The Daily Call

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Morning Summary

Jayme Casey, Pat O'Donohue (203) 861-7650 | 7.21.2017

News

From our international desk, ‘Asian markets ended Friday’s session broadly lower in a generally quiet session with no major stories. Regional news kept to existing themes with stalled US-China trade talks in the headlines. Weakness in tech had Taiwan down 0.6% while Hong Kong and Shanghai each fell about 0.2%. Resource shares and financials weighed on Australia which declined 0.6%. Japan fell 0.2% and Korea managed to buck the trend and close higher by 0.3% , rising for a 7th consecutive session. European markets opened mostly lower and have recently traded down near the worst levels of the session. The UK is a relative outperformer down 0.1% while France, Germany and Spain are all down roughly 3/4%. Attention remains on the ECB with very few meaningful economic releases scheduled today. Reuters cited sources saying ECB policymakers see October as the most likely date to decide on the future of the QE program and consider December, an option flagged by staff, as too late. Telecom is the only sector currently in the green while industrials, discretionary, tech and financials are lower. The EUR is steady +0.1%, holding on to recent gains while the GBP is +0.25%. Volumes are running in-line with the 20 day average, getting some help from options expiration’.  Domestically, futures are basically flat to down fractionally across the board. Crude is down 40c, gold is up ~$2 and the ten year yield is slightly lower at 2.24%. We are clearly in the midst of heavy earnings season. Some of the larger companies that were moving off of earnings last night include: ATHN which was trading up 5% after reporting Q2 revs. of $301MM vs. consensus $299MM and adjusted EPS of 51c vs. consensus 39c, EBAY down 5% after meeting consensus numbers with a soft guide (yet they bought back $500MM in stock and are generating roughly that in FCF per quarter), V was trading up $1 after guiding ’17 net revenue growth to 20% vs. the prior high end of the 16-18% range with consensus at 19%, MXIM was down 7% after guiding next quarter to 52c-58c vs. consensus 58c, COF was trading up $3 after lowering credit card charge-offs to 4.76% vs. the prior month’s 5.23% and reporting $1.96 vs. $1.90 consensus, PBCT beat by 1c and was trading up 2% post-close, ISRG is currently not trading after reporting $5.95 in EPS for the quarter vs. consensus $5.79 and guiding full year ’17 procedure growth to 14-15% vs. prior 12-14%, while MSFT is trading up fractionally after reporting slightly better than expected numbers but lowering ’18 operating margin by 1%, due primarily to LinkedIn OPEX . ALV (down 7%) just posted revs. of $2.55b vs consensus $2.57b and cut organic sales growth numbers due to lighter than expected light vehicle production in China and North America.  GE is trading up fractionally after reporting revs. of $29.6b vs. $29.15 consensus and guiding ’17 adjusted EPS to $1.60-$1.70 vs. consensus $1.62. SLB is bid up 50c after reporting 35c vs. 30c. consensus. HON is not trading yet after reporting Q2 at $1.80 vs. consensus $1.78 and guiding Q3 to $1.70-$1.75 vs. $1.74. CL is offered down $1 after reporting sales of $3.83b vs. est. $3.89b on global unit volume -1% due to continued softness in North America and challenges in AsiaPac. PLUG is bid up 15% on WMT contract that may be worth up to $600MM and warrants that could give it a 20% stake in the company. SYF is bid up 1% after reporting 4c better and announcing a new capital plan increasing the quarterly common stock dividend to $0.15 per share and share repurchases of up to $1.64 billion. PetIQ’s (PETQ) IPO priced 6.25MM shares at $16, which was the top end of the $14-$16 range. Secondaries announced include CCI’s 36.5MM shares priced at $96 while CHCT priced 4.25MM shares at $23.45. 

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TMT

Jared Mancuso, Sean Greeley (203) 861-7650 | 7.21.2017

M&A

Baidu (BIDU), JD.com (JD), Tencent (700.HK), others to jointly invest $12B in China Unicom - Reuters, citing sources

AMZN FTC examining allegations of Amazon.com's deceptive discounting -- Reuters, citing a source ($1028.70) Talk To Us Send To A Friend Add AMZN to portfolio
  • A complaint was brought by Consumer Watchdog, which examined ~1,000 product on AMZN''s website in June and found that AMZN put list prices on ~46% of them. Consumer Watchdog found that in 61% of the products with list prices, AMZN's list prices were higher than it had sold the product in the prior 90 days.

