>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: ALIM +29.2%, CRY +10.2%, EXAS +9.1%, EVER +6.8%, TXN +6.6%, CETV+5.4%, CR +5.3%, LVS +3.6%, MBLY +3.4%, AUDC +3.2%, CNC +3.2%, ATI +2.6%, CNXC +2.5%, ( elects not to pay a distribution to holders of subordinated units for Q2), CLGX +2.5%, KKR +2.4%, MAS +2.2%, ARLP +2%, AOS +1.5%, LLY+1.5%, SIRI +1.2%, FIS +1%, IPAR +0.9%, (Inter Parfums reports prelim Q2 sales above consensus; on track to achieve 2016 net sales guidance), DD +0.9%, UTX +0.8%, ESRX +0.5%

M&A news:
  • SWHC +2.1% (Smith & Wesson to acquire Crimson Trace for $95.0 mln, subject to certain adjustments, utilizing cash on hand; expects the acquisition to be accretive to its EPS in fiscal 2017)
  • BUD +1.3% (Anheuser-Busch InBev (BUD) revises offer to GBP 45/share in cash (from GBP 44/share prior))
  • P +1.0% (following late surge higher -- reports that the company hired advisor for strategic options)
Select metals/mining stocks trading higher: GFI +4.2%, DRD +3%, RIO +2.2%, AKS +1.8%, HMY +1.7%, KGC +1.7%,BBL +1.7%, AG +1.6%, GOLD +1.5%, BHP +1.4%

Other news:
  • VKTX +11.7% (announces 'positive' top-line results from a proof-of-concept study of VK0214 in a mouse model of X-linked adrenoleukodystrophy)
  • SGY +8.6% (announces estimated production for the quarter ended June 30, 2016 of ~29 MBoe (174 MMcfe) per day, slightly above the upper end of guidance for the quarter)
  • BEAT +6.7% (to join S&P SmallCap 600)
  • ANCB +6% (Anchor Bancorp engages investment banking firm to assist it in identifying and evaluating various strategic options and operating scenarios)
  • MPEL +5% (following LVS earnings)
  • BT +4.6% (makes governance changes to further increase independence for Openreach), GALE +3.9% (files for 3,658,012 share common stock offering by selling shareholders)
  • RAVN +3.9% (to join S&P SmallCap 600)
  • NFLX +3.7% (following Director J. Hoag's disclosure of purchase of 600K shares worth ~$51.9 mln (was disclosed last night, purchases made 7/21-7/25))
  • WYNN +3.1% (following LVS earnings)
  • NXPI +1.9% (following TXN earnings)
  • MGM +1.4% (following LVS earnings)
  • MBFI +1.2% (to join S&P MidCap 400)
  • MXIM +1% (following TXN earnings)
  • ADI +0.9% (following TXN earnings)
Analyst comments:
  • SFM +3.3% (upgraded to Buy from Sell at Goldman)
  • FMSA +2% (upgraded to Outperform at Cowen)
  • JWN +1.8% (upgraded to Overweight from Neutral at Piper Jaffray)
  • LYG +1.7% (upgraded to Hold from Sell at Berenberg)
  • XXIA +1.6% (upgraded to Buy from Hold at Stifel)
  • KR +1.4% (upgraded to Buy from Neutral at Goldman; added to Conviction Buy List)
  • ALKS +1.1% (upgraded to Outperform from Market Perform at Cowen)
  • SBUX +1% (added to Conviction Buy List at Goldman)

FT : Orange earnings dip amid stiff competition in France

Orange earnings dip amid stiff competition in France
Orange reported a slight fall in second-half core earnings as France’s biggest telecoms group continued to endure stiff competition in its domestic mobile market.
The country’s largest mobile operator by subscribers said that restated earnings before interest, taxes, depreciation and amortisation (ebitda) was €5.91bn during the first six months of the year — down 0.6 per cent compared with a year earlier.

