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PFE | Is Pfizer PFE Stock Outpacing Its Medical Peers This Year | Investors focused on the Medical space have likely heard of Pfizer PFE but is the stock performing well in comparison to the rest of its sector peers A quick glance at the company s year to date performance in comparison to the rest of the Medical sector should help us answer this question
Pfizer is a member of our Medical group which includes 908 different companies and currently sits at 2 in the Zacks Sector Rank The Zacks Sector Rank considers 16 different sector groups The average Zacks Rank of the individual stocks within the groups is measured and the sectors are listed from best to worst
The Zacks Rank is a successful stock picking model that emphasizes earnings estimates and estimate revisions The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months PFE is currently sporting a Zacks Rank of 1 Strong Buy
Within the past quarter the Zacks Consensus Estimate for PFE s full year earnings has moved 1 50 higher This signals that analyst sentiment is improving and the stock s earnings outlook is more positive
Our latest available data shows that PFE has returned about 0 79 since the start of the calendar year Meanwhile stocks in the Medical group have gained about 0 76 on average This shows that Pfizer is outperforming its peers so far this year
Looking more specifically PFE belongs to the Large Cap Pharmaceuticals industry which includes 14 individual stocks and currently sits at 48 in the Zacks Industry Rank Stocks in this group have gained about 0 45 so far this year so PFE is performing better this group in terms of year to date returns
PFE will likely be looking to continue its solid performance so investors interested in Medical stocks should continue to pay close attention to the company |
PFE | Is Pfizer s Stock a Buy | Pfizer NYSE PFE is one of the top pharmaceutical companies in the world With more than 50 billion in annual sales and profits of more than 16 billion over the trailing twelve months the company offers investors a great deal of stability The problem is that its business has shown minimal growth in recent years While its dividend may attract investors looking for recurring income it may be a struggle to find another reason to buy shares of Pfizer today However recent developments could make the company much more investable in the near future
Changes to the business could improve its growth rate
There are two big moves the company is making that will change how the stock looks and that should improve its growth rate as well
The first is the spinoff of its Upjohn division which encompasses the company s off patent medicine The division will merge with another drug manufacturer Mylan Upjohn contributed 8 1 billion to the company s top line over the past nine months or one fifth of the 39 1 billion in sales that Pfizer earned over that time but that s down 13 from the 9 3 billion that the segment generated over the prior year period Spinning off the business will allow Pfizer to focus on products that are exhibiting more growth like breast cancer drug Ibrance which has seen its sales rise 23 year to date Eliquis which treats blood clots has also seen impressive year over year sales growth of 24
Another change for Pfizer comes with its consumer healthcare business combining forces with GlaxoSmithKline in a joint venture effective Jul 31 2019 It isn t a big segment of Pfizer s business as its 2018 sales from consumer healthcare totaled just 3 6 billion which is a relatively small chunk of the 53 6 billion in revenue it generated during the year It didn t show much growth either rising just 3 8 from the prior year
By shifting its focus onto products that are core to its business and that have been exhibiting more growth Pfizer s stock becomes more valuable in the process While sales for Pfizer will look smaller its growth rate may actually improve Revenue in the third quarter was down 4 6 while year to date totals are down around 1 5
But will it be enough to attract growth investors
Although Pfizer will be cutting some low performing segments out of the stock s financial results what s left may still not be enough to make the company an attractive buy from a growth perspective In Q3 the company s biopharma segment which accounts for 80 of its top line was up just 7 3 from the prior year quarter while year to date figures show even less impressive growth 4 1 Aside from its oncology products where sales were up 28 in Q3 there aren t a whole lot of reasons for growth investors to get excited
That makes Pfizer primarily a buy for those investors who are looking for a recurring payout and a bit of stability as well The low volatility stock currently pays its shareholders a quarterly dividend of 0 38 The company recently hiked its dividend payments from 0 36 and the dividend yield is now up to 3 9 well above the 1 85 that the S P 500 averages While it s not a Dividend Aristocrat Pfizer has been raising its payouts consistently since 2010
Is the stock a buy
If you re looking for a solid dividend stock to buy and hold Pfizer could be a good option for your portfolio And with better prospects for growth moving forward the stock may perform better than it has over the past five years rising just 18 far below the S P 500 which is up 62 over the same period