News

 

AMZN  Amazon.com buying inventory from US retailers at full price - CNBC 

  • Citing an email, CNBC reports that "for a limited time," the Fulfillment by Amazon team is buying products to build its inventory with no additional fees for the retailers.
  • An Amazon spokesperson tells CNBC that merchants can opt out of the program whenever they want.

 

MSFT  Azure powered Microsoft's Q4 outperformance - WSJ

  • In an interview, CFO Amy Hood tells the WSJ that the loud-computing business turned in numbers that exceeded her expectations.

Given that at the end of the FY, the company's cloud-commercial run rate was $18.9B, Hood tells the WSJ that the company is "pretty confident" it will meet its goal (set out two years ago) of exceeding $20B in the current FY.

Corporate Actions/Syndicate

 

AMZN  Amazon.com buying inventory from US retailers at full price - CNBC 

  • Citing an email, CNBC reports that "for a limited time," the Fulfillment by Amazon team is buying products to build its inventory with no additional fees for the retailers.
  • An Amazon spokesperson tells CNBC that merchants can opt out of the program whenever they want.

 

MSFT  Azure powered Microsoft's Q4 outperformance - WSJ

  • In an interview, CFO Amy Hood tells the WSJ that the loud-computing business turned in numbers that exceeded her expectations.

Given that at the end of the FY, the company's cloud-commercial run rate was $18.9B, Hood tells the WSJ that the company is "pretty confident" it will meet its goal (set out two years ago) of exceeding $20B in the current FY.

Upgrades/ Downgrades

 

AMZN  Amazon.com buying inventory from US retailers at full price - CNBC 

  • Citing an email, CNBC reports that "for a limited time," the Fulfillment by Amazon team is buying products to build its inventory with no additional fees for the retailers.
  • An Amazon spokesperson tells CNBC that merchants can opt out of the program whenever they want.

 

MSFT  Azure powered Microsoft's Q4 outperformance - WSJ

  • In an interview, CFO Amy Hood tells the WSJ that the loud-computing business turned in numbers that exceeded her expectations.

Given that at the end of the FY, the company's cloud-commercial run rate was $18.9B, Hood tells the WSJ that the company is "pretty confident" it will meet its goal (set out two years ago) of exceeding $20B in the current FY.

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Energy News

 (203) 861-7650 | 7.21.2017

News

PLUG Plug Power announces expanded collaboration with Walmart The company announced a new collaborative agreement with Walmart to facilitate further expansion of its ongoing relationship with Wal-Mart Stores, Inc. (WMT).  The new agreement includes revised deal terms with Walmart that allow Plug Power to access project financing at a lower cost of capital and no restricted cash, making Plug Power’s future distribution transactions with Walmart cash flow positive up front. Plug Power expects to provide its GenKey hydrogen fueling station and fuel cell energy solutions to up to 30 additional Walmart sites in North America over the next three years, with ten sites already under contract and scheduled to be finished by the end of 2017.  The value of these 2017 commitments is expected to be around $80M.  On average, Plug Power has deployed a new Walmart site every 6 weeks since 2014, resulting in a deployed fleet of 5500 Plug Power fuel cells at 22 of Walmart’s U.S. distribution centers as of the end of 2016.  As part of the agreement, and as an incentive to align Walmart’s future business with Plug Power’s growth and success, Plug Power has granted Walmart warrants to acquire up to 55,286,696 of Plug Power's common shares. Warrants for the first 5,819,652 shares vested upon execution of the new program agreements at an exercise price of $2.1231 per share, which is based on the volume weighted average closing price of Plug Power common shares for the thirty trading days ending 19-Jul-17. Additional warrants will vest in installments tied to successive $50M payment thresholds, up to a total of $600M in the aggregate, made by Walmart in connection with qualified purchases of goods and services from Plug Power. The exercise price for warrants vesting after the first 34,917,912 warrant shares will be based on the volume weighted average closing price at the time that such warrants vest. The details of the warrants and vesting is described in more detail in a report on Form 8-K filed by Plug Power with the SEC earlier today

WSJ's Heard on the Street column says gas prices may be volatile
The column says that some regions have produced a lot of gas but do not have pipeline capacity, causing sharp discounts in these regions. Rushing to build pipelines may not work as associated production at the Gulf of Mexico could be sold at any price.

