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July 22, 2014
12:29 EDTCMG, UTX, KO, HOG, DAL, DD, MCD, KMB, CIT, TRV, VZ, HLF, NFLXOn The Fly: Midday Wrap
Stocks on Wall Street were higher at midday despite worse than expected quarterly sales from the owners of two of the largest, most well-known brands in the world, Coca-Cola (KO) and McDonald's (MCD). Those two were among the six Dow members that reported this morning, as earnings season significantly picks up its pace. The market has also managed to shrug off news that airlines, headlined by Delta (DAL), have suspended service until further notice to and from Tel Aviv following reports of a rocket or associated debris near the Israeli airport. ECONOMIC EVENTS: In the U.S., the Consumer Price Index rose 0.3% in June, matching expectations. The FHFA home price index rose 0.4% to 212.4 in May. Existing home sales rose 2.6% to a rate of 5.04M in June, beating expectations for a 2.2% monthly increase to a 5.0M rate. The Richmond Fed's manufacturing index rose 3 points to 7 in July, missing the consensus forecast by 1 point. COMPANY NEWS: One fifth of the Dow Jones Industrial Average reported on their earnings this morning. Among the six members that issued quarterly reports, only Verizon (VZ) advanced, while Coca-Cola, McDonald’s, United Technologies (UTX), Travelers (TRV) and DuPont (DD) all declined... Shares of Herbalife (HLF) began the day in negative territory after having fallen yesterday after hedge fund manager Bill Ackman, who has repeatedly called the company a pyramid scheme, told CNBC that his presentation on the company today would show why the company "is going to collapse." Among the allegations made today, Ackman estimated that Herbalife's nutrition clubs lose an average of $12K for their operators, that the clubs contribute "enormously" to Herbalife's results and that Herbalife insiders are selling while the company is repurchasing shares. The stock moved into positive territory shortly after the presentation began and was up more than 13% near midday as the presentation was continuing. MAJOR MOVERS: Among the notable gainers was Chipotle Mexican Grill (CMG), which rallied 13% after the fast casual restaurant operator's second quarter results handily beat analysts' consensus estimates and it raised its fiscal 2014 comparable restaurant sales outlook. Also higher was CIT Group (CIT), which rose 11% after reporting on its second quarter and announcing plans to acquire OneWest Bank for $3.4B in cash and stock. Among the noteworthy losers following their earnings reports were Harley Davidson (HOG), which fell 6%, Netflix (NFLX), which dropped 5% and Kimberly Clark (KMB), which slid more than 2%. INDEXES: Near midday, the Dow was up 69.71, or 0.41%, to 17,121.44, the Nasdaq was up 36.51, or 0.83%, to 4,461.21, and the S&P 500 was up 11.54, or 0.58%, to 1,985.17.
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November 13, 2015
09:21 EDTMCDWendy's '4 for $4' a hit, McDonald's promo may be next
An analyst at Citi believes Wendy's (WEN) has seen strong results from its ongoing "4 for $4" promotion, prompting him to add the stock to the firm's Focus List and predict that the company's same-store sales growth this quarter will beat expectations. 4 FOR $4: Under an ongoing promotion that was launched in October, Wendy's offers a junior bacon cheeseburger, four piece chicken nuggets, fries, and a drink for $4. Citi analyst Gregory Badishkanian told investors in a research note this morning that his analysis and talks with those in the fast-food industry suggest that the promotion continues to drive strong results, leading to a rise in transactions at Wendy's with little to no impact on restaurants' average check total. Badishkanian predicts Wendy's will post fourth quarter same-store sales growth of at least 4%, versus the First Call consensus forecast of 2.7% and the 3.3% growth implied by the high-end of the company's fiscal year guidance. INDUSTRY VALUE FOCUS: Wendy's management has emphasized value offerings recently, but other quick service restaurant peers are also increasing their focus on value, Badishkanian noted. The analyst sees a good chance that McDonald's (MCD) will roll-out a "2 for $2" promotion soon, which he believes could have a "modest" impact on Wendy's, but more of an impact on Restaurant Brands' (QSR) Burger King. Badishkanian predicts McDonald's same-store sales growth should accelerate further in the fourth quarter, but not at the expense of Wendy's. He keeps a Buy rating on Wendy's shares with an $11 price target. WHAT'S NOTABLE: Yum! Brands (YUM), which also competes in the quick service food space with its KFC, Pizza Hut and Taco Bell brands, is rallying this morning after reporting last night that its China division's same-store sales grew an estimated 5% in October. PRICE ACTION: Wendy's stock has gained over 5% in the last month, closing yesterday at $9.63 per share. In that same period, McDonald's shares have risen over 8% while Restaurant Brands has declined 3%.
