>>> Valero Energy beats by $0.03, beats on revs

Valero Energy beats by $0.03, beats on revs
  • Reports Q4 (Dec) earnings of $0.81 per share, $0.03 better than the Capital IQ Consensus of $0.78; revenues rose 10.3% year/year to $20.71 bln vs the $18.89 bln Capital IQ Consensus.
  • The refining segment reported $715 mln of operating income for the fourth quarter of 2016, compared to $876 mln for the fourth quarter of 2015.
  • Incurred $217 mln of costs to meet biofuel blending obligations in the fourth quarter and $749 mln in the year, primarily from the purchase of Renewable Identification Numbers in the U.S.
  • "Domestic refined product demand remained strong and we exported 359,000 barrels per day of gasoline and diesel combined during the fourth quarter...Looking ahead, we expect an improving economy and relatively low crude oil and refined product prices to support consumer demand growth."

>>> Coach reports EPS in-line, revs in-line; maintains operational outlook for

Coach reports EPS in-line, revs in-line; maintains operational outlook for FY17, while lowers rev on FX (35.98)
  • Reports Q2 (Dec) earnings of $0.75 per share, in-line with the Capital IQ Consensus of $0.75; revenues rose 3.8% year/year to $1.32 bln vs the $1.32 bln Capital IQ Consensus. Total North American Coach brand sales increased 2% on both a reported and constant currency basis to $744 million versus $731 million last year. North American direct sales rose 5% for the quarter. Total North American bricks and mortar comparable store sales rose ~4%, while aggregate North American comparable store sales increased ~3%, including the negative impact of e-commerce. As planned, sales at North American department stores declined ~30% on both a POS and net sales basis. International Coach brand sales rose 3% to $448 million on a reported basis from $437 million last year and 1% on a constant currency basis. Greater China sales were ~even with prior year in dollars and increased 6% on a constant currency basis. In Japan, sales rose 9% in dollars and decreased 2% in constant currency, impacted by a decline in Chinese tourist spend, lapping last year's dramatic increase. Gross margin for the quarter was 69.0%, including ~30 basis points of benefit from currency, as compared to 67.7% in the prior year period.
  • The Company is maintaining its operational outlook for fiscal 2017, while adjusting its revenue guidance based solely on current exchange rates. The Company's previous fiscal 2017 revenue guidance was for an increase of low-to-mid single digits, including an expected benefit from foreign currency of ~100-150 basis points. Given the significant strengthening of the U.S. dollar, the Company is now projecting revenue to increase low-single digits, including an expected negative impact from foreign currency of 50 basis points for the full fiscal year or over 100 basis points of pressure for the second half of the fiscal year based on current exchange rates (consensus +1.7% to $4.57 bln). Importantly, the Company is maintaining its operating margin forecast for Coach, Inc. of between 18.5-19.0% for fiscal 2017. This guidance incorporates the negative impact of both Stuart Weitzman and the strategic decision to elevate the Coach brand's positioning in the North American wholesale channel, including a reduction in promotional events and the closure of about 25% of doors. Interest expense is still expected to be in the area of $25 million for the year while the full year fiscal 2017 tax rate is now projected at about 26% as compared to previous guidance of ~28%. Taken together, the Company continues to project double-digit growth in both net income and earnings per diluted share for the year.
  • "We are both pleased and proud of our performance this holiday season, particularly in light of the challenging and volatile global retail environment. Our team delivered top-line growth in each of our reportable segments, highlighted by positive comparable store sales in North America and overall gross margin expansion."

