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Fly News Breaks for February 28, 2018
BTI, PM
Feb 28, 2018 | 08:29 EDT
While all consumer industries are facing disruptive competition, the change is most dramatic in Tobacco, Citi analyst Adam Spielman tells investors in a research note on the sector titled "The New World of Tobacco." Heated tobacco has taken 20% of the Japanese market in two years, and Juul e-vapor systems are getting well over 70% of incremental spend on nicotine products in the U.S., the analyst points out. In addition, new products like Raptor and Mesh may cause further problems in Europe, he adds. Spielman thinks tobacco companies will have to deliver on both sales and margin to merit higher valuation multiples. Philip Morris (PM) is moving as fast as possible into this "New World," the analyst contends. He thinks the company's margins start increasing again within 12 months, driving a stock "rerating." The analyst upgraded Philip Morris to Buy from Neutral with an increased price target of $125. On the flip side, Spielman downgraded British American Tobacco (BTI) to Neutral from Buy. The analyst does not see the stock rerating until it is clear the company can turn sales growth into margin expansion. He sees investments making this unlikely over the next 12 months. Spielman has a GBP 48 price target for the shares.
News For PM;BTI From the Last 2 Days
PM
Apr 20, 2018 | 10:29 EDT
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Procter & Gamble (PG) downgraded to Neutral from Buy at BofA/Merrill and to Hold from Buy at Deutsche Bank aw well as Argus. 2. Philip Morris (PM) downgraded to Buy from Conviction Buy at Goldman Sachs and to Underperform from Neutral at BofA/Merrill. 3. DHT Holdings (DHT) downgraded to Neutral from Overweight at JPMorgan with analyst Noah Parquette saying he has become more constructive on a crude tanker recovery in 2019 but cites relative valuation for the downgrade on DHT. 4. Skechers (SKX) downgraded to Neutral from Outperform at Wedbush with analyst Christopher Svezia citing the company's first quarter results. 5. Tyson Foods (TSN) downgraded to Hold from Buy at Vertical Group. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
PM
Apr 20, 2018 | 07:18 EDT
Stifel analyst Christopher Growe said he still believes in iQOS and its "power to reshape" Philip Morris. However, given that the more bullish case for iQOS is now likely delayed following the company's Q1 report and FY18 guidance, Growe lowered his price target on Philip Morris to $100 from $125. He maintains a Buy rating on the shares, which he notes are now trading at a "deep discount" to global consumer staples peers and should see support from the 5% dividend yield.
PM
Apr 19, 2018 | 16:27 EDT
Stocks opened in negative territory and remained there throughout the day. The early weakness was related to the technology sector amid concerns of slowing Apple (AAPL) iPhone demand following cautious commentary about mobile phone demand out of semiconductor foundry Taiwan Semiconductor Manufacturing (TSM). The selling picked up momentum as 10-year bond yields edged higher, providing an alternative place for investors to put their money. Oil prices also proved to be a headwind for stocks, as the price of oil moved above $69 a barrel before coming back in a bit later in the day. ECONOMIC EVENTS: In the U.S., initial jobless claims dipped 1,000 to 232,000 in the week ended April 14. The Philly Fed manufacturing index edged up 0.9 points to 23.2 in April. The leading economic indicators index rose 0.3% in March, as expected. COMPANY NEWS: Apple shares slipped 2.8% after key chip supplier Taiwan Semiconductor's narrow earnings miss was accompanied by weak guidance... Amazon (AMZN) shares were in focus after CEO Jeff Bezos told investors that the company has exceeded 100M paid Prime members globally and has shipped more than 5B items with Prime worldwide... Among some of the biggest companies reporting earnings last night and this morning, American Express (AXP), Alcoa (AA) and Kinder Morgan (KMI) advanced following their reports, while Philip Morris (PM) and Novartis (NVS) declined. Procter & Gamble (PG) fell 4% after the consumer goods giant reported in-line Q3 core EPS and also announced it has agreed to acquire the Consumer Health business of Merck KGaA (MKGAY) for a price of approximately EUR3.4B... In other M&A news, Shire (SHPG) confirmed that it has received three conditional proposals from Takeda (TKPYY) regarding a possible offer for the company, all of which it rejected, including the most recent offer valued at GBP46.50 per Shire share. Allergan (AGN) confirmed that was also in the early stages of considering a possible offer for Shire, though later said that it does not intend to make an offer for Shire... Qualcomm (QCOM) reported that, at the request of the Ministry of Commerce in China, the company and NXP Semiconductors (NXPI) have withdrawn and refiled the notice of acquisition regarding the companies' planned combination. In conjunction with the refiling, NXP and Qualcomm have agreed, among other things, to extend the end date of their purchase agreement from April 25 to July 25, 2018. MAJOR MOVERS: Among the noteworthy gainers was Adamas Pharmaceuticals (ADMS), which rose 7% after it announced "positive" data from its Phase 3 open-label study of GOCOVRI extended release capsules. Also higher was BNY Mellon (BK), which gained nearly 6% after reporting quarterly results. Among the notable losers was Ichor Holdings (ICHR), which dropped almost 10% after it agreed to acquire IAN Engineering. Also lower was Sleep Number (SNBR), which fell 14% after reporting quarterly results. INDEXES: The Dow fell 83.18, or 0.34%, to 24,664.89, the Nasdaq lost 57.18, or 0.78%, to 7,238.06, and the S&P 500 declined 15.51, or 0.57%, to 2,693.13.
