Today - Friday, February 12, 2016
- Vonage Holdings (NYSE:VG) is up 0.4% today after a "messy" quarter, according to Oppenheimer, which cut its price target to $6.50 from a previous $8.
- The company had initially dropped off heavily, as much as 11.2% yesterday, after it supplied light forward guidance in its Q4 earnings report. But shares recovered to finish with a 1.5% gain.
- The acquisition of Icore and termination of Basic Talk hurt the guidance, says analyst Timothy Horan, but "We believe the results mask the underlying strength of the business. Business bookings in the quarter were strong, and VG is exiting unprofitable consumer products, which we believe is the correct strategy."
- The company can use free cash flow to keep making accretive acquisitions, he writes, and the company trades at a big discount to pure-play business peers.
- Shares are trading at $4.74, implying 37% upside in Oppenheimer's target. Meanwhile, FBN Securities upgraded the shares to Outperform.
- Previously: Vonage down 7.3% after guiding to lighter full-year revenues (Feb. 11 2016)
- Previously: Vonage Holdings beats by $0.01, beats on revenue (Feb. 11 2016)
- Boeing (BA +0.2%) pokes into the green, stabilizing after yesterday's 9% loss that followed a report that the SEC was investigating the company's accounting practices.
- Boeing fell further at the open after J.P. Morgan's Seth Seifman downgraded shares to Neutral from Overweight, saying that the primary risk from the probe is that it will cause expectations for cash flows from the 787 to become "impaired."
- RBC analyst Robert Stallard, who rates the shares at Sector Perform, explains that if Boeing's forecasts are accurate, the company "must generate $29B of cash on the 787 on the current program block to justify the scale of the asset on the balance sheet, and the profit booking rate in the P&L... We imagine the SEC is taking a close look at that forecast."
- However, Sterne Agee CRT keeps its Buy rating and $196 price target, saying the SEC probe will not hurt Boeing, as the company has been using the same accounting practices "for decades," is "highly audited," and it is too early in the 787's life cycle to accuse the company of misstating its costs.
- Deutsche Bank's Myles Walton also reiterates his Buy rating, seeing management's assumptions for implied profitability of the 747 and 787 as too optimistic but that "there is enough information for the market to make its own judgement through adequate disclosures."
- Thomson Reuters (NYSE:TRI) has amended its normal course issuer bid, in connection with a plan to buy back an additional $1.5B in shares.
- The amendment increases common shares that the company can repurchase by another 9.2M. That means up to 39.2M common shares (about 5% of issued and outstanding shares as of last May) can now be repurchased until May 27, 2016.
- Under the current NCIB, the company bought back about 25.64M shares between May 28 of last year and this Tuesday, for about $982.8M (averaging $38.34/share).
- Shares are up 3.6% today, to $35.85.
- Time Warner (TWX -0.2%) is wrapping up its earnings week down 10.3% over the past five days. The media giant posted disappointing revenues Wednesday morning and then joined in a sell-off afflicting a number of earnings-reporting media firms.
- It's received price target cuts in kind now from some analysts. Barrington Research maintained its Outperform rating while cutting its price target to $78. Wedbush (also Outperform) trimmed to a bit higher, $82.
- Meanwhile, Jefferies cut its target to $75, from $82, following a "sloppy" quarter, but reiterated its Buy rating as well.
- Shares are currently trading at $62.19, implying upsides of 21%-32% in those targets from today's price.
- Previously: Albert Fried still bullish on Time Warner with key films ahead (Feb. 10 2016)
- Previously: Media stocks caught in downdraft with earnings coming in (Feb. 10 2016)
- Previously: Time Warner call: HBO Now has 800K subs with more catalysts ahead (Feb. 10 2016)
- Previously: Time Warner -7.6% after movie results drive revenue miss (Feb. 10 2016)
- Primark (OTCPK:ASBFF, OTCPK:ASBFY) plans to open six stores in the U.S. this year.
- The Irish clothing retailer will focus on the Northeast in this phase of its expansion.
- Primark saw a bump in sales in the last nine weeks of 2015 after hitting a rough patch due to the late start to the cold weather season in Europe.
- USA Technologies (USAT +13%) is near a 52-week high of $3.71 after posting an FQ2 beat. The mobile payments/telemetry services firm is once more reiterating FY16 (ends June '16) guidance for revenue of $69M-$71M and 75K+ net new connection adds; the FY16 revenue consensus is at $71.5M.
- Metrics: 20K net new connections were added in FQ2 vs. 16K in FQ1 and 12K a year ago, bringing the total base to 369K. 350 new customers were added vs. 675 in FQ1 and 550 a year ago, increasing the base to 10,625. Transaction volume rose 9% Q/Q and 22% Y/Y to $138M.
