The Dawn Patrol – 27.07.12 – On Earnings, Capex and Draghi. Barclays is bear (be bull). Sorry for the pic…


Markets to open up today as the S&P closed close to its highs,  nobody wants to be short in case the ECB effectively does something over the WE. Macro eyes on the US GDP, Michigan, Spanish Unemployment and Italian auction of €£8.5bn 6m bills.

Get some rest over the WE, as we may have another interesting week next week with a Fed meeting (nothing specific) an ECB meeting (more talk expected) and a large Spanish auction, and some more earnings.

EU earnings  – no big drama today: Danone 1H Underlying Net & Rev. beats ests. and confirms FY targets, LVMH H1 shows robust sales but  margin hit, PPR announced stronger numbers despite weakness at Puma, GALP 2Q net beat, LIND 1H sales inline, RNO + ML beat 1H op profit exp, Vallourec marginal beat  but guidance remains unclear , strong beat for EAD and raise FY forecasts,  SGO with missed with negative outlook,  Lafarge 2Q Ebitda ahead & maintain FY forecast,  USG 2Q beat cons,  RHK adjusts its expectation for FY earnings adjusted by EUR 25m to EUR 30m, Gamesa reduced 2012 sales view,  BELG 2Q net missed cons and keep FY forecast, UCB solid results but no guidance raise expected.


AMZN: -1.5% – 2Q EPS 1c, est. 3c, 2Q sales $12.83b, est. $12.90b., Amazon sees 3Q net sales $12.9b- $14.3b, est. $14.11b; sees 3Q op. loss $50m-$350m, est. profit $119.6m.

SBUX: -8.5% – Starbucks 3Q EPS 43c, Est. 45c. Starbucks Now Sees 4Q EPS 44c-45c, Est. 48c. Says China business growth strong, Europe “troublesome”. Starbucks saw beginning of U.S. slowdown in June

FB: -9.6% – Facebook 2Q Rev. $1.18b, Est. $1.16b. Facebook 2Q adj. EPS 12c, may not compare to est. Advertising rev. $992m vs est. $936.4m. Payments rev. $192m vs est. $199.3m. Monthly active users 955m at June 30vs est. 950.1m. Facebook’s growth still slowing down. 2Q Rev up 33% from a year ago, compared w/ 45% in 1Q, 55% in 4Q and 104% in 3Q.

EXPE: +10% – Expedia 2Q Adj. EPS 89c; Dividend Boosted to 13c-Shr From 9c. Expedia 2Q adj. EPS 89c, may not compare to est. 72c; rev. $1.04b, est. $988.7m.

APKT: flat% – Acme Packet sees yr. rev. $270m-275m, est. $301.2m; sees yr. adj. EPS 43c-47c, est. 72c.



On European Earnings

As you all know, the numbers look better than feared as most companies surprised on the upside… BUT… the earnings had been revised dowdwards dramatically. Top line was better, but on the EPS level it ain’t that pretty…
According to Reuters (through JPM), S&P 500 Earnings for Q2 are now expected to drop 0.1% from a year ago vs up 3.1% on the 1st of July. Ex Apple, this drop would have been 0.7%

Barclays Earnings Scorecard


On Capex

The headline on durable goods orders yesterday looked OK, but we should remain very cautious. As JPM highlighted yesterday, it’s been driven by the volatile aircraft category. In fact, core cpital good orders declined at a 3.1% annual rate last quarter… Let’s focus on the GDP today…

On Draghi

The Dark Night Rises and is about to do everything inhis power to save the Euro. At first, it seemed like Mario was about to announce some new gear that only Mr Fox could design. But commentators (at least the IMF, GS and JPM) seem much more cautious.

Mackie @ JPM: No big bazooka in sight… but probably some SMP intervention and… AND… additional LTRO. In addition, JPM thinks the ECB could announce new measures including new collateral. The aim to help finance SMEs… (see Wednesday’s ECB lending data).

Schumacher @ GS: Mario’s comment highlight the “ECB’s determination to use the SCB’s balance sheet in one form or another to support the Euro“. But GS expects the ECB to wait for action from local governments before springing into action. As JPM, GS expects another round of SMP and LTRO. But whatever the ECB uses, GS thinks it will only be a short term relief.


