Today - Thursday, March 26, 2015
- Down as low as 1.89% earlier in the session, the 10-year U.S. Treasury yield has popped all the way up to 2.01%.
- The last 24 hours may be a red flag to Treasury bulls; The 10-year yield was at 1.86% early yesterday and rose throughout the session even as stocks fell sharply - the first time in memory both stocks and Treasurys sold off on the same session. The selloff is a minor one today, but yields remain on the rise.
- TLT -1.7%, TBT +3.4%
- ETFs: TBT, TLT, TMV, IEF, TBF, EDV, TMF, PST, TTT, ZROZ, SBND, TLH, IEI, TYO, VGLT, DLBS, DTYS, UST, UBT, TLO, VGIT, TBX, GSY, SCHR, TENZ, DTYL, TYD, LBND, ITE, DLBL, TYBS, DFVL, TBZ, FIVZ, DFVS, TYNS, SYTL
- After pricing its 7M-share IPO at $18, SolarEdge (Pending:SEDG) opened at $20.00 and is currently at $21.69, up 20.5%.
- The solar inverter/power optimizer maker is valued at $826M, or (given FY14 sales and recent growth) potentially ~2x forward sales.
- Rival/microinverter leader Enphase (ENPH +3.3%) appears to have gotten a lift from SolarEdge's debut; its market cap is currently at $518M.
- Prospectus, details/financials, IPO analysis,
- Royal Bank of Scotland (RBS -0.5%) is soon set to announce the sale of its international wealth management unit Coutts to Switzerland's Union Bancaire Privee, reports the WSJ.
- Analysts figure the sale price will be in the area of $600M.
- The move is in keeping with RBS's (80% state-owned) to focus its energies and capital on being a U.K. retail bank.
- Previously: RBS narrows field of bidders for private-banking business (March 13)
- Total soda volume in the U.S. fell for the 10th straight year, according to data from Beverage Digest.
- Volume at Coca-Cola (KO -0.2%) was down 1.1%, while PepsiCo (PEP +0.5%) volume declined 1.4%. Both soda giants offset the soda slide in part with sales in juices, smoothie, and flavored waters.
- Dr. Pepper (DPS +2.5%) volume was flat during the year.
- Monster Beverage (MNST +0.5%) bucked the trend with a 7% rise in volume.
- Total U.S. volume in the category was down 0.9%.
- FutureFuel (FF -5.4%) falls sharply after an SEC filing reveals that Procter & Gamble has told the biofuels company it plans to end its purchase agreement on Dec. 31.
- PG said decision to terminate resulted from its need for flexibility to address declining market trends in the dry laundry additives marketplace.
- FF received $43.9M in revenue from PG during 2014, representing 12.8% of its total company revenue.
- Stephen Swad has resigned as Rosetta Stone's (NYSE:RST) CEO after three years on the job, as well as from the company's board. Director/ex-Goldman managing partner A. John Hass will serve as interim CEO while the board looks for a replacement.
- The announcement comes two weeks after the language software vendor announced (along with its Q4 results) it's cutting jobs and lowering its consumer product investments. Shares tumbled on account of Rosetta's light bookings and 2015 guidance.
- Moody's downgrades various credit ratings on SeaWorld Entertainment (SEAS -1.1%) due to the change in the capital structure at the company and forecast on earnings.
- "The stable rating outlook reflects our expectation that SeaWorld will experience low single digit percentage revenue and EBITDA declines in 2015," reads the note from the ratings agency.
- The rating on SeaWorld's revolving credit facility goes to B1 from Ba3.
- Though the Nasdaq is nearly flat today, many security tech plays are rallying. CyberArk (CYBR +4.6%) is a standout, adding to Monday's post-lockup gains. So are Qualys (QLYS +4.7%), Vasco (VDSI +3.8%), and Proofpoint (PFPT +4.3%). Palo Alto Networks (PANW +1.8%), Fortinet (FTNT +1.9%), and Imperva (IMPV +2.2%) are up more moderately.
- Possibly helping the group: The House Intelligence Committee has unanimously passed a cybersecurity bill that will make it easier for companies to share information about attacks without risking lawsuits. A full House vote could happen by late April, and the Senate is working on a similar bill. The White House recently floated its own cybersecurity initiatives.
- Yesterday, FBR's Daniel Ives (bullish on the space for some time) forecast spending on "next-generation" security solutions will rise 25% this year, up from a prior 20% estimate. He thinks less than 10% of companies have fully invested in next-gen offerings, and sees evidence of a "surge in deal flow with a major upgrade cycle underway in 2015, as enterprises and governments 'fast track' cybersecurity initiatives across the board."
- Ives expects FireEye (FEYE +0.7%), Palo Alto, Fortinet, and Proofpoint to benefit from the trend, which he isn't sqeamish about hyping. "This once-in-a-multi-decade upgrade opportunity is poised to be a rising tide for all security boats ... with legacy security solutions no longer 'good enough' and next-generation products well positioned to replace traditional firewall and endpoint vendors over the coming years."
- ETF: HACK
- Previously: Three cybersecurity companies reportedly planning $1B+ IPOs
- Canada's government says it will give the National Energy Board until next year to deliver up-to-date guidelines for oil pipeline companies to improve safety and protect the environment.
- The instructions coincide with several major pipeline expansion projects proposed in Canada by companies such as Kinder Morgan (NYSE:KMI), Enbridge (NYSE:ENB) and TransCanada (NYSE:TRP).
- The Conservative government has promoted expansion of the oil and gas industry, pledging to make the country an "energy superpower."
- Meanwhile, the NEB reportedly is investigating up to a dozen new allegations of natural gas pipeline safety code violations at TRP, which would mark the second time in recent years the regulator has probed safety practices at TRP following complaints by a whistleblower.
- Hotel stocks are out ahead of market averages as sentiment stays positive on the sector
- Traders some to be piggybacking off each other without any major news out.
- Companies active in timeshares are well-represented on the list of gainers.
- Starwood Hotels & Resorts Worldwide (HOT +4.9%) reached an all-time high of $86.76 on huge volume.
- Also putting in gains are Hyatt Hotels (H +2.9%), Hilton Worldwide (HLT +1.6%), Morgans Hotel Group (MHGC +1%), Interval Leisure Group (IILG +2%), and Wyndham Worldwide (WYN +1.4%).
- Windstream (WIN +0.6%) shareholders will receive 1 share of CS&L for every five shares held as of Apr 10 and cash in exchange of fractional shares. It will distribute 80.1% shares and intends to use the balance 19.9% to reduce debt.
- The company also declared pro-rated quarterly dividend of $.0659/share to shareholders of record as on Apr 10 which is conditional to the closing of spin-off.
- Following the distribution of CS&L shares, Windstream shareholders will have 1-for-6 reverse stock split and expects to pay annual dividend of $0.60/share.
- CS&L expects to list its common stock on Nasdaq under the symbol (CSAL) and intends to pay an annual dividend of $2.40 per share.
- Windstream re-affirmed its financial guidance for 2015.
- Sempra Energy (SRE -0.6%) slips a bit after providing an investor presentation that reaffirms its FY 2015 EPS guidance of $4.60-$5.00, compared with $4.84 analyst consensus estimate, but sees 2016 EPS of $4.80-$5.20, below $5.27 consensus.
- In longer-term guidance, SRE says a build-up of base plan earnings shows it has contracts in place that, in combination with utility operations, yield an ~11% compound annual growth rate, creating EPS in 2019 of $7.00-$7.50.
- Reuters reports an investor group led by SoftBank (OTCPK:SFTBF) is in talks with Indian phone OEM Micromax to buy a 20% stake in the company for $800M-$1B.
- Canalys recently estimated Micromax passed Samsung to become India's top-selling smartphone vendor (Samsung begged to differ). The company's Android and feature phones have gained a strong following thanks both to their low prices and focus on the needs of emerging markets users.
- Micromax was reported in January to be planning an IPO with Goldman and Morgan Stanley's help. As the owner of Sprint and Japan's #2 carrier, SoftBank could help Micromax expand into the world's two largest developed phone markets.
- MKM's Michael Genovese is pleased with Infinera's (NASDAQ:INFN) recent unveiling of two new photonic integrated circuits (PICs) that will go into optical transport systems aimed at 100G metro networks. "PICs are the source of the company's competitive advantage in long haul, and we expect the new more flexible and granular PICs to form the basis of a compelling Metro 100G aggregation/Telecom product later this year."
- Infinera asserts its new PICs offer more flexibility by allowing capacity to be "divided at a granular optical level with each slice capable of being routed in a different direction as it exits the line card or the system housing it." One PIC (the ePIC-500) delivers 500Gbps of capacity at network hub locations, and the other (the oPIC-100) 100Gbps at network spoke locations.
- Infinera claims tests showed "an estimated average reduction of 28 percent in modules, 31 percent in power and 45 percent in bandwidth inefficiencies as compared to conventional, commercial off the shelf technologies that deliver single-wavelength or super-channel solutions for 100G, 200G or 400G."
- Genovese sees Infinera's addressable market expanding to ~$20B in 2018 from ~$5B in 2014 as it "competes in end-to-end Optical Transport including Metro and [data center infrastructure]," and as its systems handle traffic forwarding features traditionally handled by routers - the latter could pose challenges for Cisco and Juniper.
- Infinera is once more within a dollar of a 52-week high of $19.48.
- Fertility specialists presented data today from their experiences with OvaSciences's (OVAS +2.3%) AUGMENT fertility treatment at the Society for Reproductive Investigation 62nd Annual Scientific Meeting.
- Robert Casper, M.D., Medical Director of TCART Fertility Partners, Toronto, Canada, reported a 53% clinical pregnancy rate (n=9/17) in women who received AUGMENT treatment after failing one to three previous in vitro fertilization (IVF) cycles, often with poor embryo quality.
