Thursday, October 27, 2016
- With after-hours trading winding down, Baker Hughes (NYSE:BHI) has given back much of a surge tied to buyout chatter with GE, as GE clarifies that an outright purchase is right out.
- "We are in discussion with Baker Hughes on potential partnerships. While nothing is concluded, none of these options include an outright purchase," GE's Chief Communications Officer Deirdre Latour tells CNBC.
- Baker Hughes had spiked as high as $65.50 (a 20%-plus gain) in late trading, but after the GE clarification, the stock is trading up 6.9% after hours.
- Nintendo's (OTCPK:NTDOY +5.8%) new Switch console won't stand alone, but be part of a bigger ecosystem with more accessories and integrating more technologies, President Tatsumi Kimishima said today.
- The company will announce pricing and a specific launch date for the console formerly known as "NX" on Jan. 13.
- Kimishima -- who took over last year after the death of Satoru Iwata -- said he was "surprised" by the stock's decline after a three-minute teaser video showed off the console's name and form factor for the first time, and said "By no means was that everything" to the system.
- Nintendo made a deliberate decision not to talk about software titles so far, he says. "One thing we still can’t show is the software lineup. We want people to touch the device in January and experience the software for themselves."
- He also declined to get more specific on sales forecasts aside from the early one where it plans to sell 2M units in the first month after it begins selling in March.
- Previously: Jefferies: Nintendo Switch an important software showcase (Oct. 20 2016)
- Vocera Communications (NYSE:VCRA) is up 12.8% after hours, after logging beats on top and bottom lines in its Q3 earnings and acquiring Extension Healthcare.
- Vocera's acquisition of the Indiana-based hospital communications firm comes at $55M in all cash. The two companies were existing partners, share more than 40 hospital customers, and will work to deepen interoperability of Vocera's platform with more than 120 clinical systems, with the help of Extension's Engage software solution for clinical integration.
- Revenue rose 28% and adjusted EBITDA was $2.6M, beating an expected $0.9M.
- Deferred revenue came to $41.8M. Cash, equivalents and short-term investments were $121.6M against no debt.
- Revenue breakout: Product, $19.3M (up 36.5%); Service, $14.5M (up 17.4%). Among product sales, device sales rose 35% and software sales rose 40.6%. In Services, maintenance and support revenues rose 12% while professional services and training rose 38.9%.
- Press Release
- Baker Hughes (NYSE:BHI) +18.5% AH following a Dow Jones report that General Electric (NYSE:GE) is in talks to buy the company.
- With a $23B market cap, BHI could go for more than $30B in a takeover, given the typical premium, according to the report, which notes that a deal would rank as GE's biggest ever.
- GE reportedly approached BHI about a takeover, but no other details are known.
- Cempra (NASDAQ:CEMP) Q3 results ($M): Revenues: 4.0 (+59.1%).
- Net Loss: (32.3) (-17.0%); Loss Per Share: (0.62) (+1.6%).
- Shares are down 15% after hours on robust volume in apparent reaction to statements made during the earnings call that appeared to imply that the India-based manufacturing facility that will make solithromycin may not be ready for an early Q1 U.S. market launch. The FDA's action dates are in late December.
- Results – revenue $2.73B (-0.7% Y/Y, $20M above estimates), EPS $1.49 ($0.39 above estimates)
- Operational highlights – mobile search MAUs 660M (+3% Y/Y), mobile maps MAUs 348M (+7% Y/Y), GMV for Transaction Services $2.9B (+49% Y/Y), activated Baidu Wallet accounts 90M, a 99% Y/Y increase
- Q4 projections – Revenue of $2.675B-$2.756B (4.6%-1.7% Y/Y decline).
- Baidu (NASDAQ:BIDU) chairman and CEO Robin Li: "We saw further improvements in customer quality in the third quarter as we continued to implement stricter standards for online marketers. During the quarter the growing popularity of our news feed product helped drive user stickiness in search and across the Baidu content ecosystem. We look forward to further innovating through initiatives such as our digital assistant Duer and autonomous cars, and to bringing new AI-based applications to market."
- Conference call
- Press release
- ShoreTel (SHOR -2.2%) has risen 3.7% after hours following fiscal Q1 results where it squeezed out a profit, beating expectations for a loss.
- Overall revenue fell 4.2% and missed, though all gross margin lines expanded for the second straight quarter. And hosted revenue became the biggest of the revenue lines.
- "Although the product revenue decline was greater than we anticipated, we have and will make the necessary cost adjustments to our financial model as our business transforms to a recurring revenue model," says CEO Don Joos.
- Revenue breakout: Product, $31.85M (down 23.3%); Hosted and related services, $35.6M (up 21.2%); Support and services, $18.8M (down 1.5%).
- For the out quarter, the company is guiding to revenue of $84M-$90M (vs. consensus for $89.6M), non-GAAP gross margin of 63.5%-64.5% and non-GAAP operating expenses of $56M-$57M.
- Press Release
- Aerie Pharmaceuticals (NASDAQ:AERI) is up 2% after hours on robust volume in response to its announcement of successful results from a Phase 3 clinical trial, Rocket 4, assessing Rhopressa (netarsudil ophthalmic solution) in lowering intraocular pressure (IOP) in patients with glaucoma or ocular hypertension. The study met its primary endpoint of showing non-inferiority (no worse than) to twice-daily timolol.
- The most common adverse event was hyperemia (excess blood in the eye) which was reported in 40% of the participants. 85% of the events were rated as mild.
- The company has withdrawn its New Drug Application (NDA) from the FDA that it submitted last quarter due to the lack of preparedness for a pre-approval inspection at a third party manufacturing site. The contract manufacturer has notified Aerie that it expects to be ready for an FDA inspection in January. Aerie intends to resubmit its NDA at that time.
