>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: RADA -9.1%, SBLK -5.7%, SPLS -5.2%, CTXS -4%, (updates on its operations review, offers FY16 guidance, announces plan to spin off GoTo businesses, names new Chief Marketing Officer), SFUN -2.7%, SQM -2.1%, GILT -1.9%, MTSI -1.1%, AMCN -0.7%, GBDC -0.5%.

Other news: KBIO -12% (cont volatility pre-mkt), NBG -8.2% (cont volatility pre-mkt), SYT -4.8% (may be related to Reuters story regarging Bayer stating its crop chem business is not for sale), CLGX -3.8% (still checking), OME -3.3% (Wynnefield filed an amended 13D disclosing letter sent as follow up to several earlier communications detailing concerns and doubts related to the credibility of the 'purported strategic review process'),, QCOM -2.6% (announces receipt of report from Korea Fair Trade Commission alleging it violates Korean competition law), IBN -2.3% (Sensex down overnight), INFY -1.4% (Sensex down overnight), WMGI -0.9% (announced a secondary offering of 4.5 mln shares by an affiliate of Warburg Pincus), .

Analyst comments: DSX -4.6% (downgraded to Hold from Buy at Deutsche Bank), GPRO -3.8% (target lowered to $15 from $20 at Piper Jaffray), SGEN -3.2% (initiated with a Sell at Goldman
)

FT : Syngenta weighs deals in sector shake-up

Syngenta weighs deals in sector shake-up


Syngenta is actively considering deals with rival companies, as the $100bn agricultural industry prepares to be shaken up by a series of blockbuster mergers, the group’s chairman has said.
In an interview with the Financial Times, Michel Demaré said that — having rebuffed repeated approaches from US competitor Monsanto — the Swiss company was now seeking opportunities to combine its strength in crop chemicals with other groups’ leading positions in agricultural seeds.

“We are all convinced that [the sector] will look quite different in six months,” he said, adding that conversations among the leading companies in the sector were “extremely active”.
Apart from Syngenta, which has a market capitalisation of SFr35bn ($34bn), other leaders in the sector include Monsanto, Dupont’s seed business and the agriculture units of Dow Chemical, BASF and Bayer.
Mr Demaré said: “On the crop chemical side, we are the strong leader. On the seed side, Monsanto and [Dupont’s] Pioneer are the key leaders. The winning company in the future will be the one that can combine these two strengths and have an integrated offer.”
He said the bids for his company earlier this year made other deals likely. “This is the result of the Monsanto approach for Syngenta, which for sure has shaken the whole industry,” he said. “It has created the huge activity in which everyone is speaking to each other.”
His comments came as the possibility of a transaction involving Syngenta has been raised again by industry executives and investors.
On Tuesday, Monsanto said it had re-evaluated the purchase of a rival agribusinesses — including Syngenta — less than three months after it abandoned a $46bn hostile pursuit of the Swiss group.
A day earlier, reports also revealed that ChemChina, China’s largest chemicals company, had made an offer for the Swiss group valuing its equity at SFr449 a share, or about $42bn. According to people familiar with the matter, Syngenta rejected the offer from the state-owned Chinese group because it undervalued its business.
Syngenta’s shares are now up 5 per cent since the start of the week, trading at SFr382.40.

Jeremy Redenius, analyst at Bernstein Research, said: “Syngenta is a target or beneficiary of consolidation.” He said that, of the possible combinations, a merger or purchase of Dow Chemical’s agribusiness would bring significant synergies for the Swiss group.
Potential deals among agricultural businesses, especially those selling to farmers, are expected to increase as the plunge in grain prices cuts their revenues and profitability.
However, with the agricultural seeds and chemicals sector already dominated by large international companies, any transaction will be carefully scrutinised by antitrust regulators.
Mr Demaré said: “It is clear that every potential combination has an antitrust risk.”
He said that Syngenta’s search for a new chief executive was on track, following the resignation of Mike Mack last month. Finance director John Ramsay is acting as interim chief executive until a replacement is found. Mr Demaré said: “We want to get it right.”

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: MCUR +10% (reports Q3 results and withdraws guidance given recently announced clinical trial results; commences a process to review all strategic alternatives ), DQ +6.1%, VIPS +4.2%, JACK +3.9%, LOW +2.1%, TGT +1.4%.