But with higher yielding dividend stocks out there and better options available for growth there isn t an overly compelling reason to buy Pfizer today especially with all the changes that the company is undergoing Until Pfizer can show some strong sustainable growth investors may want to look elsewhere at other healthcare stocks to invest in |
PFE | Why Pfizer Stock Fell 10 2 in 2019 | What happened
Pharmaceutical mega titan Pfizer NYSE PFE lost an eye catching 10 2 of its value over the course of 2019 according to data from S P Global Market Intelligence Investors avoided this top drugmaker last year for two major reasons
First the drugmaker s decision to spin off its generic drug business known as Upjohn and merge it with Mylan was not a big hit with Wall Street Although this strategic move will remove a key overhang in the form of ongoing patent losses it will also significantly reduce the company s free cash flow lessening its firepower for value creating business development transactions
Second Pfizer s top selling pain medication Lyrica officially began facing generic competition in the middle of 2019 Unsurprisingly its sales plummeted during the third quarter
So what
Wall Street rarely likes major shake ups especially when they are undertaken by industry stalwarts like Pfizer Pfizer however clearly needed to change course Despite the drugmaker s successful pivot to oncology as a main growth driver it simply hasn t been able to generate healthy levels of top line growth on a consistent basis due to an avalanche of patent expiries The spin off of its generic drug business should immediately remedy that fundamental problem In fact management expects the company s revenues to rise by an average of 6 annually for the period from 2021 through 2025
Now what
Is Pfizer s stock worth buying after last year s double digit pullback The answer is a resounding yes The fact of the matter is that this pharmaceutical giant should be a far more compelling growth play than it has been in years past thanks to management s decision to finally execute a much needed split |
WFC | SEC charges Wells Fargo Rhode Island agency with securities fraud | By Suzanne Barlyn Reuters The U S Securities and Exchange Commission on Monday charged a Wells Fargo NYSE WFC Co unit and a Rhode Island agency with civil fraud stemming from a bond deal for a now bankrupt video game company founded by former Boston Red Sox pitcher Curt Schilling Wells Fargo Securities and Rhode Island s economic development agency defrauded investors to finance the company called 38 Studios the SEC said The company was named after Schilling s Major League jersey number The charge stems from a 75 million bond offering in 2010 that was part of a Rhode Island program intended to spur economic development the SEC said Wells Fargo disputes the SEC s allegations and will respond to them in court a spokesman said The state s economic development agency the Rhode Island Commerce Corp is reviewing the SEC s complaint a spokeswoman said The agency previously filed a lawsuit against Wells accusing it of not disclosing material information about the 38 Studios deal to its board and investors the spokeswoman said That lawsuit also names two former executives of the agency The Rhode Island Commerce Corp did not tell investors that 38 Studios faced a funding shortfall to produce a particular video game the SEC said in its complaint The state agency loaned 50 million to 38 Studios which needed another 25 million to produce the game Unable to get the extra money 38 Studios defaulted on the loan without producing the video game the SEC said Wells and its lead banker in the offering Peter Cannava who is also charged in the case misled investors by not telling them about a side deal with 38 Studios the SEC said Wells received nearly double the amount of compensation it had disclosed to investors in offering documents because of that deal according to the SEC Cannava s lawyer Brian Kelly said the allegations lack merit Two former executives with the Rhode Island agency Keith Stokes and James Saul have already settled charges of abetting the fraud without admitting or denying the allegations the SEC said Each will pay a 25 000 penalty and cannot participate in future municipal securities offerings the SEC said Their lawyers did not return calls requesting comment Stokes and Saul are the former executives named in the agency s own lawsuit The agency s financial adviser in the deal First Southwest Company LLC settled separate allegations that it violated rules by not properly documenting services it was providing First Southwest which the agency is also suing did not admit or deny the findings Its lawyer did not return a call requesting comment
When it went under in 2012 38 Studios said it owed more than 150 million and had less than 22 million in assets Schilling said the company personally cost him 50 million |
WFC | U S based bond funds attract 4 billion as investors warm to riskier debt ICI | By Trevor Hunnicutt
