>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • PLAY +13.3%, EMKR +13.2%, WDC +4.7%, (raises Q2 outlook; renews patent cross-license agreement with Samsung),HOFT +2.2%, KEQU +2%
  • VRA +1.6%, KFY +1.1%
M&A news: AVH +2.3% (responds to media reports regarding its search for a strategic investor; received conditional and confidential proposals from certain parties)

Select EU financial related names showing strength in sympathy with CS investor day (see below): HSBC +1.9%, RBS+1.7%, PUK +1.5%, BCS +0.8%, LYG +0.7%


Other news:
  • ANTH +13.6% (reports Blisibimod BRIGHT-SC IgA Nephropathy continues to demonstrate 'positive' trends in the week 48 analysis; promotes J. Craig Thompson to CEO replacing Paul Truex who has been appointed to new role as Exec Chairman)
  • ENPH +6.6% (continued strength)
  • VKTX +5.8% (confirms the FDA has granted orphan drug designation to VK0214 for the treatment of X-linked adrenoleukodystrophy)
  • WDC +4.6% (raises Q2 outlook; renews patent cross-license agreement with Samsung)
  • SQ +4.4% (Engadget discusses that Square (SQ) users will now be able to spend via Apple (AAPL) Pay)
  • SPWR +4.3% (announces restructuring program; plans to reduce 2017 annual operating expenses to less than $350 mln; provides guidance)
  • WEN +3.9% (Trian Fund Management increases active stake to 23.45% )
  • CS +2.5% (provides strategic update at its Investor Day; targeting lower costs for co's end-2018 objective)
  • AMD +2.1% (in sympathy with WDC)
  • TXMD +2% (among stocks with favorable commentary on Tuesday's Mad Money)
  • MA +1.2% (increases quarterly dividend to $0.22/share from $0.19 prior qtr and approves $4 bln share repurchase program)
  • STX +1.1% (WDC sympathy)
  • JUNO +1% (announces an update of data from studies of its investigational chimeric antigen receptor T cell product candidates was presented; encouraged by the safety and efficacy results )
Analyst comments:
  • RIO +3.7% (upgraded to Outperform from Neutral at Credit Suisse)
  • VALE +3.1% (upgraded to Neutral from Underperform at Credit Suisse)
  • MU +2.3% (initiated with a Buy at Citigroup)
  • GPK +2.1% (upgraded to Buy from Neutral at BofA/Merrill)
  • MELI +1.7% (upgraded to Buy from Neutral at Goldman)
  • AV +1.5% (upgraded to Outperform at RBC Capital Mkts)
  • TEVA +1.5% (resumed with an Outperform at Oppenheimer)
  • AZO +1.2% (upgraded to Overweight from Neutral at JP Morgan)

>>> Brown-Forman reports EPS in-line, revs in-line; reaffirms FY17 EPS guidance

Brown-Forman reports EPS in-line, revs in-line; reaffirms FY17 EPS guidance but lowers underlying net sales, operating income guidance

  • Reports Q2 (Oct) earnings of $0.50 per share, in-line with the Capital IQ Consensus of $0.50; revenues fell 2.8% year/year to $830 mln vs the $837.25 mln Capital IQ Consensus; underlying net sales +3%; underlying operating income +8%.
    • Underlying net sales in the United States and emerging markets improved quarter over quarter.
  • Co reaffirms EPS guidance for FY17, sees EPS of $1.71-1.81 vs. $1.76 Capital IQ Consensus. Lowers underlying net sales growth to 4% to 5% from +4-6%; lowers underlying operating income growth to 6% to 8% from +7-9%

>>> US Early premarket gappers

Early premarket gappers

Gapping up: ANTH +25.9%, VKTX +14.9%, PLAY +13.2%, WDC +5.4%, ENPH +5.1%, RIO +3.6%, VALE +3.4%, CS +3.1%,CHK +2.2%, WEN +2.2%, HSBC +2.1%, GPK +2.1%, MU +2.1%, PBR +1.9%, RBS +1.9%, POWL +1.8%, LYG +1.6%, TEVA+1.5%, AU +1.4%, PUK +1.3%, BCS +1.3%, AZN +1.2%, KEQU +1.2%, MA +0.7%, AMD +0.7%