- Financials: Free cash flow improved to $507K from $362K in FQ1 and -$3M a year ago. License/transaction fee revenue rose 30% Y/Y to $13.7M, and equipment sales 106% to $4.8M; gross margins for both businesses rose. GAAP operating expenses rose 31% Y/Y to $9.8M. USAT ended 2015 with $14.8M in cash, $7M in credit line debt, and $2.1M in long-term debt.
- USA Technologies' FQ2 results, earnings release
- Last month: USAT buys assets of vending payment tech firm for $5.6M
- Verizon (VZ +1.3%) is shuttering two cloud services it offers to the public, consolidating more customers in its other offerings.
- The carrier is closing Verizon Public Cloud Reserved Performance and Marketplace. Verizon Cloud Storage users won't be affected.
- It's encouraging bumped users to move to a similar offering, its Virtual Private Cloud, before April 12 or data will be "irrecoverably deleted."
- Chesapeake Energy (CHK -7.3%) remains sharply lower even after a Bloomberg report that it is is planning to pay $500M of debt maturing in March, using a combination of cash on hand and other liquidity that may include its credit line.
- CHK also is considering selling assets to shore up its capital so it can address more than $1B of debt coming due in 2017, according to the report.
- Creditors are gearing up for negotiations over how to reorganize CHK's ~$10B debt load, and at least one group of unsecured bondholders is said to have hired advisers to help evaluate the company’s assets in the U.S.
- Ten days after reporting Apple plans to unveil a new 4" iPhone (called the 5se) and the iPad Air 3 on March 15, 9to5 Mac reports Apple (AAPL +0.2%) plans to begin selling the devices online and in retail stores on Friday, March 18. Pre-orders are said to be "unlikely."
- The 5se, which could appeal to those partial to smaller iPhones, has been rumored to sport an A9 CPU and M9 motion co-processor, an 8MP rear camera and 1.2MP front camera, and Bluetooth 4.2, 802.11ac Wi-Fi, and NFC radios. Air 3 rumors have mentioned a smart connector along with an improved display, speakers, and battery life. Apple disclosed on its FQ1 call 60% of iPhone owners haven't yet upgraded to the 6/6+ or 6S/6S+.
- Separately, sources tell The Hollywood Reporter Beats co-founder Dr. Dre is starring in and producing a six-episode TV series called Vital Signs that's being bankrolled by Apple.
- The magazine adds Dre's series will likely be distributed via Apple Music (now has over 11M paid subscribers), and that it's not clear if distribution will occur via other platforms such as Apple TV and the iTunes store. The show is said to be a semi-autobiographical "dark drama with no shortage of violence and sex."
- Variety reported in September Apple has held initial talks with Hollywood execs about financing original content - a field where Netflix and Amazon have made huge investments. Multiple sites have reported Apple has hatched and (for now) suspended plans to launch an online TV service.
- Whiting Petroleum (WLL -8.9%) may have received the toughest treatment from Moody's, but the ratings agency downgrades a total of eight of companies as part of a sweeping re-examination of oil and gas producers.
- The ratings affected companies rated Ba, or the first tier of debt Moody’s considers risky enough to be a speculative investment.
- While Moody's cut WLL's debt rating by five notches, SM Energy (SM -1.2%) and WPX Energy (WPX +3.5%) both fell four notches to B2 from Ba1, and cites the likelihood of a "dramatic increase in financial leverage in 2017” with SM's cut.
- QEP Resources (QEP -0.5%) and Energen (EGN -11.6%) fell three notches to B1 from Ba1.
- Unit Corp. (UNT +2%) fell two notches to B2 from Ba3, which Range Resources (RRC +0.7%) and Newfield Exploration (NFX +2.7%) both slipped to Ba3 from Ba1.
- Ratings for Antero Resources (AR +2.7%) and Concho Resources (CXO +2.2%) were confirmed at Ba2 and Ba1, respectively.
- Linn Energy (LINE +1.8%) and LinnCo (LNCO -3.1%) are downgraded to Sell from Neutral at Citigroup, where oil and gas analyst Faisel Khan believes Linn likely will file for Chapter 11 bankruptcy after the next round of borrowing base redetermination and/or post a covenant breach.
- Citi says Linn’s hedges protecting cash flows against the steep declines in oil are starting to roll off, and that cash flows could turn negative next year.
- Khan adds that recoveries in bankruptcy for unsecured bondholders likely will be low, which is reflected in the company’s bond prices that are trading at pennies to a dollar.
- Sirius XM (NASDAQ:SIRI) is up 1.2% today, following news that its affiliate Sirius XM Canada said it was approached for a potential deal.
- The Canadian unit is in early stage talks, and Sirius XM owns about 32% of it. Meanwhile, The Globe and Mail says that top shareholders were examining a go-private deal that could value it at C$750M (about $538M).
- That's about C$4.25/share; Sirius XM Canada jumped 15.8% in Toronto to C$4.26.