- Rhopressa is a triple-action eye drop that targets the trabecular meshwork, the eye's primary fluid drain and the diseased tissue responsible for elevated IOP in glaucoma. It is known to inhibit both Rho Kinase and norepinephrine transporter.
- Results – revenue $428.61M (+39.7% Y/Y, $31.86M above estimates), EPS $1.35 ($0.30 above estimates), gross margin 49.4%, operating expenses $93.3M
- Segment revenues – Portable Audio Products increased from $257.1M in Q2 2015 to $383.4M, Non-Portable Audio and Other Products declined from $49.6M to $45.2M over the same term.
- Q3 projections – Revenue of $475M-$515M, GAAP gross margin of 47%-49% and combined GAAP R&D and SG&A expenses of $107M-$113M.
- President and CEO Jason Rhode: "Robust demand for portable audio products drove Cirrus Logic’s revenue above the high end of guidance. We are extremely pleased with our progress in the September quarter as we began volume shipments of our new digital headset solution, expanded our share with boosted amplifiers and ramped production in a mid-tier smartphone at another leading customer. With a broad portfolio of components that span the entire audio signal chain we believe we are well positioned to capitalize on a variety of growth vectors in the coming years."
- Cirrus Logic (NASDAQ:CRUS) had posted Y/Y revenue declines in each of the two quarters prior to this report.
- Conference call
- Press release
- Stryker (NYSE:SYK) Q3 results ($M): Net Sales: 2,833 (+17.1%); Orthopedics: 1,077 (+5.6%); MedSurg: 1,253 (+33.0%); Neurotechnology and Spine: 503 (+9.7%).
- Net Income: 355 (+17.9%); Non-GAAP Net Income: 526 (+10.5%); EPS: 0.94 (+19.0%); Non-GAAP EPS: 1.39 (+11.2%); CF Ops (9 mo.): 1,164 (+410.5%).
- 2016 Guidance: Sales Growth: 6.0 - 6.5%; EPS: $4.42 - 4.63: Non-GAAP EPS: $5.75 - 5.80 from $5.70 - 5.80.
- Q4 Guidance: EPS: $1.41 - 1.62; Non-GAAP EPS: $1.73 - 1.78.
- Consensus view was EPS of $1.37 on revenues of $2.8B.
- Shares are up 1% after hours on light volume.
- Century Aluminum (NASDAQ:CENX) -12.9% AH after reporting a sizable Q3 loss when a break-even result was expected, on a 26% Y/Y drop in revenue and a 21% decline in shipments.
- CENX says Q3 shipments of primary aluminum totaled 182,429 metric tons vs. 231,040 metric tons shipped in the year-ago quarter of 2015, primarily due to curtailment actions taken in H2 2015.
- CENX says the commodity price has firmed, demand remains generally good, and supply - excluding in China - remains constrained; however, value-added product premiums, especially in the U.S., are under pressure due to the "significant and growing level of imports caused by the excess production in China."
- Digital Realty Trust (DLR -4.7%) posted Q3 earnings where revenues grew 6% and beat expectations, and grew FFO and core FFO per share.
- Funds from operations were $199M, or $1.31/share vs. a year-ago $1.28/share, and core FFO came to $1.44/share, up 9% Y/Y and up 1% sequentially.
- The company signed total bookings representing $55M in annualized GAAP rental revenue ($9M from interconnection). Along with new leases, DLR signed renewal leases representing $44M in annualized GAAP rental revenue.
- Digital Realty reiterated its full-year outlook on core FFO/share at $5.65-$5.75, in line with expectations.
- Conference call to come at 5:30 p.m. ET.
- Press release
- Results – revenue $22.45B (+20.2% Y/Y, $400M above estimates), EPS $9.06 ($0.43 above estimates), operating income $7.627B (vs. $6.140B Y/Y), operating margin 34% (vs. 33% Y/Y), net income $6.326B (vs. $5.102B Y/Y)
- Segment revenues – Google (revenue $22.254B [vs. $18.534B Y/Y], operating income $6.778B [vs. $5.807B Y/Y]), Other Bets (revenue $197M [vs. $141M Y/Y], operating loss $865M [vs. $980M Y/Y])
- Stock repurchase – Up to $7B of Class C capital stock authorized.
- Both Class A (GOOGL) and C (GOOG) shares are up around 2% in after hours trading.
- Conference call
- Press Release
- Results – revenue $32.7B (+28.9% Y/Y, in line with estimates), EPS $0.52 ($0.26 below estimates), operating cash flow for trailing twelve months $14.6B (+49% Y/Y), free cash flow for trailing twelve months $8.6B (vs. $5.4B Y/Y), net sales $32.7B (+29% Y/Y), operating income $575M (vs. $406M Y/Y), net income $252M (vs. $79M Y/Y)
- Segment revenues – North America $18.874B (+26% Y/Y), International $10.609B (+28% Y/Y), AWS $3.231B (+55% Y/Y), Consolidated $32.714B (+29% Y/Y)
- Q4 projections – Net sales of $42B-$45.5B (17%-27% Y/Y growth), operating income between $0-$1.25B (vs. $1.1B Y/Y).
- Amazon (NASDAQ:AMZN) founder and CEO Jeff Bezos: "Alexa may be Amazon’s most loved invention yet — literally — with over 250,000 marriage proposals from customers and counting. And she’s just getting better. Because Alexa’s brain is in the cloud, we can easily and continuously add to her capabilities and make her more useful — wait until you see some of the surprises the team is working on now."
