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Fly News Breaks for March 14, 2018
SAH, GPI, GM, PAG, AN, F, LAD, ABG
Mar 14, 2018 | 08:28 EDT
Morgan Stanley analyst Adam Jonas raised his U.S. seasonally adjusted annual rate, or SAAR, forecast for automakers by an average of 850,000 units from 2018 through 2021, which represents slightly more than a 5% increase from his prior forecast. However, his average U.S. SAAR forecast is still well below last year's 17.3M units and 8% under the cyclical high of 17.6M units in 2016. Jonas points to U.S. tax reform and "relatively stable" recent trends in auto sales and credit as reasons for the hike, noting that while infrastructure action from the federal government could be a material positive, it is not explicitly in his new forecast. Adding that the higher view has a net positive impact on estimates and price targets for exposed auto Original Equipment Manufacturers, or OEMs, and suppliers, Jonas raised his price targets on General Motors (GM), Asbury Automotive (ABG), AutoNation (AN), Group 1 Automotive (GPI), Lithia Motors (LAD), Penske Automotive (PAH), Sonic Automotive (SAH) and Ford (F). He also double upgraded Ford, to Overweight from Underweight, this morning.
News For GM;ABG;AN;GPI;LAD;PAG;SAH;F From the Last 2 Days
GM, F
Jul 20, 2018 | 11:28 EDT
Check out today's top analyst calls from around Wall Street, compiled by The Fly. BOFA CUTS YUM CHINA TO UNDERPERFORM: BofA Merrill Lynch analyst Chen Luo downgraded Yum China (YUMC) to Underperform from Neutral and cut its price target to $34 from $44.30. Luo said he expects Yum China to continue to underperform given a likely peak in KFC trends amid China's weakening macro environment, a likely prolonged turnaround at Pizza Hut combined with heavy costs, a slowdown in Chinese consumer consumption, and RMB depreciation. Yum China is down 4.8% in late morning trading. CREDIT SUISSE CUTS FIVE BELOW TO NEUTRAL: Credit Suisse analyst Judah Frommer downgraded Five Below (FIVE) to Neutral from Outperform, telling investors that he is moving to the sidelines as he sees risk/reward balanced at current levels given the stock's material outperformance and back-half comp acceleration that he believes is priced into shares. Frommer keeps his $110 price target and says Five Below remains one of the most differentiated concepts in retail. Five Below is down 4.4% in late morning trading. BAIRD MORE CAUTIOUS ON DRUG SUPPLY CHAIN: Baird analyst Eric Coldwell downgraded Express Scripts (ESRX), AmerisourceBergen (ABC), and McKesson (MCK), all to Neutral from Outperform, citing the heavy political attack in recent weeks against pharmacy benefit managers and members of the drug supply chain. Among them, he said AmerisourceBergen remains his preferred name, but he cannot justify putting new money to work in these names in the current environment. SUNTRUST STARTS VIKING WITH A BUY: SunTrust analyst Edward Nash initiated Viking Therapeutics (VKTX) with a Buy rating and a price target of $14, saying its VK2809 drug for lipid disorders "has the potential to become a promising treatment by addressing multiple metabolic issues" associated with the non-alcoholic steatohepatitis disease, or NASH. Viking is up 8.3% in late morning trading. JPMORGAN SAYS BUY GM, SELL TESLA INTO EARNINGS: JPMorgan analyst Ryan Brinkman forecast lower than consensus Q2 earnings for Ford (F) and higher than consensus earnings for General Motors (GM). The analyst is also concerned about the potential for a "large loss and accompanying large cash outflow" at Tesla (TSLA) in Q2 to "make the bridge" to GAAP profitability and positive cash generation in the second half of the year. Brinkman maintained Overweight ratings on GM and Ford, with a preference for GM shares. He also kept his cautious Underweight rating on Tesla shares, seeing 44% downside to his $180 December 2018 price target.