OPEC output set to rise 145K bpd in July - Reuters Reuters, citing Petro-Logistics, reports that OPEC's oil output is set to rise by 145K bpd this month. It adds July volumes represent an increase of more than 600K bpd over the first-half 2017 average.  StreetAccount notes that oil has dropped on the news, especially given the increased focus on weaker compliance with the OPEC production-cut deal

WNRL Tesoro Logistics holders led by Tesoro Corporation file amended 13D; submit preliminary proposal to acquire Western Refining Logistics Tesoro Logistics LP (TLLP) submitted anon-binding preliminary proposal to acquire Western Refining Logistics, LP in an all-stock transaction with an exchange ratio of 0.4906 TLLP common units for each WNRL common unit.  This exchange ratio represents an attractive 9.7% premium to the exchange ratio as of 16-Nov-16, one day prior to the announcement of Tesoro Corporation’s acquisition of Western Refining, Inc., and a 5.9% premium to the exchange ratio as of 13-Apr-17, the last trading day prior to TLLP’s 17-Apr-17 13-D filing.  TLLP expects to effect the transaction through a merger of a newly formed TLLP subsidiary into WNRL, with WNRL surviving as a wholly owned subsidiary of TLLP.  Additionally, TLLP expects to acquire the general partner interest in WNRL through the merger of another newly formed TLLP subsidiary into Western Refining Logistics GP, LLC (“WNRL GP”), with WNRL GP surviving as a wholly owned subsidiary of TLLP

Upgrades/ Downgrades

PLUG Plug Power announces expanded collaboration with Walmart The company announced a new collaborative agreement with Walmart to facilitate further expansion of its ongoing relationship with Wal-Mart Stores, Inc. (WMT).  The new agreement includes revised deal terms with Walmart that allow Plug Power to access project financing at a lower cost of capital and no restricted cash, making Plug Power’s future distribution transactions with Walmart cash flow positive up front. Plug Power expects to provide its GenKey hydrogen fueling station and fuel cell energy solutions to up to 30 additional Walmart sites in North America over the next three years, with ten sites already under contract and scheduled to be finished by the end of 2017.  The value of these 2017 commitments is expected to be around $80M.  On average, Plug Power has deployed a new Walmart site every 6 weeks since 2014, resulting in a deployed fleet of 5500 Plug Power fuel cells at 22 of Walmart’s U.S. distribution centers as of the end of 2016.  As part of the agreement, and as an incentive to align Walmart’s future business with Plug Power’s growth and success, Plug Power has granted Walmart warrants to acquire up to 55,286,696 of Plug Power's common shares. Warrants for the first 5,819,652 shares vested upon execution of the new program agreements at an exercise price of $2.1231 per share, which is based on the volume weighted average closing price of Plug Power common shares for the thirty trading days ending 19-Jul-17. Additional warrants will vest in installments tied to successive $50M payment thresholds, up to a total of $600M in the aggregate, made by Walmart in connection with qualified purchases of goods and services from Plug Power. The exercise price for warrants vesting after the first 34,917,912 warrant shares will be based on the volume weighted average closing price at the time that such warrants vest. The details of the warrants and vesting is described in more detail in a report on Form 8-K filed by Plug Power with the SEC earlier today

WSJ's Heard on the Street column says gas prices may be volatile
The column says that some regions have produced a lot of gas but do not have pipeline capacity, causing sharp discounts in these regions. Rushing to build pipelines may not work as associated production at the Gulf of Mexico could be sold at any price.

