>>> US Close Dow-0,54% S&P-0,81% Nasdaq-0,84% Russell-0,47%

Closing Market Summary: Energy Sector Leads Stocks Lower

The stock market began the new week on the defensive with the Nasdaq (-0.8%) and S&P 500 (-0.8%) pacing the slide. The Dow (-0.5%) and Russell 2000 (-0.3%) outperformed, but the two indices also spent the bulk of the day in negative territory.

Equity indices opened the trading day with slim gains that evaporated during the first few minutes of the session. The S&P 500 slumped back below its 50-day moving average (2046) at the start and spent the rest of the day well below that level as influential sectors weighed.

Most notably, the energy sector (-2.8%) was the weakest performer with crude oil contributing to the pressure after Goldman Sachs lowered its short-term forecast for the commodity. WTI crude ended the pit session on its low, down 4.9% at $46.07/bbl.

Meanwhile, the remaining cyclical groups registered slimmer losses, but heavily-weighted financials (-0.9%) and technology (-1.3%) kept the market under pressure throughout the session.

The top-weighted tech sector spent the day in a steady retreat as components of all sizes registered losses. Large cap names like Apple (AAPL 109.25, -2.76), Google (GOOGL 497.06, -3.66), and Microsoft (MSFT 46.60, -0.59) lost between 0.7% and 2.5%, while chipmakers also lagged with the PHLX Semiconductor Index falling 2.0%.

To be fair, a small pocket of relative strength could be found among cybersecurity names after President Obama spoke about online safety, and is expected to touch on the subject once again during the State of the Union Address on January 20. Cyber-Ark Software (CYBR 38.37, +1.31) and FireEye (FEYE 35.29, +1.61) gained 3.5% and 4.8%, respectively.

Elsewhere, biotechnology names also found themselves among the outperformers, thanks in large part to Celgene (CELG 117.00, +3.33). The stock soared 2.9% after the company issued guidance for 2015 at the JP Morgan Healthcare Conference. Meanwhile, the iShares Nasdaq Biotechnology ETF (IBB 315.06, +1.74) gained 0.6% while the health care sector (-0.1%) could not stay above its flat line.

Similar to health care, countercyclical consumer staples (-0.3%) and utilities (-0.3%) outperformed while the telecom services sector (+0.6%) spent the day in the green.

Treasuries slumped overnight, but spent the day in a steady advance. The benchmark 10-yr yield fell four basis points to 1.91%.

Today's participation was roughly in-line with average as nearly 760 million shares changed hands at the NYSE floor.

Tomorrow, the Job Openings and Labor Turnover Survey will be released at 10:00 ET while the Treasury Budget for December (consensus $3.00 billion) will be reported at 14:00 ET.
  • Dow Jones Industrial Average -1.0% YTD 
  • S&P 500 -1.5% YTD 
  • Nasdaq Composite -1.5% YTD 
  • Russell 2000 -2.0% YTD

>>> Santander draws EUR 500m investment from Soros

Santander draws EUR 500m investment from Soros 

George Soros, the US-based investor, is understood to have invested EUR 500m in Banco Santander's recent EUR 7.5bn capital increase, El Mundo reported.

The Spanish-language daily cited financial sources with knowledge of the matter for the information.

Santander announced on Friday, 9 January, that it had successfully concluded the capital increase, which was directed at institutional investors.

El Mundo

(BN) Shire Hunt for Next Target Spotlights PTC to Synageva: Real M&A

Shire Hunt for Next Target Spotlights PTC to Synageva: Real M&A
2015-01-12 19:29:06.901 GMT


(For a Real M&A column news alert: SALT REALMNA <GO>.)

By Tara Lachapelle
(Bloomberg) -- Shire Plc just announced its biggest
takeover yet, and it’s already hinting at another one.
The Dublin-based drugmaker is buying NPS Pharmaceuticals
Inc. for $5.2 billion, just one year after completing the $4.2
billion purchase of ViroPharma Inc. Given the cash Shire
generates -- about $400 million per quarter on average -- this
latest transaction won’t limit the $42 billion company from
pursuing future deals, which it needs to become a leader in
biotechnology, Chief Executive Officer Flemming Ornskov said in
an interview.
Shire’s takeover criteria continue to include high-margin
treatments for rare diseases, particularly already-approved or
late-stage products. With the $1.6 billion breakup fee it
received when AbbVie Inc. dropped a plan to buy the company late
last year, Shire’s financial leverage will be relatively low,
according to CRT Capital’s Timothy Chiang.
“Their balance sheet is still relatively clean,” Chiang
said in a phone interview from Stamford, Connecticut. “M&A
remains a recurring theme.”
Here are a handful of drug developers with products in the
later stages of the testing and approval process that are valued
at $100 million to $10 billion, according to data compiled by
Bloomberg:

PTC THERAPEUTICS INC. -- The $1.8 billion company applied last
month for U.S. Food and Drug Administration approval to market
its treatment Translarna for a rare genetic muscle disorder
called nonsense mutation Duchenne muscular dystrophy. It is
already approved in the European Union and has been granted
orphan-drug status in both regions, which extends its market
exclusivity. Revenue at South Plainfield, New Jersey-based PTC
is projected by analysts to surge to more than $500 million by
2018 before topping $1 billion beginning in 2020.

SYNAGEVA BIOPHARMA CORP. -- Shares of Lexington, Massachusetts-
based Synageva have surged 53 percent since early November, when
it reported positive phase 3 study data for its drug for
lysosomal acid lipase deficiency, which can cause cirrhosis of
the liver and accelerate atherosclerosis. The $4 billion company
requested a priority review from the FDA, which would shorten
the agency’s decision time to 8 months from about a year.
Analysts forecast more than $500 million in sales starting in
2019.

RETROPHIN INC. -- A smaller candidate at just $363 million,
Retrophin has an orphan-designated treatment undergoing a phase
2 trial for focal segmental glomerulosclerosis, which can cause
kidney failure. It also has approved drugs for gallstones and
hypertension. Shares of the New York-based drug developer have
risen 18 percent in the past year.

ULTRAGENYX PHARMACEUTICAL INC. -- This $1.7 billion
biotechnology company focused on rare diseases is projected to
generate more than $500 million of annual revenue beginning in
2022. A phase 3 study is under way for its therapy for a
metabolic disorder that affects most tissues and organs, and can
cause stillborn babies and infant deaths. The Novato,
California-based drug developer also received orphan status for
treating a syndrome that causes the brain to not function
properly because it doesn’t get enough glucose.

Bigger Ambitions -- Should Shire desire a larger target,
BioMarin Pharmaceutical Inc. and Vertex Pharmaceuticals Inc. are
options. San Rafael, California-based BioMarin, valued at about
$14 billion, touched a record $98.63 Monday and has a slate of
experimental treatments for rare diseases and cancer. Revenue
may climb above $1 billion next year and then top $2 billion in
2019. At $29 billion, Boston-based Vertex would be an even
larger merger partner. It’s already generated more than $1
billion of annual sales and the stock has risen 53 percent in
the past year.

A representative for BioMarin said the company doesn’t
comment on speculation. Representatives for PTC, Synageva,
Retrophin, Ultragenyx and Vertex didn’t immediately respond to
requests for comment.

For Related News and Information:
Shire May Extend Takeovers After Buying NPS for $5.2 Billion
Drug Buying Spree Still Bustling as Pfizer Leads Hunt: Real M&A
Shire Said to Consider Bid for NPS as It Revisits Takeovers
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>
Merger Calculator: MRGC <GO>
M&A Data: MA <GO>

To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman

>>> IBM - IBM: F4Q-14 results to be under pressure with FY-1

IBM: F4Q-14 results to be under pressure with FY-15 outlook still uncertain; target lowered to $165 from $180 at Deutsche Bank; Hold (156.94   -2.16)

Deutsche Bank lowers their IBM tgt to $165 from $180 as they expect secular challenges to persist for co, pressuring F4Q-14 results and co's FY-15 outlook. Mgmt backed off of its $20 FY-15E EPS last Q, and will likely give guidance on the call which is substantially lower given challenges. Firm expects rev to continue to be under pressure from the shift to the cloud and the negative Y/Y drag from the sale of the Series x business to Lenovo, although a new mainframe cycle slightly mitigates these declines. FX headwinds are also expected to continue and lower China demand is hurting co more than its peers.

>>> SPX - Very interesting statistic on S&P 500 and pre-election years in th

Very similar background between 1935 and 2015 and very similar price action between 2007-8 and 2014-15, take a look

 

1)   S&P 500 in 2007-2008 Vs 2014-2015

 

o   Look at the similarity between the price action in 2007-2008 Vs 2014-2015.

