>>> Fresh Del Monte beats by $0.28, reports revs in-line

Fresh Del Monte beats by $0.28, reports revs in-line

  • Reports Q3 (Sep) earnings of $0.57 per share, excluding non-recurring items, $0.28 better than the single analyst estimate of $0.29; revenues rose 5.8% year/year to $936.1 mln vs the $927.4 mln single analyst estimate.
  • "We are very pleased with our financial performance in the third quarter. We saw excellent growth in our fresh-cut and avocado businesses. We hold a commanding position as the global leader in the fresh-cut space, and avocados are becoming one of our fastest growing categories. We look to aggressively capitalize on our position as a leader in avocados to meet growing customer demand..."

>>> US Gapping Up

Gapping up
In reaction to strong earnings/guidance: IDTI +9.5%, ( to acquire ZMDI for $310 mln; transaction will add $20 mln of quarterly revenues and be accretive to earnings in first full quarter following close ), BABA +8.5%, ASC +6.9%, EW +6%, SAVE +5.4%, AGEN +5.2%, CNC +5.1%, COH +4.9%, PCRX +4.8%, ROSG +4.4%, MGLN +4.2%, AGII +3.7%, BMY +3.6%, PAH+3.4%, ONE +3.2%, PFE +2.8%, UTHR +2.8%, YNDX +1.8%, MDSO +1.7%, CIGI +1.4%, MRK +1.2%, TXT +1.1%, BP +1.1%, .

M&A news: PRSN +166.6% (to be acquired by Galil Medical for $1.00/share, or ~$10.6 mln), TRIV +55% (TriVascular Technologies to be acquired by Endologix (ELGX) for $9.10/share, or ~$211 mln), RIVR +29.6% (German American Bancorp to acquire River Valley Bancorp, whereby shareholders will receive 0.770 shares of GABC stock and $9.90/share in cash per RIVR share)

Select China related stocks trading higher after BABA earnings: WBAI +5.6%, JD +4.7%, DANG +3.5%, JMEI +3%, BIDU +1.9%

Other news: UQM +24.6% (supply agreement with ITL Efficiency Corporation in China news), ASTI +18.2% (announced it is working closely with Bye Aerospace, to develop an aircraft to fill the gap between mapping and surveillance of Mars from orbital satellites and ground-based rovers), CYTK +13.9% (Amgen and Cytokinetics Incorporated (CYTK) announce top-line results from COSMIC-HF), SBBP +9.2% (RA Capital Management discloses 12.7% passive stake in 13G filing), SHPG +5.6% (announces positive topline results from OPUS-3, a phase 3 efficacy and safety study of lifitegrast versus placebo, trial met primary endpoint), AGEN +5.2% (announces that GSK's second pivotal Phase III efficacy study of its shingles vaccine candidate containing Agenus' QS-21 Stimulon-adjuvant ), YHOO +5.1% (in symp with BABA), PBMD +3.3% (announces first regulatory approval facilitating commencement of a Phase IIb clinical study of IMP321; trial initiation is expected before the end of 2015), LOOK +2.8% (shareholders approved reverse split and spin-off of co's assets and liabilities into LookSmart Group, Inc.), RMBS+2.5% (approves accelerated share repurchase program of ~$100 mln in common stock), MNGA +2.5% (reports that its cutting fuel has been selected for five major demolition projects in Florida), TWTR +1.7% (IBM announces collaboration with Twitter and The Weather Channel), TASR +1.6% (Reuters reporting that Baltimore's Police Department has begun testing body cameras with its officers) AA +1.3% (positive commentary on Mad Money)

Analyst comments: VMW +1.8% (upgraded to Buy from Hold at Drexel Hamilton)

>>> Corning misses by $0.01, misses on revs; Announces Strategic and Capital All

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Corning misses by $0.01, misses on revs; Announces Strategic and Capital Allocation Framework

