>>> US After Hours Summary: LPSN +21.5%, WSTL +15.8%, VRTX +2.3%

After Hours Summary: LPSN +21.5%, WSTL +15.8%, VRTX +2.3%, QRVO -15.5%, WFM -11.2%, FB -3.3% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: LPSN +21.5%, WSTL +15.8%, OTEX +11.9%, SKX +11.3%, FORM +10.9%, EHTH +9.5%, HOLX +9.4%, VNDA +8.7%, PEGA +7.3%, NTRI +7.2%, ANIK +6.7%, TER +6.7%, RKUS +6.6%, WDC +5.6%, EPE +5.6%, HDSN +5.5%, CWST +4.9%, NE +4.7%, PPC +4.4%, EROC +3.9%, SSNC +3.8%, DEPO +3.2%, ATNI +3.1%, VRTX +2.3%, ESV +2.2%, ARR +2.2%, PODD +1.9%, ORLY +1.4%, INUV +1.3%, WYNN +1.1%

Companies trading higher in after hours in reaction to news: UNIS +45.5% (announced the introduction of the Imperium platform of instant patch pumps for insulin; announced $45 mln equity purchase agreement with Lincoln Park Capital and $25 mln at-the-market facility with Cantor Fitzgerald), IMNP +5.5% (announced securing of up to $21.5 million through two financing agreements), PPC +4.4% (announced Board approval for a new $150 million share repurchase program; co also reported earnings), BDBD +4.2% (Engaged Capital disclosed 9.6% active stake in 13D filing; Engaged has had discussions with management), DEPO +3.2% (announced Board rejection of the revised, unsolicited and non-binding proposal from Horizon Pharma; co also reported earnings), EXPR +2.9% (to replace Associated Estates Realty (AEC) in the S&P SmallCap 600), LDOS +2.5% (awarded an ~$4.34 bln Navy contract), JBL +1.8% (announced Board authorization for up to $100 million in share repurchases during the period from today through August 31, 2016), GLPG +1.4% (co's selective JAK1 inhibitor filgotinib meets key efficacy endpoints, shows ACR70 responses up to 39%, and maintains safety profile after 24 weeks of treatment in DARWIN 1 Phase 2B study)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: QRVO -15.5%, FMI -13%, FOE -12.1%, WFM -11.2%, CAVM -7.9%, LOCK -7.2%, THRM -6.8%, PVA -5.4%, VAR -5.4%, WLL -5.1%, PEIX -4.8%, ORC -4.1%, IXYS -4%, SPRT -3.7%, FB -3.3%, LQ -2.9%, FISV -2.2%, WPRT -2.1%, ARII -2%, CMPR -1.9%, HLS -1.9%, TTEK -1.9%, SCTY -1.7%, AAC -1.7%, NOW -1.3%, AMC -1.2%, MTGE -1.1%, CMO -1%, CLD -0.9%, MAR -0.8%

Companies trading lower in after hours in reaction to news: GNCA -8.2% (announced a public offering of common stock; size and terms not disclosed), NVIV -3.7% (disclosed entry into a Sales Agreement with Cowen to sell up to $50 mln shares of its common stock), AAC -1.7% (issued a response to a grand jury indictment, related to its investigation by the California Department of Justice; co also reported earnings), CP -1.3$ (announced $800 mln debt offering), AMAG -0.7% (announced a public offering of $200 mln of common stock)

>>> US Close Dow+0.69% S&P+0.73% Nasdaq+0.44% Russell+0.41%

Closing Market Summary: Cyclical Sectors Lead Stocks Higher

The stock market registered its second consecutive advance on Wednesday with the S&P 500 climbing 0.7% to extend its weekly gain to 1.4%. The benchmark index overtook its 100- (2,095) and 50-day moving averages (2,100) during morning action while the tech-heavy Nasdaq (+0.4%) struggled to keep pace with the broader market.

Equity indices began the day with slight gains after China's Shanghai Composite spiked 3.4% overnight, which improved risk tolerance among global investors. The Dow and S&P 500 rallied throughout the session while the Nasdaq hovered near its opening levels into the afternoon before setting new highs ahead of the close.

The tech-heavy index was pressured by biotechnology as iShares Nasdaq Biotechnology ETF (IBB 377.43, -5.41) lost 1.4% despite better than expected earnings from Gilead Sciences (GILD 115.71, +2.64). Shares of GILD spiked 2.3% while the broader health care sector (+0.2%) settled among the laggards. Similar to biotechnology, high-beta chipmakers lagged, but the PHLX Semiconductor Index was able to end the day higher by 0.1%. On the earnings front, Twitter (TWTR 31.24, -5.30) sank 14.5% after the company's bottom-line beat was overshadowed by cautious commentary regarding user growth outlook.