- Conference call
- Press Release
- AstraZeneca (AZN -3.6%) heads south on triple normal volume on the heels of its announcement that the FDA has placed a partial clinical hold on its clinical trials assessing durvalumab in patients with head and neck squamous cell carcinoma (HNSCC).
- The partial clinical hold, which suspends recruitment, was instituted so an analysis can be made on adverse events related to bleeding. The effort is part of routine safety monitoring of the Phase 3 KESTREL and EAGLE studies.
- Bleeding is a common complication in therapies to treat HNSCC due to the nature of the disease, the proximity of tumors to major blood vessels and prior treatments such as surgery and radiation.
- Durvalumab is a human monoclonal antibody that binds to programmed death ligand-1 (PD-L1) which is expressed by some tumors to evade detection by the immune system by binding to PD-1 on cytotoxic T lymphocytes. Blocking the interaction between PD-L1 and PD-1 enhances the immune system's ability to detect and kill cancer cells.
- Whiting Petroleum (WLL +5.9%) is one of the day's strongest performers among oil and gas stocks despite posting a wider than expected Q3 loss on 75% less revenue Y/Y.
- WLL says Q3 production came in at the high end of guidance and totaled 11M boe, an average of 119.9K boe/day, and sees Q4 production at 10.4M-10.8M boe.
- But Oppenheimer's Fadel Gheit sees plenty to like in the numbers, saying WLL’s operating results have "significantly improved," and the company's financial flexibility has improved on debt reduction through asset sales and equity exchanges.
- Piper Jaffray applauds WLL for higher oil production and beating analysts’ EBITDA predictions with lower capex relative to consensus expectations.
- Gheit also thinks WLL is a takeover candidate, given its reduced debt and low valuation, noting that shares have fallen 65% since the company was shopped around last year.
- BT Group (NYSE:BT) is off 2.4% today after Q2 earnings came in quite strong, adding users across the board, and the company boosted its dividend 10%.
- Revenue grew to £6B -- up 34.5%, but up 1.1% adjusting for the purchase of wireless firm EE. EPS fell 10% on an as-reported basis, though (adjusted EPS up 4%).
- BT logged monthly net additions in mobile pay of 280,000, and hit broadband net adds of 76,000. Openreach added 440,000 fiber broadband net adds, with half of those from external providers for the first time.
- "Our consumer facing lines of business have performed well, but in the enterprise space, UK public sector continues to be a challenging market," says CEO Gavin Patterson.
- Revenue breakout: Consumer, £1.25B (up 11%); EE, £1.28B (new); Business and Public Sector, £1.18B (up 15%); Global Services, £1.41B (up 16%); Wholesale and Ventures, £522M (down 9%); Openreach, £1.27B (flat).
- Press Release
- Q3 highlights – Revenue higher by 5.5% Q/Q, 1.9% Y/Y (first Y/Y revenue increase in years), gross margins up 190 bps Q/Q, 100 bps Y/Y to 35.8%.
- STMicroelectronics (NYSE:STM) president and CEO Carlo Bozotti: "Demand is currently strong in the smartphone market and we continue to see positive trends in automotive and industrial . . . While we remain mindful of macroeconomic factors and their potential impact on our customers and the semiconductor market, we see less macro risk than we did earlier in the year."
- Q4 projections – Revenue to grow 3.2% Q/Q (+/- 3.5 percentage points), gross margin to be at 37% (+/- 2 percentage points).
- Press release
- Sanchez Energy (SN +2.7%) is in talks to partner with Blackstone (BX +1%) on a deal to purchase Anadarko Petroleum's (APC +1.5%) south Texas oil and gas assets for $3B-$3.5B, WSJ reports.
- Blackstone and the P-E firm’s GSO Capital Partners credit arm likely would fund or participate in the purchase, although the details are not known, according to the report.
- Sanchez reportedly also has been in talks with Apollo Global Management (APO +1.5%) and energy-focused P-E firm EIG Global Energy Partners to participate in the bid.
- Thinly traded micro cap Proteostasis Therapeutics (PTI -31.2%) slumps on double average volume in response to the company's update this morning on lead product candidate PTI-428, a CFTR modulator in development for the treatment of cystic fibrosis.
- Results from a Phase 1 study, expected this quarter, will be delayed until Q1 2017. The reasons? The company says one participant in the healthy volunteers trial was murdered and the resultant media attention slowed recruitment. The perpetrator was allegedly a participant in another clinical trial at the same site, the only active site in the healthy volunteers arm. The company adds that Hurricane Matthew also gummed up the works because three trial sites in the CF group were in the path of the storm. The delays mean that the proof-of-concept phase will not begin until later this quarter.
- PTI-428 is called an amplifier which increases the amount of immature CFTR protein in the cell thereby providing additional substrate for correctors (e.g., lumacaftor) and potentiators (e.g., ivacaftor) to act upon.
- Tronc (TRNC -21.1%) and Gannett (GCI -14.1%) are diving together, on a Bloomberg report that a Gannett pursuit of Tronc is in doubt with banks reportedly withdrawing funding.
- Tronc shares had just moved up Tuesday on a report that Gannett was eager to get a deal done before Gannett's earnings today (didn't happen).
- Gannett has undergone a hostile pursuit for Tronc through the year, but recent reports had backchannel negotiations that got the acquisition price closer to $18.75/share. Tronc's at $13.43 and slipping.
- Several lenders have withdrawn, Bloomberg says, over concerns about the health of both businesses at the $18.75/share valuation for Tronc. But the companies are reportedly working to try to salvage the deal.
- Gannett stock has been declining through the day after its profits missed expectations.
- Black gold one week ago had topped $52 per barrel, but had backed off to as low $49 yesterday. Up 1.1% on today's session, oil currently sits at $49.72.
