The Dawn Patrol – 25.10.12 – Earnings by the dozen! FT lowers div… Read the short summary on MS strategy.

Bonjour,

Early this morning, Futures indicated slightly down, but given the poor quality of earnings published this morning, it could worsen. Asia continues to go up thanks to Japan who could increase QE big time. Gold up at $1708.85 EURUSD at 1.3010. Today will be another scrambling though day with lots of earnings and lots odf macro data. UK GDP, EU M3 and US Durable Goods orders. No European bonds auctions.

Since it’s only about results today, I tried to summarise as many as I could, but you’ll find the info on your screens anyway. Pernod below, FTE cuts dividend (-2% pre market) and SAFRAN is not that great. These are three names I like. I’ll stick to my calls on SAFRAN and FT (yes I know it’s not a great company) and for PERNOD, it was a switch from LVMH, so wait for the stock to come doan a bit more…

Not related to anything, but it will probably be the highlight of my week…

HOT (and boring)

(there are actually many more numbers this morning).

 

FRANCE TEL cuts its dividend from €1 to 80c and sees a drop in CF for 2013. This is not a surprise. It has been well flagged by some analysts (read Nomura’s Fred Boulan). And the dividend remains high. There is a lot of fat to trim, competition is harsh but FT is fighting back with SOSH. This may be the signal to get in. I said long FTE/ short ILD. I still believe in this call. France Telecom Would Look at Maroc Telecom If for Sale.

BEST BUY warned that earnings and same-store sales would fall in its third quarter, and said Mike Vitelli, the head of its US business, will leave as part of changes under new CEO Hubert Joly. The news pushed its shares down 6.8% in after-hours trading.

AXA 9 Mo. Sales Gain 3.7% to EU68.4b; Analyst Est. EU68.2b 
BASF 3Q Ebit Pre-Exceptionals Beats Est., Reiterates Forecast 
CREDIT SUISSE 3Q Net CHF254m Vs Est. CHF415m; net interest income was CHF1.71b, est. CHF1.69b; ROE 2.9%, est. 5.7%; Tier 1 ratio 18l.5% vs 16.5%.
DASSAULT SYSTEMES 3Q Non-IFRS EPS Beats; Raises 2012 Forecasts
ERAMET 3Q Sales EU793m; Says Income From Ops Likely Lower in 2H
GEMALTO shows good numbers and guidance increased. I like Gemalto too… but was less vocal on it.
SAFRAN (which I like a lot) posts numbers in line, and reiterates guidance which may disappoint given the recent run
NOVARTIS 3Q Pharmaceuticals rev. $7.8b (down 5% Y/y) vs avg. analyst est. $7.9b (3 ests), EPS in line and forecasts confirmed.
PERNOD dissapoints with a miss on organic sales at 5% vs 6.3% est due to weaknessesin Europe and Asia. I said to switch in from LVMH post the results… Let’s wait for the stock to come doan a bit more…
SCHNEIDER
Electric Cuts 2012 Organic Sales Growth Forecast; 3Q sales EU6.1b, up 7.1% Y/y, vs est. EU6.10b.
SOLVAY Ebitda Beats Estimates On Polymers, Soda Ash, Guar Gum
TECHNIP EBITDA at €269m vs est of €266m. FY group sales seen towards EU8b vs previous EU7.65b-EU8b; subsea sales to be at least EU3.5b vs previous EU3.35b-EU3.5b; onshore/offshore revenue to be EU4.3b vs previous EU4.3b-EU4.5b, operating margin to be 6.5%-7%.
UNILEVER 3Q Underlying Sales Growth 5.9%; Est. 5.3%
WPP Cuts FY Sales Forecast, Sees Growth of as Little as 2.5%

 

 

 