M&A news: FCS +8.7% (to be acquired by ON Semiconductor (ON) for $20/share in cash, or ~$2.4 bln), NSC +6.6% (Canadian Pacific proposes to acquire Norfolk Southern), CP +5.1% (Canadian Pacific proposes to acquire Norfolk Southern), AHS +3.5% (signs an agreement to acquire B.E. Smith for $160 mln in cash; expected to be immediately accretive to Co's GAAP and adjusted EPS), PSEM +3.2% (Montage Technology Group increases cash offer for Pericom Semiconductor Corporation to $19.00/share), CAG +2.9% (announces plans to separate into two independent public companies), PMCS +2.1% (Microsemi (MSCC) has increased its offer to acquire PMC-Sierra; new offer valued at $12.05/ PMCS share), .

Select Brazil related names showing strength: SID +15.2%, GGB +8.8%, EPR +2.6%, PBR +2.5%, BAK +2.2%, .

Select metals/mining stocks trading higher: VALE +3.2%, MT +3.1%, NEM +2.4%, RIO +1.7%, BBL +1.3%, BHP +1%, FCX +0.7%, .

Select oil/gas related names showing strength: SDRL +4.5%, RIG +2.1%, BP +1.7%, RDS.A +1.7%, TOT +1.6%, OAS +1.5% .

Other news: AVXL +27.5% (announces that it is moving forward with the development program for ANAVEX 2-73 in a larger double-blinded, randomized, placebo-controlled Phase 2/3 trial), MIFI +11.5% (announced that Wells Fargo Bank has increased the Company's five-year senior secured revolving credit facility to $48 million), UVE +8.7% (co issued a statement 'correct misleading allegations and misinformation presented by Lakewood Capital'), THLD +7.1% (enters into definitive co-promotion agreement for Evofosfamide w/ Merck KGaA (MKGAY)), DBVT +6.4% (presents preclinical Data on its Viaskin technology), DEPO +4.3% (acquired the rights to Cebranopadol from Grünenthal GmbH), RAX +4.1% (prices upsized offering of $500 mln of 6.500% senior notes due 2024), RDEN +3.6% (co's President of Global Fragrances, Joel B. Ronkin, resigned to accept a position as CEO of a privately-held personal care organization), COMM +2.1% (Maverick Capital's Lee Ainslie long recommendation), CSX +2% (on CP / NSC news), AXLL +1.7% (appointed Timothy Mann as CEO), STM +1.7% (semi peer), NVS +1% (Co's unit Sandoz receives FDA acceptance for proposed biosimilar pegfilgrastim), UNP+0.8% (on CP / NSC news).

Analyst comments: BLUE +4.6% (initiated with a Buy at Goldman), FARO +3.8% (upgraded to Buy from Hold at Canaccord Genuity), KITE +3.5% (initiated with a Buy at Goldman), TASR +3.3% (upgraded to Buy from Neutral at Ladenburg Thalmann), SBH +3.1% (upgraded to Buy from Neutral at Goldman), HALO +2.9% (initiated with a Buy at Citigroup), GPRE +2.8% (resumed with a Outperform at Credit Suisse), AAPL +1.6% (added to Conviction Buy List at Goldman), CGNX +1.5% (upgraded to Buy from Hold at Canaccord Genuity), MIDD +1.5% (upgraded to Outperform from Market Perform at BMO Capital Markets), INCY +1.3% (initiated with a Buy at Goldman
)

NYT : Silver Lake Is Said to Invest $100 Million in SolarCity

Silver Lake Is Said to Invest $100 Million in SolarCity

At a time when investors have darkened on the solar power industry, a big investment firm has moved in to buy a stake in SolarCity, the biggest company in the sector.

SolarCity is expected to announce on Wednesday that it has raised $113 million in a new investment led by the clean-energy arm of Silver Lake, as well as the solar company’s chairman, Elon Musk, and its chief executive, Lyndon Rive.

The new financing is meant to be a show of confidence in SolarCity, the biggest installer of rooftop solar power systems, as questions have arisen about a recent shift in strategy. The company announced last month that it would focus on becoming cash-flow positive by slowing down its astronomical growth rate. The rate, about 85 percent a year, is expected to slow to about 40 percent.