- Making for a nice excuse to buy was a story saying OPEC energy ministers told Russia they are willing to cut peak output by as much as 4%.
- USO +1.15%
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, UGA, USL, DNO, OLO, UHN, SZO, OLEM, OILK, OILX
- The company topped EPS estimates by $0.04, but fell a bit short on the top line. Digging deeper, Evercore ISI's Warren Gardiner says MSCI (MSCI -3.4%) is facing pressure from ETF fees, noting ETP AUM rose 12% Y/Y, but ETP revenues rose just 3.6%, with management noting the fee rate as down 9%.
- Gardiner: "We continue to think fee pressures will be a drag on revenue growth here."
- The stock's pullback today brings the decline since Sept. 1 to about 11%. Prior to that, MSCI had been more than a three-bagger over the previous three-plus years.
- Amec Foster Wheeler (AMFW -20.2%) shares slide by one-fifth after the company postponed a capital markets day that it had scheduled for next month, saying it needed more time to come up with a new strategy to combat continued weakness in the oil and gas industry, while leaving all options open for cutting its £1.1B debt.
- Jon Lewis, who took over as CEO in June, had promised to set out his vision for the company on Nov. 15 but is delaying until March 21, saying it had identified “multiple long-term opportunities [but] more work is required to develop detailed plans on how to deliver their full potential.”
- Analysts at Barclays say it is “clear that the task in hand is greater than expected,” and that AMFW “appears not to rule out any form of capital structure, again creating the specter of a potential capital exercise, or indeed rule the dividend as sacrosanct.”
- GNC Holdings (GNC -22.6%) trades sharply lower after Q3 earnings missed estimates.
- Same-store sales fell 8.5% during the quarter on a nearly even split between sales weakness at franchised stores and company-owned outlets.
- "We are focused on eliminating confusion regarding our product pricing, providing customers with an improved loyalty program, enhancing the customer experience in our stores and reinvigorating the GNC branded product innovation pipeline," says CEO Robert Moran.
- Shares of GNC are now at multi-year low.
- Previously: GNC Holdings misses by $0.12, misses on revenue (Oct. 27)
- CVR Refining (CVRR -10.3%) plunges after suspending its dividend as it reports much lower than expected Q3 earnings on a 14.7% Y/Y decline in revenue to $1.16B.
- CVRR says its Q3 RINs expense totaled $58.3M, and estimates FY 2016 RINs expense at $210M-$250M; in today's earnings conference call, CEO Jack Lipinski called RINs "an egregious tax on our business."
- Parent company CVR Energy (CVI -7.4%) released an analysis saying that some of the world's biggest oil companies, including Chevron (NYSE:CVX), BP and Royal Dutch Shell (RDS.A, RDS.B), could reap a total of more than $1B this year by selling RINs, while smaller refiners are forced to spend hundreds of millions to buy credits to comply with EPA rules.
- Energy Fuels (UUUU +3.9%) is higher after the uranium miner said it discovered an extensive system of high-grade copper mineralization at its Canyon mine in Arizona.
- The discovery comes amid a broader assessment project at the Canyon mine, which UUUU calls the best source of high-grade uranium in the U.S.
- The company says it is expanding the scope of its appraisal efforts at the facility to include copper recovery, with the potential of significantly improving the economics of the mine.
- Q3 adjusted net income of $10.1M or $0.80 per share vs. $11.7M and $0.92 earned in Q2, and $9.8M and $0.78 a year ago.
- Mortgage products revenue of $53.5M up 21% Y/Y. Non-mortgage products revenue of $41M up 60%. Non-mortgage as a percent of total revenue at 43% vs. 37% a year ago.
- Variable marketing margin of 38% vs. 36% in Q2 and 35% a year ago.
- Full-year revenue guidance of $370M-$375M is down 3% at the midpoint from previous. Variable marketing margin of $134M-$137M, or 41-44% over 2015. Adjusted EBITDA stays the same at $64M-$66M, or 57-62% above 2015.
- Previously: Tree.com misses by $0.03, misses on revenue (Oct. 27)
- TREE -15.5%
- CenturyLink (NYSE:CTL) is off a circuit-break halt up 14.9% on news it's in advanced talks to merge with Level 3 Communications (NASDAQ:LVLT), itself up 6.5%, according to The Wall Street Journal.
- A deal could be announced in coming weeks, sources told the WSJ, but no terms have been reported as yet.
- Level 3 operates one of the world's largest Internet backbones. CenturyLink, for its part, has looked to sell some of its data centers even as it has reached into hosting and cloud services.
- It would be the latest big deal in a consolidating (and still highly competitive) telecom sector.
- CenturyLink is set to report earnings Nov. 2, while Level 3 is scheduled for the morning of Nov. 3.
1:10 PM| 1:10 PM | 9 Comments
- Nano cap Immune Pharmaceuticals (IMNP +38.4%) moves up on more than a 5x surge in volume in response to its announcement that it has received guidance from the FDA on the design of a Phase 3 study to assess Ceplene, in combination with low-dose interleukin 2 (IL-2), for the maintenance of remission in patients with acute myeloid leukemia (AML).
- The company intends to submit the final study protocol in early 2017 and, if approved, to initiate the trial shortly thereafter. The primary endpoint will be overall survival (OS).
- Ceplene (histamine dihydrochloride) acts by enhancing the immunostimulatory effects of IL-2. It was developed by EpiCept and approved in the EU in October 2008. Immune merged with EpiCept in August 2013.
- National Oilwell Varco (NOV -7.2%) plunges after posting a larger than expected Q3 loss, as revenues keep shrinking in the international, offshore and capital equipment markets.
- NOV reports Q3 revenue of $1.65B, down 5% Q/Q and 50% Y/Y, after it had expected revenue to bounce 10% off the bottom due to "large projects booked earlier in the year and see continued improvement in our production-related businesses."