Barclays (Singh) Europan equity Explorer
All I want is a quite life, But in August?
see 4 warning signs  – financial conditions are tightening  once again, French bond spreads are widening, Eurozone credit conditions have  worsened anew and latest US PMI surveys have deteriorated further.
An European policymakers take holidays too… So stay cautious.
Stay OW UK and Swiss vs UW Germany. Prefer Healthcare, Media, Telcos vs UW Tech, Construction and Banks

No offense, but Mr. Singh has been a great contrarian indicator last year…





CAIXABANK 1h Net Eu166 Mln; Analyst Estimate Eu182.4 Mln

CNP 1h Net Eu540m vs. Analyst Estimate Eu536m

SCOR 2Q Net Eu102mln vs. Est. Eu108mln ; 1H Net EU206m


AVIVA  plans to leave the Taiwan insurance market to focus on higher growth markets, Bloomberg reports

BARCLAYS may report a drop in 2Q net, according to analysts’ ests.

HSBC to Sell 44% Stake in Card-Processing Venture for $242m

RBS says some customers had difficulties yesterday afternoon with online banking, debit cards, Bloomberg reports


INTESA PT Cut to EU1.3 at Banca Akros; Kept at Accumulate

UNICREDIT PT Cut to Eu3.3 VS Eu3.6 at Banca Akros; Kept at Hold



ATOS 1H Rev. Matches Est; 1H rev. EU4.37b vs.est. EU4.35b ; 1H net EU102m ; Net cash of EU101m at June 30 vs net debt of EU142 at Dec. 31; Says order entrystrongly accelerated in 2Q; Reiterates 2012 op. margin of 6.5%, “slight organic rev. growth” in 2012, free cash flow of about EU250m; Reiterates 50% EPS increase for 2013

EADS 1H Profit Beats Est. ; 1H sales EU24.9b vs. est. EU23b. ; 1H Ebit EU1.4b vs.  est. EU881m ; Outlook: Sees 2012 ebit ex-items ~EU2.7b vs previous >EU2.5b; sees 580 commercial aircraft deliveries vs prev. 570; says grow around 10% vs prev. well above 6%;

LAFARGE 2Q Ebitda Ahead ; 2Q sales EU4.26b vs est. EU4.31b; 1h Ebitda Eu1.007b vs. Est. Eu978.2m ; says economic conditions remain challenging, remains prudent in outlook in 2Q results today, maintains FY growth, cost-cutting, divestment targets; mMaintains estimated market growth of 1-4%, expects higher pricing; emerging markets continue to be main driver of demand

LEGRAND 2Q sales EU1.14b vs EU1.15b est. ; 2Q net income adj. EU145m vs EU139m est. ; Confirms 2012 Targets, Reiterates Zero Organic Growth

LINDE 2Q Sales Eu3.67 Bln; Analyst Est. Eu3.66 Bln

MICHELIN 1h Op. Profit Eu1.32b; Analyst Estimate Eu1.28b

PIRELLI 1H Net In-Line; 1H revenue EU3.02b, up 8.3% ; 2Q rev. rises 5.5% to EU1.47b ; 2Q net EU222m vs. est. EU223.5m.; tire unit 2012 Ebit target at least EU800m; Outlook: Cuts FY rev. target to ~EU6.4b from ~EU6.45b (due tovolume reduction of less-profitable products); Reiterates FY ebit of at least EU800m, margin above 12%; says efficiencies raised to ~EU150m from EU120m; says net financial position negative below EU1.1b

RENAULT 1H Profit Beats Est. ; Rev. EU20.9b, est. EU20.2b. ; 1H ebitEU482m est. EU363m. ; Auto op FCF was -EU200m ; Outlook: reiterates plan for FY higher sales, positive operational FCF in auto div.; says French market to drop ~10% vs prev. ~-7%


AIR FRANCE Says Job Cuts Will Concern 2,767 Ground Staff

GLENCORE makes ‘Best, Final’ offer of C$12.50 to Viterra Holders, as it increases proxy payment from C$5.00 per C$1,000 principal amount of 2021 notes.; Glencore gets approval from Australian Regulator to buy Viterra

SAINT-GOBAIN sees 2H op profit moderately lower than 1H; will seek to pass on higher raw material, energy costs in form of higher prices.

REXEL Confirms FY Targets; Sees Adj. Ebitda Margin at Least 5.7%

VALLOUREC says demand in Europe, Brazil industrial markets has “recently deteriorated, with no improvement expected” for rest of year.