Although the technology sector (+0.7%) struggled in the early going, the top-weighted sector closed the gap during afternoon action, ending in-line with the broader market. Similarly, the materials sector (+0.7%) settled near the S&P 500 while the other four cyclical sectors displayed relative strength.

Most notably, the industrial sector spiked 1.2% with transport stocks fueling the move after C.H. Robinson (CHRW 69.85, +3.12) beat bottom-line estimates on light revenue. The stock surged 4.7% while the broader Dow Jones Transportation Average jumped 1.7% to extend this week's gain to 4.3%.

Elsewhere, the energy sector (+1.3%) settled ahead of industrials thanks to an intraday rally in crude oil that sent the energy component higher by 1.7% to $48.77/bbl. Also of note, Anadarko Petroleum (APC 76.28, +3.43) soared 4.7% after beating earnings expectations.

Today's advance in equities was accompanied by selling in the Treasury market that sent the 10-yr yield higher by three basis points to 2.28%. Treasuries spiked off their intraday lows after the latest policy statement from the FOMC called for more improvement in the labor market before raising rates. On a related note, the Dollar Index (97.16, +0.40) dipped immediately after the minutes crossed the wires, but rallied during the late afternoon at the expense of the euro (-0.8%), which slipped to 1.0980.

For the second day in a row, participation was ahead of average with more than 850 million shares changing hands at the NYSE floor.

Economic data released this morning was limited to the MBA Mortgage Index and Pending Home Sales:
  • The weekly MBA Mortgage Index rose 0.8% to follow last week's 0.1% uptick 
  • Pending home sales for June fell 1.8% while the consensus expected an increase of 1.0% 
Tomorrow, weekly Initial Claims (consensus 272,000) and the advance reading of Q2 GDP (consensus 2.5%) will be released at 8:30 ET.
  • Nasdaq Composite +7.9% YTD 
  • S&P 500 +2.4% YTD 
  • Russell 2000 +2.0% YTD 
  • Dow Jones Industrial Average -0.4% YTD

>>> Honeywell targeting more M&A after Elster; 'we're going to keep going'

Deal Reporter

Honeywell targeting more M&A after Elster; 'we're going to keep going'
Honeywell (NYSE:HON) will continue to pursue buys after announcing an agreement to acquire the Elster division of Melrose Industries, according to CFO Tom Szlosek.

During the conference call on Tuesday (28 July) held to discuss the deal, Morgan Stanley's Nigel Coe suggested that Honeywell still had ample balance sheet capacity, and asked if the company was done on M&A for this year or could do one or two additional deals.

"I don't think we're done," Szlosek replied. "I don't really think this changes our focus on it, the efforts that we're devoting towards it, our pipeline. We've got a number of attractive things, and we're going to keep going. So we're excited about the environment ... and we're going to keep pushing forward here."

In his opening remarks on the call, Szlosek said the purchase of Elster, which is based mainly in Mainz-Kastel, Germany, would provide runway for future organic growth and additional M&A in the combined business.

The company announced Tuesday it will pay USD 5.1bn for Elster, a provider of thermal gas solutions for commercial, industrial, and residential heating systems and gas, water, and electricity meters, including smart meters and software and data analytics solutions. Elster's consensus sales for 2015 are estimated to be USD 1.8bn. Honeywell expects the deal to close in the first quarter of 2016.

In his overview of the deal on Tuesday's call, CFO Szlosek noted Honeywell's three principal deal hurdle requirements: IRR greater than Honeywell's cost of capital; year five book ROI including amortization of intangibles and other purchase accounting items greater than 10%; and earnings accretion in year two after close.

"This acquisition will meet all three of those requirements, enabled by the expected 8%-plus cost synergies," he said.

Deal process, regulatory outlook

On the call, Barclays analyst Scott Davis if the process had been an auction.

"We termed it a public company process, but the reality is that we worked very closely with Melrose and we actually had private company-type due diligence. We're very comfortable with the access that we had, and it was a fairly lengthy process," Szlosek replied.

Asked later in the session by Bernstein's Steven Winoker why Honeywell did not buy Elster in 2012 when it was available before being acquired by Melrose, Szlosek said Honeywell had "other priorities at the time" though "it certainly was something on our screen."