OPEC output set to rise 145K bpd in July - Reuters Reuters, citing Petro-Logistics, reports that OPEC's oil output is set to rise by 145K bpd this month. It adds July volumes represent an increase of more than 600K bpd over the first-half 2017 average.  StreetAccount notes that oil has dropped on the news, especially given the increased focus on weaker compliance with the OPEC production-cut deal

WNRL Tesoro Logistics holders led by Tesoro Corporation file amended 13D; submit preliminary proposal to acquire Western Refining Logistics Tesoro Logistics LP (TLLP) submitted anon-binding preliminary proposal to acquire Western Refining Logistics, LP in an all-stock transaction with an exchange ratio of 0.4906 TLLP common units for each WNRL common unit.  This exchange ratio represents an attractive 9.7% premium to the exchange ratio as of 16-Nov-16, one day prior to the announcement of Tesoro Corporation’s acquisition of Western Refining, Inc., and a 5.9% premium to the exchange ratio as of 13-Apr-17, the last trading day prior to TLLP’s 17-Apr-17 13-D filing.  TLLP expects to effect the transaction through a merger of a newly formed TLLP subsidiary into WNRL, with WNRL surviving as a wholly owned subsidiary of TLLP.  Additionally, TLLP expects to acquire the general partner interest in WNRL through the merger of another newly formed TLLP subsidiary into Western Refining Logistics GP, LLC (“WNRL GP”), with WNRL GP surviving as a wholly owned subsidiary of TLLP
Morning Summary | TMT | Energy  | Healthcare  | Consumer  | Financial  | Industrial  | Global Trading Summary

Healthcare News

Patrick O'Donohue, CFA, Jared Mancuso (203) 861-7650 | 7.21.2017

News

BCLI Brainstorm receives $16M grant for Phase 3 clinical trial of NurOwn in ALS ($4.53) 

  • The California Institute for Regenerative Medicine (CIRM) has awarded Brainstorm a grant of $16M to support the pivotal Phase 3 study of NurOwn, for the treatment of amyotrophic lateral sclerosis (ALS).
  • Brainstorm is in the advanced stages of planning a Phase 3 clinical trial investigating NurOwn in ALS. The trial is expected to enroll approximately 200 patients and will be conducted at 6 top ALS clinical sites in the U.S. The primary outcome measure will be the ALSFR-S score responder analysis. The patient population will be optimized to include faster-progressing patients who demonstrated superior outcomes in the NurOwn Phase 2 ALS trial. 

VNDA Vanda again receives negative opinion from EMA CHMP for Fanaptum in the treatment of schizophrenia ($16.30) 

  • Vanda Pharmaceuticals announced that the European Medicines Agency's Committee for Medicinal Product for Human Use (CHMP) has adopted a negative opinion recommending against the marketing authorization of Fanaptum (oral iloperidone tablets) for the treatment of schizophrenia in adult patients in the European Union. 

QURE uniQure BV announces successful development and scale up of manufacturing processes for its Hemophilia B gene therapy program ($8.28) 

  • The company has successfully developed and optimized a reproducible and scaled-up manufacturing process for producing its lead gene therapy candidate for patients with hemophilia B at its state-of-the-art manufacturing facility in Lexington, Massachusetts.
  • This progress includes the validation of analytical methods required to manufacture and test product in accordance with Good Manufacturing Practices (GMP). 

ATMS FDA grants orphan drug designation to Artemis Therapeutics for Treatment of malaria ($1.39) 

  • According to the FDA's Orphan Drug product website, Artemis Therapeutics has been granted Orphan drug designation for artemisone for the treatment of Treatment of malaria.
    • Designation date 07/19/2017. 

PODD Insulet to assume distribution and commercial support for its Omnipod System in Europe ($50.40) 

  • Insulet announced plans to assume, on 1-Jul-18, the distribution, sales, marketing, training and support activities of Insulet’s Omnipod System across Europe following the expiration of the company’s global distribution agreement with Ypsomed AG (Ypsomed) on 30-Jun-18.

Corporate Actions/Syndicate

BCLI Brainstorm receives $16M grant for Phase 3 clinical trial of NurOwn in ALS ($4.53) 

  • The California Institute for Regenerative Medicine (CIRM) has awarded Brainstorm a grant of $16M to support the pivotal Phase 3 study of NurOwn, for the treatment of amyotrophic lateral sclerosis (ALS).
  • Brainstorm is in the advanced stages of planning a Phase 3 clinical trial investigating NurOwn in ALS. The trial is expected to enroll approximately 200 patients and will be conducted at 6 top ALS clinical sites in the U.S. The primary outcome measure will be the ALSFR-S score responder analysis. The patient population will be optimized to include faster-progressing patients who demonstrated superior outcomes in the NurOwn Phase 2 ALS trial. 