06:41 EDTNFLXJohn Malone wishes he had made hostile bid for Netflix in 2012, NY Post reports
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06:36 EDTCMGChipotle hits lowest consumer perception since 2007, CNBC reports
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November 12, 2015
19:41 EDTVZAT&T, Verizon ask FCC to limit Charter/Time Warner Cable merger, Bloomberg says
A trade group for AT&T (T) and Verizon (VZ) petitioned the FCC to limit Charter's (CHTR) coordination with other cable companies if the merger with Time Warner Cable (TWC) is allowed to proceed, reports Bloomberg. USTelecom also asked the FCC for restrictions on John Malone, Charter's largest shareholder. Reference Link
19:00 EDTNFLXOn The Fly: After Hours Movers
UP AFTER EARNINGS: USA Technologies (USAT), up 15.9%... Blue Buffalo (BUFF), up 7.3%... Planet Fitness (PLNT), up 12.3%... Darling Ingredients (DAR), up 8.1%... Applied Materials (AMAT), up 3.8%... Lipocine (LPCN), up 19.9% after reporting quarterly results and that the FDA has assigned a Prescription Drug User Fee Act goal date of June 28, 2016. ALSO HIGHER: Syngenta (SYT), up 14.5% after Bloomberg reported that the company rejected an initial $42B bid from ChemChina... Yum! Brands (YUM), up 4.1% after reporting that October China Same-Store Sales are up 5%. DOWN AFTER EARNINGS: bebe stores (BEBE), down 10.5%... Nordstrom (JWN), down 20.3%... Fossil (FOSL), down 14.7%... Cisco (CSCO), down 4.8%... El Pollo LoCo (LOCO), down 8.7%... Tahoe Resources (TAHO), down 7.2%. ALSO LOWER: Paycom Software (PAYC), down 5.2%... Netflix (NFLX) down 1% after Dow Jones reported that Hulu, a joint venture of Disney (DIS), Comcast (CMCSA, CMCSK), and Fox (FOX, FOXA), is in discussions to sell a stake in the company to Time Warner (TWX)... TJX Companies (TJX), down 4%, Burlington Stores (BURL), down 5.3%, Macy's (M), down 1.6%, Target (TGT), down 1.9%, J.C. Penney (JCP), down 1.4%, and Kohl's (KSS), down 1.3%, after Nordstrom reported quarterly results and cut its fiscal 2015 guidance.