- Ellie Mae's (ELLI +17.6%) big Q4 beat is accompanied by guidance for 2016 revenue of $317M-$321M and EPS of $1.79-$1.86, above a consensus of $306.6M and $1.72. Reported 2015 revenue and EPS was respectively $253.9M and $1.69.
- Q1 guidance is in-line: Revenue of $67.5M-$68.5M and EPS of $0.29-$0.31 vs. a consensus of $68M and $0.31.
- Active users of Ellie Mae's Encompass mortgage origination software rose 25% Y/Y in Q4 to 136,167, with SaaS Encompass active users rising 43% to 121,406. Revenue per average active Encompass user rose 10% to $475.
- GAAP operating expenses rose 30% Y/Y to $36.4M (compares with 39% revenue growth). Ellie Mae ended 2015 with $85M in cash and no debt.
- CEO Jonathan Corr: "We have built a powerful all-in-one mortgage management platform and network that provides one system of record for lenders to originate and fund mortgages, is deeply integrated with a broad array of vendors, investors and agencies, and allows lenders to achieve loan quality, regulatory compliance and operating efficiency." He declares his company's 2016 new business pipeline to remain "very robust."
- Ellie Mae's Q4 results, earnings release
- Kohl's (KSS +2.2%) eliminated three top positions as part of a reorganization.
- The company removed the positions of Chief Digital Officer, senior VP of store environment/development, and senior VP of communications/PR.
- The tightening comes amid dissatisfaction from activist shareholders on the performance of Kohl's.
- The U.S. oil rig count fell for the eighth consecutive week, shedding 28 to 439, according to the latest Baker Hughes survey.
- The total U.S. rig count, which includes two fewer natural gas rigs to 102, fell by 30 to 541 following last week's decline of 48.
- Compared to last year, the total U.S. rig count has fallen by 62%, with oil rigs down by 60%.
- ETFs: UNG, USO, OIL, UGAZ, UCO, DGAZ, UWTI, SCO, BNO, BOIL, DWTI, GAZ, DBO, DTO, KOLD, USL, UNL, DNO, OLO, SZO, DCNG, OLEM
- Cavium (CAVM +9.6%) CFO Arthur Chadwick discloses he bought 20K shares on Tuesday at $47.77, raising his stake to 68,172.
- The network processor/ARM server CPU developer is posting big gains a day after making a fresh 52-week low of $45.59. Shares rose two weeks ago after Cavium posted nearly in-line Q4 results and better-than-feared guidance, but soon gave back their gains as markets sold off.
- Knowles (KN -12.1%) has tumbled towards $10 following its Q4 report. Though officially beating consensus by $5.8M, Q4 revenue of $310.5M was just slightly above the guidance ($310M) given in Knowles' Jan. 13 pre-announcement.
- Knowles used the Q4 report to state it plans to sell its consumer electronics speaker and receiver component business. A $191.5M Q4 impairment charge was recorded related to the business, which carries relatively low gross margins.
- Q1 guidance, which excludes the speaker/receives ops, is for revenue of $170M-$190M and EPS of $0.01-$0.07. The pre-earnings consensus, which naturally includes the business, was at $265.3M and $0.09. On the earnings call (transcript), Knowles stated reclassifying speakers/receivers as a discontinued business will have an $87M Q1 sales impact.
- The rest of Knowles' MCE unit is expected to see revenue drop 30% ($34M) Q/Q due to "normal seasonality and lower shipments to a North American OEM as they adjust their inventory levels to reflect current market demand." That's almost certainly a reference to Apple, which offered light calendar Q1 sales guidance two weeks ago. Specialty component revenue is expected to drop 8% Q/Q following a strong Q4 led by hearing aid component sales.
- Gross margin is expected to rise to 36%-38% from Q4's 32.8% due to the speaker/receiver reclassification. However, GM for continuing ops is expected to drop 500 bps Q/Q due to lower volumes/capacity utilization and a lower ASP for "mature" products.
- Q4 sales benefited from "improving trends" at Chinese mobile OEMs. CEO Jeff Niew: "We expect growth from these customers in 2016 as they grow their share and we benefit from multi-[microphone] adoption and higher value audio solutions." Sales to Samsung fell Q/Q as expected. Kiew: "We continued to maintain strong microphone share at this customer, but sales remained weak due to mix shifts to lower-end handsets within their portfolio, as well as continued share loss experienced by this customer."
- Knowles' Q4 results, earnings release
- A decline in shares of Walt Disney (NYSE:DIS) -- down 2.4% since posting record-high earnings after Tuesday's close -- has confounded investors who saw very little to worry about in the new report.
- Hilliard Lyons shares that concern, as analyst Jeffrey Thomison sees "excessive" drops in the stock price, which is off 14.1% YTD and down 22.3% over the past three months. He's maintaining a Buy rating but trimming the two-year price target on the stock from $130 to $120 -- just short of 33% upside from today's $90.30.