Gapping down: SIGM -18.1%, OHAI -12.9%, LADR -11.8%, PES -10.4%, AVAV -9.9%, OXM -9.4%, BBG -6.4%, ESV -5.7%,SEAC -5.4%, HQY -4.4%, NDRM -3.4%, IBN -3.2%, HMY -2.7%, BLUE -2.5%, SHPG -1.5%, SIG -1.1%, GSK -0.8%

(MS) Property 2017 Outlook : potential surprises and top picks

Stocks have been pushed around by political and macro factors more than usual this year but despite a busy political calendar in 2017, our strategy colleagues expect this to normalise. From a bottom up perspective we feel most compelled by Spain, by German residential, and by logistics.

How to play UK property stocks? 
The outlook for London offices is challenged with rising supply and most likely sluggish demand, which we think will lead to rental declines and softer yields. UK retail property values are also at risk owing to stagflationary pressures and rising business rates. But then most stocks screen cheap on NAV, some even look good on earnings. Therefore, in absolute terms downside risks may be limited, but we see no clear catalyst to drive these stocks higher while the deterioration in fundamentals accelerates; in relative terms we see more value elsewhere in the sector. We highlight Segro as our most preferred UK name as it is exposed to the compelling logistics market.

Coping with bond yield anxiety. 
Over the long term property stocks' performance relative to European equities tends to be positively correlated with
bond yields, even if this has been different in recent years. Recent underperformance is consistent with previous periods of sudden bond yield rises. But this tends to be short-lived, and a sustained rise in bond yields with higher inflation expectations usually leads to solid property stock performance. Our multi-cycle analysis suggests this could be the right time to revisit attractive equity stories in this sector. We appreciate that this time could indeed be
different, but then history suggests it rarely is.

Top picks. 
Our key OWs are Deutsche Wohnen, LEG and Vonovia (we think German residential yields will fall further despite higher bond yields), Merlin (the cyclical rental recovery is imminent we think), Segro (logistics is one of the most
attractive asset classes in Europe) and Unibail-Rodamco (largely on valuation). 

Potential surprises. 
On the positive side, we think that if we are proven wrong on Spain it will be by not being sufficiently bullish. We also see potential for upside surprise in cities such as Frankfurt driven by financial services demand. On the negative side, we could envisage a material downturn in Swedish property. 

Where could we be wrong ?
Our fundamental bottom-up approach skews our stock positioning towards eurozone stocks. But then we are alive to the fact that next year's political calendar contains several risk events that could potentially reduce the relative attractiveness of eurozone exposure. To some extent our recommendations offer some hedging as several of our OW rated stocks are German, and we would expect strong demand for real assets in Germany in case of heightened risk around the Eurozone.

>>> PNL - NA : Rejects revised €5.75/shr final proposal from Bpost (update) - Bo

Rejects revised €5.75/shr final proposal from Bpost (update) 
- Boards unanimously reject Bpost's final proposal; believe that combination will not be successful
- Boards consider it likely that acquisition by Bpost will trigger regulatory changes
- Acquisition by Bpost could have significant negative impact on PostNL's resilience, its employees, its position as USO provider, its stakeholder support and its continuity, which is not acceptable to boards
- PostNL intends announcing measures to improve value proposition for its shareholders at a capital markets day around presentation of Q4 results

(CS) SFR _ Trimming target price

SFR (N, TP EUR25.0): We lower our 2017 EBITDA estimate by 1% and are broadly in line with consensus. We also lower our target price slightly to €25 to reflect our revised estimates and the sector's recent de-rating. We retain our N rating on the stock. French mobile trends improved recently with mobile service revenue growth improving from -7.0% y/y in Q2 16 to -3.5% y/y in Q3 16. This was mostly driven by easier comps and with the benefit of some of the front-book price hikes in Q2 16. The low end of the market remains competitive but not very different from the sort of promotions that we saw a year ago. The high end of the market remains fairly benign with Orange making a 'more-formore' price move in August 2016.