UPS & DOWNS

ALFA LAVAL Cut To Equalweight VS Overweight at Morgan Stanley 
ELAN PT Cut 2% to Eu9 at Exane; Kept at Neutral
IBERDROLA PT Raised 9% to Eu3.6 at Exane; Kept at Underperform
KONECRANES Cut To Hold From Buy at Nordea 
MERCIALYS Rated New Buy at Berenberg; PT EU19 
SAIPEM Kept as a Citigroup Focus List Key Buy 
SAIPEM PT Cut to EU42 vs EU44 at Credit Suisse
SAIPEM Valuation Attractive Following Weakness: Morgan Stanley

TECNICAS REUNIDAS Cut To Neutral From Overweight at JPMorgan
VISCOFAN PT Raised 2% to Eu41 at Exane; Kept at Outperform
WHITBREAD Cut To Neutral VS Buy at Citi

 

Overweight SAP, is Attractively Valued, Morgan Stanley Says

TF1 (MS, Rossi) UW to EW, PT €7.35 to €6.60
TF1 has under performed Media by over 30% in the last six months. While structural challenges remain, they believe a >7% dividend yield under pinned by the robustness of TF1’s balance sheet should now provide the stock with some downside protection. MS pauses for breath and raise the rating to EW.

AFTER HOURS

AKAMAI 3Q beat +5% after hours

ARRIS GROUP 3Q in line guides 4Q better

CITRIX 3Q license revenue miss +2.5% after hours

F5 NETWORKS 3Q miss -11% after hours

LSI 3Q in line, guide 4Q lower +1.7% after hours

SYMANTEC 3Q big beat but guide 4Q small lower +9.3% after hours

CURRENT STUFF

On the FOMC Meeting
No surprises last night and everything remains the same. They commented that the housing situation improved (but from a very low base) but on the fixed investiment there is no improvement. Inflation is metioned as well as being higher (without cause for concern). They voted 11 to 1 on this policy statement, only Jeffrey Lacker didn’t. The next meeting will be much more important as it will decide to continue the Operation Twist at the same rate ($85bn a month).

On Earnings (S&P)
So far, 204 companies have reported. Q3 earnings stand at $22.50 vs $22.99 in 3Q11 showing a drop of 2.13% (UNADJUSTED numbers!). 121 have reported up EPS and 80 down EPS. In terms of surprises,: 124/204 reported positive surprises and 51/204 reported negative surprises. So far the outlooks aren’t good.

On Spanish Banks
Spanish banks Moody’s concludes its review of 18 Spanish banks, downgraded Liberbank’s ratings, maintained the review for downgrade of Ibercaja Banco following the termination of the latter’s planned merger with Caja 3, and confirmed the ratings of Caixabank, La Caixa, Banco Sabadell and Banco CAM. Overall, today’s actions conclude the reviews for downgrade of 27 of the 31 banks whose ratings we placed on review in June 2012, while the ratings of four banks remain on review.

Macro hedge funds look to emerging markets. (Financial Times)

STRATEGY

MS (Peters) Cross Asset Strategy
It’s not as good as priced.

Greg is getting more and more cuatious. Markets have risen, valuations too and there are riks looming. Q3 earnings aren’t that good and earnings forecasts don’t bode well for valuations. Any disappointement could weigh on the market big time. Consensus sees 12% EPS increase on the S&P and 12.5% for Europe… Also risk markets don’t semm to care about tail risk anymore.
Time to turn defensive… There is a better case for EM and MS still ikes credit although, it’s not that attractive anymore.

Max Kamir

Louis Capital Markets UK,LLP

Authorised and regulated by the FSA and Banque de France

39-41 rue Cambon

75001 Paris

T +33 (0)1 53 45 10 74

E mkamir
I http://www.louiscapital.com

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Bonjour,

Early this morning, Futures indicated slightly down, but given the poor quality of earnings published this morning, it could worsen. Asia continues to go up thanks to Japan who could increase QE big time. Gold up at $1708.85 EURUSD at 1.3010. Today will be another scrambling though day with lots of earnings and lots odf macro data. UK GDP, EU M3 and US Durable Goods orders. No European bonds auctions.