- "All major segments posted revenue gains, and all but the two Media Networks businesses reported sharp operating income gains," he writes. The company's studio business saw robust gains, and "Parks & Resorts and Consumer Products/Interactive Entertainment also had stellar quarters, in our view."
- As for the ESPN subscriber worries that plague the stock: "We expect this trend to continue in the next few quarters, but eventually subside as ESPN is one of the most watched and most popular cable channels in the world."
- Previously: Media stocks caught in downdraft with earnings coming in (Feb. 10 2016)
- Previously: Disney -3.1% post-earnings as analysts trim price targets (Feb. 10 2016)
- Previously: Disney call: 'Star Wars' soars; ESPN pessimism 'more dire' then deserved (Feb. 09 2016)
- L Brands (LB -3.8%) announces that CEO Les Wexner will take over the leadership of Victoria's Secret following the departure of Sharen Turney.
- Turney took over the top position at VS in 2006 and put in 16 years at the company.
- Victoria's Secret is coming off a year where comps rose 6% to outpace the broad retail sector.
- L Brands is due to report earnings on February 24.
- Valero Energy (VLO +3.2%) files lawsuits against the EPA over the agency's latest Renewable Fuel Standard plans, in an effort to alter the policy designed to boost use of renewables in transportation fuels.
- In November, the EPA set 2014-16 targets for biofuel use below a plan laid out by Congress, the first time the regulator used a "general waiver authority" to lower the volumes, acknowledging the blend wall that oil companies say is the saturation point for use of ethanol in gasoline without a major overhaul at fuel pumps and in vehicles.
- "If EPA is going to use an extraordinary action like a waiver, then at least EPA must remove any structural impediments that prevent penetration of renewable fuels," according to VLO's counsel.
- VLO is the U.S.'s no. 1 refiner and no. 3 ethanol producer, and has long sought to move the responsibility of complying with the program further downstream.
- Rovi (ROVI +16.3%) has surged after soundly beating Q4 estimates. On the earnings call (transcript), CFO Peter Halt stated Q4 benefited from catch-up payments by AT&T and Sony - Rovi renewed its licensing deals with both companies in December, while also expanding the scope of the AT&T deal. The payments offset lower analog copy protection (ACP) licensing revenue and the end of a business relationship with a set-top licensee.
- For now, Rovi's 2016 guidance doesn't include revenue from Comcast and Dish, though Rovi expects to successfully renew its licensing deals with both firms. Excluding Comcast/Dish, the company expects 2016 revenue of $490M-$520M and $1.35-$1.65; consensus is at $570.1M and $2.01.
- Q4 details: The AT&T payment helped service provider revenue rise 18% Y/Y to $124M. Consumer electronics revenue fell 8% to $22.3M, with Rovi blaming "continuing challenges in the CE industry." Other revenue fell 32% to $1.6M due to the ACP decline.
Boosting EPS: Non-GAAP costs/expenses rose only 2% Y/Y to $82.3M thanks to an 8% Y/Y drop in headcount. No buyback occurred in Q4. Rovi ended 2015 with $325M in cash and $967M in debt.
- Rovi's Q4 results, earnings release
- Party City (NYSE:PRTY) is up 7.1% as its moves off its post-IPO low set yesterday.
- Shares of Party City are still down about 50% from where the IPO was priced last April. They trade at roughly 7X 2016 earnings estimates.
- Previously: A funny thing happened on the way to the recession (Feb. 12)
- WTI crude oil climbs as much as 12%, supported by yesterday's comments by the UAE energy minister that OPEC may be willing to cooperate on possible production cuts.
- WTI crude for March delivery recently had gained $2.67, or 10.2%, to $28.88/bbl from $26.21 yesterday, the lowest settlement since May 6, 2003; Brent crude was up by $2.78, or 8.4%, to $32.61/bbl.
- The market is taking the comments seriously "because the UAE is doing an about face [after] saying a month ago a cut was going to be over their dead body basically," says Phil Flynn, senior market analyst at Price Futures Group. "Well, maybe hell froze over."
- But Michael Cohen, Barclays head of energy commodities research, says the rally is "a lot of false hope... What's been happening over the last month is, as the market's gotten increasingly short, anytime that we see these kinds of headlines, they result in this kind of rapid change in the price."
- Three reasons why an OPEC production cut is unlikely, according to FuelFix's Matt Smith: OPEC’s tactics are working, OPEC’s production is set to rise, and we are starting to see global production cuts.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DWTI, DBO, DTO, USL, DNO, OLO, SZO, OLEM
- Activision Blizzard (NASDAQ:ATVI) is down 10.1% today following yesterday's earnings miss and a laundry list of price-target cuts from analysts.
- The company hit another milestone in its $5.9B deal to acquire King Digital (KING +0.1%), though, as the European Commission has given clearance.
- Activision had gotten a required OK from South Korea on Monday.
