- Revitalize and elevate approach to content and talent
- Deepen partnerships to drive traditional revenue
- Make big moves in the digital world and physical world
- Continue to optimize and energize the organization
- Viacom's other brands - some of which hold strong positions in their categories and maintain diverse and loyal followings - will be realigned to reinforce the six flagship brands.
- The company has also identified opportunities to bring the best of Paramount to the network business, and the best of the network business to Paramount. Paramount's film slate will now include co-branded releases from each of the flagships, along with Paramount branded films focused on franchises, tentpoles and other projects. In an initial step, the company today is announcing a commitment between Nickelodeon and Paramount to move forward on a slate of four films. The first of these films, Amusement Park, will premiere in theaters in summer 2018 and will launch a TV series on Nickelodeon the following year.
- Additionally, Spike will be rebranded in early 2018 as The Paramount Network, and will serve as Viacom's premier general entertainment brand. The Paramount Network will take Spike's strong and growing programming expertise and amplify it with the globally-recognized Paramount brand - an iconic symbol of cinematic production with a history of rich, compelling storytelling. The network will leverage the very best in Viacom original scripted and non-scripted programming, and incorporate even more high-quality original and third party programming.
- Viacom today announced plans to invest in new content experiences, and will establish its first ever dedicated short-form content unit, building on existing programming as well as all-new original IP. In addition, the company plans to further extend the reach of Viacom's brands through live experiences and consumer products - creating valuable new channels for marketing, talent development and connecting with audiences.
Twitter beats by $0.04, misses on revs; issues disappointing guidance
- Reports Q4 (Dec) earnings of $0.16 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus of $0.12; revenues rose 0.9% year/year to $717 mln vs the $738.74 mln Capital IQ Consensus.
-
Revenue Breakdown
- Advertising revenue totaled $638 million, down slightly year-over-year.
- Mobile advertising revenue was 89% of total advertising revenue.
- Data licensing and other revenue totaled $79 million, an increase of 14% year-over-year.
- US revenue totaled $440 million, a decrease of 5% year-over-year.
- International revenue totaled $277 million, an increase of 12% year-over-year.
- Total ad engagements were up 151% year-over-year.
- Cost per engagement (CPE) was down 60% year-over-year.
- Q4 adjusted EBITDA of $215 million, up 12% year-over-year, representing an adjusted EBITDA margin of 30%, versus 27% in 2015.
-
Average monthly active users (MAUs) were 319 million for Q4, up 4% year-over-year and compared to 317 million in the previous quarter.
- Average US MAUs were 67 million for Q4, up 3% year-over-year and flat compared to 67 million in the previous quarter.
- Average international MAUs were 252 million for Q4, up 5% year-over-year and compared to 250 million in the previous quarter.
- Mobile MAUs represented 83% of total MAUs.
- DAU grew 11% year-over-year, an acceleration from 7% in Q3'16, 5% in Q2'16, and 3% in Q1'16.
Guidance
- Expect advertising revenue growth to continue to lag that of audience growth in 2017. Advertising revenue growth may be further impacted by escalating competition for digital ad spending and the re-evaluation of our revenue product feature portfolio, which could result in the de-emphasis of certain product features.
-
Q1
- Adjusted EBITDA to be between $75 million and $95 million, well below expectations;
- Adjusted EBITDA margin to be between 17% and 17.5%
- SBC to be between $125 and $135 million.
-
FY17
- Total non-GAAP expenses to be flat to down 5%, compared to full year 2016;
- SBC to be down 15% to 20%, compared to full year 2016;
- Capital expenditures to be between $300 and $400 million.
Luxury Companies, Cash Rich, Ready to Splurge
If acquisition targets don’t emerge this year, investors can expect a step-up in dividends
Whatever happens to demand for luxury goods this year, one thing is sure: Corporate cash will pile up.
Brands like Louis Vuitton, which anchors the portfolio of LVMH, and Gucci, owned by rival Kering, invested vast sums in opening shops in recent years. Strategic fashion now favors retail—selling goods directly to customers from opulent city-centre shops—over less controllable wholesale and licensing business. And rampant demand from China and other emerging economies, particularly after the 2008 financial crisis, encouraged flag-planting.
The market eventually buckled as falling commodity prices hit Russia and Brazil and China clamped down on corrupt gifting. Brands slowed store-opening programs to the point where they actually closed more outlets than they opened in the first half of 2016, according to brokerage Bernstein. Now demand seems to be rebounding, but with retail networks already in place, new-store numbers aren’t expected to follow.
The financial consequence of this “new normal,” as industry executives refer to it, will be a surge in free cash flows. Without having to spend on even more glitzy new stores on the world’s most expensive streets, corporate cash piles should swell. Even in the darkest hours of early 2016, luxury groups remained highly profitable. That raises an enticing question for investors: What will executives do with the cash?
One possible outcome is a pickup in mergers and acquisitions. LVMH, Kering and Swiss-watch giant Richemont have historically acted as industry consolidators. Kering wants to pay down debt, but the other two groups are cash-rich and could easily afford to play this role again.
Whether deal activity recovers—after a muted few years -- depends less on consolidators than their targets. Trench-coat specialist Burberry is one of the rare luxury companies not controlled by a family stake—hence it is the subject of periodic takeover rumors, most recently involving U.S. group Coach. Otherwise business owners must want to sell. With growth prospects looking more mundane than during the store rollout boom, but valuations still high, some could be tempted to cash in.
If deals don’t materialize, the other likely consequence of bigger free cash flows is bigger dividends. Most luxury stocks yield in the region of 2%--a level more associated with growth than today’s more mature market environment. Share buybacks have been minimal.
There are obstacles to greater cash returns: All the major luxury groups are controlled by magnates with long investment horizons and little incentive to increase shareholder payouts. Richemont’s net cash position is already equivalent to 12% of its market value—a financial inefficiency that probably wouldn’t be tolerated if activists could buy a louder voice on its shareholder register.
Yet mounting cash piles will make it harder for industry executives to bat off calls for more generous returns. That could give luxury stocks a new way to shine.