Since it’s only about results today, I tried to summarise as many as I could, but you’ll find the info on your screens anyway. Pernod below, FTE cuts dividend (-2% pre market) and SAFRAN is not that great. These are three names I like. I’ll stick to my calls on SAFRAN and FT (yes I know it’s not a great company) and for PERNOD, it was a switch from LVMH, so wait for the stock to come doan a bit more…

Not related to anything, but it will probably be the highlight of my week…

https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQZ_wiQPlX_0xGH6MfnwL_SerhFKjDv0VXI8VqJ6CLJCoTH_idxmg

HOT (and boring)

(there are actually many more numbers this morning).

FRANCE TEL cuts its dividend from €1 to 80c and sees a drop in CF for 2013. This is not a surprise. It has been well flagged by some analysts (read Nomura’s Fred Boulan). And the dividend remains high. There is a lot of fat to trim, competition is harsh but FT is fighting back with SOSH. This may be the signal to get in. I said long FTE/ short ILD. I still believe in this call. France Telecom Would Look at Maroc Telecom If for Sale.

BEST BUY warned that earnings and same-store sales would fall in its third quarter, and said Mike Vitelli, the head of its US business, will leave as part of changes under new CEO Hubert Joly. The news pushed its shares down 6.8% in after-hours trading.

AXA 9 Mo. Sales Gain 3.7% to EU68.4b; Analyst Est. EU68.2b 
BASF 3Q Ebit Pre-Exceptionals Beats Est., Reiterates Forecast 
CREDIT SUISSE 3Q Net CHF254m Vs Est. CHF415m; net interest income was CHF1.71b, est. CHF1.69b; ROE 2.9%, est. 5.7%; Tier 1 ratio 18l.5% vs 16.5%.
DASSAULT SYSTEMES 3Q Non-IFRS EPS Beats; Raises 2012 Forecasts
ERAMET 3Q Sales EU793m; Says Income From Ops Likely Lower in 2H
GEMALTO shows good numbers and guidance increased. I like Gemalto too… but was less vocal on it.
SAFRAN (which I like a lot) posts numbers in line, and reiterates guidance which may disappoint given the recent run
NOVARTIS 3Q Pharmaceuticals rev. $7.8b (down 5% Y/y) vs avg. analyst est. $7.9b (3 ests), EPS in line and forecasts confirmed.
PERNOD dissapoints with a miss on organic sales at 5% vs 6.3% est due to weaknessesin Europe and Asia. I said to switch in from LVMH post the results… Let’s wait for the stock to come doan a bit more…
SCHNEIDER
Electric Cuts 2012 Organic Sales Growth Forecast; 3Q sales EU6.1b, up 7.1% Y/y, vs est. EU6.10b.
SOLVAY Ebitda Beats Estimates On Polymers, Soda Ash, Guar Gum
TECHNIP EBITDA at €269m vs est of €266m. FY group sales seen towards EU8b vs previous EU7.65b-EU8b; subsea sales to be at least EU3.5b vs previous EU3.35b-EU3.5b; onshore/offshore revenue to be EU4.3b vs previous EU4.3b-EU4.5b, operating margin to be 6.5%-7%.
UNILEVER 3Q Underlying Sales Growth 5.9%; Est. 5.3%
WPP Cuts FY Sales Forecast, Sees Growth of as Little as 2.5%

 

 

 

UPS & DOWNS

ALFA LAVAL Cut To Equalweight VS Overweight at Morgan Stanley 
ELAN PT Cut 2% to Eu9 at Exane; Kept at Neutral
IBERDROLA PT Raised 9% to Eu3.6 at Exane; Kept at Underperform
KONECRANES Cut To Hold From Buy at Nordea 
MERCIALYS Rated New Buy at Berenberg; PT EU19 
SAIPEM Kept as a Citigroup Focus List Key Buy 
SAIPEM PT Cut to EU42 vs EU44 at Credit Suisse
SAIPEM Valuation Attractive Following Weakness: Morgan Stanley