- The key remaining hurdle is the sanction of its scheme of arrangement by the High Court of Ireland, where King is domiciled.
- Previously: Analysts lower Activision price-target after earnings miss (Feb. 12 2016)
- Previously: Activision Blizzard tanks 16% as earnings, outlook disappoint (Feb. 11 2016)
- Previously: Activision clears King-buyout hurdle as South Korea gives OK (Feb. 08 2016)
- Having gone into earnings $0.21 above a 52-week low of $4.70, Brightcove (BCOV +16.3%) has surged after beating Q4 estimates and guiding for 2016 revenue of $145M-$147M, above a $143.9M consensus and reported 2015 revenue of $134.7M.
- 2016 EPS guidance is at $0.02-$0.07 vs. a $0.06 consensus. Q1 guidance is for revenue of $34.7M-$35.2M and EPS of -$0.01 to $0.01 vs. a consensus of $35.3M and $0.00.
- Continuing recent trends, total customers for Brightcove's online video platform fell by 115 Q/Q to 5,047, while premium customers rose by 11 to 1,863. Average revenue per premium customer rose by $2K Q/Q and $9K Y/Y to $69K. New media customers included CBS Shows and Readers Digest; new digital marketing (ad) customers included AMC, Cars.com, Ford, and Starwood.
- GAAP operating expenses fell by $100K Y/Y to $23.5M. Brightcove ended 2015 with $27.6M in cash and no debt.
- Brightcove's Q4 results, earnings release
- Intercept Pharmaceuticals (ICPT +21.9%) jumps on modest volume in apparent response to yet another rumor of a possible sale. In December, shares spiked on the rumor that Shire plc (SHPG +4.3%) was interested, but it took out Baxalta instead.
- Its lead product candidate is obeticholic acid (OCA), under development for the treatment of primary biliary cirrhosis (PBC), nonalcoholic steatohepatitis (NASH), primary sclerosing cholangitis and biliary atresia.
- The supposed allure for potential suitors is NASH, a blockbuster opportunity for the first mover. OCA flunked a Japan-based Phase 2 study in NASH, however. The FDA's action date for its review of the company's NDA for PBC is February 29.
- Previously: Intercept Pharma's NASH candidate flunks mid-stage study; shares off 15% premarket (Oct. 28, 2015)
- Previously: Intercept Pharma's obeticholic acid NDA for PBC gets Priority Review; PDUFA date is February 29 (Aug. 31, 2015)
- In its first pay-for-delay decision, the U.K.'s Competition and Markets Authority (CMA) dings GlaxoSmithKline (GSK +0.7%) for ₤37.6M ($54.4M) for its activities to delay generic competition to its antidepressant Seroxat (paroxetine) during the period 2001 - 2004.
- According to the Authority, the company paid more than ₤50M to certain firms to delay the launch of their versions, thereby depriving the National Health Service of significantly better pricing. When generics finally hit the market at the end of 2003, prices were 70% below branded Seroxat.
- Despite claims that it did nothing wrong, the company has agreed to the settlement in order to avoid costly litigation.
- The CMA also fined Generics UK (now part of Mylan (MYL -1%)) and its former parent Merck KGaA (OTCPK:MKGAF)(OTCPK:MKGAY) ₤5.8M and Actavis (AGN +0.1%) ₤1.5M as the successor to Alpharma.
- Whiting Petroleum (WLL -5.7%) is sharply lower even as most energy stocks are higher today, as Moody’s downgrades WLL's corporate family rating to Caa1 from Ba2, a drop of five notches deeper into junk territory.
- The ratings agency says its move reflects expectations of very weak cash flow-based leverage metrics in 2016 and particularly in 2017, when WLL's hedges roll off; with the company facing structurally low oil prices through 2017 and a heavy debt burden, Moody's sees a heightened risk of a debt restructuring for the company.
- Paragon Offshore (OTCQX:PGNPF +146%) says it has reached an agreement with creditors to restructure its $2.7B of debt, and plans to file for Chapter 11 bankruptcy by Sunday.
- PGN says the plan will allow it to reduce more than $1.1B of debt and loosen some covenants.
- Noble Corp. (NE +8.3%), PGN’s former parent, says it reached an agreement that would release it from all claims related to the 2014 spinoff.
- Jarden (JAH +1.3%) expects to report 2015 revenue of $8.6B off of organic revenue on the high end of its 3% to 5% range. An EPS beat is also anticipated for Q4 by Jarden.
- Forward View Consulting adjusts its estimates on Q1 of 2016 after digesting the 8-K fiing. Revenue of $2.0745B is seen and EPS of $0.16 vs. $0.13 consensus.
- Jarden is due to report on February 17.
- SEC Form 8-K
- Argentina Pres. Macri, who took office in December on a platform of repealing government intervention that had choked investments, announces a tax relief plan for mining companies operating in the country.