The figure was slightly below the €5.92bn average of analysts’ forecasts. The restated ebitda margin was 29.4 per cent during the period, a decline of 0.3 percentage points compared with the first half of last year.
However, Orange confirmed its full-year target of a higher restated ebitda compared with 2015.
Stéphane Richard, chairman and chief executive, said on Tuesday that the results “again confirm the group’s positive momentum” though he said that the performance “was achieved in markets that remain highly competitive, particularly France, which experienced aggressive promotional activity”.
Orange shares were down 1.2 per cent at €14.16 in early trading.
The operator said that group operating profit during the first half was €2.14bn, a decrease of €123m compared with the first six months of last year. Revenues were €20.01bn, up 0.3 per cent — though these were flat during the second quarter after increasing 0.6 per cent in the first three months.
In France, its biggest market but where competition among the four principal operators has been fierce, revenue from mobile services fell 5.2 per cent in the second quarter. That was more than the 2.4 per cent decline Orange reported in the first three months to the end of March.
However, the fall in revenue from mobile was partially offset by a 4.4 per cent increase in revenue from fixed broadband services in France.
Orange has been seeking to compete in its domestic market, which accounts for almost half of group revenue, on network quality and services.
A failed bid to buy Bouygues Telecom, the country’s third-biggest operator by mobile subscribers, has removed any short-term hope of market consolidation and increased the likelihood that competition will remain fierce.

In Spain, Orange said that revenues increased 6.2 per cent during the second quarter after growing 1.8 per cent in the first, confirming the country’s continued recovery.
In Africa and the Middle East, growth slowed to 2.3 per cent during the second quarter after increasing 4.4 per cent during the first. Orange said that it had 108.5m customers in the region at the end of June, a decrease of 0.4 per cent on a year earlier. It attributed the fall to strengthened requirements to verify the identities of customers in most countries.

>>> Caterpillar beats by $0.13, beats on revs; co sees FY16 forecast closer to b

Caterpillar beats by $0.13, beats on revs; co sees FY16 forecast closer to bottom end of prior guidance
  • Reports Q2 (Jun) earnings of $1.09 per share, excluding non-recurring items, $0.13 better than the Capital IQ Consensus of $0.96; revenues fell 16.0% year/year to $10.34 bln vs the $10.13 bln Capital IQ Consensus.
    • The decrease was primarily due to lower sales volume resulting from continued weak commodity prices globally and economic weakness in developing countries. While sales for both new equipment and aftermarket parts declined in all segments, most of the decrease was for new equipment. Unfavorable price realization also contributed to the decline
    • Sales declined in all regions
    • Sales declined in all regions
    • Mining, oil and gas, and rail industries remain challenged
    • However, co does has strong balance sheet ­-- Maintained $0.77 per share dividend (announced June 8, 2016)
  • Co sees FY16 forecast closer to bottom end of prior guidance; sees EPS at $3.70, excluding non-recurring items, vs. $3.53 Capital IQ Consensus Estimate; sees FY16 revs of $40-42 bln vs. $40.29 bln Capital IQ Consensus Estimate
  • More specifically, co said, "The outlook for 2016 that we provided with our first-quarter financial results in April expected sales and revenues in a range of $40 to $42 billion. At the midpoint of that range, profit was expected to be $3.00 per share, or $3.70 per share excluding restructuring costs. Over the past quarter, economic risks have persisted and, as a result, our current expectations for 2016 sales and revenues are closer to the bottom end of that outlook range."
  • Co also said, "World economic growth remains subdued and is not sufficient to drive improvement in most of the industries and markets we serve. Commodity prices appear to have stabilized, but at low levels. Global uncertainty continues, and the recent Brexit outcome and the turmoil in Turkey add to risks, especially in Europe."