  • Reports Q3 (Sep) earnings of $0.34 per share, $0.01 worse than the Capital IQ Consensus of $0.35; revenues fell 5.1% year/year to $2.45 bln vs the $2.5 bln Capital IQ Consensus.
  • "The weakening global economy, particularly in China, and the stronger U.S. dollar impacted all of our businesses," R. Tony Tripeny, senior vice president and chief financial officer, said. "We are pleased with the improving pricing environment for LCD glass, and the strong industry acceptance of Corning Gorilla Glass 4, which is growing faster than we anticipated."
Strategic and Capital Allocation Framework
  • Corning plans to deploy over $20 billion of capital through 2019 with the majority expected to come from operating cash flow.
  • Today, the Board of Directors increased the company's share repurchase authorization by $4 billion. The company also announced plans to commence a $1.25 billion accelerated share repurchase program during the fourth quarter. Additionally, the company anticipates increasing its dividend per common share by at least 10% annually through 2019.
  • By 2019 GLW will return more than $10 billion to shareholders through share repurchases and increased dividends. As part of this plan, Corning intends to target an adjusted debt-to-EBITDA ratio of 2, and to reduce its global cash to approximately $2 billion.
  • Invest approximately $10 billion in Corning's focused portfolio.
Outlook
  • Display Technologies: Corning expects its fourth-quarter LCD glass volume to be down slightly sequentially. Corning's LCD glass price declines are expected to decline less in the fourth quarter than in the third quarter.
  • Optical Communications: Corning expects fourth-quarter sales to increase by a low-to-mid-single-digit percentage rate over its sales in the comparable period a year ago.
  • Specialty Materials: Fourth-quarter sales are expected to decline at a low- teens percentage rate on a year-over-year basis.
  • Environmental Technologies and Life Sciences: Sales of both business segments are expected to decline at a mid-single-digit percentage rate in the fourth quarter versus a year ago.
  • Core equity earnings from Dow Corning Corporation are expected to be approximately $80 million.

>>> Pfizer beats by $0.09, beats on revs; raises FY15 guidance

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Pfizer beats by $0.09, beats on revs; raises FY15 guidance
  • Reports Q3 (Sep) earnings of $0.60 per share, excluding non-recurring items, $0.09 better than the Capital IQ Consensus of $0.51; revenues fell 2.2% year/year to $12.09 bln vs the $11.57 bln Capital IQ Consensus; increased 6% operationally, which includes $0.3 billion reflecting one month of Legacy Hospira U.S. Operations; 4% ex-Hospira.
    • Operational revenue growth in developed markets was driven primarily by the performance of several key products, including Prevnar 13 in adults, Ibrance and Eliquis -- all products that are early in their life cycles -- as well as from Lyrica primarily in the U.S., and the inclusion of one month of legacy Hospira U.S. operations. In emerging markets, revenues increased 5% operationally, reflecting continued strong operational growth, primarily from the Innovative Products business.
  • Co issues upside guidance for FY15, raises EPS to $2.16-2.20 from $2.04-2.10 vs. $2.08 Capital IQ Consensus; raises es FY15 revs to $47.5-48.5 bln from $46.5-47.5 bln vs. $47.56 bln Capital IQ Consensus Estimate.
  • Results reflect Pfizer's operations as well as one month of legacy Hospira U.S. operations but do not include any financial results from legacy Hospira international operations.

>>> Baxter beats by $0.12, beats on revs; guides Q4 EPS in-line



Baxter beats by $0.12, beats on revs; guides Q4 EPS in-line
  • Reports Q3 (Sep) adj. earnings of $0.41 per share, $0.12 better than the Capital IQ Consensus of $0.29; revenues fell 8.2% year/year to $2.49 bln vs the $2.46 bln Capital IQ Consensus, driven by a negative impact from foreign exchange. Excluding the impact of foreign exchange, Baxter's worldwide sales grew 2 percent in the quarter and exceeded the company's guidance of comparable year-over-year sales. Sales within the United States declined 1 percent to $1.0 billion, while international sales of $1.5 billion declined 12 percent, primarily as a result of the effects of foreign exchange.
  • Co issues in-line guidance for Q4, sees adj. EPS of $0.30-0.32 vs. $0.30 Capital IQ Consensus Estimate. For the fourth quarter, the company expects sales to decline 1 percent, excluding the impact of foreign exchange. On a reported basis, including the impact of foreign exchange, the company expects sales to decline approximately 9 percent. After adjusting for the impact of both foreign exchange and increased competition in the U.S. for cyclophosphamide, Baxter expects sales growth of 1 to 2 percent in the fourth quarter of 2015.