- The tax cut adds to Macri’s elimination of currency and capital controls that, along with falling prices, led to a $2B slump in mining exports since 2012.
- Barrick Gold (ABX -0.5%) operates the Veladero mine in Argentina, AngloGold Ashanti (AU -2.5%) owns a 92.5% stake the Cerro Vanguardia mine, and Goldcorp’s (GG +1.8%) assets in the country include a 37.5% stake in the Glencore-controlled Alumbrera (OTCPK:GLCNF, OTCPK:GLNCY) mine and its Cerro Negro mine.; other foreign mining companies with Argentine operations include Yamana Gold (AUY -0.3%) and Silver Standard Resources (SSRI +1.3%).
- CNBC reports Visa's (NYSE:V) stake in Square (SQ +8.5%), which was disclosed yesterday evening, stems from Visa's 2011 investment in the mobile card-reader/payment-processing firm.
- Visa was only now required to disclose the size of its Square stake; it didn't disclose the size of its investment in 2011. Square's IPO prospectus didn't list Visa as a major shareholder - Jack Dorsey and fellow co-founder James McKelvey were respectively reported to have 21.9% and 8.4% stakes, and VC firm Khosla Ventures a 15.5% stake.
- Of note: Visa only has a 9.99% stake in Square's Class A shares. Its total stake in the company is estimated to be around 1.1%.
- Regardless, Square remains sharply higher today, and is back above its $9 IPO price. Q4 results don't arrive until the afternoon of March 9.
- ArcelorMittal (MT +3.9%) says it expects South Africa to adopt tariffs as a safeguard against cheap imports before the end of March.
- MT's South African unit is among the country’s steelmakers who have said they are struggling to compete with an increase in subsidized Chinese supplies at prices as much as 25% below local production costs; the steelmakers are applying for import tariffs and duties against dumping while asking the government to source its requirements only from local producers.
- The unit, South Africa's largest steelmaker, says its FY 2015 loss exceeded its 2014 loss by 23x.
- Though Blucora (BCOR -14.7%) slightly beat Q4 EPS estimates (while missing on revenue), the company is guiding for Q1 EPS of $0.88-$0.96 and 2016 EPS of $0.96-$1.12, below consensus estimates of $1.07 and $1.32. Q1 is a seasonally big quarter for Blucora's TaxAct tax prep software business.
- Revenue guidance is stronger - Q1 revenue of $162.5M-$167M and 2016 revenue of $444M-$462.5M vs. consensus estimates of $163.9M and $451.5M.
- Q4 details: Blucora's Wealth Management unit, the product of the recent HD Vest acquisition, saw revenue rise 4% Y/Y to $82.1M, and op. income rise 18% to $12.2M. The Tax Preparation segment, which features TaxAct, saw revenue rise 14% to $2.9M, and op. loss grow 47% to $4.5M. Q4 is a seasonally weak quarter for TaxAct.
With the HD Vest deal closed, Blucora ended 2015 with $56M in cash, $11M in available-for-sale investments, $385M in long-term debt, and $186M in convertible debt.
- Blucora's Q4 results, earnings release
- Hasbro's (HAS -0.4%) iconic Play-Doh property turns 60 today, but the brand isn't necessarily showing its age.
- Play-Doh contributed the greatest revenue growth in the company's preschool category during Q4, outpacing Jurassic World and Star Wars. Overall, sales in the preschool category were up 17% in constant currency during the quarter.
- Interpublic Group (IPG -0.3%) posted organic revenue growth of 5.2% in a fourth quarter where it beat profit and revenue expectations along with returning cash to shareholders.
- Headline revenues declined 0.5% to $2.2B, though organic revenues rose 4.1% internationally and 6.2% in the U.S. Operating income for Q4 was $456.4M, up 5.4%, and operating margin was 20.8%, up from a prior-year 19.6%.
- "From every perspective, 2015 was a very successful year," said CEO/Chairman Michael Roth. "We continue to convert growth to profit at a high level, which led to operating margin improvement of 100 basis points in 2015."
- The company bumped its quarterly dividend up 25% and added $300M to its repurchase authorization.
- It's forecasting organic revenue growth of 3-4% for 2016 as well as an increase in operating margin of 50 basis points or better.
- Press Release
- Buffalo Wild Wings (NASDAQ:BWLD) is on watch after two more norovirus cases were linked to a restaurant in Overland Park, Kansas.
- The number of confirmed cases from the incident late in January now stands at three.
- Shares of BWLD took a tumble when the sickness reports first start piling in. Some analysts think the stock will recover a bit when the investigation is concluded.
- Black Box Intelligence reports same-store restaurant sales fell 0.8% in January.
- A broad slow-moving winter storm during the third week of January cut into sales by 10% for the industry.
- Same-store traffic was down 3.2% during the month, while average guest check was 2.4% higher.