- Pregnancy rates across IVF clinics using AUGMENT range from 25 - 53%.
- The company will host a conference call tomorrow morning at 10:00 am ET to discuss the results.
- Previously: OvaScience schedules webcast to discuss AUGMENT fertility treatment (March 25)
- Nielsen (NLSN +0.4%) expects to begin tracking Netflix (NFLX -0.7%) and Amazon Prime usage sometime in the middle part of this year.
- The company's aim is to measure total audience, although the methodology used to pin a number to streaming viewers is expected to draw some criticism.
- Netflix, Hulu, and Amazon all keep a tight lid on viewing data.
- Novo Nordisk (NVO +7.4%) says it will submit the prespecified interim analysis of the DEVOTE cardiovascular (CV) outcomes trial, a randomized, double-blind global study comparing long-acting Tresiba (insulin degludec) to Sanofi's (SNY -2.3%) Lantus (insulin glargine), to the FDA as part of the resubmission of its New Drug Application (NDA) that the FDA rejected in February 2013.
- At that time, the agency sent the company a Compete Response Letter (CRL) to its NDA filed in September 2011 requesting additional CV data from a dedicated CV outcomes trial. The letter also stated that neither Tresiba nor Ryzodeg could be approved until certain violations cited in a December 12, 2012 Warning Letter were resolved.
- Ryzodeg combines Tresiba with fast-acting insulin aspart. The European Commission approved both Tresiba and Ryzodeg in January 2013.
- In addition to beating FQ2 estimates, Accenture (NYSE:ACN) has hiked its FY15 (ends Aug. '15) local currency revenue growth guidance to 8%-10% from 5%-8%. However, forex is now expected to have an 800 bps impact on FY15 revenue growth, up from a prior 500 bps.
- Due to the forex hit (widely expected), FY15 EPS guidance has been cut to $4.61-$4.71 from $4.66-$4.80 (consensus is at $4.75). Likewise, FQ1 revenue guidance of $7.35B-$7.6B (assumes an 1100 bps forex hit) is below a $7.63B consensus.
- New consulting bookings fell by $400M Y/Y in FQ2 to $4.2B, and new outsourcing bookings by $400M to $5.1B. Forex had a 600 bps impact on bookings growth.
- North American revenue was a strong point, rising 13% Y/Y to $3.41B. Europe fell 2% to $2.66B (700 bps forex hit), and "growth markets" rose 3% to $1.42B (900 bps forex hit). Telecom/media/tech revenue +8%; financial services +2%; health/public service +12%; products +6%; resources -1%.
- Hurting EPS: Gross margin fell to 29.9% from 31.3% a year ago. Boosting EPS: SG&A spend fell to 16.3% of revenue from 17.9%, and $601M was spent to buy back 6.8M shares. Free cash flow was $220M, below net income of $743M.
- Shares have surged to new highs.
- FQ2 results, PR
- Two weeks after Twitter (TWTR +1.1%) confirmed its acquisition of live streaming app Periscope, Periscope has launched an iOS app (an Android app will arrive later). "It may sound crazy, but we wanted to build the closest thing to teleportation," says Periscope. "While there are many ways to discover events and places, we realized there is no better way to experience a place right now than through live video."
- Initial reviews are positive. The Verge argues Periscope is superior to Meerkat, which has received plenty of buzz (and just got $14M in funding) since launching in February, thanks in part to Periscope's support for saving/replaying live streams. "For everything it got right, Meerkat still looks like an app built in eight weeks — which it was. Periscope has been in development for more than a year...." One complaint: Users can be bombarded with notifications from followed accounts launching live streams.
- Both The Verge and Engadget are fans of Periscope's approach to user feedback - when users like a stream, they can tap to send animated hearts that appear in the corner of the screen. They can also send messages to a broadcaster.
- Like Twitter's Vine 6-second video app, Periscope will remain separate from Twitter's core app for now. But Periscope also suggests its app (like Vine) will be integrated with Twitter. "Twitter brings you closer to people, places, interests, and events in an experience that’s immediate, unfettered, and conversational. We think Periscope can help further that mission..." Twitter recently cut off Meerkat's ability to import Twitter follower lists.
- Francesca's (FRAN +4%) trades higher with some retail analysts warming up to the retailer after it turned its first earnings beat in eight quarters.
- Goldman Sachs upgrades the stock to a Neutral rating from Sell.
- Nomura lifts its price target on the Buy-rated stock to $19.
- Previously: Francesca's beats by $0.01, beats on revenue (Mar. 25 2015)
- Previously: More on Francesca's Q4 (Mar. 25 2015)
- Since the start of October (Bill Gross exited in late September), Pimco's (OTCQX:AZSEY) Total Return fund (MUTF:PTTRX) - ETF version BOND - has returned 3.73%, beating out 92% of its peers, according to the latest data from Morningstar. Year-to-date, the fund has returned 2.378%, ahead of 96% of its peers. The benchmark Aggregate Bond Index (NYSEARCA:AGG) has returned 1.736% YTD.
- Outflows at Total Return continue, however, with February marking the 22nd consecutive month of net exits. With AUM of $124.7B, Total Return is in danger of losing its title of world's largest bond fund to the Vanguard Total Bond Market Index fund (MUTF:VBMFX) - ETF version BND.
- "I am not invested with Pimco right now," says one wealth manager, willing to admit in print he moved everything out when Gross left.
- Source: WSJ
- Celgene (CELG +0.8%) and Martinsried, Germany-based MorphoSys AG mutually agree to terminate their co-development and co-promotion agreement for MOR202, a fully human monoclonal antibody being investigated, in combination with Velcade (bortezomib) and Revlimid (lenalidomide), for the treatment of blood cancers. MorphoSys will continue the development of MOR202 on its own, including sponsoring a planned Phase 1/2a study in relapsed/refractory myeloma that will include combination cohorts with lenalidomide and pomalidomide (Pomalyst/Imnovid) provided by Celgene.
- MorphoSys plans to release first clinical data from the trial at a medical conference this year. The Revlimid and Pomalyst cohorts will be added by mid-year.
- Financial details are not disclosed, although MorphoSys has increased its 2015 revenue guidance to €101M - 106M from €58M - 63M to reflect the realization of deferred revenues from the original Celgene agreement and a one-time payment from Celgene for development costs.
12:52 PM| Comment!
- Calumet Specialty Products Partners (CLMT -1.3%) appoints Bill Hatch as its interim CEO, as CEO Bill Grube takes the newly formed position of Executive Vice Chairman.
- Hatch retired as Vice President Operations and Chief Operating Executive of Citgo in 2008 after a 33-year career at the company.
- Grube co-founded CLMT in 1990 and has been CEO of Calumet GP since that time.
- U.S. rail stocks are under pressure, led by Genesee & Wyoming (GWR -1.9%) after cutting Q1 revenue guidance to $375M, $25M less than guidance provided Feb. 10 and below analyst consensus of $418M.
- GWR says Q1 traffic has been weaker than its expectations due to severe winter weather in four of its North American regions, as well as weakness in certain commodity groups, including steam coal and metals.
- GWR's stock price target is cut to $108 from $113 at Credit Suisse, citing February carload data that points to a decline in both thermal coal and metals.
- Also, Union Pacific (UNP -2.1%) was downgraded earlier by Cowen as the firm adjusts UNP's growth expectations, and Norfolk Southern (NSC -0.2%) was downgraded by Raymond James.
- Deutsche Bank thinks 3G Capital will be back in the food sector for a major acquisition faster than some other investment firms anticipate.
- 3G put itself in a stronger position to make a major purchase by not adding debt in the Kraft deal.
- Analyst Eric Katzman sees some food names trading with a premium as the 3G shadow hangs over the sector, while others have downside risk with M&A speculation not making as much sense.
- Premium on: ConAgra (NYSE:CAG), General Mills (NYSE:GIS), Mondelez International (NASDAQ:MDLZ), Pinnalce Foods (NYSE:PF), PepsiCo (NYSE:PEP).
- Premium off: Campbell Soup (NYSE:CPB), Hershey (NYSE:HSY), Hormel (NYSE:HRL), Kellogg (NYSE:K), J.M. Smucker (NYSE:SJM).
- Previously: Investors snapping up food stocks (Mar. 25 2015)
- Previously: Beer fallout from Kraft buyout (Mar. 25 2015)
- Previously: Kraft-Heinz merger has a few ETFs on the move (Mar. 25 2015)
- Roughly €8B exited the banking system in February, bringing total deposits to €152.4B, the lowest level since June 2005. Over the last three month period, about €25B in deposits has been pulled out amid fears of capital controls or an exit from EMU.
- In the meantime, the government is rushing to put together a list of promised reforms necessary to secure more creditor cash to keep paying bills, and the ECB yesterday boosted the amount of money Greek banks can borrow under the ELA to €71.1B from €69.8B.
- Source: WSJ
- GREK -1.4%, NBG -3.7%
- Schlumberger (SLB +0.2%) must satisfy a list of conditions, in part linked to sanctions, to gain approval for its $1.7B bid to buy Russia's Eurasia Drilling, says the head of Russia’s commission on foreign investment, which will meet with SLB executives in the next 10 days.
- One condition could require SLB to sell Eurasia if sanctions impede the company’s work, according to the Russian official.
- Lukoil, Eurasia’s largest customer, is backing the deal, saying it would be good for Russia; Lukoil CEO Vagit Alekperov owns ~3% of the driller’s shares.
- As was widely expected, the FCC has voted to begin negotiations with Ericsson's (NASDAQ:ERIC) Telcordia unit regarding a major local phone number-porting contract, after relying on Neustar (NYSE:NSR) to provide the service for 18 years. Neustar has responded to the news by once more blasting the FCC's selection process, and affirming its guidance for 1H15.
