On the surface, Morgan Stanley's (MS +3.5%) Q1 results appear far better than those of Goldman Sachs (GS +0.6%), with FICC revenues up 9% Y/Y vs. a decline at Goldman. But Oppenheimer's Chris Kotowski notes Morgan had an especially easy comparison since 2013 Q1 was particularly weak. "Nonetheless, it is always nice to see year-over-year growth, and Morgan Stanley's is the best we have seen so far."
Kotwoski also takes note of return on tangible common equity - 11.1% at Goldman vs. 10.9% at Morgan. Despite the lower ROE, Morgan trades for 10.3x 2015 estimates vs. 9.4x for Goldman. Investors may want to have to take a harder look at which one to buy.
SandRidge Energy (SD +3.7%) pushes solidly higher following positive comments last night from Jim Cramer.
"Because SandRidge is so hated by Wall Street, the analysts can't see the incredible turnaround happening in front of their faces," Cramer said, noting that SD has delivered three consecutive quarters where the company beat earnings estimates and raised guidance since James Bennett took over as CEO.
Cramer also likes SD's real estate assets, particularly the Mississippian play, where the company owns 1.8M acres; SD has 10 years worth of drilling inventory, and new technology could extend that to 20 years or more, he says.
Microsoft (MSFT -1.4%), whose enterprise software ops compete against both IBM (middleware, databases, developer tools) and SAP (ERP/CRM apps, databases), is trading lower. As is IBM archrival H-P (HPQ -2.6%).
A few enterprise cloud software vendors, some of whom compete against SAP, are also off: JIVE -3.5%. N -2%. VEEV -1.9%. MKTO -2.2%.
Though SAP's (SAP -2.1%) non-IFRS cloud subscription/support revenue rose 32% Y/Y in Q1 (even with Q4's rate) to €221M, its traditional software license revenue fell 5% to €623M after growing 1% in Q4.
Much like archrival Oracle's 2013 license revenue misses, the latter figure is bound to trigger fears about the impact of cloud software competition.
Support revenue (driven by software licenses, relatively steady) rose 5% Y/Y to €2.21B, and all other revenue fell 8% to €643M. Opex rose just 2% Y/Y.
A strong euro took a toll: Whereas revenue and op. profit each rose 2% Y/Y at current exchange rates, they've would've risen 6% and 7% at constant currency. SAP expects a similar forex impact for the whole of 2014.
SAP now has 3.2K+ Hana customers, up from 3K+ at the end of 2013, and nearly 1K customers now run its core Business Suite on Hana (up from 800). But no Hana revenue figure is given; Hana revenue rose 61% in 2013 to €633M.
Cloud billings rose 23% Y/Y to €228M (36% exc. forex), and the cloud deferred revenue balance 20% to €454M (29% exc. forex).
In spite of the Q1 miss, SAP is reiterating its full-year revenue and op. profit forecasts.
Deutsche Bank analysts raise their price targets on top oil service stocks (OIH), seeing increasing strength in a North American cyclical recovery with current forward earnings estimates perhaps proving to be conservative.
Basic Energy Services (BAS) gets a big price boost to $43 from $18, citing a recent activity update that indicated utilization levels had increased across all the company’s business segments.
Other top stocks rated Buy at the firm, including those whose price objectives have been raised: BHI, EXH, HAL, PTEN, PES, SLB.
The outlook for Chesapeake Energy (CHK +1.7%) is on the upswing because CEO Doug Lawler has made substantial progress since taking the helm last June, top shareholder Southeastern Asset Management says in a letter today.
Lawler’s “capital discipline and operational effectiveness will reward shareholders,” according to the owner of ~10% of CHK shares.
Lawler has voiced plans to cut spending 20% this year, bringing it down to less than half of 2012 levels as CHK sells assets and spins off its oilfield services division.
TriVascular Technologies (TRIV +12%) holds onto its gain from yesterday's debut that ended at $13.79 (+14.9%) on turnover of 2.2M shares. Volume thus far in today's trading is light at 63K, however.
The medical device maker's lead product is its Ovation System, an endovascular stent graft for the repair of an abdominal aortic aneurysm. It received CE Mark approval in August 2010 and FDA approval in October 2012. Commercial sales began in the U.S. in November 2012.
Revenues for 2012 and 2013 were $5.4M and $19.5M, respectively.
Sold is SPL Acquisition Corp. to Shenzhen Hepalink Pharmaceutical. American Capital (ACAS +0.9%) realized a 15% compounded annual rate of return over the seven-plus year life of its debt and equity investments in the company.