NEW YORK Reuters U S based bond mutual funds attracted 4 1 billion in the latest week reversing outflows from the prior week as investors warmed to corporate debt according to data released Wednesday by the Investment Company Institute ICI
Investment grade bond funds which posted outflows during the prior week took in 124 million during the week that ended March 2 according to ICI
High yield bond funds added a second straight week of new money the data showed as investors pumped 3 6 billion into the funds more than double the prior week
High yield and risk assets are moving in lock step with oil prices said Niklas Nordenfelt senior portfolio manager at Wells Fargo NYSE WFC Asset Management which has seen inflows in its high yield products High yield is also benefiting from the fact it has sold off and started showing pretty attractive yields
During the prior week junk bond funds in the United States broke a 15 week streak of outflows that swallowed 28 8 billion of the funds cash and precipitated the December collapse of Third Avenue s Focused Credit Fund
Investors embraced risk taking through bond funds last week said Todd Rosenbluth who directs mutual fund research at S P Global Market Intelligence This is more than six times as much that went into government funds
Government bond funds which have benefited from a flight to safety took in just 571 million this week down from an average 1 billion per week over the prior two weeks But the government funds nonetheless added a 12th week to their streak of inflows
Municipal bond funds added a 22nd consecutive week to their inflows taking in 934 million during the week ICI said
Results for stock funds were mixed Funds focused on domestic shares posted 2 2 billion in outflows during the week while international stock funds took in 2 2 billion of new cash according to ICI a mutual fund trade organization
Some stock funds saw outflows even as the market moved higher according to Rosenbluth |
WFC | U S import prices fall but downward trend nearing end | By Lucia Mutikani
WASHINGTON Reuters U S import prices fell in February for an eighth straight month weighed down by declining costs for petroleum and a range of other goods but the pace of decline is slowing as the dollar s rally fades and oil prices stabilize
The Labor Department said on Friday import prices slipped 0 3 percent last month after a 1 0 percent decrease in January Import prices have decreased in 18 of the last 20months reflecting a robust dollar and plunging oil prices
They were down 6 1 percent in the 12 months through February the smallest year on year drop since December 2014 Weak import prices have contributed to holding inflation below the Federal Reserve s 2 percent target
We strongly feel that the peaks in both overall and core disinflation pressures are behind us said John Ryding chief economist at RDQ Economics in New York
The import deflation is likely close to an end as the dollar s appreciation loses some steam after the greenback gained about 20 percent against the currencies of the United States main trading partners between June 2014 and December 2015
So far this year the dollar has strengthened about 0 9 percent on a trade weighted basis At the same time oil prices have also shown tentative signs of stabilizing Should these trends continue import prices could start to rise soon and help to push up domestic inflation
IMPROVING TREND
Prospects of higher oil prices and slower dollar appreciation should help keep this improving trend intact said Sam Bullard a senior economist at Wells Fargo NYSE WFC Securities in Charlotte North Carolina
Reports last month showed a broad pick up in prices in January raising optimism among economists that inflation will rise toward the Fed s target and allow the U S central bank to continue gradually raising interest rates this year
The Fed increased its key overnight interest rate in December for the first time in nearly a decade Economists had forecast import prices slipping 0 6 percent last month
U S financial markets were little moved by the data taking their cue from firming oil prices Stocks on Wall Street were trading higher while prices for U S Treasury debt fell The dollar was flat versus a basket of currencies Last month imported petroleum prices fell 4 0 percent after plummeting 14 3 percent in January Import prices excluding petroleum dipped 0 1 percent after being unchanged in January
Imported food prices fell 2 0 percent last month the largest drop since February 2012 while prices for industrial supplies and materials excluding petroleum slipped 0 3 percent
Prices for imported capital goods were unchanged and the cost of imported automobiles fell 0 1 percent Prices for imported consumer goods excluding autos rose 0 3 percent The report also showed export prices fell 0 4 percent in February after sliding 0 8 percent in January Export prices were down 6 0 percent from a year ago
Export prices for industrial supplies and materials fell 2 0 percent Prices for food exports rose 0 9 percent |
LB | Why L Brands Stock Just Popped 13 | What happened
Shares of Victoria s Secret owner L Brands NYSE LB are soaring on angel wings up 13 3 as of 11 a m EST after The Wall Street Journal reported this morning that CEO Leslie Wexner is in talks to sell Victoria s Secret retire from his post as L Brands boss or both