>>> Pfizer misses by $0.04, reports revs in-line; FY17 EPS and rev guidance midp

--> -1.28% pre-market - low volumes

Pfizer misses by $0.04, reports revs in-line; FY17 EPS and rev guidance midpoints below consenus
  • Reports Q4 (Dec) earnings of $0.47 per share, $0.04 worse than the Capital IQ Consensus of $0.51; revenues fell 3.0% year/year to $13.63 bln vs the $13.69 bln Capital IQ Consensus.
  • Co issues in-line guidance for FY17, sees EPS of 2.50-2.60 vs. $2.60 Capital IQ Consensus Estimate; sees FY17 revs of 52.0-54.0 vs. $54.86 bln Capital IQ Consensus Estimate.
  • Essential Health Highlights: IH delivered 2% operational revenue growth in fourth-quarter 2016, driven by continued growth from key brands including Ibrance, primarily in the U.S., Eliquis globally, the addition of Xtandi revenues in the U.S. resulting from the acquisition of Medivation in September 2016, as well as Xeljanz and Lyrica, both primarily in the U.S. Global Ibrance revenue more than doubled operationally while global operational revenue growth for Xeljanz and Eliquis was 62% and 50%, respectively. Sequentially, fourth-quarter 2016 Ibrance revenues in the U.S. increased 15% compared to third-quarter 2016.
    • Global Prevnar/Prevenar 13 revenues declined 23% operationally. In the U.S., Prevnar 13 revenues decreased 33% due to the continued decline in revenues for the Adult indication due to a high initial capture rate of the eligible population following its successful fourth-quarter 2014 launch, which resulted in a smaller remaining "catch up" opportunity compared to the prior-year quarter, as well as the unfavorable impact from the timing of government purchases for the pediatric indication.
    • Fourth-quarter 2016 operational growth was also negatively impacted by lower revenues for Enbrel in most developed Europe markets, primarily due to continued biosimilar competition, as well as the loss of Rebif alliance revenues resulting from the year-end 2015 expiry of the collaboration agreement to co-promote Rebif in the U.S.
  • Essential Health Highlights: Fourth-quarter 2016 EH revenues decreased 6% operationally, resulting from a 20% operational decline from Peri-LOE Products(8) and a 3% operational decline from Legacy Established Products (LEP) partially offset by 3% operational growth from the Sterile Injectable Pharmaceuticals (SIP) portfolio and 48% operational growth from Biosimilars(8). EH revenues excluding the performance of HIS, which Pfizer expects to divest in February 2017, declined 5% operationally.

>>> Xerox reports EPS in-line, misses on revs; guides FY17 EPS in-line (6.95)

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Xerox reports EPS in-line, misses on revs; guides FY17 EPS in-line
  • Reports Q4 (Dec) earnings of $0.25 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.25; revenues fell 7.2% year/year to $2.73 bln vs the $2.78 bln Capital IQ Consensus.
  • Fourth-quarter adjusted operating margin of 14.0 percent was up 0.7 percentage points from the same quarter a year ago. Gross margin was 40.0 percent, and selling, administrative and general expenses were 23.4 percent of revenue.
  • Co issues in-line guidance for FY17, sees EPS of $0.80-0.88, excluding non-recurring items, vs. $0.88 Capital IQ Consensus Estimate. Xerox expects to generate operating cash flow from continuing operations of $700 to $900 million and free cash flow from continuing operations of $525 to $725 million in 2017.
  • "With the separation of Conduent [CNDT] now complete, we turn our full attention to delivering on our strategy, which includes pursuing the growing areas of the market. As the strategy begins to yield results, our revenue trajectory is expected to improve over time while we expand our margins and continue to generate strong cash flows."

