>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: SALE +18.9%, LMNX +11.2%, NLS +11.1%, SANM +10.2%, GEL +8.9%, RNG +8.7%, PERI +7.9%, NPTN +7.2%, TZOO +5.9%, ZTS +5.1%, RTEC +4.9%, AUDC +4.5%, FN +4.2%, INCY +4%, SUP +3.7%, LB +3.4%, MBLY +3.4%, AFSI +3.3%, DISCA +3.1%, TXRH +3%, ONDK +2.7%, UNT +2%, CDE +1.9%, GNC +1.9%, CFMS +1.8%,CFMS +1.8%, SSNC +1.7%, PXD +1.7%, NRZ +1.6%, ALL +1.1%, MOS +1.1%, MCEP +1%

M&A news: KING +15.1% (to be acquired by Activision Blizzard (ATVI) for $18 per share ), NGLS +9.9% (to be acquired by Targa Resources (TRGP) in an all-stock transaction at a ratio of 0.62 TRGP shares per NGLS share), AEO +7.5% (acquires Tailgate Clothing Company for ~$11 mln; raises Q3 EPS guidance to ~$0.34), EMC +0.5% (Dell might sell $10 bln in assets to secure EMC deal, according to Reuters)

Other news: BKD +15.3% (concluded executive search process; hired Labeed Diab as COO and Lucinda Baier as CFO), ZSAN +10.2% (reported positive results from the Phase 1 clinical trial of ZP-Triptan patch for migraine), ZNGA +5.9% (KING peer), CVM +5.7% (Park West Asset Management disclosed 5.7% passive stake in 13G filing), GLUU +5.2% (KING peer),RGLS +5.2% (Regulus Therapeutics and GlaxoSmithKline (GSK) announce a Phase II study to evaluate the combination of RG-101 and GSK2878175), VRX +4.5% (Philidor to wind-down principal operations), SBBP +4% (reports COR-004 results at the Society for Endocrinology BES 2015 conference; trial met its key efficacy endpoint of IGF-1 level reduction), INCY +4% (reports findings from its Phase 1/2 study of epacadostat), GNC +1.9% (announces it has resumed market share repurchases and will repurchase an additional $200 mln before the end of 2015), MWW +1.4% (CEO disclosed purchase of 25000 shares, worth total of $155.5K; transaction date 10/30), VSR +1.2% (announces the award of two new task orders; combined value is $17.1 mln), P +1.1% (Eminence Capital discloses 5.6% passive stake in 13G filing), ISIS +1% (reports an update on ISIS-TTR Rx, including positive data from multiple clinical studies)

Analyst comments: N/
A

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: VSH -13.1%, AMAG -11.3%, QLYS -11%, NMM -10.4%, AQXP -10.3%, TNET -9.3%, S -8.5%, CGNX -8.4%, CAR -7.7%, EXLP -7.4%, DWRE -7.3%, ADM -7.3%, FIT -7.2%, TASR -6.5%, CGEN -6.2%, UBS -6.1%, AEIS -5.3%, ANIP -5.1%, UNXL -5%, OLN -4.8%, UNVR -4.8%, ODP -4.4%, GGP -3.9%, DBVT -3.6%, ARIA -3.6%,AXLL -3.5%, K -3.3%, AIG -2.9%, AXON -2.8%, NCLH -2.8%, VGR -2.7%, FTR -2.5%, DNOW -2.2%, MDCO -2.2%, ZIOP -2%, AMC -1.8%, OHI -1.5%, EMR -1.4%, KMT -1.3%, KONA -1.2%, TDOC -1%

M&A news: EJ -6.1% (receives revised non-binding 'going private' proposal for $6.64/share)


Other news: ASC -12% ( announces a 4 mln share secondary offering by selling stockholder, GA Holdings), AQXP -10.3% (reports results from Phase 2 KINSHIP trial with AQX-1125; trial did not meet primary endpoint), AREX -5.4% (to be removed from the S&P SmallCap 600), SUI -3.7% (prices offering of 3,250,000 shares of common stock at $65.00 per share), HTZ-3.3% (following CAR results), FCAU -1.8% (reported October 2015 US sales), GSK -1.4% (Pfizer (PFE) spoke to GSK about M&A deal before talks with Allergan (AGN), according to FT), AEG -0.8% (receives designation as 'systemically important' by the Financial Stability Board)

Analyst comments: CNX -3.2% (downgraded to Sell from Hold at Deutsche Bank), MDLY -2.4% (downgraded to Mkt Perform at FBR Capital), NVDA -0.7% (downgraded to Hold at Needham)
.