So what
L Brands stock and the S P 500 have moved in opposite directions over the past year with the S P up 24 and L Brands stock down 26 Sales are down and profits along with them For these reasons if no other investors may be thinking that a change of management is in order
Additionally the Journal points out that activist investors including Barington Capital Group have been pushing L Brands to consider splitting off its fast growing Bath Body Works consumer products brand from the weaker Pink and Victoria s Secret probably by spinning off and selling the latter
Last year sales at the flagship Victoria s Secret business declined a fraction of a percent while Bath Body enjoyed nearly 12 sales growth VS profits fell by roughly half while Bath Body operating profit was up 13 even better than sales growth
Now what
Selling off VS and maybe also Pink a lingerie brand targeting teens and tweens would instantly diminish L Brands sales but just as quickly lift its profit margin and provide a big cash influx that could be reinvested in growing the brand that s actually growing It would however also deprive L Brands of any benefit that a buyer might reap from turning around the iconic Victoria s Secret
Judging from today s price action though it looks like investors would be OK with that |
LB | Sycamore Partners eyes Victoria s Secret | L Brands LB 12 9 is in talks with Sycamore Partners about a potential deal for the Victoria s Secret business sources tell The Wall Street Journal A decision on a full of partial sale of Victoria s Secret is anticipated within a few weeks
Previously L Brands 12 as board discusses new direction Jan 29
Previously Wedbush sees Wexner exit as positive for L Brands Jan 29 |
LB | Why Victoria s Secret Will Continue to Be a Drag on L Brands | It s no secret that Victoria s Secret has been the reason for L Brands NYSE LB earnings woes The company s once adored lingerie brand has seen revenue dwindle as shoppers turn to rivals that focus more on comfort than glamour And yet this month analysts at Bank of America Deutsche Bank Keybanc and Barclays all upgraded the shares even suggesting an eventual L Brands breakup according to CNBC
Investors may want to bet on an L Brands turnaround and some might consider sales at the company s Bath Body Works bath products chain a reason to be optimistic Same store sales rose 9 in the third quarter and were up 10 over the first three quarters of the year compared to the prior year period
But here s where the problem lies At least for now L Brands isn t just about Bath Body Works and the bath chain s sales gains fail to compensate for declines at Victoria s Secret The lingerie chain s quarterly sales slipped 7 and were down 6 year to date and related impairment charges resulted in a net loss for L Brands More recent financial data doesn t brighten the picture After L Brands comparable sales fell 3 over the holiday period the company lowered its guidance for fourth quarter earnings per share to 1 85 from 2
An image problem
So what s the issue at Victoria s Secret and what s the company doing about it A big problem is image Victoria s Secret has failed to keep up with the needs of today s shopper These days many women prefer a brand that emphasizes comfort over fashion About 40 of millennials say their closets hold mostly comfort wear according to research by The NPD Group Further the report showed that millennials were responsible for more than a third of women s intimate apparel sales in 2017 and 2018
L Brands has made some efforts to align Victoria s Secret with shoppers new priorities The brand sells the comfortable sports bras and bralettes bras without wires or padding that have gained popularity therefore reducing its reliance on items like the pushup bra The cancellation of the Victoria s Secret Fashion Show featuring glamorous models wearing lingerie and angel wings may also signal that change is ahead On the third quarter earnings call chief financial officer Stuart Burgdoerfer said It s important to evolve the marketing of Victoria s Secret
Emotional content
But investors need to see more before scooping up L Brands shares with confidence Though the company seems to be toning down the Victoria s Secret glamour above all else image it s unclear if the plan is to reshape the brand s image or just make a few adjustments As for concrete changes management said that in the sleep and lounge business the brand is investing in higher quality fabrics and overall the aim is to increase product quality and emotional content across all categories Still this doesn t offer us more clarity about what Victoria s Secret will look like a year from now or further down the road and that makes it difficult to bet on an L Brands recovery
If L Brands decides to truly transform the Victoria s Secret image a new question arises Will it be successful The strength of the image once a benefit now may be the brand s downfall It won t be easy to change the image of pink lace and beautiful models most people see when they think of Victoria s Secret
Too early or too late