VNDA Vanda again receives negative opinion from EMA CHMP for Fanaptum in the treatment of schizophrenia ($16.30) 

  • Vanda Pharmaceuticals announced that the European Medicines Agency's Committee for Medicinal Product for Human Use (CHMP) has adopted a negative opinion recommending against the marketing authorization of Fanaptum (oral iloperidone tablets) for the treatment of schizophrenia in adult patients in the European Union. 

QURE uniQure BV announces successful development and scale up of manufacturing processes for its Hemophilia B gene therapy program ($8.28) 

  • The company has successfully developed and optimized a reproducible and scaled-up manufacturing process for producing its lead gene therapy candidate for patients with hemophilia B at its state-of-the-art manufacturing facility in Lexington, Massachusetts.
  • This progress includes the validation of analytical methods required to manufacture and test product in accordance with Good Manufacturing Practices (GMP). 

ATMS FDA grants orphan drug designation to Artemis Therapeutics for Treatment of malaria ($1.39) 

  • According to the FDA's Orphan Drug product website, Artemis Therapeutics has been granted Orphan drug designation for artemisone for the treatment of Treatment of malaria.
    • Designation date 07/19/2017. 

PODD Insulet to assume distribution and commercial support for its Omnipod System in Europe ($50.40) 

  • Insulet announced plans to assume, on 1-Jul-18, the distribution, sales, marketing, training and support activities of Insulet’s Omnipod System across Europe following the expiration of the company’s global distribution agreement with Ypsomed AG (Ypsomed) on 30-Jun-18.

Upgrades/ Downgrades

BCLI Brainstorm receives $16M grant for Phase 3 clinical trial of NurOwn in ALS ($4.53) 

  • The California Institute for Regenerative Medicine (CIRM) has awarded Brainstorm a grant of $16M to support the pivotal Phase 3 study of NurOwn, for the treatment of amyotrophic lateral sclerosis (ALS).
  • Brainstorm is in the advanced stages of planning a Phase 3 clinical trial investigating NurOwn in ALS. The trial is expected to enroll approximately 200 patients and will be conducted at 6 top ALS clinical sites in the U.S. The primary outcome measure will be the ALSFR-S score responder analysis. The patient population will be optimized to include faster-progressing patients who demonstrated superior outcomes in the NurOwn Phase 2 ALS trial. 

VNDA Vanda again receives negative opinion from EMA CHMP for Fanaptum in the treatment of schizophrenia ($16.30) 

  • Vanda Pharmaceuticals announced that the European Medicines Agency's Committee for Medicinal Product for Human Use (CHMP) has adopted a negative opinion recommending against the marketing authorization of Fanaptum (oral iloperidone tablets) for the treatment of schizophrenia in adult patients in the European Union. 

QURE uniQure BV announces successful development and scale up of manufacturing processes for its Hemophilia B gene therapy program ($8.28) 

  • The company has successfully developed and optimized a reproducible and scaled-up manufacturing process for producing its lead gene therapy candidate for patients with hemophilia B at its state-of-the-art manufacturing facility in Lexington, Massachusetts.
  • This progress includes the validation of analytical methods required to manufacture and test product in accordance with Good Manufacturing Practices (GMP). 

ATMS FDA grants orphan drug designation to Artemis Therapeutics for Treatment of malaria ($1.39) 

  • According to the FDA's Orphan Drug product website, Artemis Therapeutics has been granted Orphan drug designation for artemisone for the treatment of Treatment of malaria.
    • Designation date 07/19/2017. 

