Buckingham analyst James Mitchell notes that companies under his coverage with full service brokerage operations are underperforming on Wednesday on the news that Charles Schwab (SCHW) cut commissions on listed equity products. While the analyst understands "the knee-jerk reaction" in names such as Raymond James (RJF) and Morgan Stanley (MS), he would emphasize that full service brokers have very different service models and customer bases than the discount brokers. Mitchell does not see the recent developments in the discount brokerage industry as materially impacting the pricing model of the full service brokers, although he would expect pricing to continue to decline in line with historical trends. That said, he acknowledges that the pricing war among the e-brokers is likely to remain a sentiment headwind on the full service players in the near- term. The analyst has Buy ratings on both Raymond James and Morgan Stanley.
JMP Securities analyst Devin Ryan downgraded E-Trade (ETFC) to Market Perform from Outperform after its announced $13B buyout by Morgan Stanley (MS). The analyst believes that the deal value is "full and fair" with "strong" merits that should make the company's economics "better than initially advertised".
Stocks are down at midday as Microsoft (MSFT), Apple (AAPL) and other big tech names are leading markets lower with their losses. Japan has reported... To see the rest of the story go to thefly.com. See Story Here
Unusual total active option classes on open include: Charles Schwab (SCHW), Morgan Stanley (MS), Marathon Petroleum (MPC), Chesapeake (CHK), Clovis (CLVS), L Brands (LB), Enphase Energy (ENPH), FuelCell (FCEL), Taiwan Semi (TSM), and NVIDIA (NVDA).
HIGHER: E-Trade (ETFC), up 24% after announcing Morgan Stanley (MS) will acquire the company in an all-stock transaction valued at approximately $13B. Under the terms of the agreement, E-Trade stockholders will receive 1.0432 Morgan Stanley shares for each E-Trade share, which represents per share consideration of $58.74 based on the closing price of Morgan Stanley common stock... Adesto Technologies (IOTS), up 55% after entering a definitive agreement for Dialog Semiconductor (DLGNF) to acquire all outstanding shares of the company for $12.55 per share in cash, or for approximately $500M enterprise value. UP AFTER EARNINGS: Domino's Pizza (DPZ), up 19%... TherapeuticsMD (TXMD), up 5%... Stamps.com (STMP), up 38%. DOWN AFTER EARNINGS: ViacomCBS (VIAC), down 9%... Southern Company (SO), down 2%... Six Flags (SIX), down 18%... Wix.com (WIX), down 10%. ALSO LOWER: L Brands (LB), down 11% after the company and Sycamore Partners announced a transaction that positions Bath & Body Works as a standalone public company and separates Victoria's Secret Lingerie, Victoria's Secret Beauty and PINK into a privately-held entity. Under the terms of the transaction, Victoria's Secret, with a total enterprise value of $1.1B, will be separated from L Brands into a privately-held company majority-owned by Sycamore. After taking into account certain liabilities, Sycamore will purchase a 55% interest in Victoria's Secret for approximately $525M. L Brands will retain a 45% stake in Victoria's Secret... Morgan Stanley, down 4% after acquiring E-Trade in an all-stock transaction valued at approximately $13B.
Morgan Stanley (MS) and E-Trade Financial (ETFC) have entered into a definitive agreement under which Morgan Stanley will acquire E-Trade in an all-stock transaction valued at approximately $13B. Under the terms of the agreement, E-Trade stockholders will receive 1.0432 Morgan Stanley shares for each E-Trade share, which represents per share consideration of $58.74 based on the closing price of Morgan Stanley common stock on February 19. The acquisition is subject to customary closing conditions, including regulatory approvals and approval by E-Trade shareholders, and is expected to close in the fourth quarter of 2020. The transaction provides "significant upside potential" for shareholders of both Morgan Stanley and E-Trade, the company said in a statement. "Shareholders from both companies will benefit from potential cost savings estimated at approximately $400 million from maximizing efficiencies of technology infrastructure, optimizing shared corporate services and combining the bank entities, as well as potential funding synergies of approximately $150 million from optimizing E-Trade's approximate $56 billion of deposits," they said. Morgan Stanley said its "full-service, advisor-driven model coupled with E-Trade''s direct-to-consumer and digital capabilities, will allow the combined business to have best-in-class product and service offerings to support the full spectrum of wealth."