- To soften the blow, the telecom data service provider has launched a $150M buyback that lasts until March 25, 2016. It's good for repurchasing 12% of shares at current levels. As of Dec. 31, Neustar had $329M in cash to pay for buybacks with, and $792M in debt.
- Benchmark has launched coverage on Textura (NYSE:TXTR) with a Buy rating and $35 target.
- The construction industry cloud software provider is now up 11% from its March 13 close. Shares rallied last month following a Q4 beat, but quickly gave back their gains. A number of insiders bought shares in December.
- "The underlying factors driving this trend [lower] are still there," says Marvin Barth, European head of FX strategy at the bank, noting the EU's large output gap has gone nowhere, thus depressing return on capital, especially when compared to the U.S.
- He also takes note of the ECB's commitment to hold rates near zero as facilitating the euro's (NYSEARCA:FXE) use as a funding currency, though the borrowing is not being used to invest in the European economy.
- Barclays moves up its forecast for euro/dollar parity by three months to Q3 of this year.
- The euro's lower by 0.4% today to $1.0920.
- ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
- Southern Copper (SCCO -0.5%) is initiated with a Hold rating and a $32 price target at Brean Capital, which believes SCCO's significantly richer valuation than peers is justified by a deep bench of opportunities and strong balance sheet from which to pursue them.
- As SCCO pursues its aggressive expansion program, the firm projects the majority of the company's capex budget - currently $4.3B through 2017 - will be funded by cash from operations, with only a modest temporary increase in leverage in 2015.
- On the whole, Brean believes SCCO is one of the better positioned names to not only weather the cyclical downturn in commodity pricing, but also to expand and execute growth opportunities ahead of and during a market recovery.
- Galena Biopharma (GALE -2.5%) announces that women who are human leukocyte antigen (HLA)-A24+ or HLA-A26+ are now eligible for enrollment in its ongoing Phase 2b study evaluating NeuVax (nelipepimut-S), in combination with trastuzumab (Herceptin), in breast cancer patients who are node positive and triple negative and those who are node negative with HER 1+/2+ expressing tumors who are disease-free after standard-of-care therapy. HLA-A24- and/or A26-positive patients are predominantly of Asian descent.
- HLA-A2+ or A3+ women represent more than 60% of the North American, European and Chinese breast cancer populations. HLA-A24+ and A26+ patients represent an additional 10 - 15% in the U.S., but up to 70% of the breast cancer population in Japan.
- The primary efficacy endpoint of the study is invasive disease-free survival through Year 5. The trial began in October 2014 and will run until October 2019, although the final data collection for measuring the primary endpoint will happen in October 2016.
- NeuVax is an HER2-directed immunotherapy being investigated for the prevention of breast cancer recurrence after standard-of-care treatment in the adjuvant setting. Adjuvant therapy is any treatment given after primary (first-line) therapy.
- A rumor that the Chinese consortium interested in acquiring OmniVision (OVTI +1.6%) might up its offer by $1/share to $30/share has helped the image sensor vendor move higher. Many other chip stocks are selling off for the second day in a row.
- The consortium, led by Beijing P-E firm Hua Capital, made a $29/share non-binding buyout offer last August. OmniVision currently trades 10% below the offer price.
- Macquarie has downgraded Ubiquiti (NASDAQ:UBNT) to Neutral, and cut its target by $3 to $32. The firm launched coverage on Ubiquiti at Outperform in March 2014, when shares were at $54.56.
- After falling yesterday thanks to a major tech selloff, the wireless broadband/enterprise Wi-Fi hardware vendor is down 6.5% over the last two days. Shares now trade for just 12x an FY16 (ends June '16) EPS consensus of $2.32; the FY16 revenue growth consensus is at 15.8%.
- Repsol (OTCQX:REPYY, OTCPK:REPYF) says Antonio Brufau, its Chairman and top executive for more than a decade, will hand over all executive powers to his number two man, CEO Josu Jon Imaz, effective April 30.
- Imaz has run day-to-day business at Repsol since he was promoted to the job last April, but Brufau had kept oversight of the finance and communication divisions and is still officially the company's top executive.
- Repsol says it will ask shareholders to re-elect Brufau as chairman in a non-executive capacity for four years, at a meeting also due on April 30.
- Private-equity buyouts of $17.14B YTD are at their lowest level since 2012 as banks - with regulators looking over their shoulders - cut back on the amount of debt they'll extend for takeovers. Leveraged loan volume this year of $26.5B is 82% less than the same time frame in 2014, and the lowest since 2009.
- Fewer and smaller deals, along with less leverage means less risk, but also means lower returns for buyout firms. It also means lower prices for sellers.
- “The limitation on leverage has taken away some buying power and in some cases, created a gap between sellers’ expectations and the price that private-equity firms can justify paying,” says Carlyle Group's (CG -1%) Pete Clare.
- According to S&P Capital IQ, 21% of P-E deals this year have been financed with leverage at or above levels deemed risky by regulators; that's down from 35% in Q4 and 60% in Q3.
- Along with Carlyle, Blackstone (BX -0.9%) in its annual report warned leverage restrictions could hurt its business. Apollo Global (APO -1.7%) and KKR (KKR -1.2%) included similar language in both their 2013 and 2014 filings.
- Source: WSJ
- ETFs: PSP, PEX
- A day after Banco Santander downgraded ASML to Hold, Deutsche has downgraded to Sell. Thanks in part to a chip stock rout, the Dutch photolithography equipment giant is now down 11% over the last two days.
- Of note: Several chip equipment peers are also selling off today following SanDisk's warning, and European equities in general are under pressure.
- Shares rallied to new highs a month ago after ASML announced TSMC had exposed more than 1K wafers in a single day on an ASML EUV system.
- Update: SA commenter Philip Marlowe observes TSMC stated during a Credit Suisse conference talk it would begin using EUV for chip production later than previously expected.
- In its first set of annual results since its 2014 merger, Amec Foster Wheeler (AMFW -3.7%) says pre-tax earnings fell to £155M from £255M a year earlier but total revenue grew 2% Y/Y to £3.92B, in line with expectations as improvement in its clean energy business offset weakness in the U.S. and Europe and currency headwinds from a strong pound.
- Revenue from oil operations fell 5% Y/Y in 2014, while that from the power business including renewable energy and nuclear rose 16%, a trend the company expects to continue in 2015.
- AMFW expects its business to remain under pressure throughout 2015 while oil prices remain weak, but believes its acquisition of Foster Wheeler will benefit through increased exposure to lucrative emerging markets and the Middle East.
- After rallying over the last week, SuperCom (NASDAQ:SPCB) has tumbled back below $8 in response to its big Q4 miss. The RFID/electronic document tech provider is reiterating full-year guidance for 40%+ revenue growth and EPS above $1.20, but there may be some skepticism.
- No explanation is given in the Q4 report for the miss. Instead, SuperCom highlights the $60M in new contracts it received in 2014, and the progress it has made in "transitioning our legacy RFID components business into a solutions-focused provider of products aimed at very specific targeted market verticals."
- Hurting EPS: Gross margin (non-GAAP) fell to 69.4% from Q3's 77.6%; it was up from 65.5% a year ago. During its Q3 CC (transcript), SuperCom mentioned it normally expects GM to be around 75%, and that initial product installations carry lower margins than recurring revenue.
- With revenue rising 183% Y/Y, operating expenses rose 150% to $5.09M; sales/marketing spend totaled $2.16M, G&A $1.25M, R&D just $608K, and "other expenses" $1.09M.
- Q4 results, PR
- Listening to American Express (AXP -1.7%) explain the details behind the Costco breakup at its investor day yesterday, Susquehanna's James Friedman and John Coffey see a "silver lining."
- Costco's demands, say the two, would have lowered returns and forestalled AmEx from pursuing better deals due to rigid non-competes. One of these deals could be the Plenti multi-partner program announced last week - CEO Ken Chenault says this could not have been done 60 days ago.
- Though management wouldn't comment on plans for selling the Costco loan book or their plans for retaining existing card holders, they did say efforts to retain spending from the Costco-Canada portfolio were "encouraging."
- Previously: AmEx seeks to reassure at investor day; Munger questions competitive edge (March 25)
- Previously: American Express to launch loyalty program (March 18)
- Decoupling of global monetary policy continues to drive dispersion in markets and opportunities for trading businesses to monetize client flows," say Credit Suisse's Christian Bolu and Susan Katzke, expecting healthy Q1 results from the brokerage industry.
- They also note the "digestion" of sizable M&A backlogs will provide a boost to earnings.
- The team boosts its Q1 EPS estimate for Goldman Sachs (GS -0.3%) to $4.30 from $4.16, and see Q1 year-over-year FICC growth for the first time since 2009. ROE should be an industry-leading 11%. They'll also be looking for management earnings call commentary surrounding capital plans. The target price of $225 is 1.3x book value and 12x 2016 estimated earnings.
- Morgan Stanley (MS -0.2%), however, rates just a Neutral as core trading revenues will be lower Y/Y thanks to elevated commodities revenue a year ago.
- Cowen analysts see plenty of room to go in gains for the refinery sector, and moves up Q1 earnings estimates for across the firm's coverage universe.
- Cowen acknowledges that while crack spreads should start moving back to normal levels as industry maintenance winds down after April, margins are still strong, and many expect one of the largest-ever travel seasons this summer.
- The six stocks rated Outperform at Cowen are Delek (NYSE:DK) with a $43 stock price target, Marathon Petroleum (NYSE:MPC) with a $120 target, PBF Energy (NYSE:PBF) at $35, Tesoro (NYSE:TSO) at $90, Valero (NYSE:VLO) at $70 and Western Refining (NYSE:WNR) with a $60 price target.
- TransDigm (TDG -0.2%) has completed its purchase of the Telair Cargo Group, an aerospace cargo handling business, from AAR (AIR), for ~$725M in cash.
