Gapping up
In reaction to strong earnings/guidance: TNAV +23.9%, OIIM +23.2%, RGLS +16.1%, NVCR +15.2%, ENPH +13.9%,TTOO +13.8%, (also T2 Biosystems announces a collaboration with Allergan (AGN) to develop a novel diagnostic panel to detect Gram-negative bacterial species and antibiotic resistance; will receive $4 mln in milestone payments ), YELP +11.5%, OCLR+11.3%, CALX +10.4%, CRTO +9.2%, BRCD +8.8%, FLKS +8.5%, IPHI +7%, (Inphi to acquire ClariPhy Communications for $275 million in cash as well as the assumption of certain liabilities at the close), TNET +6.7%, VECO +5.9%, ODP +5.9%,PBPB +5.8%, SQ +5.5%, EA +5%, PZZA +5%, KNOP +5%, WING +4.9%, SHOP +4.7%, TSRA +4.5%, TSRA +4.5%, BGFV+4.1%, NYMT +4%, LNTH +3.9%, HZN +3.6%, BABA +3.6%, NBLX +3.3%, ORBK +3.3%, XCO +2.8%, CYH +2.6%, JIVE+2.5%, ETSY +2.3%, AMSG +2.1%, CIM +2.1%, DVN +1.9%, ELGX +1.8%, BBOX +1.8%, ARCC +1.6%, FNBC +1.5%, TWX+1.4%, TWX +1.4%, CALD +1.2%, NRZ +1.2%, DLPH +1.1%, TRNC +1%, .
M&A news:
In reaction to strong earnings/guidance: TNAV +23.9%, OIIM +23.2%, RGLS +16.1%, NVCR +15.2%, ENPH +13.9%,TTOO +13.8%, (also T2 Biosystems announces a collaboration with Allergan (AGN) to develop a novel diagnostic panel to detect Gram-negative bacterial species and antibiotic resistance; will receive $4 mln in milestone payments ), YELP +11.5%, OCLR+11.3%, CALX +10.4%, CRTO +9.2%, BRCD +8.8%, FLKS +8.5%, IPHI +7%, (Inphi to acquire ClariPhy Communications for $275 million in cash as well as the assumption of certain liabilities at the close), TNET +6.7%, VECO +5.9%, ODP +5.9%,PBPB +5.8%, SQ +5.5%, EA +5%, PZZA +5%, KNOP +5%, WING +4.9%, SHOP +4.7%, TSRA +4.5%, TSRA +4.5%, BGFV+4.1%, NYMT +4%, LNTH +3.9%, HZN +3.6%, BABA +3.6%, NBLX +3.3%, ORBK +3.3%, XCO +2.8%, CYH +2.6%, JIVE+2.5%, ETSY +2.3%, AMSG +2.1%, CIM +2.1%, DVN +1.9%, ELGX +1.8%, BBOX +1.8%, ARCC +1.6%, FNBC +1.5%, TWX+1.4%, TWX +1.4%, CALD +1.2%, NRZ +1.2%, DLPH +1.1%, TRNC +1%, .
M&A news:
- ADGE +20% (to be acquired by Tecogen (TGEN) in a stock-for-stock merger)
- BRCD +9% (Brocade confirms it will be acquired by Broadcom (AVGO) for $12.75 per share)
- CPPL +7.2% (Columbia Pipeline Partners enters into a definitive agreement and plan of merger with TransCanada)
Select optical related names showing strength after OCLR earnings: ACIA +2.2%, FNSR +2.1%, NPTN +2%, .