- Q3 revenue in NOV's rig systems segment totaled $470M, down 17% Q/Q and 69% Y/Y, with new orders of $185M compared to $363M shipped out of backlog, resulting in a $2.76B total backlog; revenue in the rig aftermarket segment fell 12% Q/Q and 44% Y/Y.
- In its earnings conference call, NOV estimated that it captured $240M-$250M of its forecast $400M in annualized cost savings during Q3; the company also said it expects Q4 rig revenues to decline in the mid single-digit percentage range, with rig margins falling a few hundred bps.
- Higher in premarket, Sirius XM (NASDAQ:SIRI) has slipped 3.5% on very heavy volume after an in-line earnings report that also featured the initiation of a dividend and an increased buyback.
- Shares were up as much as 3.3% in premarket trading after the report.
- Net income rose 16%, to $194M, and EBITDA of $492M was up 10% and beat an expected $475.5M.
- It added 345,000 net subscribers to inch closer to 31M total. Self-pay net adds were 385,000, bringing that total base to 25.5M.
- Average revenue per user grew 3% to $13.04; combined with the increase in subs, revenues were up 9.4% overall to a record $1.3B.
- The company launched a quarterly dividend of a penny per share, and increased its buyback authorization by $2B. That brings total authorization to $10B, of which Sirius XM has repurchased $7.6B worth.
- And it boosted revenue guidance for 2016 to about $5B and forecast full-year EBITDA of $1.85B (both in line with expectations). It sees full year net adds of about 1.7M subscribers, about 1.6M self-pay subscribers, and free cash flow approaching $1.5B.
- Press Release
- Praxair (PX -1.7%) is lower despite reporting generally in-line Q3 results, as it offers downbeat Q4 guidance amid soft manufacturing activity in the U.S. and elsewhere.
- PX now sees Q4 EPS of $1.36-$1.43, vs. $1.46 analyst consensus estimate, and forecasts FY 2016 EPS of $5.44-$5.51, compared with previous guidance for $5.45-$5.60.
- CEO Steve Angel noted "strong demand in more resilient food, beverage and healthcare markets, but persistent weakness from industrial sectors like manufacturing and upstream energy."
- Suncor Energy (SU +6%) is surging after reporting better than expected Q3 earnings on strong upstream production, lower operating costs and record crude throughput at its refineries.
- SU says its oil sands assets successfully returned to normal production rates following Q2's forest fire shut-in, resulting in total oil sands production of 433.7K bbl/day, while oil sands cash operating costs fell 18% Y/Y to $22.15/bbl, lowest in more than a decade.
- Syncrude production soared to 183.8K bbl/day from 28.1K in the prior-year quarter, as a result of additional working interests acquired in 2016 and improved upgrader reliability; Syncrude cash costs fell to $27.65/bbl from $41.65 a year ago.
- Refinery crude throughput improved to a record 465.6K bbl/day in Q3 from 444.8K in the prior-year quarter.
- Also, SU raises its full-year total production guidance to 610K-625K boe/day, up from its previous estimate of 585K-620K boe/day, and cuts its capital spending budget to C$5.8B-C$6B from previous guidance of C$6B-C$6.5B.
- Nokia (NYSE:NOK) has tumbled in U.S. trading, down 7.6% and setting a three-year low today, after reporting Q3 earnings that missed on revenues as the company tried to ride out a weak market while holding out for synergies from its Alcatel-Lucent merger.
- Revenues slipped 7% and missed expectations, as the Networks business fell 12%.
- Net sales were weak in Mobile Networks (within Ultra Broadband Networks) and made up 80%f the decrease in the Networks business, it said. "IP Networks and Applications also contributed to the decrease. This was partially offset by growth in Fixed Networks within Ultra Broadband Networks."
- "Nokia delivered solid third-quarter results," said CEO Rajeev Suri, though analysts largely said the report wasn't strong. The company targeted slight sequential improvements in Networks sales and operating margin and achieved those, he said.
- But the road is set for similar declines ahead: "As we look forward, we expect [market] conditions to stabilize somewhat in 2017, with the primary addressable market in which Nokia competes likely to decline in the low single digits for that year."
- Press Release
- Infinera (NASDAQ:INFN), reporting Q3 results yesterday and kicking off an upcoming wave of earnings for the segment, realized an expected 20% revenue fall-off, continuing to note a challenging environment and weak demand. Its shares are lower today by 8%.
- Others in the space – Acacia Communications (ACIA -11.8%), Oclaro (OCLR -9%), NeoPhotonics (NPTN -7.2%), Fabrinet (FN -5.3%), Ciena (CIEN -3%), Finisar (FNSR -5%) (strong Q3 reported in September), Lumentum Holdings (LITE -2.7%), Applied Optoelectronics (AAOI -4.6%)
- According to the WSJ, the SEC has informed a number of companies that they are being investigated over their use of non-GAAP metrics, the latest in a number steps the agency is taking ti discourage their use.
- Though the two companies were not mentioned in the Journal report, Gotham City Research suggests, MDC Partners (MDCA -8.6%) and Endurance International Group Holdings (EIGI flat) are two that would fit the description of what the SEC is looking at.
- In other MDC news, now-former bull Albert Fried & Co. downgrades the stock.
- Cliffs Natural Resources (CLF -16.9%) plunges after the reported a surprise Q3 loss and lower than expected EBITDA, driven by weaker than expected U.S. iron ore sales volumes and higher costs.
- CLF says its Q3 U.S. iron ore production volume fell to 3.86M metric tons from 4.1M in the year-ago quarter, but sales margins rose to $12.57/metric ton from $8.70; Asia-Pacific iron ore production was essentially flat at 2.97M metric tons vs. 2.93M a year ago, and sales margins jumped to $6.75/metric ton from $2.20.