- The company financed the acquisition through a combination of existing cash on hand and borrowing of $75M under its existing revolving credit facility.
- Previously: TransDigm to acquire Telair Cargo Group (Feb. 23 2015)
- The Philadelphia Semi Index (SOXX -1.8%) is now down 6% over the last two days. Today's losses come after NAND flash giant SanDisk issued a Q1 warning and withdrew its full-year guidance - price pressure, soft enterprise sales, and delayed product qualifications were all blamed.
- Meanwhile, some are partly blaming yesterday's big selloff on cautious remarks from TSMC (has an estimated ~50% global foundry share) at a Credit Suisse conference. CS analyst Randy Abrams reports TSMC (NYSE:TSM) has observed "a slowdown in the past 4-5 weeks due to US$ strength impacting European and emerging market purchasing power," and that inventories "will be a few days above seasonal exiting 1Q15." Pac Crest downgraded TSMC two weeks ago on inventory concerns.
- Following an Asian trip, Susquehanna's Chris Caso has argued there isn't too much to be alarmed about, though he admits forex could be an issue. "There’s mixed signals here and there. We weren’t picking up anything that was tremendously different across the supply chain. PCs were the weakest area. That’s really not a surprise."
- RF chipmakers Skyworks (SWKS -4.6%) and Qorvo (QRVO -2.1%), among 2014's best performers, are again selling off; peer Avago is off only slightly. Also seeing further profit-taking are Ambarella (AMBA -3%), NXP (NXPI -3.6%), Freescale (FSL -2.8%), Cavium (CAVM -3.2%), and STMicroelectronics (STM -4.5%).
- Among equipment makers, Axcelis (ACLS -2.9%), Aixtron (AIXG -3.6%), Veeco (VECO -3%), and Kulicke & Soffa (KLIC -2.5%) are declining. A selloff in European equities could be affecting Aixtron, NXP/Freescale, and STMicro.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
- Diamondback Energy (FANG +3.4%) is initiated with an Overweight rating and $90 price target at Morgan Stanley, which says FANG warrants a substantial premium given its superior assets, management and balance sheet.
- FANG offers oil exposure that should outperform in a sustained downturn and participate in any rebound if prices improve, the firm says.
- At the Howard Weil Energy Conference this week, FANG provided an investor presentation that included a 2015 capital budget of $325M-$375M; FANG says it is aggressively pursuing cost reductions and anticipates an overall reduction of at least 20%.
- pSivida (PSDV -1.9%) enrolls its target of 120 patients in the pivotal Phase 3 study evaluating Medidur for the treatment of posterior uveitis, a blinding eye disease. It will allow an additional 10 patients to enroll who meet the entry criteria. Top-line data is expected in H2 2016, regulatory clearance in late 2016 or early 2017.
- Medidur is an injectable micro-insert that delivers the steroid flucinolone acetonide on a sustained basis for 36 months. It employs the same insert as the one used for Iluvien for diabetic macular edema. Patients with posterior uveitis are usually treated with oral or injectable steroids, but side effects can develop over time which limits effective dosing.
- Stifel Nicolaus sees a bright future for the North American soft drink industry.
- The investment firm calls a comprehensive beverage agreement between Coca-Cola (KO -0.3%) and refranchisees a positive development that can lift price/mix realization across the sector.
- Market caps on beverage names don't reflect the implied pricing benefit, reasons Stifel.
- Cott (COT +2.6%) and Dr. Pepper Snapple (DPS +2.5%) are the two beverage companies most closely tied to Coke's pricing action.
- Previously: Dr. Pepper Snapple catches Stifel upgrade
- Alcoa (NYSE:AA) has been approved for a $259M loan from the $25B U.S. Energy Department program that helped fund flops like Fisker and Solyndra as well as successes such as Tesla, which is resuming lending after a four-year hiatus.
- The Alcoa loan will help the company upgrade a plant in Tennessee that supplied the metal for the new all-aluminum body Ford F-150 pickup truck unveiled last year.
- Scholastic (SCHL -1%) trades lower after missing estimates with its FQ3 report.
- The company rode the popularity of the Minecraft Handbook to a 7% increase for its children's book unit revenue.
- International sales at Scholastic were down 5% with F/X a drag.
- The media/licensing/advertising side of the business saw a double-digit drop in revenue.
- Previously: Scholastic misses by $0.03, misses on revenue
10:34 AM| Comment!
- Aldeyra Therapeutics (ALDX +0.7%) opens patient enrollment in a Phase 2 trial assessing NS2 in patients with noninfectious anterior uveitis, a rare disease characterized by inflammation in the front of the eye. The company expects to provide preliminary data by the end of the year.
- NS2 is an aldehyde-binding molecule. By decreasing aldehyde load, it may mitigate excessive inflammation caused by excess aldehydes.
- Management has changed, as has the name and ticker - now Equity Commonwealth (NYSE:EQC) - but the stock price is about the same today as it was the day before previous management conceded defeat one year ago, writes Jake Mooney.
- Corvex Management led the takeover, claiming the stock was worth $40 or more, but the hoped-for benefits of internalizing management have been slow to come. While the leadership team - including Chairman Sam Zell - is now internal, property management is not (CBRE is in charge, supposedly on an interim basis).
- Expenses, says Stifel analyst John Guinee, are "egregiously high" at roughly twice the level at peers. Nevertheless, Guinee endorses the company strategy - which includes selling much of the portfolio and cutting leverage - and maintains a Buy rating on the stock. In Guinee's view, investors (maybe including himself) are comparing EQC to peers when maybe they ought to be looking at it as a liquidation play.
- "The new management team at EQC appears to still be finding its way with regard to both long term strategy and the time frame under which it will be able to right the ship," says the team at RBC, which has an Underperform rating.
- Kate Spade (KATE -1.3%) has closed the online store of Kate Spade Saturday after a final sale of products at bargain prices.
- Retail analysts think the lifestyle brand may have reached too high by covering a large number of categories right from the start.
- The company hasn't officially outlined how the brand name will survive within the parent company, according to Racked.
10:07 AM| Comment!
- Nevada and Delaware launched a multi-state online poker network this week in an effort to grow traffic.
- The platform was built by 888 Holdings (OTCPK:EIHDF).
- Caesars Entertainment (NASDAQ:CZR) has a hand in online poker through Caesars Interactive Entertainment and its WSOP property.
- Online poker revenue in New Jersey, Nevada, and Delaware has disappointed over the last year.
- Engaged Capital, owner of a 0.6% stake (modest by activist standards) in ROVI, has submitted a slate of three directors for election at the company's May 13 annual meeting.
- The activist notes the board collectively owns just 0.2% of Rovi's shares, and says it has "sought to work with the Board to improve strategy, cost structure, capital allocation, executive compensation and corporate governance."
- Meanwhile, Rovi has issued a statement regarding yesterday's Netflix suit hearing, which triggered a 12% drop. "No decision was made and we remain confident in our arguments and look forward to the judge’s decision, which is expected sometime in the next couple months."
- Relatively-recent IPO Otonomy (OTIC +0.2%) initiates a Phase 2 study evaluating AuriPro for the treatment of pediatric patients with acute otitis media (middle ear infection) with tympanostomy tubes (small tubes inserted into the eardrum in order to keep the ear ventilated).
- The one-month study will enroll 30 U.S. patients aged 6 months to 17 years. Clinical effect will be measured for up to two weeks through assessment of the presence of otorrhea (drainage from the tube).
- AuriPro is a sustained-exposure formulation of the antibiotic ciprofloxacin. A New Drug Application (NDA) was filed with the FDA on February 25 for the treatment of middle ear effusion in pediatric patients undergoing tympanostomy tube replacement surgery. Its value proposition is the sustained exposure to ciprofloxacin in a single administration rather than the current standard of care of a multi-day regimen of ear drops.
- "Too many short-term and longer-term loans are made based on a lender's ability to collect and not on a borrower's ability to repay," says CFPB boss Richard Cordray. "The proposals we are considering would require lenders to take steps to make sure consumers can pay back their loans."
- Among the options is a requirement for lenders to determine whether a borrower could repay the entire loan when it is due - rather than just rolling it over - by confirming income and debt. Other possibilities include capping the number of loans a borrower can get in a certain period, and/or capping interest rates and application fees.
- Source: WSJ
- World Acceptance (WRLD -2.7%), Cash America (CSH -4.2%), Regional Management (RM +0.3%), First Cash Financial (FCFS -0.9%).
- Previously: CFPB takes aim at payday lenders (Feb. 9)
9:53 AM| Comment!
- Franco-Nevada (FNV +2.4%) opens higher after reporting Q4 earnings that slightly missed analyst expectations along with a 23% Y/Y increase in revenues.
- FNV also raised its dividend 5% to $0.21/share.
- Q4 production rose 33% Y/Y to a quarterly record 92.7K gold equiv. oz.
- For FY 2015, FNV expects attributable royalty and stream production to total 335K-355K gold equiv. oz. from its mineral assets and revenue of $20M-$30M from its oil and gas assets; of the 335K-355K gold equiv. oz., 210K-220K are expected from FNV's various stream agreements.
- FNV said it expects to fund $300M-$350M in 2015 in connection with its precious metals stream agreement on Cobre Panama.
- FNV also issued a five-year outlook, which analysts said was lower than expected.
- Receiving a $25M order, Harris (HRS -0.7%) will supply a NATO nation with its Falcon III man-pack and handheld tactical radios.
- Both radios are equipped with Harris' Adaptive Networking Wideband Waveform, which enables military forces to leverage advanced battle management applications such as collaborative chat, streaming video and intelligence collection.
- Execs with Lululemon (NASDAQ:LULU) outlined during the firm's earnings conference call the transitory impacts to profit that the company expects to outlive.
