LCM Dawn Patrol – 25.04.13 – Apple, lots of earnings.

Bonjour,

European stocks are seen opening flat to higher on Wednesday, consolidating the previous session’s gains after continued strong earnings and hopes for further monetary easing buoyed stocks in the United States and Asia overnight. Apple Inc. shares reversed course and fell in after-hours trade Tuesday as the iPhone maker’s lower quarterly margins came into focus. Meanwhile, other technology stocks got hammered led by drops in Juniper Networks Inc. and VMware Inc. following their quarterly earnings reports.

Today, we’ll learn a bit more about the Italian government as Amato should be the new PM. Apple rose last night and you’ll find a short summary below of what matters now.

NEWS

Lloyds branch sale to Co-op collapses: The planned sale of more than 600 branches to the Co-operative Group has collapsed after the Co-op concluded yesterday it could not proceed with the deal. It means Lloyds will have to revive a “plan B” to float the branch network as a freestanding business, and bankers are sceptical that process could be initiated, let alone completed, by the end of the year — which is its deadline imposed by Brussels. The Co-op board’s decision yesterday to pull the plug on the deal are not yet clear. FT
US sues Novartis, alleging kickbacks: “The U.S. government filed a civil fraud lawsuit against Novartis AG on Tuesday,accusing a unit of the Swiss drug maker of causing the Medicare and Medicaid programs to pay tens of millions of dollars in reimbursements based on fraudulent, kickback-tainted claims.”
Ziggo CEO Bernard Dijkhuizen sold shares for 27 euros apiece on April 22, according to filing posted on Dutchfinancial markets regulator AFM’s website today.

EARNINGS

GDF Suez 1Q Ebitda beats est., affirms 2013 Targets Q1 conf call feedback: comforting message on balance sheet and earnings – JPM “The tone of the call was broadly positive, and management’s message on power prices, cost of debt and disposals comforted us in our view that downside risks to earnings expectations are limited, following three years of continuous earnings downgrades.”
Air Liquide revs below est : 1Q rev. EU3.7b, est. EU3.90b, reiterate growth goal.
Peugeot 1Q sales beat & reiterate cash targets
France Telecom 1Q Sales, Ebitda Miss; confirms targets, says it will pay a 2013 div. of at least EU0.8/shr
Ericsson 1Q Gross Margin, Sales Miss Estimates.
Daimler missed on EBIT and forecasts 2013 Ebit to drop, Lowering earlier target
ABB 1Q Net Income Misses Estimates, oper. cash flow rise -$223m vs -$22m citing higher net working capital for large projects, timing of “customer advances” mainly in power businesses.
Credit Suisse 1Q Net CHF1.3b vs Est. CHF1.27b; RoE 14%, lower than exp 1Q wealth mngt, Net new money CHF12b
SHBA 1Q net income beat : SK3.47b vs est. SK3.26b.
ASM International 1Q Sales Miss Est. Sees “strong double-digit” sales rise in 2Q vs 1Q.
Novartis 1Q EPS beat est, cut 300 jobs in Lincoln. 1Q Pharmaceuticals rev. $7.88b vs est. $7.78b
Zodiac confirms forecasts, Net income in the first half fell 4% to 146.6M, Aeronautical market is “bouyant,”
N. Hydro 1Q net income NK263m vs NK87m Q/q; rev. NK16.1b vs est. NK17.1b. Norsk says it expects a balanced primary aluminium market in 2013, based on expected demand growth outside China of 2-4%, announced curtailments and new production coming on stream.