- Varonis' (VRNS +16.7%) Q4 beat has been accompanied by guidance for 2016 revenue of $153.5M-$156.5M (+21%-23% Y/Y) and EPS of -$0.42 to -$0.49 vs.a consensus of $152.6M and -$0.46.
- Q1 guidance is for revenue of $28.3M-$28.8M (+23%-25% Y/Y) and EPS of -$0.38 to -$0.39 vs a consensus $28.6M and -$0.40.
- Top-line performance: License revenue (drives future maintenance/services revenue) rose 30% Y/Y in Q4 to $28.2M, on par with total revenue growth. 377 new customers were added vs. 363 a year ago, raising the total to ~4,350. U.S. revenue rose 36% Y/Y to $24.4M, and EMEA revenue 32% to $16.8M. Rest of World revenue fell 16% to $2.6M.
- Financials: GAAP operating expenses rose 21% Y/Y to $37M - $24.3M was spent on sales/marketing, $8.2M on R&D, and $4.5M on G&A. Varonis ended Q4 with $106.3M in cash and no debt (compares with a $415.5M market cap).
- Varonis' Q4 results, earnings release
- Rio Tinto (RIO +7.4%) says it will seek financing for its Simandou iron ore project in Guinea, despite writing down its value due to low commodity prices and funding uncertainties.
- Rio says its 2015 net loss of $866M, accentuated by a $1.1B writedown of the $20B Simandou project, will not impede the hunt for funding or the timing of the project.
- At full production at ~100M metric tons/year of iron ore, Rio expects Simandou to ~$7.5B in revenues and add $5.6B to Guinea's GDP.
- Rio says it will present a feasibility study in May outlining the cost of the project, and investors will then make a decision; until then, the timing of the venture is unclear.
- Consumer spending in the U.S. showed some strength in January to defy some of the signals being sent by equity markets.
- "The markets may have decided that the U.S. is headed for recession, but obviously no one told U.S. consumers," said econimist Paul Ashworth.
- Though data shows consumers have pulled back on some big-ticket categories to save more, there's some pockets of retail that could surprise this year - especially if gas prices move closer to $1/gallon.
- Companies that consumers interface with daily or weekly are more likely to benefit than those in the luxury discretionary space where falling 401K or profit-sharing plan values weigh a bit heavy on demand (home improvement, jewelry, high-end auto, etc), note analysts.
- Potentially sitting in that sweet space: Ross Stores (NASDAQ:ROST), TJX Companies (NYSE:TJX), Ulta Salon (NASDAQ:ULTA), Columbia Sportswear (NASDAQ:COLM), Skechers (NYSE:SKX), Nike (NYSE:NKE), Foot Locker (NYSE:FL), Dollar General (NYSE:DG), Target (NYSE:TGT), Party City (NYSE:PRTY), Churchill Downs (NASDAQ:CHDN), Isle of Capri (NASDAQ:ISLE), Penn National Gaming (NASDAQ:PENN), Boyd Gaming (NYSE:BYD), Casey's General Stores (NASDAQ:CASY), McDonald's (NYSE:MCD), Cracker Barrel (NASDAQ:CBRL)... add your own in the comments.
- SunEdison (SUNE -21.8%) is now down 32% over the last two days amid news a New York judge has granted a request by Latin American Power investors for a restraining order blocking SunEdison asset transfers pending a Feb. 25 hearing regarding whether the hold should remain in place as the investors pursue a $150M arbitration claim.
- An exception exists for asset transfers of fair value and in the ordinary course of business. The investors have argued an asset transfer hold is necessary because SunEdison could be insolvent by the time their case ends.
- SunEdison's market cap is down to $506M. The company hasn't yet announced a Q4 earnings date.
- Yesterday: Solar stocks hammered again; SunEdison tumbles after lawsuit
- Zayo Group Holdings (NYSE:ZAYO) is 8.5% lower this morning after the data infrastructure provider posted a loss for its fiscal Q2, missing on top and bottom lines.
- Adjusted EBITDA of $218.9M also fell slightly short of an expected $220.5M. The company's noting sequential growth: Revenues are up Q/Q at a 3% annualized sequential growth rate, EBITDA is up at a 7% annualized sequential rate, and net loss of $10.8M was less than the previous quarter's loss of $15.2M.
- Capex was $172.4M, and Zayo added 7,905 route miles and 813 buildings to the network. At year-end, it had $176.2M of cash, and $440.8M available under a revolving credit facility.
- Press Release
- Lukoil (OTCPK:LUKOY, OTC:LUKOF) has told the Russian government it wants to buy recently nationalized rival Bashneft, as the state decides whether to sell a controlling or minority stake in the firm to plug a budget deficit, Reuters reports.
- A sale would mark a significant reversal after more than 15 years of non-stop consolidation and nationalization of Russia's energy industry.