>>> Europe Pre-Market Indications

CS
Alfa Laval +3-5% Q4 net sales 5.5% beat, orders 6% beat
Autos -0.5% Weaker in Asia - MITSUBISHI -4.1%, MAZDA -3.8%, HONDA -2.8%
Britvic +1-2% Group revenue 4.3% ahead of last year
Com Hem -1% 4Q revs inline, EBITDA 1.7% beat, stocks hasd a good run
Deut Bank +1% Reached agreement on Russian operations, penalty of $425m
Galp +1-2% Solid trading statement, upstream exit rate better
Gemalto +0.5% Awarded a multi-year contract from Swedish Tax Agency
Givaudan -3% EBITDA 481 vs 513, Div at the low end of the range
Greencore +2-3% LFL sales +9.1% in Q1, confident of delivering FY
H&M +4-5% Q4 Pre tax SEK 7.41b est SEK 7.04b, margin better
Luxottica +1-2% Q4 sales inline with expectations, 2017 started well
Miners -0.5% Copper +0.70%, Brent -0.30%, Iron Ore CLOSED, China CLOSED
Ocado +2-3% EBITDA a miss, revs inline, op profit slightly better
Randgold -1% CS DOWNGRADE to NEUTRAL (Valuation)
Repsol +0.5% Trading update slightly light, FCF and net debt better
Royal Dutch +1-2% To sell package of UK North Sea assets to Chrysaor
Saipem -1-2% Peer Chiyoda profit warning relating to UK subsea entity
Seadrill -10%+ Restructuring update, clearly difficult
Severn Trent +0.5% Upgrading outcome delivery incentive, confirms expectations
SSE M/P numbers and guidance inline, CS is corp broker
Subsea -1-2% Peer Chiyoda profit warning relating to UK subsea entity
TechnipFMC -1-2% Peer Chiyoda profit warning relating to UK subsea entity
Tele Austria +1% Q4 Revenues +1.6% y/y, guidance slightly better
Tods +2-3% CS DOUBLE UPGRADE to OUTPERFORM (Trough margin)
RBC INDICATIONS:
RBC INDICATIONS:
EURO STOXX +9bps FTSE FUTURE +16bps
*ALFA LAVAL: +3% Q4 net sales beat, 5% adjusted EBIT beat, marine margin guidance poor.
*BRITVIC: +1% Q1 trading solid, sales in constant currency +4.3%, good performance.
*COM HEM: +1% Q4 revs in line, underling EBITDA slightly ahead, '17 guidance in line.
*CYBG: -1% core SME loan growth negative, '17 guidance unchanged.
*SANONE: +1% positive read from YAKULT (+7%), they own 20% on good Q3 numbers.
*DBK: +2% to pay $425M settle with NY DFS, FCA fined £163M for money laundering.
*FIAT: -2% Brazil car sales -15% YoY in JAN v -10% in December.
*GALP: +1% Q4 trading update confirms volume growth on track, prod increased.
*GIVAUDAN: -4% H2 underlying earnings miss, EBITDA 6% below consensus.
*H&M: +5% Q4 PTP 5% beat & EPS 8% beat, January trading in line.
*LUXOTTICA: +1% Q4 retail net sales €2.14B, wholesale weaker.
*OCADO: +1% FY core earnings +3.3%, EBITDA tad light.
*POLYMETAL: 0% purchased the 25% minority stake in its TARUTIN copper deposit.
*REPSOL: -1% Q4 production slightly light, refining margin increased.
*SANNE: +3% US performance better, lower interests costs and tax rate, better EPS.
*SHELL: +2% sell package North Sea assets & sells 22% stake in Thailand Bongkot field.
*SSE: 0% div continue to increase in line with inflation, reiterates guidance.
*UCG: -2% FY'16 net loss expected to be €1B worse than initial guidance.
*WOOD GROUP: +1% secured new 5-year contract with HESS in Malaysia.
MainFirst Pre Mkt Indications
*UNICREDIT-Additional Neg.1-offs amount to about €1b,Net -€11.8b.........-2%
*DBK-Pays $425m to settle NY probe over Russian m/laundering.............+1%
*GEMALTO-To supply Digital Identity Solution 4 Swedish Tax Agency........+0.5%
*VOLVO-Gained Europe Heavy Trucks Market share in 2016 - DI..............+0.5%
*GIVAUDAN-FY Sales 4.66b(4.69),Ebitda 1.13b(1.15),Div 56(58).............-3%
*SCA-Skandia & Folksam interested in SCA's forest division - DI..........+0.5%
*NORDEA-Plans to end Equity Ops in Finland says Kauppalehti..............U/C
*DUFRY-Extends World Duty Free concession at Jersey Airport 10yr.........+0.5%
*TLG IMMOB-Selling 6.7m new shs,via JPM & UBS(fund real est acq).........-0.5%
*ALFA LAVAL-Net Sales 9.90b(9.38),Div 4.25(4),Savings SK500mln...........+3%
*LHA-Wants lower ticket prices,also no major delays from labor talks.....-0.5%
*CENTROTEC-FY Sales 575m(569.5),Ebit upper end.FY17 Sales ok,Ebit lite...+0.5%
*COMDIRECT-FY N/Int 118.9m(119.3),Fee Inc 215.4m(212.3),Net 92.5m(89.2)..+0.5%
*GFK-FY16 Sales 1.48b(1.492),Sees difficult enviroment in 2017...........-0.5%
*LUXOTTICA-Net Sales 2.14b(2.137),First few weeks of 2017 started well...+1%
*H&M-Q4 PT 7.41b(7.04),NI 5.91b(5.46),Gross Margin 57%(56.6),New tgts...+3%

MS Pre Open Indications
ALFA SS +3-4%
BVIC LN +1-2%
COMH SS +1%
CYBG LN -1%
DBK GY +4%
GIVN VX -2-3%
HMB SS +2-3%
LUX IM UNCH/+1%
OCDO LN +2-4%
RDSA LN +1%
SSE LN +1%
SVT LN +1%
TEVA IT -10%
TLG GY -3%
ZAL GY +1%