 

§  2007-2008 = Green

§  2014-2015 = yellow

 

o   If price was to continue and look the same one would expect to see a move lower in the S&P 500.

 

 

2)   S&P 500 In Pre-Election years – comparing 1935 to 2015 ?

 

 

-    I attached the performance of the S&P500 Index since 1931

-    Using pre-elections years in the US

 

o   Blue – Pre election

o   Yellow – pre election year and year ending in 5

o   Green – years ending in 5

 

-    One can see that the S&P performed best in pre-election years ending in 5 (1935, 1955, 1975 & 1995)

-    I also attached the chart of 1935 which is very similar to 2015 in many ways

 

o   Market crashed in 1929 and in 2009

o   In 1935 the main theme was deflation which is very similar to market talk these days  

o   1935 was pre-election year and so is 2015

o   Both years ending in 5

 

-    In 1935 the S&P rallied 41%, it first fell in the first quarter 16% (equivalent for a move to 1,758) and then rallied till the end of the year, if this was the case in 2015 expect the S&P to move lower till March (16% from the top would target 1,758) before rallying till year-end.

 

-    Judging 1935 I think the S&P can move lower towards 1,700-1,750 before resuming its uptrend

 

 

 

 

 

S&P500 1935

 

S&P500 2015 ?

 

 

 

>>> Long SAP Short Sage - have a look - look pdt attached- let me know if any Q

See Full note attached

Long SAP GY EQUITY:
Last Price Price Target Stock Rating
€55.70 €63.9 Buy
I. The stock is down 10% since July 23:
1) The Market reproved SAP's communication on its acquisitions.
2) The Market blamed SAP all its cash went on acquisitions and too little organic development.
II. Since SAP has focused its strategy on the cloud SAP became the fastest growing entreprise cloud company at scale (SAP source):
1) SAP has a stronger growth than Oracle in cloud segment. 33% organic growth in cloud subscriptions and support (40% including acquisitions (Ariba, SFSF, Hybris)), compares well with pure-play
vendors. Every cloud company acquired has performed up to expectations (SFSF growing by 30% per year, Ariba 60% and Hybris 100%).
2) In September 2014 it made a strategic move by acquiring Concur, the cloud based travel leader.
3) The cloud revenues representing € 1.2 Bn in 2013 could reach € 3.7 Bn in 2017.
4) We continue to believe in SAP’s Cloud transition and its strategy to gain market share in the long-term.
III. January 20, SAP is expected to announce its consolidated earnings for the year 2014 and to communicate on its 2017/2020 targets:
1) The headline beat at Oracle after two years of mixed results is positive for the sector, and especially for SAP. We believe the strong growth in Oracle's EMEA cloud division (80% y/y)
proves a healthy demand.
2) SAP expects cloud revenues to exceed software revenues by 2018 (SAP source).
3) SAP’s management recently said they don’t foresee acquisitions and want to focus on organic growth. The 2014's operating margins should be 34.5%, compared to 2013 (32.8%).
4) SAP trades at 15.7x its earnings in 2015, 9% under its historical average and while the software sector trades at 18.5x.
IV. 1 hour ago SAP presented its fourth quarter 2014 results:
1) The results are better than the expectations.
2) The cloud subscriptions and support sales increased 68% compared to Q4 2013. The total revenu is up 7%.
SHORT SGE LN EQUITY:
Last Price Price Target Stock Rating
Gbp 466.3 Gbp 407.4 Sell
I. The stock is up 35% since mid-october (GPB 350) with a strong increase after 2014 earnings presentation (3rd December):
1) The new CEO Stephen Kelly reiterates the 2012’s strategy wich turned on the cloud business, 2015’s goals and guidances (6% of organic growth and 28% margin for 2015).
2) The confident and pragmatic message from the new management made a positive impression.
II. We continue to believe Sage is overvalued:
1) Because of the risks surrounding the company: lack of innovation, lower margins in the software sector and the competition (low barriers and bigger companies like the well-funded companies).
2) Sage reported in-line results and the growth has been constant for 18 months, but Sage still doesn’t find its target in the cloud business. The absolute numbers remain too small at 86k paying
subscriptions.
3) In March 2015 Sage’s management supposed to confirm if the business’s transition to the cloud softwares is still ahead.
4) The stock trades at 17x its earnings in 2015, 10% above its historical average.