PODD Insulet to assume distribution and commercial support for its Omnipod System in Europe ($50.40) 

  • Insulet announced plans to assume, on 1-Jul-18, the distribution, sales, marketing, training and support activities of Insulet’s Omnipod System across Europe following the expiration of the company’s global distribution agreement with Ypsomed AG (Ypsomed) on 30-Jun-18.
Morning Summary | TMT | Energy  | Healthcare  | Consumer  | Financial  | Industrial  | Global Trading Summary

Consumer News

Josh DiMarzo (203) 861-7650 | 7.21.2017

News

TPB  Turning Point Brands announces $50M at-the-market equity program through Cowen

There is no current intention to sell shares under the at-the-market equity program

Corporate Actions/Syndicate

TPB  Turning Point Brands announces $50M at-the-market equity program through Cowen

There is no current intention to sell shares under the at-the-market equity program

Upgrades/ Downgrades

TPB  Turning Point Brands announces $50M at-the-market equity program through Cowen

There is no current intention to sell shares under the at-the-market equity program

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Financial News

John Fay, Brad Berger (203) 861-7650 | 7.21.2017

News



Big pay back in style at big banks - WSJ The WSJ reports that the SEC and other agencies have released new regulatory agendas showing that they are no longer going to try to restrict the size of Wall Street bonuses. The WSJ reports that the SEC agenda also omits any mention of proposed rules regarding swap trading and for public companies to compare executive pay to stock performance. A former SEC official tells the WSJ that the agendas give a sense of the direction that agencies are moving in, but they don't necessarily prescribe what the government will or won't do.


KEY Stocks mentioned on CNBC's Mad Money with Jim Cramer -- TheStreet CEO Interview: Cramer talked to Beth Mooney, chairman and CEO of Keycorp (KEY). Mooney said that while guidance is conservative for the coming quarter, she thinks the bank is well-positioned to profit with any increase to consumer confidence in H2. Cramer said Key had increased too fast during the quarter but with the recent pullback, investors will not got another opportunity to buy them at this low price point again

Corporate Actions/Syndicate



Big pay back in style at big banks - WSJ The WSJ reports that the SEC and other agencies have released new regulatory agendas showing that they are no longer going to try to restrict the size of Wall Street bonuses. The WSJ reports that the SEC agenda also omits any mention of proposed rules regarding swap trading and for public companies to compare executive pay to stock performance. A former SEC official tells the WSJ that the agendas give a sense of the direction that agencies are moving in, but they don't necessarily prescribe what the government will or won't do.


KEY Stocks mentioned on CNBC's Mad Money with Jim Cramer -- TheStreet CEO Interview: Cramer talked to Beth Mooney, chairman and CEO of Keycorp (KEY). Mooney said that while guidance is conservative for the coming quarter, she thinks the bank is well-positioned to profit with any increase to consumer confidence in H2. Cramer said Key had increased too fast during the quarter but with the recent pullback, investors will not got another opportunity to buy them at this low price point again

Upgrades/ Downgrades



Big pay back in style at big banks - WSJ The WSJ reports that the SEC and other agencies have released new regulatory agendas showing that they are no longer going to try to restrict the size of Wall Street bonuses. The WSJ reports that the SEC agenda also omits any mention of proposed rules regarding swap trading and for public companies to compare executive pay to stock performance. A former SEC official tells the WSJ that the agendas give a sense of the direction that agencies are moving in, but they don't necessarily prescribe what the government will or won't do.


KEY Stocks mentioned on CNBC's Mad Money with Jim Cramer -- TheStreet CEO Interview: Cramer talked to Beth Mooney, chairman and CEO of Keycorp (KEY). Mooney said that while guidance is conservative for the coming quarter, she thinks the bank is well-positioned to profit with any increase to consumer confidence in H2. Cramer said Key had increased too fast during the quarter but with the recent pullback, investors will not got another opportunity to buy them at this low price point again

Morning Summary | TMT | Energy  | Healthcare  | Consumer  | Financial  | Industrial  | Global Trading Summary

Industrial News

 (203) 861-7650 | 7.21.2017

M&A

EXC   Exelon merger with Pepco affirmed by the DC Court of Appeals  

  • The District of Columbia Court of Appeals today affirmed the Public Service Commission of the District of Columbia’s approval of Exelon’s merger with Pepco Holdings, which combined Exelon’s three electric and gas utilities – BGE, ComEd and PECO – with PHI’s three electric and gas utilities, Atlantic City Electric, Delmarva Power and Pepco.