TECNICAS REUNIDAS Cut To Neutral From Overweight at JPMorgan
VISCOFAN PT Raised 2% to Eu41 at Exane; Kept at Outperform
WHITBREAD Cut To Neutral VS Buy at Citi

 

Overweight SAP, is Attractively Valued, Morgan Stanley Says

TF1 (MS, Rossi) UW to EW, PT €7.35 to €6.60
TF1 has under performed Media by over 30% in the last six months. While structural challenges remain, they believe a >7% dividend yield under pinned by the robustness of TF1’s balance sheet should now provide the stock with some downside protection. MS pauses for breath and raise the rating to EW.

AFTER HOURS

AKAMAI 3Q beat +5% after hours

ARRIS GROUP 3Q in line guides 4Q better

CITRIX 3Q license revenue miss +2.5% after hours

F5 NETWORKS 3Q miss -11% after hours

LSI 3Q in line, guide 4Q lower +1.7% after hours

SYMANTEC 3Q big beat but guide 4Q small lower +9.3% after hours

CURRENT STUFF

On the FOMC Meeting
No surprises last night and everything remains the same. They commented that the housing situation improved (but from a very low base) but on the fixed investiment there is no improvement. Inflation is metioned as well as being higher (without cause for concern). They voted 11 to 1 on this policy statement, only Jeffrey Lacker didn’t. The next meeting will be much more important as it will decide to continue the Operation Twist at the same rate ($85bn a month).

On Earnings (S&P)
So far, 204 companies have reported. Q3 earnings stand at $22.50 vs $22.99 in 3Q11 showing a drop of 2.13% (UNADJUSTED numbers!). 121 have reported up EPS and 80 down EPS. In terms of surprises,: 124/204 reported positive surprises and 51/204 reported negative surprises. So far the outlooks aren’t good.

On Spanish Banks
Spanish banks Moody’s concludes its review of 18 Spanish banks, downgraded Liberbank’s ratings, maintained the review for downgrade of Ibercaja Banco following the termination of the latter’s planned merger with Caja 3, and confirmed the ratings of Caixabank, La Caixa, Banco Sabadell and Banco CAM. Overall, today’s actions conclude the reviews for downgrade of 27 of the 31 banks whose ratings we placed on review in June 2012, while the ratings of four banks remain on review.

Macro hedge funds look to emerging markets. (Financial Times)

STRATEGY

MS (Peters) Cross Asset Strategy
It’s not as good as priced.

Greg is getting more and more cuatious. Markets have risen, valuations too and there are riks looming. Q3 earnings aren’t that good and earnings forecasts don’t bode well for valuations. Any disappointement could weigh on the market big time. Consensus sees 12% EPS increase on the S&P and 12.5% for Europe… Also risk markets don’t semm to care about tail risk anymore.
Time to turn defensive… There is a better case for EM and MS still ikes credit although, it’s not that attractive anymore.

Max Kamir

 

Louis Capital Markets UK,LLP

Authorised and regulated by the FSA and Banque de France

39-41 rue Cambon

75001 Paris

 

T +33 (0)1 53 45 10 74

E mkamir@louiscapital.com
I
http://www.louiscapital.com

 


IMPORTANT NOTICE:

Unless otherwise stated within the attachment, the above information is not determined to be research and is not from LCM Research but it may refer to a research analyst/research report. Unless indicated, these views are the author’s and may differ from those of the research department of Louis Capital Markets, LP or its affiliates. We do not represent this is accurate or complete and we may not update this.

The information contained herein is confidential and is intended solely for the addressee(s). It shall not be construed as a recommendation to buy or sell any security. Any unauthorized access, use, reproduction, disclosure or dissemination is prohibited. Neither Louis Capital Markets, LP nor any of its subsidiaries or affiliates shall assume any legal liability or responsibility for any incorrect, misleading or altered information contained herein.

Graham Secker, Ronan Carr, Jonathan Garner, …
12.00

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