>>> JetBlue Airways beats by $0.04, reports revs in-line; co also will expand it

JetBlue Airways beats by $0.04, reports revs in-line; co also will expand its Mint experience by bringing 30 additional A321 aircraft into its fleet; co also announces west coast expansion
  • Reports Q2 (Jun) earnings of $0.53 per share, $0.04 better than the Capital IQ Consensus of $0.49; revenues rose 1.9% year/year to $1.64 bln vs the $1.64 bln Capital IQ Consensus.
  • Revenue passenger miles for Q2 increased 10.3% to 11.6 bln on a capacity increase of 11.1%, resulting in a load factor of 85.0%, a 0.6 point decrease YoY. Yield per passenger mile was 12.87 cents, down 9.9% YoY.
  • Passenger revenue per available seat mile (PRASM) for Q2 decreased 10.5% YoY to 10.94 cents and operating revenue per available seat mile (RASM) decreased 8.2% to 12.09 cents.
  • Operating expense per available seat mile (CASM) for Q2 decreased 9.9% YoY to 9.78 cents. Excluding fuel and profit sharing, CASM decreased 1.0% to 7.48 cents.
  • Mint expansion: JetBlue announces today it intends to further expand its highly successful Mint experience by amending its purchase agreement with Airbus to bring 30 additional A321 aircraft into its fleet over seven years. The additional aircraft will allow JetBlue to capture an opportunity to position itself as the carrier of choice in transcontinental markets with a targeted approach that leverages its east coast strength. Airbus is scheduled to deliver 15 incremental A321ceos starting in 2017.
  • West Coast Expansion: As west coast travelers face reduced options and less competition, JetBlue is quickly moving to organically strengthen its presence on a national scale with a leading transcontinental franchise between the west and east coasts. JetBlue's targeted approach will give the airline increased frequencies in high-value west coast markets, including the Bay Area and Los Angeles, while leveraging the strength of its east coast point of sale. In addition to JetBlue's intention to expand Mint to grow its west coast presence, JetBlue is strengthening its Long Beach (LGB) focus city with new all-core service.
  • Outlook: For Q3, CASM excluding fuel and profit sharing is expected to grow between 1% and 3%. For 2016, JetBlue continues to expect CASM excluding fuel and profit sharing to grow between zero and 1.5%. In Q3, capacity is expected to increase between 5.5% and 7.5%. For the full year 2016, JetBlue continues to expect capacity to increase between 8.0% and 9.5%.

>>> Starwood Hotels misses Q2 estiamtes after divesting Vistana; guides Q3/Q4 EP

Starwood Hotels misses Q2 estiamtes after divesting Vistana; guides Q3/Q4 EPS in-line; expects deal with Marriot (MAR) to close in the coming weeks
  • Reports Q2 (Jun) earnings of $0.71 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus of $0.73; revenues rose 0.4% year/year to $1.25 bln vs the $1.34 bln Capital IQ Consensus.
  • Adjusted EBITDA was $297 million, which includes operating earnings from the Company's former vacation ownership business of $19 million and $2 million from the hotels transferred to Interval Leisure Group as part of the vacation ownership spin-off transaction, all of which are classified as discontinued operations.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 1.4% in constant dollars (increased 0.7% in actual dollars) compared to 2015. Systemwide REVPAR for Same-Store Hotels in North America increased 3.4% in constant dollars (increased 3.1% in actual dollars).
  • While the Company expects the Marriott (MAR) transaction to close in the coming weeks, the following outlook assumes that the Company remains an independent Company through December 31, 2016. Full year owned earnings are negatively impacted by approximately $46 million due to asset sales completed in 2015 and 2016, with additional negative impact of ~$20 million due to lost earnings from the five hotels transferred to ILG in connection with the ILG transaction.
  • Co issues in-line guidance for Q3, sees EPS of $0.71-0.72, excluding non-recurring items, vs. $0.72 Capital IQ Consensus Estimate. Adjusted EBITDA is expected to be approximately $270 million to $280 million (based on the assumptions below). REVPAR at Same-Store Systemwide Hotels Worldwide is expected to be up 1% to 3% in constant dollars (~80 basis points lower in actual dollars at current exchange rates). REVPAR at Same-Store Systemwide Hotels in North America is expected to be up 3% to 4% in constant dollars and actual dollars at current exchange rates. REVPAR at Same-Store Owned Hotels Worldwide is expected to be up 4% to 6% in constant dollars (~20 basis points lower in actual dollars at current exchange rates).
  • Co issues in-line guidance for Q4 (Dec), sees EPS of $0.79-0.84, excluding non-recurring items, vs. $0.83 Capital IQ Consensus Estimate. Adjusted EBITDA is expected to be ~$285 million to $295 million (based on the assumptions below). REVPAR at Same-Store Systemwide Hotels Worldwide is expected to be up 1% to 3% in constant dollars and in actual dollars at current exchange rates. REVPAR at Same-Store Systemwide Hotels in North America is expected to be up 3% to 4% in constant dollars and actual dollars at current exchange rates. REVPAR at Same-Store Owned Hotels Worldwide is expected to be down 1% to up 1% in constant dollars (~50 basis points higher in actual dollars at current exchange rates).