>>> Martin Marietta misses by $0.15, misses on revs (155.45)

Martin Marietta misses by $0.15, misses on revs

  • Reports Q3 (Sep) earnings of $2.04 per share, $0.15 worse than the Capital IQ Consensus of $2.19; revenues rose 7.8% year/year to $1.08 bln vs the $1.15 bln Capital IQ Consensus.
  • Aggregates product line volume increase of 5.4%; aggregates product line price increase of 5.4%.
  • Cash provided by operating activities for the first nine months of 2015 was $319.6 million compared with $201.6 million in the comparable 2014 period.
  • During the quarter, the company repurchased 917,000 shares of its common stock for $158 million.
  • FY15 Outlook: Sees Net sales for the Cement segment to be between $375-$400 million, generating $105-$110 million of gross profit. Sees net sales for the Magnesia Specialties segment to be between $235-$240 million, generating $80-$85 million of gross profit... Sees Aggregates-related downstream product lines to generate between $875-$925 million of net sales and $80-$85 million of gross profit... Consolidated EBITDA to range from $800-$820 million, exclusive of the loss on the California cement sale and related expenses and absent the early onset of winter weather in the company's markets.
  • 2016 Outlook: Infrastructure market to increase slightly ... Nonresidential market to increase slightly ... Residential market to experience a double-digit increase... ChemRock/Rail market to remain relatively flat.

>>> GlaxoSmithKline highlights from R&D Day; aiming to file for 20 new drugs by

GlaxoSmithKline highlights from R&D Day; aiming to file for 20 new drugs by 2020

At a presentation to investors in New York today, GSK described a portfolio of innovation, focussed across six core areas of scientific research and development: HIV & Infectious diseases, Oncology, Immuno-Inflammation, Vaccines, Respiratory and Rare Diseases. Around 40 new potential medicines and vaccines were profiled, supporting the Group's outlook for growth in the period 2016-2020 and the significant opportunity the Group has to create value beyond 2020.
  • The portfolio represents some of the latest scientific achievements from GSK's R&D organisation and its more than 1,500 company and academic collaborations. The company believes approximately 80% of the medicines and vaccines presented have the potential to be "first-in-class" with novel mechanisms of action. As a result, many of these potential medicines and vaccines may offer benefits beyond current standards of care and, in some cases, could radically transform how patients are treated.
  • In total GSK has the potential to file up to 20 assets with regulators before 2020. Seven of these assets are in advanced late-stage development (with the potential to launch before 2020) with the remainder, being in earlier development, notably in the areas of oncology, immuno-inflammation and respiratory disease. In 2016/2017 GSK has the potential to start phase II development of ~30 new molecular entities and product line extensions and to start phase III development of ~20 NMEs and PLEs.
  • GSK expects core EPS to grow at a CAGR of mid-to-high single digits on a CER basis over the five year period 2016-2020.

>>> Freddie Mac posts first loss in four years due to accounting associated with

Freddie Mac posts first loss in four years due to accounting associated with use of derivatives; Does not need a Treasury draw down

  • $475 Million Net Loss and $501 Million Comprehensive Loss; No Draw Needed From U.S. Treasury
  • $4.2 Billion Year-to-Date Net Income and Comprehensive Income
  • $96.5 Billion Returned to Taxpayers To Date.
  • $1.5 billion (after-tax), approximately, was driven by the fair value losses on derivatives used to hedge the company's interest rate risk. However, significant GAAP earnings volatility can occur as the derivative instruments are measured at fair value each period while certain hedged assets and liabilities are not.
  • $0.6 billion (after-tax), approximately, of the comprehensive loss was the result of credit spread changes on various assets and liabilities measured at fair value.
  • In the second quarter of 2015, the comparable result was an estimated $0.7 billion (after-tax) gain.
  • Net Worth of $1.3 Billion; No Draw Request or Dividend Obligation Under the Purchase Agreement
  • The company has returned $96.5 billion to taxpayers and drawn $71.3 billion from the Treasury.
  • The amount of available funding remaining under the Purchase Agreement is unchanged at $140.5 billion.
  • "For the first time in four years, Freddie Mac had a net loss in the most recent quarter. This $0.5 billion loss was caused mainly by the accounting associated with our use of derivatives, whereby the derivatives are marked-to-market but many of the assets and liabilities being hedged are not. The resulting difference between GAAP reporting and the actual underlying economics, which has created significant GAAP income volatility in our quarterly financial statements, reduced the after tax earnings in the quarter by an estimated $1.5 billion as interest rates declined significantly" said Donald H. Layton, chief executive officer. "In the prior quarter, we had the opposite result with a $1.5 billion positive contribution to earnings as rates rose significantly.".
  • "Finally, as this loss was just a fraction of the $1.8 billion net worth reserve we have under the Preferred Stock Purchase Agreement, no U.S. Treasury draw was needed, so total dividends paid remains unchanged at $96.5 billion, $25 billion more than we have received."

FT : The eurozone’s fiscally lax nations are at it again

The eurozone’s fiscally lax nations are at it again

France, Italy and Spain are slipping the EU’s budget leash, writes Tony Barber

It is Groundhog Day in the eurozone. Some governments are displaying the same artful disregard for budget rules that marked their behaviour in the euro’s first 10 years. The question is whether this fiscal mischief is dangerous. Does it make the eurozone vulnerable to another near-death experience?
Seen from Germany, fiscal recklessness was the original sin of eurozone governments and the root cause of Europe’s post-2008 debt crisis. It follows that budgetary rectitude is the remedy. Hence the EU’s 2012 fiscal compact, with its stipulation that budgets should be, except under specific circumstances, balanced or in surplus.