SAH
Jul 18, 2018 | 16:25 EDT
Stocks opened with modest gains as investors appeared to be in a holding pattern. The averages moved in a narrow range throughout the session, with the Dow and S&P closing in the green and the Nasdaq finishing not far from where it began. The Fed's Beige Book report said the economy has continued to expand at a modest to moderate pace, though manufacturers have signaled some worries about tariffs. ECONOMIC EVENTS: In the U.S., housing starts plunged 12.3% to an annual pace of 1.173M in June. Building permits declined 2.2% to a 1.273M rate. Also, Fed Chairman Jerome Powell appeared before the House Financial Services Committee to deliver his second day of testimony on monetary policy after presenting yesterday to members of the Senate. Meanwhile, the Federal Reserve said in today's Beige Book that economic activity has continued to expand across the U.S., with 10 of the 12 Federal Reserve Districts reporting moderate or modest growth. The Fed added that manufacturers in all districts have express concern about tariffs. COMPANY NEWS: The EU has hit Alphabet-owned Google (GOOG, GOOGL) with a record $5B antitrust fine for abusing the dominance of its Android mobile operating system. Google CEO Sundar Pichai, in response to the European Commission competition ruling, stated that the decision "rejects the business model that supports Android, which has created more choice for everyone, not less. We intend to appeal." Commenting on the decision, Baird analyst Colin Sebastian said he believes it to be a "pro-Amazon" (AMZN) ruling, benefiting the e-commerce giant and potentially Apple (AAPL) as well. Alphabet later said in a statement that it will take a charge of $5.07B in its second quarter results as a result of the fine... Amazon announced that its latest Prime Day surpassed Cyber Monday, Black Friday and the previous year's event, when comparing 36-hour periods, to become the biggest shopping event in Amazon history. Prime members worldwide purchased more than 100M products and small and medium-sized businesses selling on Amazon "far exceeded" $1B in sales, Amazon stated. MAJOR MOVERS: Among the noteworthy gainers was Morgan Stanley (MS), which rose nearly 3% after it reported better than expected quarterly results, authorized a $4.7B share repurchase program, and raised its quarterly dividend to 30c per share. Also higher after reporting quarterly results were United Continental (UAL), CSX (CSX), and Abbott (ABT), which gained a respective 9%, 7%, and 3%. Among the notable losers was Sonic Automotive (SAH), which slipped 4% after it provided downbeat guidance for the second quarter. Also lower was Healthcare Services (HCSG), which fell 9% after reporting quarterly results. INDEXES: The Dow rose 79.40, or 0.32%, to 25,199.29, the Nasdaq slipped 0.67, or 0.01%, to 7,854.44, and the S&P 500 advanced 6.07, or 0.22%, to 2,815.62.