PWR   Quanta Services acquires Stronghold for $450M plus milestones

  • Quanta Services, Inc. (PWR) announced that it has completed the acquisition of Stronghold, Ltd. and Stronghold Specialty, Ltd. (Stronghold), a specialized services company that provides high pressure and critical path solutions to the downstream and midstream energy markets.
    • Stronghold generated revenues of approximately $500M for the full year of 2016 and has a workforce averaging approximately 2,800 employees. The industrial services market is a natural service line expansion for Quanta, further enabling Quanta to meet energy customers' needs. Stronghold's operations will be reflected in Quanta's Oil and Gas Infrastructure services segment.
    • The transaction consideration consists of an upfront payment of approximately $450M, comprised of $360M of cash and 2.7M shares of Quanta Services common stock valued at approximately $90M, with a cash and stock earnout that could provide maximum additional consideration of $100M if cumulative three-year EBITDA targets are achieved.
    • For the remainder of 2017, the acquisition of Stronghold is expected to generate $6.0M to $7.5M of net income attributable to common stock and to be accretive to Quanta's GAAP diluted EPS attributable to common stock by $0.02 to $0.03 and to non-GAAP adjusted diluted EPS attributable to common stock by $0.06 to $0.07, with accretion expected to increase in 2018. Adjusted diluted EPS attributable to common stock is calculated by adjusting net income attributable to common stock to account for, all net of tax, $3.0M to $4.0M of acquisition and integration costs, $2.0M to $2.5M of amortization expense associated with Stronghold's intangible assets and approximately $0.5M of non-cash stock-based compensation expense.

Harris Williams & Co. served as financial advisor and Baker Botts L.L.P. served as legal advisor to Quanta for the transaction

Corporate Actions/Syndicate

Upgrades/ Downgrades

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Global Trading Summary

Ralph Mak, Mark Huttmann (203) 861-7650 | 7.21.2017

News

Asia

Last

Actual

%change

Mtd

Ytd

Nikkei 225

20,099.75

(44.84)

-0.22%

0.33%

5.16%

Shanghai

3,237.98

(6.88)

-0.21%

1.43%

4.33%

Hang Seng

26,706.09

(34.12)

-0.13%

3.65%

21.39%

Australia

5,722.84

(38.61)

-0.67%

0.02%

1.01%

Europe

Last

Actual

%change

Mtd

Ytd

EuroStoxx 50

3,475.14

(24.57)

-0.70%

0.96%

5.60%

Germany

12,355.04

(92.88)

-0.75%

0.24%

7.61%

UK

7,482.99

(4.79)

-0.06%

2.33%

4.76%

France

5,164.67

(35.15)

-0.68%

0.85%

6.21%

 

Market Holidays:

 

Market commentary:

Australia’s ASX index lost 0.7% as shares were weighed by declines in resources and banks following recent gains.  Energy producers weakened as crude oil prices softened overnight. Shares of Woodside Petro and Oil Search slipped 1.2% to 1.6% while Santos lost 0.3%.  Diversified miners BHP Billiton and Rio Tinto lost 1.9% and 2%, respectively, while South32 and iron-ore producer Fortescue Metals Group each lost 2.5%. National Australia Bank led its peers lower, falling 1.1%, while Westpac Banking dropped 0.9% and Commonwealth Bank of Australia was 0.7% lower. Australia & New Zealand Banking, which had led the major banks higher on Wednesday and Thursday, declined a more modest 0.5%.  Market turnover was largely flat vs the 20 day avg., -13% from yesterday. 

 

Taiwan’s Taiex index fell 0.6% as shares ended near session lows amid declines in technology and telecommunications. Technology shares fell as investors took profits following the recent strength in the sector. Shares of major chipmakers TSMC and United Microelectronics fell 0.7% and 2%, respectively. Apple assembler Hon Hai Precision lost 1.3% while lens maker Largan Precision sank 2.8% despite JPM’s positive stance on co’s in the smartphone supply chain, citing robust earnings growth, especially Apple exposed firms. Telecommunications suffered the biggest loss with Chunghwa Telecom sinking 5.5% after trading ex-dividend, while Taiwan Mobile and Far Eastone Telecom finished flat. Financials were weak across the board as Mega Financial, -1.4% and Yuanta Financial -1.1%, led peers lower. Market turnover fell 15% vs the 20 day avg. 