Of course it is possible that with or without an image revamp L Brands will successfully boost sales at Victoria s Secret It s also possible that an L Brands breakup will happen and improve the financial picture In either case results won t be delivered overnight and any such plan will be costly for the company in the near term For the long term investor this is exactly why now is too early to bet on better days at Victoria s Secret and L Brands
Or from another perspective it s too late Last year the shares traded at about 8 times earnings their lowest by that measure in at least 10 years and finished the year with a 29 decline but that s no longer the story today They ve rebounded 15 this year sending L Brands valuation to more than 15 times earnings There may be short term gains ahead as some investors react to analyst upgrades and speculate on recovery scenarios but until signs of improvement or a new strategy emerge the shares seem too risky |
LB | Victoria s Secret may be up for sale | The secret s out
Victoria s Secret may be up for sale L Brands NYSE LB s CEO is exploring strategic alternatives that could result in a full or partial sale of the lingerie retailer according to the Wall Street Journal
The company has been under pressure from an activist investor to sell the struggling Victoria s Secret brand where sales have fallen for at least four quarters Customers have been buying cheaper bralettes and sports bras from the likes of Aerie and Rihanna s lingerie line Savage X Fenty A full sale would leave would chop its 13 billion revenue nearly in half leaving L Brands with Bath Body Works and PINK under its umbrella
The Journal also reports the billionaire who built Victoria s Secret Abercrombie Fitch and The Limited Leslie Wexner is in talks to step aside as CEO He has been in the headlines for his association with financier Jeffrey Epstein who died in prison after being indicted on charges of sex trafficking underage girls Wexner hasn t been accused of criminal wrongdoing
News of the latest developments pushed up shares of L Brands 14 in early trading Wednesday whittling away at their 29 decline last year |
LB | L Brands May Want to Shed Victoria s Secret but It s a Tough Sell | Read the headlines carefully and you ll see L Brands NYSE LB has neither confirmed nor denied rumors of lingerie retailer Victoria s Secret being put up for sale Likewise whispers that CEO Leslie Wexner is stepping down only cite unnamed people familiar with the matter as the source of the prospect
Nevertheless given the company s ongoing struggle to reverse its declining same store sales and the fact that the sale prospect has been broached before there could be some truth to the matter Investors certainly felt that way on Wednesday after hearing the suggestion sending shares higher to the tune of 12 9 by the close
The market may want to tamp down the enthusiasm however L Brands could be interested in selling the Victoria s Secret brand and holding on to its much more successful Bath Body Works brand but that doesn t mean anyone s interested in buying a brand that needs a major overhaul
Not aligned with 2020 societal norms
In its heyday it was all the rage Any respectable mall in the 1990s was home to a Victoria s Secret store selling lingerie and other high end undergarments in an era where the sexualization of the female form was the norm
But times have changed Victoria s Secret s customers in their 20s and 30s in 1990 are now in their 50s and 60s and their 20 something and 30 something daughters aren t buying into some new cultural norms Yes the advent of the metoo movement was and still is a factor although a careful look at the shift reveals it was taking shape before movie producer Harvey Weinstein found himself in the spotlight for all the wrong reasons The shift has also been rooted in more than just the objectification of one gender The retailer has been criticized for excluding women that don t have model esque bodies which as it turns out are most women
The damage the Victoria s Secret brand has suffered however goes beyond the typical frustration consumers might feel when a company lets them down Tex Mex food fans were irritated when Chipotle Mexican Grill was found to be the epicenter of an E coli outbreak It took a couple of years for the restaurant chain to recover from that letdown Shoppers wanted J C Penney to continue sending them coupons in the mail The retail giant still hasn t recovered from that letdown For Victoria s Secret and what it stands for though too much of the consumer pushback has been unapologetically hostile
Take last year s comment from the plus size model Jessica Leahy as an example She pulled no punches in saying I can t wait to dance on Victoria s Secret s grave after the company was essentially forced to cancel its annual fashion show It was a strong comment but one reflective of growing ire about the lingerie retailer s entire operational premise Les Wexner s relatively close professional relationship with accused child sex trafficker Jeffrey Epstein is also a connection many consumers simply can t overlook
It s particularly problematic considering the company s prime target market Forrester data suggests almost 7 out of 10 millennials consider an organization s values before buying their products The same store sales trend says those consumers are balking
Competitors responded to the cultural shift first