Shore
CARPETRIGHT - recent LfL sales +6.8%,comfortable with FY profit range.......+2%
SSE - re-its FY g'dance,divi to rise in line with RPI.......................-1%
STRIDE GAMING - trading in line,organic growth encouraging,well placed......UNCH
JOULES - grp revs +16.2% £81.4m,PBT +19.9%,margins +101bps,trading in line...+2%
CARCLO - H2 trading remains strong and in line,debt in line,positive outlook.+1%
BRITVIC - Strong start to year.Says confident of meeting estimates..........+1%
GREENCORE - Confident 2017 to meet market expectations......................UNCH
OCADO - Fy ptp +21.8%.Gross retail sales+13.6%.Active customers +13.9%.......+1%
EARTHPORT - Sees H1 rev 14.3m.Gross margin 70%.Cash balance 11.4m..........UNCH
CYBG - Q1 in line,mortgage book +4.4%,CET1 rose to 12.8%,FY17 g'dance unch..UNCH
INTERMEDIATE CAP - Q3 in line,AuM +3% €22.6bn,mkt conditions favour position.+1%
SEVERN TRENT - Q3 trading in line,ODI rewards ahead of prev g'dance.........UNCH
SCS GROUP - in line,LfL +2.7%,against tough comp's for remainder of yr.....UNCH
CONVIVIALITY - correction H1 EPS,7.2p not 9.2p,no affect on profit in period.-1%

(CS) Intesa - Generali : price and synergies matter

■ Posing conditions for a potential deal: Intesa’s (ISP) CEO posed the conditions for a potential deal with Generali (GASI): no capital weakening and no dilution for shareholders. The CEO also claimed a strategic rationale for the deal mentioning that “insurers make sense when they are integrated in a banking network.” 
■ Price and synergies matter: Since the piece of news came out on January 23, GASI jumped by +8.7% (to €14.9 as at Jan 30, or 9.7x PE17E), while ISP dropped by -11% (to €2.20 as at Jan 30, or 10.5x PE17E) setting 6.78 ISP shares for each GASI share market swap ratio. A paper deal could be CET1 accretive but dilutive EPS wise: price and synergies matter for value creation. 
■ Potential CET1 and RoTE uplift, but synergies required for EPS accretion look challenging: In our base case, a 100% acquisition could be slightly accretive CET1-wise, if financed via shares swap, and the Danish Compromise is applicable. The higher Generali’s RoTE could support the combined profitability uplift. At the market swap ratio, we need at least demanding €900m post-tax synergies to make the deal EPS accretive. 
■ A strategic U-turn: ISP’s strategy was focused on core asset management business while no large scale acquisitions of insurers so far. In our view, the strategic rationale of the Generali deal could lie in: (i) business and geographical diversification; (ii) creation of a huge player in the asset management business; (iii) dilution of the banking business and of bad loans weight. We see the following potential downside: (i) high execution risk; (ii) Regulatory headwinds in terms of potential capital add-ons for complexity; (iii) uncertainty related to the Danish Compromise duration; (iv) potential antitrust issues in Italy; (v) price and synergies inconsistent with value creation.

>>> TELEFONICA (TEF SM): Singapore SWF and CVC may be preparing a joint €1.76b b

TELEFONICA (TEF SM): Singapor​e​ SWF ​and ​CVC ​may be ​prepar​ing​ a ​joint ​€1.76b bid for a minority stake (47%?) in TEF´s unlisted telecom tower and submarine cable affiliate Telxius​,. The bid would value​ the TEF affiliate​ at €3.75b. TEF scrapped last year the IPO of Telxius as it did not attract sufficient investor interest​. The aborted placing valued the company​ at between €3-3.75b. Ardian or KKR​ may also be interested in Telxius​. (Expansion)

(CS) Italian Luxury : Switching pair of Italian footwear

■ We prefer Tod's Group over Ferragamo. Ferragamo has outperformed Tod's Group by >60% in the last three years largely due to 40% lower consensus earnings cuts. With both stocks now trading at similar multiples despite being at different stages in the margin and earnings cycle, we raise our rating on Tod's Group to Outperform (from Underperform) and reiterate our Neutral rating on Ferragamo. We lift both targe

(CS) Global Equity Strategy :

Continental Europe: stick to this being our joint top overweight. 
We raise our year-end Euro Stoxx 50 target to 3,450 from 3,300 (and midyear target to 3,500 from 3,350). What is supportive? 

* There has been significant capitulation. 
* GDP growth of 2% should be consistent with c.15% outperformance. 
* The stage of the cycle: Europe outperforms 70% of the time the bund yield rises and also outperforms when the global cycle turns up. 
* Valuation: Europe’s 12-month forward P/E is on a 19% discount to the US, and a 17% discount on normalised earnings. The equity risk premium is still high, at 7.4%. 
* Profits: earnings momentum in absolute and relative terms is at a 5-year high. We upgrade EPS growth to 8.5% for 2017 (from c.6%). Nearly half of consensus EPS growth is from financials and energy (where we have net upgrades in both). Rising inflation helps margins. Above all, the profit share of GDP remains close to trough levels. 
* The ECB is likely to remain dovish until at least the aftermath of the French elections