CURRENT STUFF

Italian prime minister set to be announced: After a long day of talks yesterday, President Giorgio Napolitano was expected to nominate a prime minister today. Giuliano Amato, a former socialist prime minister, was widely tipped although the mayor of Florence, Matteo Renzi and centre-left deputy leader Enrico Letta have also emerged as possible candidates. (Financial Times)(Reuters)

Portugal announces ambitious stimulus measures: “Economy Minister Álvaro Santos Pereira said the government will aim to cut the corporate tax rate, provide incentives for foreign companies to move to Portugal, tackle a highly bureaucratic system that hurts investments and offer financing for small- and medium-size enterprises at attractive terms.” There were no figures attached to the plan, some of which may require approval from international creditors. (Wall Street Journal)

UPS&DOWNS

Apple (MS, Huberty) New Products and Easier Comps Drive Growth in Dec
The key to AAPL working from here is 1) consensus Sept Q estimates moving closer to our $35B Rev / $7 EPS, 2) iOS7 preview with hints of new services, like mobile payments, at June WWDC, 3) return to EPS growth in C4Q13 on the back of new product launches and annualizing iPad Mini introduction.

Chemicals(MS, Walsh) Calibrating 2013 risks under a realistic downside case
Arkema: EW to OW, PT €87
Akzo Nobel: OW, PT €60 | Positive RTI
DSM: UW, PT €45 | Negative RTI

Our downside ‘13 scenario suggests ~10% EBITDA cuts are possible across European spec chems. While stocks are already down 14% on average, the downgrade cycle has only just started, so it remains too early to turn outright positive. But opportunities are emerging – we upgrade Arkema to OW.

BAE SYSTEMS CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
DEUTSCHE POST ADDED TO EUROPEAN ANALYST FOCUS LIST AT JPMORGAN
DEUTSCHE POST RAISED TO BUY FROM HOLD AT BERENBERG
GL EVENTS RAISED TO BUY VS HOLD AT SOCGEN
IAG RAISED TO HOLD VS SELL AT LIBERUM
KEMIRA RAISED TO HOLD VS SELL AT NORDEA
L’OREAL CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
MOBISTAR CUT TO NEUTRAL VS BUY AT CITI
MONEYSUPERMARKET.COM RAISED TO BUY VS HOLD AT JEFFERIES
NESTLE RAISED TO OUTPERFORM VS SECTOR PERFORM AT RBC
NOVOZYMES CUT TO NEUTRAL VS BUY AT GOLDMAN
SAIPEM CUT TO HOLD VS BUY AT SOCGEN
SECHE ENVIRONNEMENT RAISED TO HOLD VS SELL AT SOCGEN
SPECTRIS RAISED TO BUY VS HOLD AT INVESTEC
STORA ENSO RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
TDC RAISED TO BUY VS HOLD AT NORDEA
TPSA RAISED TO HOLD VS SELL AT SOCGEN

OVERNIGHT MARKETS: UP

Asian markets
Nikkei 225 up +225.21 (+1.66%) at 13,755
Topix up +11.11 (+0.97%) at 1,155
Hang Seng up +282.34 (+1.29%) at 22,089

US markets
S&P 500 up +16.28 (+1.04%) at 1,579
DJIA up +152.29 (+1.05%) at 14,719
Nasdaq up +35.78 (+1.11%) at 3,269

European markets
Eurofirst 300 up +28.03 (+2.43%) at 1,183
FTSE100 up +125.50 (+2.00%) at 6,406
CAC 40 up +130.92 (+3.58%) at 3,783
Dax up +180.10 (+2.41%) at 7,658

Currencies
€/$ 1.30 (1.30)
$/¥ 99.40 (99.46)
£/$ 1.52 (1.52)

Commodities ($)
Brent Crude (ICE) up +0.27 at 100.58
Light Crude (Nymex) up +0.37 at 89.55
100 Oz Gold (Comex) up +11.80 at 1,420
Copper (Comex) unchanged 0.00 at 309.40

10-year government bond yields (%)
US 1.70%
UK 1.71%
Germany 1.26%

CDS (closing levels)
Markit iTraxx SovX Western Europe -2.45bps at 95.58bp
Markit iTraxx Europe -3.58bps at 107.47bp
Markit iTraxx Xover -16.35bps at 433.75bp
Markit CDX IG -2.99bps at 80.76bp

Sources: FT, Bloomberg, Markit

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