At the end of the call, asked by Goldman Sachs analyst Joe Ritchie about potential antitrust hurdles and if any portfolio overlap could create uncertainty in the approval process, the CFO said Honeywell said done a careful screen in this regard.

"We don't think there are any material antitrust issues on our screen, but obviously it's a process we don't control," Szlosek said. "And you've got the big three regulators that we need to deal with, the U.S., Europe and in China. We're going to pull out all the stops to get this done as fast as we can. We've got Melrose's commitment on that as well. And we, knock on wood, hope that will not be a major factor in this."

Honeywell's financial advisors during the past half-decade have included Deutsche Bank and Rothschild. For legal, Bingham McCutchen, O’Melveny & Myers and Jenner & Block have been used on multiple acquisitions in recent years, according to the Mergermarket M&A database.

Morris Township, New Jersey-based Honeywell has a market capitalization of USD 82bn.

Telegraph : Iran Minister Says Nuclear Deal Will Create 'Opportunities' to Work

Iran and America will have “opportunities” for greater cooperation in tackling terrorism if the nuclear agreement is implemented successfully, according to the Islamic Republic's deputy foreign minister.
In an interview with The Telegraph in Tehran, Majid Takht Ravanchi cautiously laid out a path for how Iran's rapprochement with the United States might go beyond the nuclear deal.
He stressed that it was “premature” to go into detail, but the struggle against terrorism was one possible area for future cooperation.
Mr Ravanchi added that no “serious issues” stood in the way of reopening the British Embassy in Tehran, predicting that normal ties could be restored sooner than UK officials have suggested.
As the minister with special responsibility for Iran's relations with America and Europe, Mr Ravanchi helped to negotiate the nuclear agreement announced in Vienna on July 14. In the aftermath of that accord - which he called a “new baby” - he laid out Iran's view of relations with America.
”For the future, it is premature to see whether there will be possibilities for Iran and the United States to work together on regional issues. First we have to see how this new baby, if I can say, can be brought up,” he said.
“If everything goes well in the implementation of the agreement, I think there will be opportunities. I cannot say now to what extent Iran can cooperate with the West.”
• Iran nuclear deal: new generation dares to dream of brighter future
For now, Mr Ravanchi said the priority was to ensure the nuclear deal was “nurtured, protected, supported”. He added: “Suppose that this matter is being implemented properly and over time the necessary confidence is built, there are opportunities - and first and foremost is over how to deal with this problem of terrorism and extremism.”
Mr Ravanchi added: “This is an issue which is not confined to a specific region, which is not related to only one country. So these are the opportunities that can be discussed, can be elaborated, between Iran and others in the future.”
As for the timing of any future cooperation with America, Mr Ravanchi stressed how the progress of the nuclear agreement, officially known as the Joint Comprehensive Plan of Action (JCPOA), would be the decisive factor.
”It seems to us that we need four to five months before this JCPOA begins to be implemented. So we are talking about somewhere around six months to one year - and I think it is not really wise to talk about it now,” he said.
Iran has joined the struggle against the Islamic State of Iraq and the Levant (Isil), carrying out air strikes and deploying military commanders in Iraq.
Mr Ravanchi stressed how the Isil “menace” transcended national boundaries. “This is an international threat and this needs an international response. We believe that all members of the international community should come together and try to address this problem.”
President Barack Obama is trying to persuade Congress to endorse the nuclear deal. In order to reassure Republican critics, he has declared that America retains the option of using force against Iran or re-imposing sanctions.
These comments have stirred unease in Tehran, but Mr Ravanchi said Iranians understood that Mr Obama's remarks were “for domestic consumption”.
He added: “Talking about the use of force is an empty threat and does not solve any problem. But we know they have difficulties back home, they have to address the concerns being raised in the Congress. As far as reaction to those comments in Iran is concerned, I think the Iranian people know these are not something they should really worry about.”
Mr Ravanchi said: “There is a bitter history between Iran and the United States. As I said, this nuclear deal can be the foundation for possible future interaction.”
Britain closed its embassy in Tehran in 2011 after the mission was stormed and looted. The Foreign Office retaliated by expelling Iran's diplomats from London.
Mr Ravanchi made clear that both embassies would soon reopen. “There are a number of issues which need to be resolved, but I think these are not difficult issues,” he said. “We have not discussed officially when that specific date should be, but I don't think this is going to be a major problem.”
Philip Hammond, the Foreign Secretary, suggested last week that Britain's embassy in Tehran could reopen by December. For his part, Mr Ravanchi said: “I think we can do it even earlier, because these issues are not really serious issues.”