And the company, which has reported a quarterly profit only twice since going public in December 2012, reported a bigger-than-expected loss for its third quarter.

Shares in SolarCity have fallen 32 percent since then, closing on Tuesday at $26. That values the company at about $2.5 billion, down from more than $5.2 billion at the same time last year. And the company has become the target of investors like the investment manager James Chanos who are betting that its stock will continue falling.

SolarCity’s stock was up more than 8 percent in premarket trading on Wednesday.

Others in the solar industry have struggled as well over the last several months, notably SunEdison, a rival solar energy provider that investors worry has overextended itself financially in pursuit of growth. Shares in that company have tumbled more than 80 percent over the last 12 months.

Yet the slump in the solar industry has drawn the attention of Silver Lake’s clean-energy arm, Kraftwerk, which had invested roughly $25 million in SolarCity in February 2012, before the company went public — and quadrupled its money by the time it sold off its holdings a year and a half later.

Executives at the investment firm had stayed in touch with company management, according to people briefed on the matter, asking what would be the best way to become involved again in the company.

As SolarCity’s stock tumbled over the last three weeks, Silver Lake Kraftwerk executives approached Mr. Rive and offered what they described as a show of confidence in the company: a big investment.

Under the terms of the deal, Silver Lake Kraftwerk will buy $100 million worth of notes, convertible into shares at $33 each. Mr. Musk will put in $10 million, and Mr. Rive will buy $3 million.

The convertible notes do not pay out interest, these people said, because Silver Lake Kraftwerk expects to reap its profit from what it hopes will be a resurgence in SolarCity’s stock price.

While Silver Lake Kraftwerk will not take a seat on the company’s board, it will have weekly access to Mr. Rive and have regular updates on the company’s plans and strategy.

Behind the investment firm’s move is a belief that SolarCity will remain the biggest and hardiest company in the solar power industry. The company’s shift to focus on positive cash flow signified to Silver Lake Kraftwerk an effort to prepare for the long term, becoming less of a speedy growth company and more like a reliable utility, the people briefed on the matter said.

The change in strategy could become especially important by the end of next year, when a federal tax credit that covers 30 percent of the costs of installing the company’s rooftop systems is scheduled to fall to 10 percent.

Focusing on improving cash flow is meant to allay Wall Street’s fears about how the company will finance itself after losing its significant tax advantage. And the ability of solar providers to finance themselves reliably has become a huge concern among investors, as seen by the steep slide in SunEdison’s stock price.

Moreover, according to people briefed on the deal, SolarCity remains significantly larger than its competitors combined, giving it a market share that Silver Lake Kraftwerk believes will be hard to beat.

The investment is expected to close on Dec. 7.

>>> Target reports EPS in-line, revs in-line with comps at high end of guidance;

Target reports EPS in-line, revs in-line with comps at high end of guidance; guides Q4 EPS in-line (raises low end of FY16 EPS guidance)
  • Reports Q3 (Oct) earnings of $0.86 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.86; revenues rose 2.1% year/year to $17.61 bln vs the $17.57 bln Capital IQ Consensus.
    • Q3 comps +1.9% vs. +1-2% guidance, driven by traffic growth of 1.4 percent. On a two-year stacked basis, sales and traffic growth were stronger in the third quarter than either of the first two quarters of the year.
      • Comparable sales in signature categories (Style, Baby, Kids and Wellness) grew more than 2.5 times faster than the company average.
      • Digital channel sales increased 20 percent, contributing 0.4 percentage points to comparable sales growth.
    • Third quarter gross margin rate was 29.4% vs. 29.5%, as benefits from a favorable merchandise mix and the comparison over last year's intense promotional markdowns were offset by reimbursement pressure in Healthcare and the impact of investments in quality and innovation on the company's owned and exclusive brands.
  • Co issues in-line guidance for Q4, sees EPS of $1.48-1.58, excluding non-recurring items, vs. $1.54 Capital IQ Consensus Estimate.
  • Co raises FY16 EPS to $4.65-4.75, excluding non-recurring items, from $4.50-4.65 vs. $4.72 Capital IQ Consensus.