If the eurozone crisis had a multitude of causes, of which fiscal irresponsibility was not the most important (except in Greece), it will seem less worrying that some governments are reverting to old habits. However, even if a new round of rule-bending will not kill the eurozone, it should not be dismissed as irrelevant.
Governments that observe common rules will never trust those that evade them. The real danger, then, is that an enduring mistrust over rule-bending will prevent the eurozone from achieving the closer banking, fiscal and economic union required to survive another serious crisis.
Consider the draft 2016 budgets that eurozone governments have just sent to the European Commission. The plans of France, Italy and Spain, which account for almost half the eurozone’s economic output, make it difficult to avoid the conclusion that all three governments pretend to observe the rules while skipping round them in practice. So, once again, Germany and its northern European allies grumble about fiscal laxity and a cavalier approach to rules in southern Europe. Southern Europeans raise their eyebrows in despair at the stubborn inflexibility of the northerners. Groundhog Day, indeed.
What does the commission think? In January it published “Making the Best Use of the Flexibility Within the Existing Rules of the Stability and Growth Pact”. This pointed out that the EU’s fiscal rules are not so strict as to suppress all budgetary flexibility — but that rules are rules and governments ought to adhere to them. After the crisis, the commission wrote, “the existence and respect of the rules have been essential to restore trust and confidence”.

If respect for the rules is “essential”, the eurozone is back in trouble — because France, Italy and Spain are making their disdain for the rules obvious. France aims to cut its structural budget deficit in 2016 by 0.3 percentage points of gross domestic product less than it promised seven months ago. This might seem trivial, were it not that France has a long record of slipping its fiscal leash. In March, Paris secured a reprieve from EU finance ministers and won two more years to bring its budget deficit under the EU ceiling of 3 per cent of GDP. Italy wants to go further and loosen its budget strings. Instead of reducing its structural deficit by 0.5 percentage points, it wants to raise it by 0.4 percentage points. Spain’s 2016 budget foresees a higher structural deficit, not a smaller one as outlined under EU rules.
What do all three governments have in common? Spain will hold legislative elections in December, France holds presidential and parliamentary elections in 2017 and Italy will probably also elect a new legislature in 2017.
Naturally, the incumbents — Mariano Rajoy in Spain, François Hollande and Manuel Valls in France and Matteo Renzi in Italy — want to boost their chances of re-election. But let us be honest — it is doubtful they believed in the new fiscal rules in the first place. If, however, they imagine this is the way to make Germany sacrifice more sovereignty for the sake of an integrated eurozone, they could not be more wrong.

>>> Coty announced new organizational structure; will become effective subject t

Coty announced new organizational structure; will become effective subject to completion of Coty’s merger with The Procter & Gamble Company’s (PG) businesses

Coty's business will be organized into three divisions: Coty Luxury Division, Coty Consumer Beauty Division, Coty Professional Beauty Division. Coty will also be launching a new department, called Growth and Digital, which will be focused on accelerating growth.

Leadership: Bart Becht, Chairman and Interim Chief Executive Officer - Before joining Coty in 2011 as chairman, Mr. Becht served as chief executive officer of Reckitt Benckiser (RBGLY) from 1995 to 2011. Patrice de Talhouët, Chief Financial Officer -- Mr. de Talhouët will continue to oversee the finance organization. In addition, he will be responsible for all M&A activities as well as information systems and real estate. Prior to joining Coty, he spent seven years at Mars, Inc. in various executive finance positions and 12 years at Alcatel-Lucent (ALU). Ralph Macchio, Chief Scientific Officer. Jean Mortier will retire from Coty and will be succeeded, effective immediately, by Edgar Huber as President Global Markets. Jean has agreed to stay with Coty through June 2016 as a Special Advisor to the CEO.
As previously disclosed, the merger with P&G's Specialty Beauty Business is expected to close in the second half of calendar year 2016, subject to regulatory clearances, works council consultations, and other customary conditions.

>>> Kellogg beats by $0.01, misses on revs (70.61)

Kellogg beats by $0.01, misses on revs

  • Reports Q3 (Sep) earnings of $0.85 per share, $0.01 better than the Capital IQ Consensus of $0.84; revenues fell 8.5% year/year to $3.33 bln vs the $3.43 bln Capital IQ Consensus, due to the effect of currency translation.
  • Currency-neutral comparable net sales increased by 1.0% in the quarter as the result of growth in Latin America, Asia, Canada, and the U.S. Specialty Channels business.
  • Quarterly reported operating profit was $334 million, a decline of 8.7%. Reported results were affected by up-front costs associated with Project K and currency translation.
  • 2015 guidance: Reaffirmed previous guidance for currency-neutral comparable net sales, operating profit, and earnings per share in 2015; the company raised guidance for full-year cash flow. Currency-neutral comparable net sales are expected to remain approximately unchanged year-over-year. Kellogg expects full-year 2015 currency-neutral comparable operating profit to decrease at a rate between 2-4%.
  • 2016 guidance: Kellogg continues to expect that it will achieve its long-term target for currency-neutral comparable net sales of between 1-3%, and its long-term target for operating profit growth of between 4% and 6%.