- The formats of U.S. stores will be improved this year with more larger stores set to be unveiled. New concepts are being tested.
- The company sees a net F/X impact to EPS this year of $0.04 after factoring in Canada, Australia, and SG&A spending.
- Product delays tied to weather and the West Coast port issue are expected to drift into Q2.
- The new larger-sized stores will see a lag effect before profitability catches up to deleveraged costs.
- E-commerce sales were 18% of total sales last year.
- 60 new stores are planned for this year.
- Long-term comp growth in the mid single-digit range is forecast.
- Shares of LULU have recovered from a premarket slip and are up 3.04% as the earnings call helps turn the focus on the long-term story.
- Previously: Lululemon Athletica beats by $0.05, revenue in-line (Mar. 26 2015)
- Previously: Light guidance trips up Lululemon (Mar. 26 2015)
- Earnings call webcast
- Liking the "positive optionality" thanks to the planned Axis Capital (NYSE:AXS) merger, BMO's Charles Sebaski upgrades PartnerRe (PRE +0.5%) to Outperform with $122 price target from Underperform. There are three possibilities, says Sebaski, and they're all pretty good:
- 1) The Axis deal closes as described in the S-4; 2) A new bidder for PRE emerges; 3) PRE owners vote down the deal.
- NovaBay Pharmaceuticals (NBY +2.8%) Q4 results: Revenues: $0.5M (-3.9%); COGS: $0.3M (+275.0%); R&D Expense: $2.4M (-41.5%); SG&A: $2.7M (+125.0%); Operating Loss: ($4.9M) (-0.6%); Net Loss: ($4.5M) (-9.8%); Loss Per Share: ($0.09) (-10.0%).
- FY2014 results: Revenues: $1.1M (-68.6%); COGS: $0.5M (+150.0%); R&D Expense: $9.5M (-24.0%); SG&A: $7.9M (+25.4%); Operating Loss: ($16.9M) (-9.0%); Net Loss: ($15.2M) (+5.0%); Loss Per Share: ($0.31) (+26.2%); Quick Assets: $5.4M (-58.8%).
- No guidance given.
9:40 AM| Comment!
- Praising the company's brand and distribution network, and believing action camera penetration rates have plenty of room to grow, Baird has upgraded GoPro (NASDAQ:GPRO) to Outperform. Its target is at $57.
- Shares are outperforming for the second day in a row; the Nasdaq is currently down 0.8%. GoPro moved higher yesterday in spite of a major tech selloff after FBN pounded the table.
9:35 AM| Comment!
- Unsurprisingly, the upgrade is about interest rates, and Barclays analyst Kenneth Hill - upgrading to Overweight from Underweight - says Schwab (SCHW +0.3%) is the most heavily levered in the space to short-term rates. By Hill's calculations, the company would see about $1.6B in incremental revenues from a 100 basis point increase in the fed funds rate.
- Whether and when the short end actually goes higher by 100 basis points is another story.
- Novavax (NASDAQ:NVAX) prices its public offering of 24,137,931 shares of common stock at $7.25 per share. Underwriters over-allotment is an additional 3,620,689 shares. Closing date is March 31.
- Net proceeds of ~$165M will fund the advancement of the company's lead vaccine candidates, other research programs and general corporate purposes.
- Previously: Novavax initiates equity offering (March 24)
- Sucampo Pharmaceuticals (NASDAQ:SCMP) prices its public offering of 4M shares of class A common stock at $14 per share. Underwriters over-allotment is an additional 600K shares. Closing date is March 31. All shares are being offered by existing shareholders so the company will receive no proceeds. Yesterday's close was $16.84.
- The stock market is on track for a sharply lower open, as continuing worries about slowing growth sets up stocks for a fourth straight down day and sends investors to perceived safe havens such as gold and the yen; S&P -0.4%, Dow -0.5%, Nasdaq -0.7%.
- Saudi Arabia and other Gulf states launched airstrikes against rebels in Yemen, a small oil producer but one that includes an important transit route for oil tankers; crude oil surged above the $52/bbl level overnight but has since narrowed its gain to 1.8% at $50.16/bbl.
- All major bourses in Europe are trading at least 1% lower, and Asian markets ended mostly lower.
- Yesterday's selloff featured sharp losses among chipmakers, and the group likely will remain weak after SanDisk (-14%) cut its Q1 revenue guidance.
- Still ahead: EIA natural gas inventory, KC Fed manufacturing.
- Cosi (NASDAQ:COSI) reports restaurant net sales declined 10.12% to $74.91M for FY2014.
- Comparable-restaurant sales fell 4.7% for the fiscal.
- Traffic fell 5.1% for the year, while the average check was up 0.4%.
- Restaurant labor and benefit costs as a percentage of revenue -10 bps to 38.8% for the year.
- Restaurant count -11 Y/Y to 111.
- Micron (NASDAQ:MU) has dropped to $25.70 premarket after NAND flash rival SanDisk issued its second warning in two months. The company blamed "product qualification delays, lower than expected sales of enterprise products and lower pricing in some areas of the business," while adding it "expects continued impact to its 2015 financial results from these factors," as well as from supply challenges.
- Micron, which posts FQ2 results on April 2, received 28% of its FQ1 (November quarter) revenue from NAND. Shares have fallen to their lowest levels since last May.
- Chip stocks in general sold off hard yesterday - cautious remarks by TSMC about near-term demand may have played a role. Nasdaq futures are currently down 0.7%.
- Update (11:15AM): Micron has erased its premarket losses. Shares are now up 0.7%.
- Toyota (NYSE:TM) says it will unveil the new RAV4 hybrid on April 2 at the New York International Auto Show.
- The model is expected to have a unique design new to the RAV family.
- EV sales are off to a sluggish start in the U.S. this year.
- Previously: Checking in on U.S. electric vehicle sales (Mar. 03 2015)
- Investors are buying debt issued by Petrobras (NYSE:PBR), WSJ reports, reversing a long decline in the price of its bonds amid expectations the Brazilian company soon will resolve uncertainty over its financial statements.
- The price of PBR bonds maturing in March 2017 rose yesterday to $0.938 on the dollar, capping a 7% jump over the past week amid heavy volume.
- A Brazil newspaper reported yesterday that regulators approved a methodology for the company to measure losses tied to corruption investigations, raising hopes for the release of delayed 2014 audited financial statements.
- Failure to deliver the statements by the end of April would trigger a technical default on the company's bonds.
- Nano cap Rosetta Genomics (NASDAQ:ROSG) is up 11% premarket on increased volume in response to its announcement that it received a Notice of Allowance for U.S. Patent Application No. 13/412,020 entitled, "Gene Expression Signature for Classification of Kidney Tumors." The patent, jointly owned by Tel Hashomer Medical Research Ltd., claims a method for distinguishing four different types of kidney cancer: oncocytoma, clear cell renal cell carcinoma (RCC), papillary RCC and chromophobe RCC, through the expression profile of a unique set of 24 microRNAs and a classifier algorithm.
- The U.S. patent allowance will provide core protection for the Rosetta Kidney Cancer Test.
9:03 AM| Comment!
- Already holding a controlling interest in HavenBrook Homes - which manages about 4K rentals in Georgia, Alabama, Minnesota, and Alabama - Pimco (OTCQX:AZSEY) has bought out its partner in the venture, Sylvan Road Capital, according to Bloomberg.
- With clients pulling money from traditional fixed-income strategies in search of both higher yields and protection against rising rates, Pimco has been expanding its offerings of alternative investments. Private funds - those not sold to retail investors - raked in $3B in profit at Pimco between 2010 and 2013, says a former employee.
- Thinly-traded Sucampo Pharmaceuticals (NASDAQ:SCMP) is set for a gap down at the open in response to its disclosure that existing shareholders intend to sell shares in an upcoming public offering.
- Previously: Sucampo initiates equity offering by existing shareholders (March 25)
8:58 AM| Comment!
- Shares of Five Below (NASDAQ:FIVE) soar after the company increases its profit and promises more store openings.
- The company says it will add 70 stores this year off an existing base of 366 at the end of January.
- Q4 comps at Five Below compared favorably to peers, while operating income rose 31% Y/Y.
- Previously: Five Below +2.8% after topping Q4 expectations (Mar. 25 2015)
- FIVE +8.2% premarket to $34.87.
- Thinly-traded nano cap WaferGen Bio-systems (NASDAQ:WGBS) is up 18% premarket on increased volume in response to its announcement that Proctor & Gamble will use its SmartChip MyDesign quantitative PCR system to conduct various gene expression studies as well as other work. The financial aspects of the deal are not disclosed.
- PetroChina (NYSE:PTR) says its net profit fell 17.3% last year to its lowest annual profit in five years, as falling crude oil prices squeezed earnings.
- PTR says its net income dropped to 107.2B yuan ($17.2B) from 129.6B yuan a year earlier, while revenue rose 1.1% to 2.28T yuan from 2.25T a year earlier.
- Capital spending for 2015 will be reduced by 8.8% at 266B, adding to last year's 8.4% reduction; the move follows similar cuts by Chinese state-owned rivals Sinopec (NYSE:SNP) and Cnooc (NYSE:CEO).
- Oil and gas production rose 3.6% to 1.45B boe in 2014, and realized crude oil price fell 13% to 3,939 yuan/ton.
- A joint venture between CB&I (NYSE:CBI), Chiyoda International (OTCPK:CHYCF), and Zachry Industrial has been awarded a contract by FLNG Liquefaction 3, valued in excess of $2B, for the construction of the third train of a natural gas liquefaction and export facility in Texas.
- The work includes a double-walled, full-containment 165K cubic meter LNG storage tank, which will be supplied by CB&I.
- Upon completion, the three-train LNG liquefaction facility will have a total LNG capacity in excess of 13.9M tons per year.