That s the proverbial rub for L Brands and any potential buyer of Victoria s Secret It s a name that not only has to be rebuilt for relevancy in the 2020s but it must also erase its reflection of a time when social norms were less than healthy As Citigroup analyst Paul Lejuez put it last year It will be a tough balancing act to attract new customers without alienating its existing customer base While we still think a change toward inclusivity is the right move a move in that direction might be more difficult to pull off
Raising the bar on the already tall order is the need to do so in a market that s given rise to competitors like ThirdLove and American Eagle Outfitters NYSE AEO brand Aerie Both sell underwear but cater to comfort seekers rather than to the shrinking number of consumers interested in uncomfortable lingerie Aerie s promotional materials also feature women that look like and are shaped like real people Indeed if nothing else the rise of Aerie demonstrates there s room for new undergarment retailers even in a struggling brick and mortar world while ThirdLove suggests even a direct to consumer underwear label can work
That s not to suggest sexier attire is completely out of fashion For occasions where something a little racier is in order however more accessible alternatives than Victoria s Secret still exist Among all of its present challenges Victoria s Secret stores are also fighting the headwind of a retail apocalypse
Too far gone to command a premium
In 2018 Victoria s Secret s U S business generated 7 4 billion worth of revenue with three fourths of it still being driven by physical stores It s on pace to do about 7 billion in sales for all of fiscal 2019 and has logged several consecutive quarters of declining same store sales Operating income of 300 million in 2018 could be pared down to nothing once 2019 s final figures are reported Technically speaking assuming nothing changes there d be no measurable benefit in acquiring the name at all
As such the only motivation to buy the Victoria s Secret brand would be absolute certainty on the part of the buyer it could do something that Wexner hasn t tried yet Perhaps worse a suitor would have to undo much of what has been done to damage the brand
That s going to make it tough to find a buyer at a price that investors can live with |
WFC | Asian Market Update February 22 2012 | China HSBC Flash Manufacturing PMI climbs Yen tests above 80Economic Data CN CHINA FEB HSBC FLASH MANUFACTURING PMI 49 7 V 48 8 PRIOR 4th consecutive contraction 4 month high AU AUSTRALIA Q4 WAGE COST INDEX Q Q 1 0 V 0 8 E 1 year high Y Y 3 6 V 3 4 E 1 year low KR SOUTH KOREA Q4 HOUSEHOLD CREDIT Y Y 7 8 V 2 0 PRIOR slowest growth since Q4 2009 AU AUSTRALIA JAN DEWR INTERNET SKILLED VACANCIES M M 0 6 V 0 7 PRIOR 7th consecutive decline NZ NEW ZEALAND JAN CREDIT CARD SPENDING M M 0 8 V 0 9 PRIOR Y Y 3 1 V 5 9 PRIOR AU AUSTRALIA DEC WESTPAC LEADING INDEX M M 0 5 V 0 1 PRIOR matches 11 month high AU AUSTRALIA DEC CONFERENCE BOARD LEADING INDEX 0 2 V 0 3 PRIOR JP JAPAN JAN SUPERMARKET SALES Y Y 1 2 V 0 6 PRIOR 6th consecutive decline Markets Snapshot as of 05 30GMT Nikkei225 0 8 S P ASX unchangedKospi unchangedTaiwan Taiex 1 0 Singapore Straits Times 0 4 Shanghai Composite 0 7 Hang Seng unchangedS P Futures 0 1 at 1 362April gold 0 1 at 1 757 ozApril Crude 0 1 at 106 18Overview Top HeadlinesMarkets started off the session tepid despite Greece s new bailout agreement being reached the common currency has also failed to surge ahead on the news remaining cautious against both the dollar and yen high for the Asian session of 1 3249 and 105 98 Most likely this is because the prospect of reaching an agreement was already priced into the markets given there were only two outcomes and rhetoric continued to be mostly unified about the want for Greece to remain in the EU The other reason is that the markets are concerned that Greece will be unable to meet conditions for the next round of funds officials have already named conditions that must be met within the next 9 days and all will fall apart or the package will not be enough to end the debt crisis Crude oil prices continue to weigh on the markets reaching 106 30 in the session USD JPY broke through the 80 handle and a 6 month high making for prime intervention territory Commodity futures came off yesterday s session gains silver fell over 0 6 to 34 17 Copper and Wheat were both off 0 2 and corn gained to 6 30 As the session marched on markets reversed earlier losses before climbing to unchanged or positive territory China February HSBC flash PMI while still in contraction reached a 4 month high at 49 7 Shares of Alibaba shares leapt higher as it came off its trading halt after the privatization plans were announced Shanghai Securities News citing local property regulators suggesting city officials may be taking early steps to ease housing curbs however an IMF Official said China is likely to keep property curbs in place despite local governments raising opposition this is also in line with China s top leaders comments Speakers Geopolitical In the press AU Former RBA Official McKibbin EU concerns are weighing on Aussie rates RBA was correct to hold rates this