- CLF reiterates its U.S. full-year sales projection of ~18M metric tons, at cash production costs of $50-$55/metric ton; in Asia-Pacific, CLF expects sales volume of 11.5M metric tons at cash production costs of $25-$30/metric ton.
- The stock's had more than a 50% run higher over the last four months, so investors can be forgiven for taking some profits following Radian's (RDN -2%) earnings beat this morning.
- BTIG's Mark Palmer says the beat was possible thanks to revenue of $321M exceeding not only the Street's estimate of $302M, but his own bullish forecast of $308.5M. The stage is set for future growth, he says, thanks to a 40% Y/Y rise in new insurance written to $15.7B.
- Palmer reiterates his Buy rating and $22 price target (56% upside) - based on 12x 2017E EPS of $1.80. Even after the recent rally, the stock trades for just 1.07x book value vs. the 1.7x average of the last three years.
- Previously: Busy quarter for Radian (Oct. 27)
- While no agreement with California has been reached, management believes good progress has been made and the $25M reserved so far (including $10M more reserved in Q3) should be adequate. A settlement with CA would greatly cut into third-party monitor fees, which in Q3 summed to $15M.
- Faris notes settlement accruals and monitor expenses cost the company more than $30M in Q3 vs. reported operating expense of $271.7M, and reported pretax profit of $2M.
- On the East Coast, Ocwen (OCN +22.7%) expects within weeks to formally request the NYDFS's ban on the company acquiring MSRs be lifted.
- Not all is positive though as the lending segment had a "disappointing" quarter with just $3.6M of pretax income despite originations rising 8%. Faris expects better results in the future as progress is made on rolling out improved technology. He also notes the company is reaching only about 25% of customers that can benefit from lower rates or payments. "We’ve intentionally ramped up slowly and carefully to maintain quality in an environment with intense regulatory scrutiny on the entire mortgage market."
- Earnings call presentation slides
- Previously: Profit returns to Ocwen Financial; +12% after hours (Oct. 26)
- There is some evidence that Buffalo Wild Wings (BWLD +5.3%) is paying attention to the unsolicited advice from activist investor Marcato Capital by focusing on margins.
- "Our goal is to achieve a 20% restaurant level margin by the end of 2018 and we've identified several opportunities in cost of sales, labor, and operating expenses for 2017," CEO Sally Smith said on the earnings call yesterday. Restaurant-level margin was 17.6% in Q3 and is 18.3% YTD.
- "We negotiated reduced pricing on our boneless wings and other chicken that will improve our cost of sales as a percent of restaurant sales by 20 basis points in 2017," she added.
- "On cost of sales, we're focusing on waste reduction at the restaurant level and this will improve cost of sales as a percentage of restaurant sales by another 20 basis points," Smith pointed out.
- Here's the Marcato Capital letter to BWLD as a refresher.
- Earnings call transcript
- Shares of Build-A-Bear Workshop (BBW +14.1%) rocket higher after the company says it's entering Q4 with momentum.
- During Q3, Build-A-Bear stores remodeled in the Discovery format in North America saw an increase in sales of 9%.
- The chain expects to end the year with 345 stores, including 55 in the Discovery format.
- Management says there is no timetable on the strategic review going on at the company.
- Psychemedics (PMD +22.6%) Q3 results ($M): Revenues: 11.8 (+66.2%); Net Income: 2.7 (+240.0%); EPS: 0.49 (+226.7%).
- $0.15 dividend declared.
- The company specializes in abused drug testing on hair instead of urine or blood. Traces of drugs are permanently embedded in the cortex of the hair in proportion to their use over time.
- WEX (WEX +3.8%) reports Payment processing revenue rose 9.7% to $146.18M in Q3.
- Fleet Solutions revenue advanced 29.3% to $184.76M.
- Travel and Corporate Solutions revenue soar 12.1% to $63.32M.
- Health and Benefit Employee Solutions revenue rose 48.4% to $39.68M.
- Average number of vehicles serviced increased 6% to ~10.3M.
- Fleet solutions payment processing transactions expanded 15% to 102.9M.
- Total travel and corporate solution card purchase volume up 23% to $7.1B.
- Operating margin rate squeezed 1100 bps to 19%.
- Q4 Guidance: Revenue: $272M to $282M; Adjusted net income: $52M to $55M; Adjusted EPS: $1.20 to $1.27; Shares outstanding: ~43M.
- FY2016 Guidance: Revenue: $1B to $1.01B; Adjusted net income: $186M to $189M; Adjusted EPS: $4.53 to $4.60.
- Rush Enterprises (RUSHA +11.8%) trades higher after a healthy Q3 earnings beat amid a sluggish business environment for the company.
- "We are seeing a positive impact from our broad-reaching expense reductions implemented earlier this year and will remain diligent in controlling expenses," says CEO Rusty Rush.
- Rush's Class 8 sales fell 32% during the quarter and accounted for 6.5% of the U.S. Class 8 truck market.
- Previously: Rush beats by $0.07, beats on revenue (Oct. 26)
- Shares of Rush hit a 52-week high of $26.22 earlier.
- Rates are up across the globe again today, with the 10-year U.S. Treasury yield looking like it's ready for another assault on 2% - up 7 basis points on the session to 1.865%.
- Alongside a sharp move lower in REITs, the utility sector (XLU -0.9%) is facing a rough go of it.
- In the green though is the banking sector - (KBE +0.2%), (KRE +0.4%) - which has been awaiting a real move higher in rates for years. A big move on the long end while short rates hold (for now) is an added boost as it widens the yield curve.