18:48 EDTCMG, MCDMcDonald's CEO: Pace of change had slowed within company, NYT reports
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18:32 EDTNFLXHulu in talks to sell stake to Time Warner, WSJ says
Hulu, a joint venture of Disney (DIS), Comcast (CMCSA, CMCSK), and Fox (FOX, FOXA), is in talks to sell a stake in the company to Time Warner (TWX) that would value the service at more than $5B, reports the Wall Street Journal, citing sources. The potential deal would see Time Warner becoming an equal stakeholder alongside the aforementioned companies, with Disney, Comcast, and Fox each reducing their stakes 25% from roughly 33%, said the report. The news comes as Hulu and other players in the media space aim to compete with Netflix (NFLX) and Amazon (AMZN), said the Journal. Reference Link
18:29 EDTDDSyngenta rejects initial $42B bid from ChemChina, Bloomberg says
Syngenta rejected that offer citing regulatory risk, however Syngenta and ChemChina are continuing talks, Bloomberg added. Syngenta is also talking to other suitors and has had previous discussions with both DuPont (DD) and Monsanto (MON) earlier this year. Reference Link
17:21 EDTNFLXNetflix down 1% after DJ reports Hulu in talks to sell stake to Time Warner
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16:00 EDTNFLXOptions Update; November 12, 2015
iPath S&P 500 VIX Short-Term Futures up 1.28 to 20.18. Option volume leaders: GE AAPL MNKD XOM BAC FB SUNE CSCO NFLX SYF BABA MSFT
13:24 EDTNFLXEarnings Watch: Cisco seeks to break out of trading rut with Q1 report
Cisco Systems (CSCO) is scheduled to report results of its fiscal first quarter after the market close on Thursday, November 12 with a conference call scheduled for 4:30 pm ET. Cisco, a member of the Dow Jones Industrial Average, sells Internet protocol-based networking and other products related to the communications and IT industry and provides related services. EXPECTATIONS: Analysts are looking for earnings per share of 56c on revenue of $12.65B, according to First Call. The consensus range for EPS is 55c-59c on revenue of $12.55B-$12.81B. Along with its quarterly report, Cisco guided to Q1 EPS of 55c-57c and said it expects its revenue to increase 2%-4% year over year. LAST QUARTER: On August 12, Cisco reported fourth quarter EPS of 59c on revenue of $12.8B, beating consensus estimates of 56c and $12.65B for EPS and revenue, respectively. NEWS: On its Q4 earnings conference call, Cisco said that it was looking at acquisitions at the right price, particularly in areas like software and security. On August 31, Apple (AAPL) and Cisco announced a partnership to build a "fast lane" for iOS business users by optimizing Cisco networks for iOS devices and apps, integrating iPhone with Cisco enterprise environments and providing unique collaboration on iPhone and iPad. The next day, Cisco was among multiple other companies, including Amazon (AMZN), Google (GOOG), Intel (INTC), Microsoft (MSFT), Mozilla, and Netflix (NFLX), announcing the formation of the Alliance for Open Media to build next-generation media formats, codecs, and technologies in the public interest. On September 3, Business Insider reported that people at Cisco still though that chairman John Chambers was running the show as chief executive officer after appointing Chuck Robbins to that role last May. On September 15, Mandiant, a FireEye (FEYE) subsidiary, said in a blog post that researchers discovered previously unknown attacks on certain routers and that such attacks replace the operating system used in Cisco equipment. About a week later, the Wall Street Journal reported that Cisco was aiming to strengthen its business in China by joining forces with Inspur group, a move which was confirmed on September 24. On October 29, Cisco announced its intention to acquire 1 Mainstream. CNBC later reported that the company paid $100M-$150M to acquire 1 Mainstream. On November 9, Ericsson (ERIC) and Cisco announced a global business and technology partnership to "create the networks of the future." The companies said that the strategic partnership will be a key driver of growth and value for the next decade, with each company benefiting from incremental revenue in calendar year 2016 and expected to ramp to $1B or more for each by 2018. STREET RESEARCH: On August 17, Morgan Stanley downgraded Cisco to Equal Weight from Overweight and maintained a $30 price target on the stock, saying it did not believe improved growth is "secular" and anticipates growth will revert to GDP like levels as the upgrade cycle concludes. Wells Fargo said on August 28 that a 10% selloff in communication tech stocks, including Cisco, had created an attractive buying opportunity. Bernstein said a week later that Cisco, Juniper (JNPR), and F5 Networks (FFIV) should be bought on wider macro economic weakness. On October 6, Citi initiated coverage of Cisco with a Buy rating and $30 price target. A week later, Barclays initiated coverage of Cisco with an Overweight rating and a $32 price target. On November 9, RBC Capital maintained an Outperform rating and $33 price target on Cisco, saying it expects the company to report slightly better than expected results. The next day, SunTrust maintained a Buy rating on Cisco, saying its partnership with Ericsson was a positive and should strengthen Cisco's service provider business. PRICE ACTION: In afternoon trading ahead of tonight's report, Cisco shares were up 0.5% to $27.97. In the last three months, Cisco shares are fractionally higher and virtually unchanged when discounting this afternoon's slight rise.