- Pres. Putin has ordered a privatization drive to cover a budget deficit and reportedly is considering selling stakes in oil major Rosneft (OTC:RNFTF).
- Cleveland Research reports checks with Palo Alto Networks (PANW -5.7%) channel partners point to moderating growth over the next several quarters, and less enthusiasm about potential upside. Talks point to growth expectations in the 30%-40% range vs. a prior 40%.
- With investors in a risk-averse mood, Palo Alto has fallen towards $120. The next-gen firewall/security service provider was among many high-growth enterprise tech names crushed last Friday and Monday following disappointing guidance from Tableau and LinkedIn. Today's selloff also comes after FireEye and CyberArk issued mixed guidance yesterday afternoon.
- Wells Fargo offered more upbeat commentary on Wednesday, stating resellers indicate enterprises are still in the early stages of buying newer Palo Alto products and predicting the company will gain more share as larger enterprises look to buy more products from a single vendor.
10:03 AM| 10:03 AM | 1 Comment
- KB Home (KBH +3.2%) reaches a $23.5M settlement with the Florida attorney general's office to resolve allegations of shoddy construction and deceptive business practices.
- The AG alleged KBH failed to make certain disclosures to home buyers regarding the construction of some of its homes and improperly denied warranty coverage to some homeowners who were otherwise covered.
- KBH already has spent $71M to repair affected homes, including nearly 1,700 homes needing repair from water intrusion issues arising from construction defects; under the settlement, KBH must fix more homes if they are up to 10 years old and have certain defects such as cracked stucco.
- Feb. Reuters/UofM Consumer Sentiment: 90.7 vs. 92.5 expected and 92.0 prior.
- December business inventories: +0.1% at $1,813.1B vs. +0.1% consensus; -0.1% (revised) in November.
- Sales -0.6% to $1,302.3B.
- Inventory/Sales ratio of 1.39.
- Macau casino stocks are showing strong gains after results of Wynn Resorts (WYNN +10.5%) came in better than expected.
- Popping out of the report was a solid win rate and stabilizing mass market trend in Macau. During the earnings call, Steve Wynn confirmed reports that the Chinese New Year period is off to a solid start.
- Previously: Wynn Resorts revenue read: Macau -27%, Vegas +4% (Feb. 11 2016)
- Wynn Resorts earnings call webcast
- Macau movers include Melco Crown (MPEL +5.2%), Las Vegas Sands (LVS +5.6%), and MGM Resorts (MGM +5%).
- ChipMOS (IMOS -7.2%) reports January revenue of $47.9M, +1.7% M/M and -10.7% Y/Y. The annual decline narrowed from the 17.4% reported for December and the 18% reported for the whole of Q4.
- The company adds it resumed normal operations on Feb. 6 following "only a very minor impact at its manufacturing operations in the Tainan Science Park following the earthquake earlier that day."
- Shares have made new 52-week lows. They fell last month after ChipMOS announced its U.S. and Taiwan-listed units are merging.
- Oshkosh (OSK +1.1%) says it will continue work on its U.S. Defense Department contract to build nearly 17K joint light tactical vehicles, after a federal claims court judge denied Lockheed Martin's (LMT +0.2%) request for a preliminary injunction.
- LMT had sought to force OSK to stop work on building the new trucks for the Army and Marine Corps.
- OSK had resumed work on the project last month following a three-month hiatus that ended after an earlier protest lodged by LMT with the Government Accountability Office was dismissed.
- Though IPG Photonics (IPGP -7.1%) beat Q4 EPS estimates and posted in-line revenue, the company is guiding for Q1 revenue of $200M-$215M and EPS of $0.88-$1.03, below a consensus of $225.8M and $1.09.
- The industrial laser maker is still "targeting double-digit growth" for 2016. The 2016 revenue growth consensus is at 12.6%.
- Top-line performance: IPG's core materials processing product sales rose 9% Y/Y in Q4, with strong welding/cutting application growth offsetting lower sales for marking/engraving applications. Sales for other applications fell 11%, with advanced applications weakness offsetting medical/telecom strength.
China and Japan delivered double-digit growth, and Northern and Western Europe "more moderate growth." Sales fell in Russia and Turkey. CEO Valentin Gapontsev: "We expect continued strong growth for some of our recently introduced products including the QCW lasers, high power pulsed lasers as well as the tri-focal brazing laser. The growth will be enhanced by our rich product pipeline. New product introductions for 2016 include new industrial laser systems, laser projection systems, ultra-fast pulsed, UV and mid-IR lasers."
- Financials: Gross margin fell 10 bps Q/Q and 30 bps Y/Y to 54.6%. Op. margin was flat Q/Q and down 30 bps Y/Y to 37.1%. GAAP operating expenses rose 13% Y/Y to $39M (compares with 8% revenue growth). IPG ended Q4 with $689.1M in cash and $20M in debt.
- IPG's Q4 results, earnings release
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