- Bank of America (BAC +0.4%), Citigroup (C +0.4%), JPMorgan (JPM +0.4%), Wells Fargo (WFC +0.5%), PNC Financial (PNC +0.5%), Fifth Third (FITB +0.9%), U.S. Bancorp (USB +1.2%), BB& T(BBT +0.7%)
- Other high-yield beneficiaries include: MetLife (MET +0.9%), Lincoln Financial (LNC +1.3%), Schwab (SCHW +0.4%), Voya Financial (VOYA +0.9%).
- ETFs: XLF, FAS, FAZ, XLU, UTG, IDU, VPU, UYG, VFH, GUT, BUI, IYF, BTO, FUTY, IYG, FNCL, SEF, RYU, FXO, UPW, RYF, FXU, FINU, RWW, SDP, XLFS, FINZ, FUGAX, JHMF, FAZZ, FNCF, JHMU, UTLF
- The 10-year Treasury yield is making new bear-cycle highs today, up another seven basis points to 1.86% - its perkiest level since May. The move up in yields is global, with U.K. 10-years up 11 bps and Germany's up 8.5 bps.
- Earlier today, the U.K. reported Q3 GDP growth of 0.5% - far better than what had been predicted post-Brexit.
- Facing at least a little more competition in the yield department, equity REITs have turned sharply lower, with VNQ down 2.1%, and IYR off 1.8%. Mortgage REITs (REM -0.6%) are faring a little better as solid Q3 earnings begin to roll in.
- The major U.S. averages have given up early gains and turned red, led by the S&P 500 and Nasdaq, both off 0.25%.
- Individual equity REITs: Verreit (VER -2.2%), Welltower (HCN -2.4%), Equity Residential (EQR -1.6%), Omega Healthcare (OHI -3.2%), Simon Property (SPG -3.2%), General Growth (GGP -2.6%), Public Storage (PSA -2.9%), Gramercy Property (GPT -1.9%), Washington Real Estate (WRE -1.2%), Hersha (HT -2.9%), Sunstone Hotel (SHO -1.4%), Stag Industrial (STAG -2%)
- Mortgage REITs: AGNC Investment (AGNC -1.5%), Annaly (NLY -0.7%), Two Harbors (TWO -0.4%), Capstead (CMO +0.3%)
- ETFs: VNQ, IYR, MORL, REM, MORT, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, DRA, FRI, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX, RORE
- Statoil (STO +2.2%) is higher despite posting a surprise loss for the second quarter in a row and cutting its 2016 capex by another $1B.
- STO says Q3 profits were hurt in part because it produced less oil and gas than normal as it carried out extensive maintenance work on its operations.
- But investors appear to be heeding the advice of Bernstein analyst Oswald Clint to “ignore the earnings miss,” and focus instead on cash and the potential for further expansion with lower spending and costs.
- STO says it will cut full-year capex to $11B from $12B and its exploration spending to $1.5B from $1.8B.
- Produced 1.8M boe/day during Q3 vs. 1.91M boe/day in the year-ago quarter, but maintains its target of annual organic production growth of 1% during 2014-17.
- STO says it lowered its net-debt-to-capital-employed ratio to 30.3% at the end of September from 31.2% three months earlier, as it seeks to drop below 30%.
- Analysts are in with their assessments on Tesla Motors (NASDAQ:TSLA) following the company's Q3 earnings report and updates on initiatives.
- There is a general consensus that Tesla's ability to record a profitable quarter increases the odds the SolarCity (SCTY +5.3%) merger will be approved, although some skepticism and nit-picking can also be found.
- "It was a kitchen sink effort to get the third quarter to look good ahead of the deal vote," says CFRA Research analyst Efraim Levy.
- "Management asserted that it would not need to raise cash, but our model forecasts Tesla ending 2018 with $575 mln, which we think is too close for comfort," maintains Cowen analyst Jeffrey Osbourne.
- "We cannot help but feel that there are some comparability issues relative to the firm’s reported revenue, gross profit, and net income relative to even those analyst estimates included in consensus," adds JPMorgan to the discussion.
- Baird doesn't see it as nearly that gloomy, backing an Outperform rating and $338 price target with major catalysts on the calendar (solar roof event, SCTY vote, Gigfactory media tour, Model X reviews).
- Other investment firms backing their Buy ratings include Credit Suisse ($280 PT), Dougherty ($500 PT), Sterne Agee ($300 PT) and Stifel Nicolaus ($325 PT).
- Previously: Tesla beats by $0.05, misses on revenue (Oct. 26)
- Previously: Tesla Motors stays on track with delivery guidance (Oct. 26)
- Previously: Tesla talks Model 3 ramp during earnings call (Oct. 26)
- Shares of Tesla are up 4.7% at last check and traded as high as $213.70 today.
- Bemis (BMS -2.4%) reports U.S. Packaging net sales fell 4.7% to $657.6M in Q3.
- Global Packaging net sales grew 12.6% to $369.6M (-6% on a constant currency basis).
- Gross margin rate improved 10 bps to 21.9%.
- Adjusted operating margin rate +90 bps to 11.7%.
- FY2016 Guidance: Adjusted EPS: $2.65 to $2.70; Cash from operations: $425M to $465M; Capex: ~$200M.
- Dr Pepper Snapple (DPS +1.2%) expects full-year EPS to fall in a range of $4.32-$4.40 vs. $4.20-$4.30 prior and $4.37 consensus.
- The company reports a 2% gain in carbonated soft drink volume for Q3 to outpace growth in fountain and bottle can businesses.
- Management was quiet about the rumored acquisition of Bai Brands.