GEA Cut to Neutral VS Buy at UBS

INTERTEK PT Raised 7% to Gbp31 at Exane; Kept at Outperform

PEUGEOT Cut To Equalweight VS Overweight at Morgan Stanley; Cut To Neutral VS Buy at UBS

PIRELLI Kept at Outperform at Exane; 2Q Results Reassuring

ROLLS-ROYCE PT Raised 10% to 880p at Exane; Kept at Neutral

SIEMENS Cut to Equalweight from Overweight at Barclays



EDP ENERGIAS DE PORTUGAL 1H Net, Ebitda Beat Estimates ; 1H Ebitda EU1.89b vs est. EU1.87b ;  1H net income 582M vs adj. net est. EU560.8m. ; UBS continues to be neutral on EDP as negative macro situation still “main relevant driver” of share performance, expects 2Q to be weak (PT EU1.9)

SOLVAY 2Q Rev. Eu3.33 Bln; Est. Eu3.36 Bln; 2Q Ebitda Ex-items Eu565 Mln; Est. Eu530.6 Mln; 2Q EPS Eu2.68; Est. Eu2.11; Free cash flow EU138m, debt stable at EU1.8b; Reiterates 2012 Forecast


FDA advisory panel voted 10-0 that benefits of ThromboGenics’ ocriplasmin eye drug outweigh risks.

AREVA Raises 2012 Forecasts Including Ebitda, Rev. Growth

EDP says China Development Bank approves terms of EU1b Loan

GENENTECH announces second positive study of subcutaneous formulation of Actemra, to submit data to FDA.

GLAXO recalls OTC Medicine in South Africa, says Reuters; Taisho is to market Glaxo’s Obesity Drug in Japan, Nikkei Says; Human Genome Share-tender Delay Not Warranted, U.S. Judge Says; Human Genome Investors Denied Bid to Extend Glaxo Offer; Glaxo/Pfizer/Shionogi Once-Daily HIV Drug Works in Phase 3 Study

ROCHE wins FDA panel backing for 2 Lucentis doses to treat DME


Goldman Sachs raises Natural-Gas price outlook for the Third Quarter; forecasts average price at $2.90 per million British thermal units on the New York Mercantile Exchange, up from an earlier prediction of$2.10

Buy ASTRAZENECA on U.S. Seroquel Margins Visibility, UBS Says; Cut To Sell VS Hold at Nordea

SANOFI PT Raised 3% to Eu71 at Exane; Kept at Outperform



BELGACOM 2Q Adj. Ebitda Meets Estimates; 2Q rev. EU1.61b vs est. EU1.595b ; 2Q adj. Ebitda EU471m vs est. EU467.8m ; 2Q reported Ebitda includes EU34m impact from one-time accounting impact for deferred discounts, sales commissions; 2Q net EU160m vs est. EU178.5m; 1H free cash flow EU289m; net debt EU1.72b vs est. EU1.69b; Forecasts maintained: sees sales down about 1%, Ebitda down 5% to 6% for full year

TELENET 2Q Ebitda Beats; 2Q sales EU363m vs est. EU363.9m; 2Q adj. ebitda EU194.4m vs est. EU190.7m; maintains forecast for FY rev. and for 2012 capex at 22%-23% of rev.


NOKIA plans to cut 3,700 jobs in Finland as previously announced. ; Samsung topped Nokia as world’s biggest phone vendor in 2Q

UNIVERSAL MUSIC in talks to sell Parlophone: FT


European Media Sector, Utilities Raised at Citigroup

LOGITECH PT Cut 2% to Chf13.7 at Exane; Kept at Outperform



CHRISTIAN DIOR GROUP January-June Sales EU13.5b; expects to gain market share. *Christian Dior Group January-April Sales EU9b

DANONE 1H Underlying Net, Rev. Beats Ests.; 1H rev. EU10.48b vs. est. EU10.4b. ; 1H underlying net inc. EU911m vs. est. EU901m ; 1H trading oper. inc. EU1.45b, est. EU1.44b; Says 1H trading oper. margin -61bps to 13.85%, in-line with co. expectations, est. 13.75% (co.-compiled median est.); drop mainly due to high raw material costs; confirms FY targets of LFL sales growth +5%-7%, LFL oper. margin -50bps, FCF EU2b