09:36 EDTNFLXActive equity options trading on open
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08:46 EDTCITCIT Group files to sell 29.3M shares of common stodk for sharesholders
06:12 EDTKOAckman responds to Munger's Valeant criticism with Coke critique, Bloomberg says
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06:02 EDTKOCoca-Cola North America marketing chief to leave company, WSJ reports
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November 11, 2015
10:23 EDTMCDPiper, UBS say McDonald's can keep rising following analyst day
Analysts were mostly upbeat about McDonald's (MCD) in the wake of the company's analyst day meeting yesterday, with Piper Jaffray recommending that investors buy the stock and UBS saying that the company's momentum is encouraging. However, Sterne Agee CRT kept a Neutral rating on the shares, citing an uncertain outlook in the U.S. and high valuation. BACKGROUND: At its meeting, McDonald's estimated that its systemwide sales would rise 3%-5% in fiscal 2016, with operating income growth of 5%-7%, excluding some items. The company said it expects to return all of its free cash to shareholders over the long-term and reported that its U.S. restaurants were performing well so far in the fourth quarter. The fast food giant announced that it had decided not to seek to form a REIT but would look to become 95% franchised over the longer term. ANALYST REACTION: By franchising more of its restaurants, McDonald's will lower its costs and cause the stock's multiple to expand, wrote Piper Jaffray analyst Nicole Miller Regan. The company is gaining market share and recently implemented strategies that have caused its cash flow to rise, according to Regan, who kept a $130 price target and Overweight rating on the shares. McDonald's operating momentum is building, and its core fundamentals are moving in the right direction, wrote UBS analyst Keith Siegner. The company's same-store sales are rising faster than those of its peers and its margins should rise going forward, the analyst believes. Additionally, the fast food chain's capital structure has become more stable and efficient, which should enable the stock's multiple to rise, said Siegner who raised his price target on the name to $125 from $122 and kept a Buy rating on the shares. Also upbeat was Credit Suisse. McDonald's "tone was clearly positive," as the performance of its U.S. and key international businesses continue to improve, believes the firm, which raised its price target on the name to $128 from $118. However, Sterne Agee CRT was less optimistic. The firm's analyst, Lynne Collier, said she was more positive about the stock following the investor meeting, but continues to believe that the outlook for the company's traffic in the U.S. is uncertain. Additionally, Collier contended that the stock's valuation is reflecting expectations for "a sharp improvement in fundamentals." She kept a Neutral rating on the shares. PRICE ACTION: In early trading, McDonald's rose 0.8% to $114.19.
08:38 EDTMCDMcDonald's price target raised to $128 from $118 at Credit Suisse
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08:14 EDTMCDMcDonald's outlook has improved, says Sterne Agee CRT
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07:38 EDTMCDMcDonald's momentum continues, outlook encouraging, says UBS
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06:36 EDTMCDPiper still a buyer of McDonald's after analyst day
Piper Jaffray analyst Nicole Miller Regan says she remains a buyer of McDonald's following yesterday's analyst day. Management again reiterated confidence in positive global same-store sales trends and their current strategies will lead to strong cash flow, Regan tells investors in a research note. She believes leveraging the company's global franchise network should allow for multiple expansion. The analyst reiterates an Overweight rating on McDonald's with a $130 price target.
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