- Previously: Dr Pepper Snapple beats by $0.06, beats on revenue (Oct. 27)
- Previously: Dr Pepper Snapple eyes Bai Brands (Oct. 26)
- Thinly traded nano cap Aeterna Zentaris (AEZS -8.6%) slumps on modestly higher volume in response to its announcement of a direct equity offering of 2.1M units at $3.60 to a single institutional investor.
- Each unit consists of one share of common stock and 0.45 of a three-year warrant to purchase one share of common at $4.70.
- Closing date is November 1. Net proceeds of ~$6.6M will fund the preparations and submissions of NDAs for Macrilen and Zoptrex, working capital and general corporate purposes.
- Yesterday's close was $4.18.
- Tempur Sealy (NYSE:TPX) is up 11.4% after delivering a profit beat with its Q3 report.
- The company's gross margin rate improved 260 bps to 43.5% and EPS was 19% higher than a year ago, despite a drop in revenue.
- Tempur kept a tight lid on expenses during the quarter, with both selling/marketing costs and G&A spending lower than a year ago.
- Shares of TPX are still far away from their 52-week high of $82.61.
- Previously: Tempur Sealy beats by $0.11, misses on revenue (Oct. 27)
- Pinnacle Foods (PF +0.4%) reports net sales rose 19.3% in Q3, primarily due to 19.0% benefit from the Boulder Brands acquisition, as well as higher net price realization of 0.2% and increased volume/mix of 0.1%.
- North America Retail net sales grew 0.8% to $558.5M,reflecting increased volume/mix of 0.5% and higher net price realization of 0.3%.
- Segment sales: Birds Eye Frozen: $308.94M (+4.1%); Duncan Hines Grocery: $249.55M (-3%); Specialty Foods: $79.41M (-3.4%); Boulder Brands: $120.93M.
- Gross profit rate expanded 230 bps to 30.1%.
- Adjusted gross profit rate up 120 bps to 30.2%.
- Adjusted EBIT margin rate increased 70 bps to 17.7%.
- FY2016 Guidance: Boulder Brands net sales: $460M to $480M; Interest expense: ~$140M; Adjusted Diluted EPS: $2.13 to $2.15; Diluted share count: ~118; Capex: $110M to $120M.
- Citigroup upgrades Hershey (HSY +0.5%) to a Buy rating after having the food stock set at Neutral.
- The investment firm reduces its price target on Hershey to $110 from $115 to adjust for the depressed trading level.
- Still lying underneath the company's issues with the Hershey Trust is speculation of a merger with Mondelez International off in the future.
- Along with much of the rest of the REIT sector, Boston Properties (NYSE:BXP) has been in a downtrend since about Labor Day, in part thanks to a sharp rise in interest rates.
- The stock fell yesterday despite the company reporting an inline quarter and boosting full-year FFO guidance to $5.97-$5.99 per share from $5.92-$5.99.
- Nevertheless, Stifel bails, downgrading to Hold from Buy. Shares are down 2.6% today.
- Unable to take the pain from its Underperform rating on Cullen/Frost Bankers (CFR +1.7%), Macquarie upgrades to Neutral.
- Banged down late last year and early in 2016 on the energy crash, CFR has gained about 80% since bottoming out in late January.
- The lender yesterday reported a sizable Q3 earnings beat, with provisions of $5M vs. $9.2M in Q2. Net charge-offs in Q3 of $5M were down from $21.4M in Q2.
- Price target – UBS (Buy) moves from $86 to $93, Pacific Crest Securities (Overweight) from $80 to $100, Cowen and Company (Outperform) from $95 to $100 and RBC Capital Markets (Top Pick) from $90 to $95. DA Davidson reiterates ServiceNow (NYSE:NOW) at Buy with a $102 target.
- BMO Capital Markets upgrades to Outperform.
- Shares +12% in early trading to $88.50.
- ServiceNow Q3
- It's a global event, with the German 10-year Bund yield up 6.5 basis points to 0.152% - a month ago, this was yielding about negative 0.15%.
- The Italian 10-year is up 4.5 bps to 1.515%; Spain up 5.5 bps to 1.193%. The U.K. 10-year Gilt yield is higher by a full 8 bps to 1.133%.
- Even the 10-year JGB yield is up 1.2 bps to -0.049%.
- Towering above them all is the 10-year U.S. Treasury yield, ahead by 4.1 bps to 1.834% - its highest level since springtime.
- TLT -0.85%, TBT +1.7% premarket
- ETFs: TBT, TLT, TMV, TBF, EDV, GIM, TMF, BNDX, TTT, ZROZ, BWX, VGLT, TLH, UBT, DLBS, TLO, IGOV, GGOV, VUSTX, DLBL, TYBS
- Alexion Pharmaceuticals (NASDAQ:ALXN) is up 6% premarket on light volume in response to its announcement that it has initiated simultaneous registration trials to support regulatory applications for Orphan Drug-tagged ALXN1210, the company's next-generation drug intended to replace Soliris (eculizumab) for the treatment of paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS).
- Both studies are open-label with enrollment commencing this quarter. The first Phase 3 will compare ALXN1210 to Soliris in complement inhibitor treatment-naive PNH patients for 26 weeks. The co-primary endpoints are the normalization of lactate dehydrogenase (LDH) levels and the percentage of subjects who achieve transfusion avoidance.
- The second Phase 3, also with a 26-week treatment period, will assess the safety and efficacy of ALXN1210 in complement inhibitor treatment-naive adolescent and adult aHUS patients. The primary endpoint is complete thrombotic microangiopathy (TMA) response at Week 26.
- In both trials, ALXN1210 will be administered intravenously once every eight weeks. Soliris is administered once per week for five weeks then every two weeks thereafter. Both are complement protein 5 (C5) antibodies.
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