 

Japan’s NKY index finished lower by 0.2% as stocks fell for the first time in 3 days with declines in telecommunications, consumer discretionary, health care and financials outpacing better energy and industrials.  Telecommunications were the biggest laggards as shares of major wireless carriers including Softbank Group and KDDI Corp fell 0.6% apiece.  Financials and real estate shares also weakened as the group tracked losses in U.S. counterparts. Megabanks including MUFG, SMFG and Mizuho Financial slipped 0.5% to 0.7% while consumer lender Aiful Corp tumbled 1%.  Chipmakers led gains in technology with shares of Screen Holdings and Japan Materials climbing 1.4% to 2.4%. Shares of Japan Display rallied 2.5% while Advantest Corp added 2%. Toshiba Corp jumped 5.6% after announcing it will sell its 60% stake in renewable energy co. Landis+Gyr in an IPO for about 270b yen. Toshiba will look to book about 40b yen gain on the sale this fiscal year.  Energy was the biggest gainer after refiners Showa Shell and Idemitsu Kosan rallied 1.6% and 3.2%, respectively.  Exporters fell as the yen extended its overnight strength vs the USD. The big 3 automakers Nissan, Honda and Toyota fell 0.4% to 0.7% while trading houses Sumitomo Corp and Marubeni Corp fell 0.6% apiece.  Market volumes ran 15% lower than the 20 day avg., little changed from yesterday. 

 

So Korea’s Kospi index rose 0.3%, up for a 7th consecutive session as the broad measure traded at record levels amid sharp gains in financials and telecommunications. Banks supported gains in financials after major banks including KB Financial and Shinhan Financial rallied 3.4% to 4.2% after posting better than expected earnings.  Rival shares were taken higher in sympathy as shares of Hana Financial and Industrial Bank of Korea added 2% to 3.9%.  Insurers also finished stronger with shares of Samsung Fire & Marine, Hyundai Marine and Hanwha Life Insurance advancing 1% to 4.1%.  Tech shares ended mixed as Samsung Electronics and SK Hynix slipped 0.1% to 0.2%, while IT services co. Samsung SDS jumped 1.1% on back of better earnings while Samsung SDI added 2%.  Telecommunications also surged as shares of SK Telecom, LG Uplus and KT Corp rallied 2.3% to 2.9%. Market turnover was light, dropping 17% vs the 20 day avg.

 

Hong Kong’s Hang Seng Index fell 0.13% amid generally weaker trade across the region.  Technology and financials led declines on the gauge while utilities, telecoms and staples outperformed.  Shares of recent high flier AAC Technologies dropped 11.5% as investors worry that valuations are getting ahead of themselves in the sector.  Shares of power producer Power Assets jumped 10.5% after earnings and announcing a special dividend.  China Mobile added nearly 2% outperforming in the telecoms space.  Insurers underperformed in the financials space as Ping An fell 2.5% and China Life declined 1.2%.  Banks ended broadly lower with China Construction Bank falling 0.5%^ underperforming the space.  Volumes on the measure ended at 88% of the 20 day average. 

 

European markets opened mostly lower and have recently pushed down to the worst levels of the session.  The UK is a relative outperformer down 0.1%.  France and Germany are each lower by 0.8% and Spain underperforms -1%.  On the M&A front, Paysafe (PAYS.LN) confirmed it has received a 590p offer from funds managed by Blackstone and CVC Capital Partners. ACS (ACS.SM) is now trying to snatch Abertis (ABE.SM) from Atlantia (ATL.IM) hands, confirming it is studying a counteroffer. Shares of Akzo Nobel (AKZA.NA) are ~ (2%) lower this morning as PPG (PPG) CEO Michael McGerry commented, during a conference call yesterday, that PPG had put Akzo Nobel "in the rear-view mirror". Attention remains on the ECB with very few meaningful economic releases scheduled today.  Reuters cited sources saying ECB policymakers see October as the most likely date to decide on the future of the QE program and consider December, an option flagged by staff, as too late. Telecom is the only sector currently holding on to gains while industrials, discretionary, tech and financials are lower, The EUR is steady +0.1% holding on to recent gains.  The GBP is +0.25% and volumes are running in line with the 20 day average getting some help from options expirations.  


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