- BrainStorm Cell Therapeutics (BCLI -1.6%) Q4 results: Revenues: $0; R&D Expense: $1.6M (+100.0%); SG&A: $1M (+100.0%); Operating Loss: ($2.7M) (-92.9%); Net Loss: ($2.7M) (-125.0%); Loss Per Share: ($0.18) (-80.0%).
- FY2014 results: Revenues: $0; R&D Expense: $4.8M (+65.5%); SG&A: $2.6M (+23.8%); Operating Loss: ($7.4M) (-48.0%); Net Loss: ($9.2M) (-87.8%); Loss Per Share: ($0.68) (-47.8%); Quick Assets: $8.5M (+142.9%).
- No guidance given.
- Thinly-traded nano cap Conatus Pharmaceuticals (NASDAQ:CNAT) jumps 40% premarket on robust volume in response to its announcement of top-line results from a Phase 2 trial evaluating emricasan in 38 patients with nonalcoholic fatty liver disease (NAFLD), including a subset with nonalcoholic steatohepatitis (NASH). The study met its primary efficacy endpoint of a statistically significant reduction on the liver enzyme alanine amino transferase (ALT) compared to placebo (p<0.05) at Day 28. The results were similar to those observed in earlier studies.
- Patients receiving emricasan 25 mg twice per day for 28 days showed an an average reduction in ALT of ~39% from baseline compared to ~14% for placebo. Elevated ALT levels indicate liver injury.
- Patients in the test group also showed statistically significant reductions in the serum biomarkers caspase-cleaved cytokeratin 18 (cCK18), full length cytokeratin 18 and caspase 3/7.
- Emricasan is a caspase protease inhibitor designed to reduce the activity of enzymes that play key roles in inflammation and cell death (apoptosis). Reducing the activity of the enzymes will potentially interrupt the progression of liver disease.
- Investigators will present the complete results at the International Liver Congress, 50th Annual Meeting of the European Association for the Study of the Liver in Vienna, Austria, April 22 - 26.
- MLB Network selected CoreSite's (NYSE:COR) New York campus for its first outsourced data center deployment - it was completed last September.
- The network is currently distributed in about 70M homes throughout the U.S., Canada, and Puerto Rico.
- "In addition to meeting our specific connectivity, latency and security requirements, this deployment in CoreSite's data center will allow MLB Network to scale our broadcast infrastructure quickly and efficiently as we continue to grow," says MLB's Mark Haden.
- Source: Press Release
8:37 AM| 4 Comments
- Royal Dutch Shell (RDS.A, RDS.B) says it will cut at least 250 more U.K. North Sea jobs, in addition to 250 job losses announced last August, as it continues to manage costs at its operations around the world.
- Shell also says it will make changes to shift patterns, moving to an “even time rota” and considering a three weeks on, three weeks off shift pattern which will be put forward for consultation with the staff committee.
- Trade unions already are balloting their members working offshore to gauge appetite for strike action over the changes.
- Winnebago (NYSE:WGO) reports motorhome revenue rose 2.4% in FQ2 on positive shipment growth.
- Operating costs were higher than anticipated due to labor expenses and technology investments.
- Operating income rate -100 bps to 5.1%.
- Dealer inventory: Motor homes +22.3% to 4,778; towables +5.9% to 1,877.
- Previously: Winnebago misses by $0.08, misses on revenue
- WGO -6.5% premarket.
- Saudi airstrikes are targeting the military assets of Yemen's Houthi militants after (Saudi-backed) president Abed Rabbo Mansour Hadi fled the country yesterday.
- Iran chimes in, its foreign minister saying the Saudi actions will further destabilize the region.
- Gold (NYSEARCA:GLD) is up 1.1% on the session to $1,210 per ounce, and has now erased what previously were sizable losses for March.
- ETFs: GLD, IAU, SGOL, UGL, DGP, GLL, UGLD, DZZ, GLDI, OUNZ, DGL, DGZ, DGLD, AGOL, TBAR, UBG, BAR, GYEN, GEUR, BARS
- Airline stocks are reacting to the jump in crude oil prices as would be expected.
- Crude oil is markedly higher off of unrest in Yemen.
- Delta Air Lines (NYSE:DAL) is down 4.1% in premarket action, while United Continental (NYSE:UAL) is off 2.9%.
- Southwest Airlines (NYSE:LUV) and JetBlue (NASDAQ:JBLU) are both down about 3%.
- No-hedging American Airlines Group (NASDAQ:AAL) continues to be a curiosity to some traders with its tendency to move in-line with peers on oil swings - despite having a different fuel pricing strategy. AAL -3.4% premarket.
- A deeper dive into jet fuel prices is available at Platts.
- Raytheon (NYSE:RTN) has signed a second letter of intent with Poland's MESKO, after signing a first to cooperate on opportunities related to Poland's air defense architecture.
- The new agreement focuses on the production, future capabilities and co-development of Raytheon's Excalibur projectile and the TALON laser guided rocket.
- Additionally, Raytheon and MESKO will explore collaboration on a next generation anti-armor weapon and a short range air defense weapon.
- Related: Poland to choose missile defense supplier in next few weeks (Mar. 10 2015)
- Kite Pharma (KITE -7.1%) Q4 results: Revenues: $0; R&D Expense: $7.9M (+315.8%); SG&A: $5.4M (+980.0%); Operating Loss: ($13.3M) (-454.2%); Net Loss: ($13M) (-333.3%); Loss Per Share: ($0.33) (+38.9%).
- FY2014 results: Revenues: $0; R&D Expense: $23.1M (+352.9%); SG&A: $13.6M (+946.2%); Operating Loss: ($36.7M) (-473.4%); Net Loss: ($43.7M) (-460.3%); Loss Per Share: ($1.91) (-33.6%); Quick Assets: $367M (+999%).
- No guidance given.
- Investment-grade and junk-rated companies combined have sold $438B of new bonds YTD, according to Dealogic, topping the previous record of $384B in 2013. Bond sales related to M&A of $87B are also at a record YTD.
- Corporate treasurers no doubt are pushing out as much debt as possible to take advantage of low rates, but they're finding plenty of willing buyers.
- “I can’t see anything on the radar that’s going to slow things down materially,” says one fixed-income manager.
- ETFs: HYG, JNK, LQD, HYLD, CORP, SJB, CRED, ANGL, HYLS, UJB, XOVR, QLTA, QLTC, COBO, IGS, CBND, FCOR, QLTB, IGU
- Fred's (FRED) reports comparable-store sales were flat in Q4.
- The company's gross margin rate fell 240 bps to 24.6%.
- SG&A expense rate grew 180 bps to 27.7% due to increased labor and occupancy costs related to pharmacy department growth.
- FQ1 Guidance: Total sales: flat to +2%; Comparable-store sales: flat to +2%; Diluted EPS: flat to +$0.03.
- FY2015 Guidance: Total sales: +10% to +15%; Comparable-store sales: +4% to +6%; Diluted EPS: $0.50 to $0.58.
- The Japanese Ministry of Health, Labour and Welfare approves Actelion's (OTCPK:ALIOF) (OTCPK:ALIOY) Opsumit (macitentan) for the treatment of pulmonary arterial hypertension (PAH). The approval was based on the results in the SERAPHIN Phase 3 trial that showed patients treated with macitentan 10 mg per day experienced a 45% risk reduction (p<0.0001) of the composite morbidity-mortality endpoint compared to placebo.
- The company will co-promote Opsumit in Japan with Nippon Shinyaku.
- Opsumit was cleared by the FDA in October 2013 and by the European Commission (EC) in December 2013.
- An official NHTSA recall notice has been issued to General Motors (NYSE:GM) on Chevrolet Volts issued between 2011 and 2013.
- The action covers 50,236 vehicles.
- "If the engine runs for an extended period of time in an enclosed space, there may be a build up of carbon monoxide, increasing the risk of personal injury," reads the letter from regulator.
- Previously: GM recalls 64K Chevy Volt hybrids (Mar. 13 2015)
- NHTSA letter to GM (.pdf)
8:07 AM| Comment!
- In two Phase 3a trials, Novo Nordisk's (NYSE:NVO) faster-acting insulin achieved the primary efficacy endpoints of non-inferiority (no worse than) to NovoRapid (insulin aspart) in lowering HbA1c in patients with type 1 and type 2 diabetes.
- In the Onset 1 study, 1,290 type 1 diabetics had their basal insulin therapy optimized with Levemir (insulin detemir [rDNA origin]) injection during an eight-week run-in period. Afterward, 1,143 were randomized (double-blind) to receive either faster-acting insulin aspart or NovoRapid at mealtimes for 52 weeks or open-label treatment with faster-acting insulin aspart post-meal for 26 weeks. After 26 weeks, mean mealtime HbA1c of 7.6% was reduced by 0.32%, 0.17% and 0.13% for people treated with faster-acting insulin aspart, NovoRapid and post-meal faster-acting insulin aspart, respectively. This confirmed faster-acting insulin aspart's non-inferiority in HbA1c improvement to NovoRapid, although there was a higher rate of hypoglycemia for faster-acting insulin aspart within the first hour after the start of a meal.
- In the Onset 2 study, 881 type 2 diabetics inadequately controlled on a combination of basal insulin and oral antidiabetic drugs had their basal therapy optimized during an eight-week run-in period. The 689 people who reached their prespecified HbA1c target of 7.0 - 9.5% during the run-in period were randomized to receive either faster-acting insulin aspart or NovoRapid at mealtime for 26 weeks. After 26 weeks, mean HbA1c improved from 7.9% to 6.6% for both groups. This also confirmed faster-acting insulin aspart's non-inferiority to NovoRapid. There was a higher rate of hypoglycemia with faster-acting insulin aspart within the first two hours after the start of a meal.