Select metals/mining stocks trading higher:
Select metals/mining stocks trading higher:
- MUX +3.9%, KGC +3.8%, GOLD +2.8%, FSM +2.7%, SA +2.7%, AUY +2.5%, GDX +2.4%, GG +2.3%, SLW +2.2%, CDE+2.1%, ABX +2%, NEM +1.7%
Other news:
- PTN +38.4% ( reports the Reconnect Studies met the pre-specified co-primary efficacy endpoints in both Phase 3 clinical trials)
- AVXS +20.8% (provides update after receipt of FDA minutes from Type B meeting; AVXS-101 study will reflect a single-arm design, using natural history of the disease as a comparator, and enroll approximately 20 patient)
- CXRX +7.7% (enters into an additional cross currency swap agreement as part of its ongoing currency hedging program)
- IPAS +7.3% (extends partnership w/ Gogo )
- HLS +5.7% (HealthSouth (HLS) will replace Rackspace Hosting (RAX) in the S&P Midcap 400 after the close of trading on November 3)
- JBSS +4.1% (declares a special cash dividend of $2.50/share )
- INFI +2.4% (enters into a license agreement under which Verastem (VSTM) licensed worldwide rights to develop/commercialize its duvelisib)
- YHOO +2.2% (in sympathy with BABA earnings)
- ATVI +2.1% (following EA earnings/guidance)
- OMER +2% (announces results from a Phase 2 trial evaluating peroxisome proliferator-activated receptor-gamma agonist in heroin-dependent subject)
- AVH +1.6% (following late move higher on reports that UAL / DAL nearing bid)
- URRE +1.6% (announces expansion of its claim position at the Sal Rica Lithium Brine project in Utah)
- FINL +1.5% (on late report that the company could divest its Jackrabbit unit)
- TSRO +1.5% (announces that it has completed the niraparib rolling New Drug Application submission to the FDA for the maintenance treatment of patients with platinum-sensitive, recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in response to platinum-based chemotherapy)
Analyst comments:
- AMSG +2.1% (upgraded to Outperform from Market Perform at Wells Fargo)
Electronic Arts [EA] Climbs 6.1% After In-Line Results and Guidance Boost
Shares of Electronic Arts (EA 82.55, +4.71) have climbed 6.1% in pre-market after the video game publisher reported in-line earnings and raised its guidance for the full year.
The company reported an in-line second-quarter loss of $0.13 per share on a 10.2% spike in revenue to $898 million.
The company released two major titles during the quarter. FIFA 17 has seen 20.0% greater engagement when compared to last year's installment while the launch of Battlefield 1 has been met with a doubling of the player base for the first week when compared with Battlefield 4, which was released in 2013. Furthermore, the company made upbeat comments about the launch of Titanfall 2, which began selling in late October.
Looking at the revenue breakdown, digital revenue made up 63.0% or $566 million of the total, as the company continues responding to an industry shift towards more internet sales at the expense of sales at physical stores. Revenue from full game downloads increased 15.0% year-over-year to $94 million while Packaged Goods and Other revenue grew 6.0% to $332 million. Extra Content revenue increased 13.0% to $240 million while Subscriptions, Advertising, and Other revenue declined 1.0% to $83 million.
Mobile revenue showed the largest year-over-year increase, growing 21.0% to $149 million. The company has benefitted from performing phones and tablets that can handle graphics-intensive content, but a visible slowdown in phone and tablet sales in recent quarters could prove to be a headwind going forward.
Looking ahead, Electronic Arts expects to generate full-year earnings of $2.69 per share, which is up from previous guidance for $2.56 per share and ahead of current market expectations.
Moody's says the UK sovereign rating would be downgraded if the UK was unable to conclude agreement with EU that protected core elements of its access to the Single Market
A key factor in Moody's assessment of the impact of Brexit on the UK's credit profile will be how far any new trade arrangement between the UK and the European Union replicates EU membership, as well as how long it takes to achieve a new settlement.