>>> Coach beats by $0.01, reports revs in-line with N Am comps -9.5%; reaffirms

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Coach beats by $0.01, reports revs in-line with N Am comps -9.5%; reaffirms 2016 outlook
  • Reports Q1 (Sep) earnings of $0.41 per share, $0.01 better than the Capital IQ Consensus of $0.40; revenues fell 0.8% year/year to $1.03 bln vs the $1.04 bln Capital IQ Consensus.Q3 gross margin was 67.7% versus 69.3% year ago.
  • N Am comparable store sales were down 9.5% including the impact of the Internet, which pressured total comparable stores sales by about 1.5 percentage points due to the reduction in eOutlet events. As expected, at POS, sales in North American department stores declined at a mid-teens rate versus prior year, while net sales into department stores declined to a lesser degree.
  • Fiscal Year 2016 Outlook Maintained: Coach brand revenues for Fiscal 2016 +LSD in constant currency on a 52-week basis. Based on current exchange rates, foreign currency will have an ~ 200 basis point negative impact on overall Fiscal 2016 revenue growth distorted to the first half. Gross margin ~70% on a constant currency basis, while negative foreign currency effects may impact gross margin by 80-100 basis points. SG&A expenses for the brand are anticipated to rise at a mid-single-digit rate in constant currency, driven primarily by a shift in project timing from FY15, while dollar growth is expected to be somewhat lower. Therefore, taken together Coach brand operating margin estimated to be in the mid-to-high teens. This guidance excludes expected transformation-related charges of around $50 mln, as well as Stuart Weitzman acquisition and integration related charges of around $30 mln (which primarily includes the impact of limited life purchase accounting and contingent payments) over the course of 2016. In addition, the company is forecasting Stuart Weitzman brand sales in the area of $335 mln on a reported dollar basis for fiscal 2016, driving Coach, Inc. total revenue growth to high-single digits (vs +6.7% to $4.47 bln estimate) and adding about $0.09 to earnings per diluted share, excluding items. Fiscal 2016 will include a 53rd week in its fiscal fourth quarter, which is expected to contribute ~$75-$80 mln in incremental revenue and $0.06 in earnings per diluted share to Coach, Inc.

>>> Merck beats by $0.04, reports revs in-line; guides FY15 EPS above consensus,

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Merck beats by $0.04, reports revs in-line; guides FY15 EPS above consensus, revs in-line
  • Reports Q3 (Sep) earnings of $0.96 per share, $0.04 better than the Capital IQ Consensus of $0.92; revenues fell 4.3% year/year to $10.1 bln vs the $10.08 bln Capital IQ Consensus.
  • Co issues guidance for FY15, sees EPS of $3.55-3.60 vs. $3.50 Capital IQ Consensus Estimate; sees FY15 revs of $39.2-39.8 bln vs. $39.64 bln Capital IQ Consensus Estimate.
  • Q3 KEYTRUDA sales were approximately $160 million

(DBK) Falling Euro-area real bond yields should allow the equity market to re-ra

Falling Euro-area real bond yields should allow the equity market to re-rate further: because of the ECB’s hints at further policy easing, 10-year Euro-area real bond yields fell 15bps last week and now stand at around minus 40bps, some 50bps below their August peak. With real bond yields the key determinant of the P/E, the equity market has re-rated to 15.4x 12m forward consensus EPS, up from 13.6x at the end of September. If the ECB acts in December in line with our economists’ expectations (see their report Mutual reinforcements, Oct 23), real bond yields could fall another 30bps, in our view. This would be consistent with European equities’ 12m fwd P/E rising above 16x, a 5% re-rating from current levels. We note that earlier this year, real bond yields kept falling (and the equity market rising) as long as the market was anticipating ECB action – and only started rebounding after the start of the QE program in March.

US recession worries are overdone... : in our meetings, clients’ main focus has shifted from the risk of a Chinese hard landing to that of a US recession. Some of the data do indeed look worrying: a) the inventory to sales ratio has risen to a six-year high and industrial production (IP) growth fallen to a six-year low; b) S&P 500 operating EPS growth has turned negative in Q2, something which over the past 25 years has only happened during US recessions; c) Fed surveys have continued to fall sharply. However, a sufficient number of indicators are pointing to a more benign outcome: a) the Atlanta Fed’s GDP Nowcast suggests inventory run-down subtracted 2 percentage points from growth in Q3, pointing to underlying growth of 3%; b) our economist Torsten Sløk points out that residential investment should contribute 0.75pp to GDP over the coming quarters; c) the historical relationship between the change in the oil price and developed market GDP growth points to upside risks for growth. As the drag from a stronger dollar and the inventory run-down wanes, we think US macro momentum has scope to stabilize. Our economists expect 2.4% US growth this year and 2.5% in 2016.

... yet, the market-implied date for the first Fed rate hike is set to move into H2 2016: markets expect the Fed to start hiking in May 2016. Yet, following the sharp slow-down in macro momentum in Q3 and with the ECB and the PBoC easing and the dollar rising again, we think this will be pushed into H2 2016, further easing global financial conditions. A key risk for equities would be a sharp improvement in US data which tightens financial conditions by making an early Fed hike more likely.