- Faster-acting insulin aspart is a new formulation of mealtime insulin that has two new excipients to ensure early and fast absorption. The company has now completed four late-stage studies that will support its regulatory filings seeking clearance for faster-acting insulin aspart.
- Telefonica Brasil (NYSE:VIV) plans to raise up to $4B in fresh capital through a rights issue - that will could be announced as early as today - to buy local broadband provider GVT, Reuters reports.
- Brazil's anti-trust watchdog Cade gave Telefonica Brasil the go-ahead for the €7.2B ($7.8B) acquisition yesterday, but said the deal is dependent on certain conditions being met.
- These include the sale of Spanish parent company Telefonica's (NYSE:TEF) stake in Telecom Italia (NYSE:TI), which owns rival Brazilian mobile operator Tim Participacoes (NYSE:TSU).
- "It's not the stronger dollar that irks the Fed," says Morgan Stanley. "It's the pace of appreciation." Since the middle of last year, the nominal trade-weighted exchange value of the greenback has appreciated nearly 22%, or an average of 2.3% per month, creating "substantially tighter financial conditions."
- Comparing this "dollar tantrum" to 2013's "taper tantrum" - in which the Fed didn't seem concerned with what markets were doing, until one day it did and then quickly cooled its hawkish talk - Morgan Stanley believes the central bank will raise rates later than expected.
- ETFs: SHY, BIL, VGSH, SHV, SCHO, DTUS, SST, DTUL, TUZ
7:53 AM| Comment!
7:47 AM| 1 Comment
- ConAgra Foods (NYSE:CAG) reports sales in its Consumer Foods segment fell 2% to $1.8B in FQ3 on flat volume.
- Operating profit was up 3% to $274M on a tighter advertising spend.
- The Commercial Foods segment saw a 1% gain in sales to $1B and 18% rise in operating profit to $145M.
- Private Brands segment sales -5% to $1B on volume declines across brands.
- Guidance: ConAgra sees FY15 EPS of $2.15-$2.19 vs. $2.14 consensus.
- CAG +1.6% premarket.
- SanDisk (NASDAQ:SNDK) -11.5% premarket after cutting its Q1 revenue guidance, citing certain product qualification delays, lower than expected sales of enterprise products and lower pricing in some areas of its business.
- SNDK also expects the rest of 2015 to be affected by those factors as well as its previously discussed supply challenges, and now forecasts FY 2015 revenue to be lower than previous guidance but the company does not provide a specific figure.
- For its Q1, SNDK now sees revenues of ~$1.3B, depending on final sell-through results, compared to its prior outlook of $1.4B-$1.45B; Wall Street consensus had foreseen ~$1.43B.
- SNDK also withdraws its other forecasts for the quarter and year, and says it will reschedule its investor day, which had been set for May.
- The moves are key to the next phase of Morgan Stanley (NYSE:MS) CEO James Gorman's turnaround plan, as well as to build a bench for the next generation of leadership.
- The bank this week promoted 46 year-old investment banker Jonathan Pruzan to CFO to replace the departing Ruth Porat.
- Were Gorman to exit sooner rather than later, the short list of successors would include the head of wealth management Greg Fleming and the head of investment banking Colm Kelleher, but the list is far longer if Gorman moves along further down the road (which appears to be his intention at the moment).
- Less noticed than the Porat departure was last week's reshuffle of securities and wealth management leadership - the intention of which was to "cross-pollinate" key management.
- There's more downside risk to CBOE Holdings (NASDAQ:CBOE), says Citigroup, despite this year's 10% pullback in the stock price. Overvaluation amid disappointing volumes and high expectations should continue to weigh. The team keeps its Sell rating and lowers the price target to $52 from $54.
- Sharp (OTCPK:SHCAY) may cut pay by 5% for managerial staff and by ~2% for others in fiscal 2015 to lower costs, the Nikkei reports.
- The troubled electronics giant expects to save more than ¥10B ($83.7M) a year through the measures.
- Last week, Sharp announced plans to cut 12% of its workforce in a global restructuring expected to cost more than $1.7B.
- DJIA and S&P 500 futures are lower by 0.7% and Nasdaq 100 by 1%, setting up the averages to add to yesterday's sharp declines at the open.
- Europe's lower by more than 1%, and the Nikkei slid 1.4% overnight.
- Treasury yields actually rose during yesterday's tumble - the first time in memory both stock and bond prices fell together - but the 10-year yield is lower by two basis points this morning to 1.91%. Gold is up $10 per ounce to $1,207 and oil by $2 per barrel to $51.20 as the situation in Yemen worsens.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, PSQ, IVV, SPXU, UPRO, TQQQ, SPXL, RSP, QID, SQQQ, DOG, QLD, DXD, RWL, EPS, UDOW, SDOW, DDM, BXUB, QQEW, QQQE, SPLX, BXUC, SFLA, QQXT, SPUU
- Signet (NYSE:SIG) reports same-store sales rose 4.2% in FQ4.
- Comp growth by brand: Kay +4.6%, Jared +2.6%, Sterling +3.7%, Zales (total) +3.7%, Zales US Jewelry +3.2%, H.Samuel +6.0%, Ernest Jones +9.3%.
- Consolidated E-commerce sales rose 89% to $149.6M, with the addition of Zale's this year boosting the total.
- Gross margin rate -140 bps to 40.1% due in part to the Zales addition.
- SG&A expense rate +70 bps to 27.9%.
- Guidance: FQ1 same-store sales forecast to increase 3.0% to 4.0%. EPS seen at $1.42-$1.49 vs. $1.61 consensus.
- Previously: Signet misses by $0.20, misses on revenue
- SIG +0.6% premarket.
- ProPhase Labs (PRPH -3%) Q4 results: Revenues: $9M (-6.3%); COGS: $3.1M (+3.3%); R&D Expense: $0.4M (+100.0%); SG&A: $6.2M (+8.8%); Net Loss: ($0.7M) (-216.7%); Loss Per Share: ($0.04) (-200.0%).
- FY2014 results: Revenues: $22.1M (-11.6%); COGS: $7.9M (-6.0%); R&D Expense: $1.3M (+62.5%); SG&A: $17.1M (+11.0%); Net Loss: ($7.8M) (-999%); Loss Per Share: ($0.46) (-999%); Quick Assets: $2.9M (+81.3%).
- No guidance given.
- The Japanese Ministry of Health, Labour and Welfare approves Gilead Sciences' (NASDAQ:GILD) Sovaldi (sofosbuvir) for the suppression of viremia in patients with chronic hepatitis C genotype 2 infection, with or without compensated cirrhosis, in combination with ribavirin for 12 weeks.
- The data supporting approval showed a 96% HCV-2 cure rate (n=135/140) in patients receiving sofosbuvir plus ribavirin for 12 weeks as defined by SVR12 (sustained virologic response 12 weeks after completing therapy).
- In Japan, 20 - 30% of the 1M HCV-infected people are genotype 2. Currently approved therapies for HCV-2 involve 24 - 48 weeks of injections with pegylated interferon.
- The company filed a New Drug Application in Japan for Harvoni (ledipasvir/sofosbuvir) on September 24, 2014.
- Facing pressure from the drop in oil prices, General Electric (NYSE:GE) has increased the planned job cuts at its Lufkin oilfield equipment unit from 330 to 575.
- "As a result of increasingly challenging market conditions, we are announcing additional workforce reductions in our Lufkin business," said Kristin Schwarz, a GE Oil & Gas spokeswoman.
- GE bought oilfield pump maker Lufkin Industries for about $3.3B in 2013.
- GE -1% premarket
- Anheuser-Busch InBev (NYSE:BUD) is days away from nominating JAB Holding CEO Olivier Goudet as its next chairman, sources tell Reuters.
- The move would keep A-B closely tied to JAB and 3G Capital with its four board members.
- JAB and 3G are two of the biggest players on the global consumer goods scene.
- Previously: Beer fallout from Kraft buyout (Mar. 25 2015)
7:05 AM| Comment!
- Amazon (NASDAQ:AMZN) announces the expansion of Prime Now to the Dallas area.
- The company says Prime customers in the city will now have the option to receive one-hour delivery on thousands of items.
- The service runs from 8:00 a.m. to 10:00 p.m. and costs $7.99 for the 60-minute delivery option.
- Prime Now rolled out in Manhattan last December.
- S&P -0.64%.
- 10-yr +0.18%.
- Euro +0.34% vs. dollar.
- Crude +0.85% to $50.96.
- Gold +0.84% to $1,207.00.
- Lululemon (NASDAQ:LULU) reports direct to consumer revenue increased 20% Y/Y in Q4.
- Comparable-store sales were up 5% for the period.
- The company's gross profit rate fell 200 bps to 51.5%.
- SG&A expenses rate +150 bps to 25.4%.
- Inventory +10.2% to $298.2M.
- Guidance: Lululemon sees Q1 revenue of $413M to $418M vs. $442M consensus and EPS of $0.31 to $0.33 vs $0.39 consensus.
- LULU -5.64% premarket to $57.52.
- China Automotive Systems (NASDAQ:CAAS) reports sales rose 4.7% mainly due to the growth of the Chinese passenger vehicle market and the strong growth in sales of mid-level electric power steering units in Q4.
- Gross margin rate increased 40 bps to 17.7%, primarily due to greater sales volume.
- Selling expense rate grew 50 bps to 3.4%.
- Operating margin rate +30 bps to 6.9%.
- FY2015 Guidance: Revenue growth of 10% is forecast for the full year.
6:53 AM| Comment!
- Lufthansa (OTCQX:DLAKY) and unit Germanwings will hold a press conference today at 13:30 GMT to provide an update on the Germanwings flight that crashed into the French Alps on Tuesday.
- Lufthansa shares are down 2.7% in Germany.
