After Green Sky (GSKY) disclosed in a 10Q this morning that it has lost Regions Financial (RF) as a funding partner for its indirect lending product, SunTrust analyst Andrew Jeffrey said the news is "clearly a negative," as Regions is about 17% of the company's total max funding commitment, he does not believe this loss alone will constrain the calendar 2019 revenue growth outlook. Based on the 10Q, less than $150M of the funding commitment was unused, and therefore, Jeffrey contends that it is likely not material to the $4.5B in total funding the company highlighted on its recent conference call. Jeffrey, who has a Buy rating and $14 price target on Green Sky shares, says he "likes" the company's competitive position, value proposition, potential upside from new Healthcare offerings and the new American Express (AXP) relationship.
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HIGHER: AB InBev (BUD), up 5% after agreeing to divest Carlton & United Breweries, its Australian subsidiary, to Asahi Group for A$16B, equivalent to approximately $11.3B, in enterprise value... Boeing (BA), up 2% after after disclosing it plans to take a $4.9B charge related to the 737 Max grounding... Red Robin (RRGB), up 15% after Vintage Capital - a holder of an 11.6% stake - disclosed it has offered to acquire Red Robin at $40 per share. UP AFTER EARNINGS: Microsoft (MSFT), up 3%... Autoliv (ALV), up 4%... Kansas City Southern (KSU), up 3%... Crowstrike (CRWD), up 18%. DOWN AFTER EARNINGS: American Express (AXP), down 1%... ManpowerGroup (MAN), down 3.5%. ALSO LOWER: Michaels (MIK), down 8% after BofA Merrill Lynch analyst Elizabeth Suzuki downgraded the stock to Underperform from Neutral following a U.S. arts and crafts consumer survey... InflaRx (IFRX), down 2% after announcing additional in-depth analysis of the completed double blind, placebo controlled part of the ongoing international SHINE Phase IIb study to supplement the company's top line disclosure of results reported on June 5.
Reports Q2 revenue $10.84B, consensus $10.82B. "We continued the broad-based momentum throughout our business with the eighth straight quarter of FX-adjusted revenue growth at 8% or better," said Steve Squeri, chairman and CEO. "Once again, our performance was driven by a well-balanced mix of spending volumes, lending income and card fees. FX-adjusted Card Member spending was up 7%, led by consumers. This spending is occurring against the backdrop of an economy that is growing at a steady, but modest pace relative to 2018. Total loans grew 11%, with over 60% of that increase coming from our existing customers. Credit performance continued at industry-leading levels. We continued to enhance the benefits and services we offer and that helped us add 2.9M new proprietary cards this quarter. Nearly 70% of those new consumer cards we acquired this quarter carry an annual fee - a strong sign that Card Members appreciate and are willing to pay for premium value. I feel very good about the power of our business model and our returns on the investments we've been making to drive share, scale and relevance. Given this quarter's solid results, and all that we've achieved during the first half of the year, we are reaffirming our 2019 financial guidance of 8% to 10% revenue growth and full-year results that are in line with our EPS range."
American Express (AXP), Visa (V), and MasterCard (MA) are scheduled to report quarterly results on July 19, 23, and 30, respectively. What to watch for: 1. OUTLOOKS: During the company's last earnings call, Visa backed its fiscal year 2019 net revenue growth view in the low double digits, and said it sees effective tax rate of roughly 20%. Additionally, the company said it sees fiscal year 2019 class A earnings per share growth in the high-end of mid-teens range on an adjusted, non-GAAP nominal dollar basis. Also during its last earnings call, American Express backed its fiscal year 2019 adjusted earnings per share view of $7.85-$8.35, with consensus $8.13, and its fiscal year 2019 revenue growth guidance of 8%-10%. Meanwhile, MasterCard said it sees fiscal year 2019 GAAP sales growth at high end of low double digits, non-GAAP revenue growth in the low teens, operating expenses in the high single digits. The company also expects second quarter revenue growth consistent with or slightly better than first quarter, and fiscal year 2019 tax rate closer to bottom of 19%-20% range. 2. SALES ACCELERATION: In a research note to investors last month, BofA/Merrill analyst Jason Kupferberg reinstated coverage of American Express with a Buy rating and $145 price target. The analyst said he expects sales acceleration relative to first quarter levels for the remainder of 2019. Not only does American Express have much less exposure to credit than other card companies, it benefits from lower interest rates, the analyst noted. 3. EXPANDING MARKET OPPORTUNITY: Last week, Deutsche Bank analyst Bryan Keane raised his price target for Visa to $225 from $177 and reiterated a Buy rating on the shares. Although the payment networks have a long runway to benefit from the secular growth of card-based transactions, the expanding market share opportunity into new account-to-account payment flows and non-interchange based revenue models are being underappreciated, Keane contended. 4. PARTNERSHIPS: Last month, Visa announced a new strategic agreement with Western Union (WU), with the latter implementing Visa Direct, Visa's real-time push payments platform, "in an effort to bring speed and transparency to the process of sending money around the world." Meanwhile, Uber (UBER) said it was teaming up with BBVA (BBVA) and Mastercard to roll out a debit card for drivers in Mexico, Reuters' Julia Love reported, citing comments from Federico Ranero, Uber Mexico's general manager, at an event announcing the program. This comes two months after Mastercard announced an expanded partnership with Lyft (LYFT), with its Lyft Direct Debit, a new co-branded debit card and bank account issued by Stride Bank and powered by Payfare.