month JP Bank of Japan BoJ Gov Shirakawa BoJ will continue to make an effort to combat deflation ES Spain will ask EU Commission for a larger 2012 budget deficit to just over 5 instead of 4 4 original target Spanish press CN ANZ economist Ligang If China new bank lending in Feb falls from Jan levels and capital inflows ease the PBoC will do 2 additional RRR cuts this year HK press CN China s top 4 banks total yuan loans in Feb 1 20 totaled CNY70BEquitiesBNP FR Wells Fargo Agrees to Acquire the North American Reserved Based and Related Diversified Energy Lending Business of BNP Paribas No terms disclosedFBU NZ Reports H1 Net NZ 144M v NZ 153Me Rev NZ 4 5B v NZ 3 5B y yChina Vanke 200002 CN Chairman Wang Shi Sales may reach CNY200B by 2014 Chinese pressRIO Asking Japanese Aluminum buyers to pay 132 ton premium in Q2 v 112 114 currentlySUN AU Reports H1 Net A 389M v A 223M y y Rev A 8 12B v A 8 1B y yWLIL SG Reports Q4 Net S 500M v S 469Me Rev S 11 5B v S 11 6BeUS EquitiesBRCD Reports Q1 0 20 v 0 13e R 560 6M v 542Me Guides Q2 0 11 0 12 v 0 12e R 530 545M v 537Me 6 0 afterhoursDELL Reports Q4 0 51 v 0 52e R 16 0B v 16Be Guides Q1 Rev approx 7 q q implying 14 9B v 15 2Be 5 1 afterhoursINTU Reports Q2 0 51 v 0 45e R 1 02B v 1 0Be Guides Q3 2 47 2 51 v 2 49e R 1 95 1 99B v 2 0Be 3 4 afterhoursCAKE Reports Q4 0 53 v 0 52e R 477 7M v 472Me Guides Q1 0 34 0 36 v 0 40e 435 440M v 444Me SSS 2 3 5 0 afterhoursHLF Reports Q4 0 86 v 0 73e R 884M v 857Me raises dividend 50 Raises FY12 3 40 3 60 v 3 49e 4 0 afterhours |
WFC | Jobless Claims Flat Last Week At 4 Year Low | Today s initial jobless claims is a yawn with last week s new filings for unemployment benefits showing no change from the previous week s total which was revised upward slightly But the latest numbers don t provide any reason to question the persistence in the recent decline for this series The unchanged 351 000 seasonally adjusted total for new claims last week is still the lowest since early 2008 As recently as last month claims were over the 400 000 mark The fact that the latest update remains lower by 50 000 implies that the labor market will continue growing In turn that suggests that growth still has an edge for the broader economy The strength we ve had in the last few months is continuing Guy Berger an economist at RBS Securities Barring any surprises February looks like another good month for payroll growth Omer Esiner a market analyst at Commonwealth Foreign Exchange agrees that today s claims report is broadly in line with recent U S data showing a gradually improving economic backdrop Yesterday s data point on residential real estate offers some fresh support for thinking positively existing home sales rose last month and housing inventory continued to fall the National Association of Realtors The news bolsters the case for in months ahead and pondering the possibility that housing has Tomorrow s update on new home sales is expected to bring a bit more good news on this front with the consensus forecast calling for another modest rise Here s how the economics group at Wells Fargo interprets the latest housing data via its Existing Home Sales Remain Strong Inventory Levels Continue to Fall No one argues that the housing recovery if in fact it is it is a genuine recovery is the answer to all the economy s cyclical ills But if housing is no longer a dead weight there s one more reason to think that growth can survive Some peg housing s contribution to GDP as high as 18 which implies that if this sector is no longer part of the problem even if it s not yet part of the solution the demons of contraction will loosen their grip on the cycle s throat The true test of course is the labor market on which so much still depends Initial jobless claims continue to drop bullish clues as does the broad trend as suggested by the moderate revival in the The potential for a stronger dose of optimism arrives on March 9 with the scheduled release of the February payrolls data Meanwhile steady as she goes Granted Europe s recession is a joker in the deck that could derail the trend The same can be said for rising energy prices But Europe s downturn may turn out to be As for energy well Iran is still the wild card and there s always |
WFC | Jobless Claims Rose Again Last Week | New jobless claims jumped 8 000 last week to a seasonally adjusted 362 000 the Labor Department That s the third weekly increase in a row and the biggest weekly gain since late January In addition the four week moving claims average inched higher for the first time in two months Are those reasons to worry Well yes You still can t take anything for granted in macro these days least of all the idea that a recovery is destiny Having said that now s a good time to roll out the standard caveat that weekly claims are a volatile series and to the extent that we can draw any conclusions here it arises from the trend On that front fortunately the news is still encouraging As the chart below shows new claims have been trending down for nearly a year This is a robust signal that job growth will continue So far so good The drop in new claims is interrupted at times by temporary pops and now may very well be one of those times But in the last leg down which