L’OREAL 2Q Rev. Beats; 2Q rev. EU5.57b vs est. EU5.47b. ; 2Q LFL +5.7% vs. JPMorgan est. +4.9% ; Reiterates confident in ability to outperform market in 2012, achieve another year of solid growth in sales, profits

LUXOTTICA 2Q Oper. Income, Net Beats, Rev. In-Line; 2Q rev. EU1.88b vs. est. EU1.88b. ; 2Q oper. margin 17.7% vs 16.9% Y/y ;  2Q net EU195.5m, est. EU193m ; 2Q oper. inc. EU332.6m, est. EU325m ; 2Q wholesale sales +12% current FX, retail +17.7% ; 1H emerging mkt sales+35%, W. Europe +1%; Sees “solid foundation” for reaching 2012 objectives

LVMH 1H Rev., Net Beats Ests.; 1H rev. 13b vs. Est. EU12.8b.; 1H net EU1.68b vs. est. EU1.6b; 1H profit from recurring operations EU2.66b vs. est. EU2.7b ; 1H organic rev. growth 12%, 1Q up 14%; Interim div. EU1.10; Says will continue to gain mkt shr due to product introductions planned before end of yr, geographic expansion, managing costs


H&M is to close its Hong Kong flagship store on rising rent: WSJ

HEINEKEN has agreed to give Fraser and Neave another week to review the Dutch brewer’s S$5.1bn (US$4bn) offer to buy out the Singapore conglomerate’s stake in a joint venture through which the two companies run Asia Pacific Breweries, the maker of Tiger beer (Financial Times).

INTER PARFUMS says Burberry to buy license rights for $220m

PPR won’t rush Redcats disposal, Deputy CEO Jean-Francois Palus says


PUMA PT Cut 5% to Eu275 at Exane; Kept at Outperform

LUXOTTICA PT Raised to EU28.5 vs EU26.7 at UBS; Kept at Neutral



INDRA 1H revenue rose 9% to EU1.47b ; 1H Ebit EU103m vs. analyst estimate EU118.2m ; 1H net income dropped to EU61.4m vs. EU105.3m a year ago. ;confirms all targets for 2012

LOTTOMATICA 2Q rev. up 6% to EU742.7m vs. est. EU756.2m. ; 2Q Ebitda up 6% to EU259.7m vs. est. EU262m ;  2QNet EU63.8m; Co. confident of matching 2012 guidance

NYRSTAR Rev. EU1.49b vs est. EU1.61b ; 1H Adj. Ebitda EU111m vs Est. EU125.3m ; 1H loss EU28.9m vs EU20.4m profit yr ago. ; Maintains forecast for FY zinc output of ~1.1m tonnes

USG 2Q sales EU720m vs est. EU728m ; 2Q Net EU6.3m Beats Est. of EU5.4m ; says it won’t give outlook amid mkt uncertainty.

VALEO 1H Net Misses Est., Sales Beat; Sales EU6b vs.; est. EU5.94b.; 1H net EU198m vs. est. EU236m.; Op margin EU370m (6.2%) vs EU345m (6.5%) y/y; Reiterates outlook from Feb. for 2012 op margin in euros in same magnitude as yr earlier (EU704m); Says sees 5%-6% growth in global auto production FY, with 6%-7% decline in Europe


GAMESA reduced 2012 sales view and will announce restructuring plan in Oct. after reporting first half-year loss since IPO

IMERYS Sees 2012 Current Net at Least Matching 2011

RHOEN-KLINIKUM Cuts 2012 Profit Forecast, Sticks to Rev. Outlook


CLARIANT PT Cut 3% to Chf12.9 at Exane; Kept at Neutral

ERAMET Raised To Buy VS Underperform at BofAML

INVENSYS Cut To Equalweight VS Overweight at Barclays

LOTTOMATICA Kept as Preferred European Gaming Stock at Nomura; Credit Suisse Keeps Lottomatica at Outperform on Gtech Growth

NEXITY PT Raised 7% to Eu22.5 at Exane; Kept at Neutral

ROVI PT Raised 4% to Eu7 at Exane; Kept at Outperform

ST JAMES’S PLACE Raised To Neutral at Credit Suisse

STADA ARZNEIMITTEL Cut To Neutral VS Buy at Citi

TF1 PT Raised 10% to Eu7.7 at Exane; Kept at Neutral


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