GM, F
Jul 18, 2018 | 13:10 EDT
U.S. President Donald Trump said there will be "tremendous retribution" if his meeting with EU officials next week does not result in what he views as a fair auto-trade deal, the Wall Street Journal reports. The White House said this week that European Commission President Jean-Claude Juncker would visit the White House next Wednesday to "discuss a wide range of priorities, including foreign and security policy, counterterrorism, energy security, and economic growth," the report notes. Publicly traded companies in the space include Daimler AG (DDAIF), Fiat Chrysler (FCAU), Ford (F), General Motors (GM), Honda (HMC), Nissan (NSANY), Toyota (TM) and Volkswagen (VLKAY). Reference Link
SAH
Jul 18, 2018 | 12:04 EDT
Stocks opened with minor gains as investors appear to be on hold as they await more evidence from the earnings season. The Nasdaq and S&P have moved in a narrow range, but the Dow has outperformed throughout the morning, aided by strength in Boeing (BA) as the jetmaker continues to announce contract wins at the Farnborough International Airshow. Next up, investors will be watching this afternoon's release of the Fed Beige Book report at 2:00 pm ET. ECONOMIC EVENTS: In the U.S., housing starts plunged 12.3% to an annual pace of 1.173M in June. Building permits declined 2.2% to a 1.273M rate. Also, Fed Chairman Jerome Powell appeared before the House Financial Services Committee to deliver his second day of testimony on monetary policy after presenting yesterday to members of the Senate. COMPANY NEWS: The EU has hit Alphabet-owned Google (GOOG; GOOGL) with a record $5B antitrust fine for abusing the dominance of its Android mobile operating system. Google CEO Sundar Pichai, in response to the European Commission competition ruling, stated that the decision "rejects the business model that supports Android, which has created more choice for everyone, not less. We intend to appeal." Commenting on the decision, Baird analyst Colin Sebastian said he believes it to be a "pro-Amazon" (AMZN) ruling, benefiting the e-commerce giant and potentially Apple (AAPL) as well... In addition to its potentially positive read-through from Google's news, Amazon had news of its own, announcing that its latest Prime Day surpassed Cyber Monday, Black Friday and the previous year's event, when comparing 36-hour periods, to become the biggest shopping event in Amazon history. Prime members worldwide purchased more than 100 million products and small and medium-sized businesses selling on Amazon "far exceeded" $1B in sales, Amazon stated. MAJOR MOVERS: Among the noteworthy gainers was Morgan Stanley (MS), which rose 3% after it reported better than expected quarterly results, authorized a $4.7B share repurchase program, and raised its quarterly dividend to 30c per share. Also higher after reporting quarterly results were United Continental (UAL), CSX (CSX), and Abbott (ABT), which gained a respective 9%, 6%, and 3%. Among the notable losers was Sonic Automotive (SAH), which slipped 6% after it provided downbeat guidance for the second quarter. Also lower was Healthcare Services (HCSG), which fell 9% after reporting quarterly results. INDEXES: Near midday, the Dow was up 77.06, or 0.31%, to 25,196.95, the Nasdaq was up 3.20, or 0.04%, to 7,851.92, and the S&P 500 was up 5.70, or 0.20%, to 2,815.25.
GM
Jul 18, 2018 | 10:00 EDT
Notable premium selling in GM as shares trade flat. The stock unchanged at $40.03 Wednesday morning and 10K Jul - Aug 41 put spreads sold at 61c, which likely rolls 10K Jul 41 puts opened at 25c on 6/14 with shares near $43.50. Rolling the short puts to August expresses confidence that shares can recapture the $41 level over the next 30 days. Separately today, Sep 42 calls trade across the exchanges in several sweeps shortly after the opening bell from 94 to 92c per contract. 5K changed hands against 3.4K open interest. Lastly, 7.5K GM Aug 38 puts trade against 6.1K OI, including a seller of 3.8K at 46c. Total volume in GM through ten minutes is 30K calls and 5.9K puts.
F
Jul 18, 2018 | 08:59 EDT
Ford is issuing two safety recalls in North America. Ford is issuing a safety recall in North America for approximately 550,000 2013-16 model year Ford Fusion and 2013-14 Ford Escape vehicles to replace shifter cable bushings.On affected vehicles, the bushing that attaches the shifter cable to the transmission may detach from the transmission. A degraded shifter cable bushing that detaches from the transmission may allow the transmission to be in a gear state different than the gear shift position selected by the driver. Ford is not aware of any accidents or injuries related to this condition. The recall involves approximately 549,401 vehicles in North America, including 504,182 in the United States and federalized territories, 36,887 in Canada, and 8,332 in Mexico. Ford is issuing a safety recall in North America for approximately 162 2018 Ford stripped chassis incomplete vehicles with 22.5-inch wheels and 22,000-, 24,000- or 26,000-pound gross vehicle weight rating for front-wheel studs that were not heat treated properly. Ford is not aware of any accidents or injuries related to this condition. The recall involves approximately 162 incomplete vehicles in the United States.
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