On Greece, JPMorgan, Facebook (…).

Bonjour,

Europe set for lower start after Moody’s cut 16 Spanish banks + Fitch cut Greek credit rating to CCC. Latest polls have parties supporting austerity measures ahead for now. However, Times reports De La Rue is preparing for poss drachma reintroduction. Asia lower after US data missed and eurozone fears persist. G8 summit begins today in the US. Macro eyes on German PPI. Note Denmark closed today.

AFTER HOURS

CRM: +6% post – Salesforce 1Q adj. EPS 37c vs est. 34c. Sees yr rev. $2.97b-$3b, had seen 2013 rev. $2.92b-$2.95b.

GPS: +2.7% post – 1Q adj. EPS 46c, had seen 44c-46c May 3. 1Q rev. $3.49b, in line with $3.49b it saw May 3. Gap sees yr EPS $1.78-$1.83, had seen $1.75-$1.80. Analysts est. $1.98, with range ($1.80-$2.20)

AMAT flat post: 2Q adj. EPS 27c vs est. 24c (20c-26c). 2Q rev. $2.54b, est. $2.40b. Sees 3Q adj. EPS 21c-29c vs est. 26c (17c-29c); sales flat to down 10% Q/q. Sees year adj. EPS at high end of 85c-95c, est. 93c.

Facebook Confirms Pricing of IPO at $38/Shr

– Sold 421.2m shrs, 25% above an original 337.4m

– CEO Zuckerberg will control ~55.8% of voting power

CURRENT THEMES

On Greece

Citi has increased its subjective likelihood of a Grexit to 50-75% over the next 18 months. For Willem Buiter, the most likely option is for the Euro area “to refuse to offer Greece significant concessions relative to already-agreed programme targets and for the Greek sovereign to exit the euro area, but for sufficiently decisive policy measures to be taken to ‘ring-fence’ other euro area countries potentially under attack by markets.”
Greek euro exit: what the economists say – Telegraph http://tgr.ph/L4f6tZ.
Greek Leftist Leader Throws Down Gauntlet on Debt – WSJ.com http://on.wsj.com/LcKAxx
And an article in the Times: De La Rue gets ready to print Drachma (I don’t have access): http://www.thetimes.co.uk/tto/news/world/europe/article3418503.ece

 

On Facebook
The IPO is priced at the top of the range ($34-$38) and will start trading today on the Nasdaq. The IPO is oversubscribed and stock may open at a premium, but we expect these gains to be short lived. Multiples are high and the lockup expires in three months from now. Investors will ikely take profits.

 

On JPMorgan
Interesting to read ZeroHedge interpretation of the current trade put in place at JPM.
It’s Not Over Yet For JPM | ZeroHedge http://bit.ly/JQEhSz

EUROPEAN EQUITIES

FINANCIALS

Moody’s downgrades by 1-3 notches the L-T debt and deposit ratings for 16 Spanish banks; ratings carry negative outlooks or remain on review for downgrade

Spain will choose the two companies that will carry out valuations of Spanish banks’ loan books, according to Bloomberg

Spain has hired Goldman Sachs Group Inc. to value the assets of BFA-Bankia, says Expansion

– Greece euro exit would be manageable for European banks, Citi says; Grexit, with 50-75% probability, could impact exposures to Greece of up to ~€410 billion

– Italian banks 2012-14 EPS estimates cut by 14% on average, JPMorgan says

– Bankia raised its holding of own shares to 4.3% at the time of government intervention from ~1% at end-2011, reports the FT

– Credit Suisse, BNP Paribas and two other banks may take over a stake in YPF SA, after shareholder Petersen Energia SA defaulted on a loan

– Aviva says that it may sell underperforming units while it takes the rest of this year to find a replacement CEO

– Prudential became at least the fifth British firm to suffer a revolt on pay in the last three weeks as 30% of investors voted against its compensation report

INDUSTRIAL/MINERS/SERVICES

– BHP BILLITON’s Queensland coalminers are planning to strike next week

– ArcelorMittal sells Skyline Steel to Nucor for $605 million

– RENAULT plans a €250 million investment in Romania’s Ponta

– Volkswagen Added to Morgan Stanley Best Ideas

UTILITIES/OIL/HEALTHCARE/CHEMICALS

The Portuguese government approved measures to reduce the costs of the country’s electricity system as it complies with the terms of a financial aid program

– Glaxosmithkline will continue to proceed with Human Genome tender offer; it buys back 1.6 million shares at 1412p/share-1427.5p/share

– DSM says that it is to acquire Ocean Nutrition Canada in all-cash transaction, valuing the company at ~10.6 2012E Ebitda

– Chr Hansen PT Raised to DK175 vs DK145 at Credit Suisse; Reiterates Outperform

– Hikma Pharmaceuticals Raised to Overweight vs Neutral at JPMorgan

– Novo Nordisk PT Raised to DKr855 vs DKr625 at Morgan Stanley; Kept at Equalweight

– Sanofi PT Raised to EU70 vs EU65 at Morgan Stanley; Kept at Overweight

– Lanxess Added to Morgan Stanley Best Ideas

– National Grid PT Raised to 740p vs 725p at Morgan Stanley; Kept at Overweight

– Solvay Added to UBS’s European Key Call List

TMT

– STMicroelectronics claims InvenSense infringes nine patents for semiconductor manufacturing

– IBM is to create jobs with new ‘global services integration hub’ in Dublin, says Bloomberg

– Samsung may have an edge with flexible plastic this year, JPMorgan says

– BT Group Raised to Buy from Hold at Berenberg; Removed from Morgan Stanley Best Ideas after Outperformance

– Eutelsat Raised to Buy vs Neutral at UBS

RETAIL/CONSUMER/LUXURY

– Burberry wins $100 million default judgment in NYC federal court against Chinese Internet counterfeiters, reports Bloomberg

– Marks & Spencer’s CEO, may face shareholder disquiet over his remuneration if the company announces, as is likely, a drop in full-year profit next week, says Bloomberg

SMALL/MIDCAPS

– Galapagos says results thus far in 2012 encourage it to retain FY 2012 financial guidance of rev. >EU150m, positive operational income, cash flow and net result in 2012

– Fears over Mediolanum’s leverage are over-emphasized, Mediobanca says

– Deutsche Wohnen Initiated at Neutral at JPMorgan; PT EU13

– Grainger Upgraded to Neutral vs Underweight at JPMorgan

– Invensys Raised to Overweight vs Neutral at JPMorgan; PT Raised to 260p vs 240p at Morgan Stanley; Kept at Equalweight

– Marston’s Raised to Overweight vs Neutral at JPMorgan

– Sirius Minerals Rated New Buy at Jefferies; PT 25p

– FirstGroup PT Cut to 260p vs 285p at Morgan Stanley; Kept at Equalweight

– Perform Group PT Raised to 385p vs 350p at Morgan Stanley; Kept at Overweight

Buy TalkTalk as there is ‘scope for a large special or buyback,’ UBS says;PT Raised to 190p vs 170p at Morgan Stanley; Kept at Equalweight

– TF1 Cut to Underweight vs Equalweight at Morgan Stanley

 

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