Early premarket gappers
Gapping up: TNAV +23.9%, RGLS +16.1%, AVXS +14.3%, TTOO +13.8%, OCLR +12.4%, CALX +10.4%, CRTO +9.8%, FLKS+8.5%, SQ +7.2%, ENPH +6.9%, IPHI +6.7%, BRCD +6.6%, HLS +6.3%, TNET +6.2%, VECO +5.9%, PBPB +5.8%, CPPL+5.6%, URRE +5.6%, ODP +5.6%, EA +5.4%, WING +5.3%, KNOP +5%, FNSR +4.6%, TSRA +4.5%, TSRA +4.5%, PZZA+4.1%, BGFV +4.1%, NYMT +4%, LNTH +3.9%, HZN +3.6%, BABA +3.4%, NBLX +3.3%, ORBK +3.3%, XCO +2.8%, CYH+2.6%, JIVE +2.5%, CIM +2.1%, NPTN +2%, EXTR +2%, DVN +1.9%, ELGX +1.8%, BBOX +1.8%, ATVI +1.7%, ABC +1.7%,AVH +1.6%, AGN +1.6%, TSRO +1.5%, FNBC +1.5%, ETSY +1.4%, TWX +1.4%, TWX +1.4%, CALD +1.2%, DLPH +1.1%,TRNC +1%, KATE +1%, NVMI +1%
Gapping down: ADPT -51.2%, ZAGG -19.9%, DXCM -17.9%, MEMP -15%, DATA -10.8%, MYGN -9.9%, SBAC -9.8%, DHT-9.3%, RDHL -9%, X -8.6%, PAYC -6.6%, TISI -6.3%, CERN -6%, ZEN -5.6%, BYD -5.4%, FTR -5.1%, VRX -4.3%, PXD -4%,BFAM -3.7%, TSE -3.6%, HWAY -3.4%, HWAY -3.4%, TRUP -3.3%, MTCH -2.9%, CAVM -2.9%, TRP -2.8%, UIHC -2.4%, CCI-2.3%, QUOT -2.3%, Q -2.3%, PRMW -2.1%, CLX -2.1%, HLF -2%, SE -2%, NEE -1.9%, CACC -1.9%, SHOP -1.9%, ILMN -1.8%,WBA -1.6%, CXRX -1.5%, TG -1.4%, MHG -1%, VSI -1%
Gapping down: ADPT -51.2%, ZAGG -19.9%, DXCM -17.9%, MEMP -15%, DATA -10.8%, MYGN -9.9%, SBAC -9.8%, DHT-9.3%, RDHL -9%, X -8.6%, PAYC -6.6%, TISI -6.3%, CERN -6%, ZEN -5.6%, BYD -5.4%, FTR -5.1%, VRX -4.3%, PXD -4%,BFAM -3.7%, TSE -3.6%, HWAY -3.4%, HWAY -3.4%, TRUP -3.3%, MTCH -2.9%, CAVM -2.9%, TRP -2.8%, UIHC -2.4%, CCI-2.3%, QUOT -2.3%, Q -2.3%, PRMW -2.1%, CLX -2.1%, HLF -2%, SE -2%, NEE -1.9%, CACC -1.9%, SHOP -1.9%, ILMN -1.8%,WBA -1.6%, CXRX -1.5%, TG -1.4%, MHG -1%, VSI -1%
Time for a more positive stance on leading LCCs
* Downward earnings momentum close to bottoming: fragmenting of low cost industry is understood
* easyJet’s shares and estimates have been hit the hardest. Its strategic position remains strong. Double upgrade to Buy
* Ryanair has recovered from its post Brexit trough. A longterm winner, but less attractive risk reward. Upgrade to Hold
* We prefer low cost carriers to flag carriers: We continue to see a challenging
market for short haul airlines in Europe with excess capacity. Structural instability in
the low cost carrier sector continues as Wizz and Norwegian absorb very significant
fleet deliveries and Eurowings, Transavia and Vueling all target the bronze medal in
the Pan European low cost industry. We see these challenges as widely understood.
We do not think this is the case for the flag carriers’ key profit-generating North
Atlantic market, which we expect to become increasingly competitive.
* Ryanair and easyJet should outperform low cost peers: Next year Ryanair and
easyJet will benefit from significant fuel price improvements, in contrast to their low
cost competitors, whose fuel hedging has seen the benefit from falling market prices
sooner. Ryanair and easyJet remain the long-term strategic winners in the market
with solid strategic positions and strong balance sheets. Despite easyJet’s current
short-term commercial and operational challenges, we continue to see it as one of
the two market leaders.
* easyJet strong valuation case: On our estimates, easyJet trades on a CY17 PE of 9.2x,
a 21% discount to Ryanair and an 18% discount to its own 5-year average. Thinking long
term, assessing easyJet and Ryanair on the basis of their mid cycle PBT margins of 10%
and 19% respectively, easyJet trades on 8.7x, at a 35.8% discount to Ryanair. If easyJet
management fail to turn its trading around, we would expect peers to be interested in its
strategic position, network and brand.
* Upgrade easyJet from Reduce to Buy; Ryanair from Reduce to Hold: We raise our
DCF based target prices from 800p to 1,150p for easyJet, from EUR8.50 to EUR12 for
Ryanair, both on raised near-term estimates and slightly higher mid-term margins.