PM
Apr 19, 2018 | 14:53 EDT
Stifel analyst Christopher Growe noted that Philip Morris reported a Q1 earnings beat and raised its constant currency EPS growth range, though it also modestly lowered its constant currency revenue growth outlook to reflect slower iQOS sales in Japan along with some excise tax increases and a more conservative view of pricing in Russia. He believes the selloff after earnings has been overdone and maintains a Buy rating on Philip Morris shares.
PM
Apr 19, 2018 | 11:59 EDT
Stocks opened in negative territory and have remained there throughout the morning. The technology sector is the weak component, due in part to a disappointing forecast from a supplier to Apple's (AAPL) suppliers alongside brokerage firm research forecasting weakening iPhone demand. The Nasdaq is down roughly 0.8% for the morning, while the Dow is down just 0.4%, helped by strength in American Express (AXP). ECONOMIC EVENTS: In the U.S., initial jobless claims dipped 1,000 to 232,000 in the week ended April 14. The Philly Fed manufacturing index edged up 0.9 points to 23.2 in April. The leading economic indicators index rose 0.3% in March, as expected. COMPANY NEWS: Amazon (AMZN) CEO Jeff Bezos told investors that the company has exceeded 100M paid Prime members globally and has shipped more than 5B items with Prime worldwide. The good news for the e-commerce giant may not end there, as Morgan Stanley analyst Brian Nowak told investors that his analysis shows that Amazon gained U.S. apparel market share in 2017 and may achieve number one U.S. apparel market share in 2018 as Prime members and Millennials shift spending online and away from traditional brick and mortar retailers... Among some of the biggest companies reporting earnings last night and this morning, American Express, Alcoa (AA) and Kinder Morgan (KMI) advanced following their reports, while Philip Morris (PM) and Novartis (NVS) declined. Procter & Gamble (PG) is down 4% near noon after the consumer goods giant reported in-line Q3 core EPS and also announced it has agreed to acquire the Consumer Health business of Merck KGaA (MKGAY) for a price of approximately EUR 3.4B... In other M&A news, Shire (SHPG) confirmed that it has received three conditional proposals from Takeda (TKPYY) regarding a possible offer for the company, all of which it rejected, including the most recent offer valued at GBP46.50 per Shire share. Subsequent to media reports regarding other suitors interested in the company, Allergan confirmed that it is also in the early stages of considering a possible offer for Shire, though no offer has been made. Following the news, Allergan shares are down 5% while Shire shares trading in New York have gained 3%. Additionally, Qualcomm (QCOM) reported that, at the request of the Ministry of Commerce in China, the company and NXP Semiconductors (NXPI) have withdrawn and refiled the notice of acquisition regarding the companies' planned combination. In conjunction with the refiling, NXP and Qualcomm have agreed, among other things, to extend the end date of their purchase agreement from April 25 to July 25, 2018. MAJOR MOVERS: Among the noteworthy gainers was Adamas Pharmaceuticals (ADMS), which rose 4% after it announced "positive" data from its Phase 3 open-label study of GOCOVRI extended release capsules. Also higher was BNY Mellon (BK), which gained 5% after reporting quarterly results. Among the notable losers was Ichor Holdings (ICHR), which dropped 10% after it agreed to acquire IAN Engineering. Also lower was Sleep Number (SNBR), which fell over 15% after reporting quarterly results. INDEXES: Near midday, the Dow was down 94.83, or 0.38%, to 24,653.24, the Nasdaq was down 58.72, or 0.80%, to 7,236.51, and the S&P 500 was down 19.18, or 0.71%, to 2,689.46.
PM
Apr 19, 2018 | 09:23 EDT
At time of writing the stock was last down over 5.7% to $95.61, which is just fractionally above the 52-week low at $95.51. Next support below the 52-week low is at $94.91 and then at $94. Resistance is at $96.49.
PM
Apr 19, 2018 | 08:58 EDT
HIGHER: Shire (SHPG), up 1% after confirming that it has received three conditional proposals from Takeda (TKPYY) regarding a possible offer for the company and has entered into a dialogue with Takeda's advisers to discuss whether a further, more attractive, proposal may be forthcoming... Bio-Path Holdings (BPTH), up 25% after announcing pre-clinical data for prexigebersen showing potential to treat tumors in gynecologic malignancies... Sientra (SIEN), up 12% after announcing FDA approval of the company's PMA supplement allowing commercialization of its OPUS-branded breast implant products manufactured by Vesta. UP AFTER EARNINGS: American Express (AXP), up 3.5%... Alcoa (AA), up 3.6%... Kinder Morgan (KMI), up 2%... Grainger (GWW), up 7%... Blackstone (BX), up 2%. DOWN AFTER EARNINGS: Philip Morris (PM), down 4.7%... Pier 1 Imports (PIR), down 18%... Sleep Number (SNBR), down 14%. LOWER: Aceto (ACET), down 53% after announcing the company is exploring strategic alternatives, suspending further guidance and reducing its dividend... Helios and Matheson (HMNY), down 34% after the company's 10.5M share spot secondary offering priced at $2.75 per share... Qualcomm (QCOM), down 2% and NXP Semiconductors (NXPI), down 2.7% after reporting that, at the request of the Ministry of Commerce in China, they have withdrawn and refiled the notice of acquisition regarding the companies' planned combination. In conjunction with the refiling, NXP and Qualcomm have agreed, among other things, to extend the end date of their purchase agreement from April 25, 2018 to July 25, 2018.
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