- Previously: NYT: Germanwings pilot locked out of cockpit before crash (Mar. 26 2015)
- Ultragenyx Pharmaceutical (RARE -3%) Q4 results: Revenues: $0; R&D Expense: $13.5M (+64.6%); SG&A: $3.4M (+161.5%); Operating Loss: ($16.9M) (-77.9%); Net Loss: ($16.7M) (+10.7%); Loss Per Share: ($0.52) (-89.6%).
- FY2014 results: Revenues: $0; R&D Expense: $46M (+65.5%); SG&A: $10.8M (+140.0%); Operating Loss: ($56.8M) (-75.9%); Net Loss: ($64.6M) (-28.4%); Loss Per Share: ($2.25) (+84.9%); Quick Assets: $187.5M (+251.1%).
- No guidance given.
6:32 AM| Comment!
- Greece is optimistic about reaching a deal on economic reforms with its European partners early next week, unblocking urgently needed funding, Economy Minister George Stathakis told Antenna TV.
- The country's eurozone creditors have hinged the next round of bailout funds on reforms that are to approved by the bloc's finance ministers.
- However, in another setback to Greece's government yesterday, the country failed to secure a quick cash payment after eurozone officials told Athens it was not entitled to €1.2B from the European Financial Stability Facility.
- ETFs: GREK
- "Now may be a good time to begin normalizing U.S. monetary policy so that it is set appropriately for an improving economy over the next two years," Federal Reserve policymaker James Bullard said on Thursday.
- The recent decision by the U.S. central bank to remove "patient" from its policy statement makes a return to 'standard' policy making possible, he added.
- Bullard is not a voting member on the Fed's policy setting committee this year, but does take part in regular policy deliberations.
5:47 AM| Comment!
5:43 AM| Comment!
- With U.S. law allowing for exchanges of crude on a case-by-case basis with "adjacent countries", Mexico's Pemex expects imminent approval from the U.S. Commerce Department to allow it to swap up to 100K barrels of heavy crude for a similar amount of lighter U.S. oil.
- Pemex is also hoping the swaps will pave the way for the U.S. to eventually allow direct crude oil exports to Mexico, an exemption it currently allows for Canada.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
- Deepening the mystery surrounding the Germanwings (OTCQX:DLAKY) flight crash, evidence from a cockpit voice recorder indicates that one pilot left the cockpit before the plane’s descent and was unable to get back in, NYT reports.
- "The guy outside is knocking lightly on the door and there is no answer," the investigator said. "You can hear he is trying to smash the door down."
- Lufthansa (Germanwings parent) shares are down 2.5% in Germany.
- The U.K. government sold about £569M ($847M) of shares in Lloyds (NYSE:LYG) this morning, cutting its stake to 21.9% and adding to the more than £1B of stock sold by the Treasury since December.
- At its last disposal on March 9, the government lowered its stake to 22.9%, down from a peak of 40% in 2009, when it bailed out the bank during the financial crisis.
- Lloyds also said it would resume dividend payments last month after reporting its first annual profit in five years.
- Indonesia wants to have a major role in the new $50B Asian Infrastructure Investment Bank, with at least the vice-president's position reserved for the Southeast Asian country.
- "We are fighting to get a position in the AIIB ... because most likely we will be the biggest client," said Indonesian Finance Minister Bambang Brodjonegoro.
- At least 35 countries will join the AIIB by the March 31 deadline, the bank's interim chief, Jin Liqun, said on Sunday.
- Ford (NYSE:F) has invested $1B in a new plant in western India that will help it triple its exports from the country.
- Ford is planning to make India an export hub for compact cars such as the EcoSport, and the newly launched compact sedan, Ford Figo Aspire, the first car to be produced at the new facility.
- The plant will also nearly double the company's installed production capacity in the country to 610K engines and 440K vehicles a year.
- Following a similar move by rival Volkswagen, Toyota (NYSE:TM) is shifting half of all the vehicles it makes to new cost-saving platforms by 2020.
- Under the "Toyota New Global Architecture" initiative, the automaker will reduce development costs by at least 20% by designing more new models with fewer platforms.
- It also means that compared with 2008, the cost of starting new production lines will fall by 50%, and initial investment required for a new plant will drop by 40%.
- TM -1.3% AH
- Marking a new milestone since their December 2013 merger, American Airlines (NASDAQ:AAL) and U.S. Airways expect to receive a single operating certificate from U.S. regulators on April 8.
- Although the carriers still have to combine their reservation systems, a single certificate will mean the FAA recognizes the airlines as one, and that the majority of their flight, maintenance and dispatch procedures will be identical.
- AAL +0.4% AH
- Not only have brick and mortar banks transgressed numerous U.S. sanctions programs (I, II) against countries like Iran, Cuba and Sudan, but PayPal (NASDAQ:EBAY) has also just agreed to pay $7.7M to settle similar charges from the U.S. Treasury Department.
- PayPal did not adequately screen its transactions for U.S. sanctions targets for several years through 2013, resulting in 486 apparent violations of U.S. law, the Treasury said in a statement.
- Salus Capital Partners, a RadioShack (NYSE:RSH) lender, has asked U.S. Bankruptcy Judge Brendan Shannon to intervene in the auction of the electronics retailer, saying its $271M joint bid to liquidate the chain that was "materially superior" to that of Standard General's.
- Standard is offering to pay for most of its offer in the form of a "credit bid," or debt forgiveness.
- The outcome is will likely be announced this morning, when Shannon is scheduled to approve the results of the auction.
- Royal Bank of Scotland (NYSE:RBS) has increased the value of shares it's selling in Citizens Financial (NYSE:CFG) to as much as $3.7B after receiving stronger demand from investors to own a stake in its recently listed U.S. subsidiary.
- RBS agreed to sell a further 135M shares at $23.75 per share — plus a potential 20.25M overallotment option, reducing its stake in Citizens to 41.9% if the overallotment is exercised.
- RBS also aims to carry out another share sale later this year to slash its stake in Citizens below a third. That would allow it to say that it no longer controls the U.S. bank and therefore removes the company’s £60B of risk-weighted assets from its balance sheet.
- Previously: RBS slashing Citizens Financial stake (Mar. 23 2015)
- Oil is flying higher after Saudi Arabia and its Gulf allies started bombing targets in Yemen as the country slides closer toward civil war.
- Importers say the Saudi attack itself will unlikely disrupt supplies, but the threat of spreading war in the region could likely impact oil flows.
- The crisis now risks spiraling into a proxy war with Shiite Iran backing the Houthis, and Saudi Arabia and other regional Sunni monarchies supporting Yemeni President Abd-Rabbu Mansour Hadi.
- Crude futures +4.5% to $51.42/bbl.
- Previously: Yemen turmoil has oil challenging $50 per barrel (Mar. 25 2015)
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
- Though there have been a slew of reports stating Samsung (OTC:SSNLF) will be the main supplier for Apple's (NASDAQ:AAPL) A9 CPU (expected to go into the iPhone 6S/6S+ and next-gen iPad Air), "industry sources" tell Taiwan's Digitimes TSMC (NYSE:TSM) will "remain the major processor supplier for Apple in the second half of 2015."
- The world's biggest foundry will reportedly supply CPUs for the iPhone 6S and 6S+ using a next-gen 16nm FinFET process, and for a cheaper 4" "6C model" via its existing 20nm process (used to make the A8). Cowen previously reported Apple is working on a new 4" iPhone.
- The site qualifies its report by stating Samsung is also expected to be a 6S/6S+ supplier. Samsung recently began producing chips using its next-gen 14nm FinFET process, widely expected to be leveraged for A9 production. Meanwhile, A8 orders have done wonders for TSMC: The company has posted 30%+ Y/Y sales growth for several months in a row.
- In spite of a favorable Digitimes report last night as well (that one was about Q2 sales), shares fell 5.4% today amid a major chip stock rout - volume (32.3M shares) more than doubled a 3-month daily average of 13M. Barron's has reported hearing CFO Lora Ho made cautious comments about near-term demand at a Hong Kong Credit Suisse conference.
- Following Wednesday's 7.1% drop, Highpower (NASDAQ:HPJ) has fallen 21% since posting a Q4 miss (moreso on EPS than revenue) on Tuesday morning.
- The battery maker's guidance might be weighing on shares more than the Q4 numbers: It forecasts 2015 revenue of $160M-$170M, below a $178.3M pre-earnings consensus and equal to 9%-16% Y/Y growth. Net income (non-GAAP) is expected to rise to $5M-$6M from 2014's $3.9M.
- Hurting Q4 EPS: Gross margin fell to 20.1% from Q3's 21.1% and Q4 2013's 22.5%. R&D spend rose to 5.3% of revenue from Q4 2013's 4.5% and sales/distribution to 4.9% from 4.7%, but G&A fell to 7.7% from 9.7%.
- Ni-MH battery sales rose 7% Y/Y to $17.9M, but lithium battery sales fell 23.1% to $16.5M. New materials sales rose 195.9% to $994K. 2014 customer adds included Phillips, Sony, Costco, Timex, Acer, and VTech.
- Highpower ended Q4 with $14.6M in cash, $15.4M in restricted cash, $15.2M in short-term loans, $29.9M in notes payable, and $3.9M in long-term loans. After factoring net debt, shares trade for only 0.6x 2015E sales, based on the midpoint of Highpower's guidance range.
- Earnings release, CC transcript
- 4:35 Fed's Bullard: U.S. Economy and Monetary Policy
- 8:30 Initial Jobless Claims
- 9:00 Fed's Lockhart: U.S. Economy and Monetary Policy
- 9:45 PMI Services Index Flash
- 9:45 Bloomberg Consumer Comfort Index
- 10:30 EIA Natural Gas Inventory
- 11:00 Kansas City Fed Mfg Survey
- 1:00 PM Results of $29B, 7-Year Note Auction
- 4:30 PM Money Supply
- 4:30 PM Fed Balance Sheet
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