began last spring the high points have been lower and more importantly so have the lows I ll be the first to point out if the trend appears to be in mortal danger in which case the outlook for the labor market would be negatively impacted and so too would the prospects for continued economic growth Indeed the strongest case for remaining optimistic on the macro view is bound up closely with job growth these days Without this factor on our side the cycle is far more likely to succumb to the dark forces But thinking in those terms is still premature at least according to the numbers in today s claims update It s clear from the above chart that new claims have been zig zagging lower Although the recent numbers aren t helpful the uptick is still marginal and well short of refuting any prediction that the downdraft is over We can find some confirmation by looking at the raw year over year claims data which continues to indicate declines in line with recent history Yesterday s of ADP s estimate of private payrolls for February also suggests that the moderately virtuous cycle of job growth rolls on If tomorrow s payrolls report from the Labor Department delivers an equally robust review it ll be easier to think that the healing process will continue The downtrend in claims even with this modest uptick this week is being sustained Eric Green chief market economist at TD Securities Bloomberg This is consistent with a much better labor market The shift higher in job activity looks to be in tact Nick Bennenbroek who oversees currency strategy at Wells Fargo in New York Reuters We remain in this lower range as far as the jobless claims are concerned and most analysts are looking forward to at least a moderately encouraging payrolls report tomorrow I m still worried about the slowdown in personal income and spending growth but a decent number in tomorrow s payrolls report will help raise the odds that the economy can move forward But as Bloomberg s suggests expectations are somewhat muted Private payrolls are expected to rise by 220 000 for February down from 257 000 the month before That wouldn t be terrible but it wouldn t be a game changer either For the moment it seems that more of the same is a reasonable view That s been enough to bring us this far but with energy prices creeping higher and geopolitical risk via Iran still lurking the margin for error may be shrinking In other words we need a surprisingly strong jobs report tomorrow to keep a lid on worries Stay tuned |
PFE | Is Pfizer Raising Drug Prices Too Much in 2020 | Ahead of election years the cost and future of health care has become one of the top debates for better than two decades now Most politicians say that they want to lower prescription drug costs The only problem is that it never really seems to happen on a measurable basis A study from Rx Savings Solutions showed that pharmaceutical companies have issued price hikes on hundreds of drugs for 2020 While the average price increase of 5 8 was less than the average price hike of just over 6 seen a year earlier some companies are targeting higher price hikes than others Pfizer Inc NYSE PFE which saw its stock lose 10 in 2019 versus the 28 gain for the S P 500 appears to be among the companies with the largest price hikes for prescription drugs in 2020 The data are from outside sources and investors and consumers should keep in mind that some price hikes on the list prices may not be true price hikes after considering rebates and or other discounts Pfizer was shown to have raised prices by more than 9 on over 40 pharmaceutical products for 2020 Pfizer was also shown to have price hikes of about 5 6 on about 27 of the drugs it sells in the United States and prices were higher in 2020 on more than 90 drugs div connatix margin bottom 1 5em div connatix img margin unset The WSJ reported that nearly half of the drugs with price hikes were classified as sterile injection drugs which are typically administered in hospitals and in medical clinics with the majority being a hike of less than 1 00 per product dose A further executive summary of the CPI RX from the White House in October 2019 showed that as of August 2019 the annualized price change in drug prices had been 0 7 from a year earlier The White House document also warned that there is no formal way of tracking net net drug price changes due to the complexities and variables It said The most informative measure of prescription drug prices would be based on net prices and would reflect all discounts and rebates However due to the difficulty in obtaining information on rebates no such measure exists Heparin products which are blood thinners were shown to have price hikes of 15 and that is after a 50 increase in the costs of its raw materials and expanded capacity to meet demand The African swine flu in China was shown to have a hand in the cost of materials as the drug is derived from pig products although Pfizer s U S heparin supply is not shown to be sourced from China In a prior blog post Rx Savings Solutions discussed the Consumer Price Index Prescription Drug Index CPI Rx as an overall inflation measurement of drug prices Unfortunately this is only a partial guide as the CPI Rx is shown to not include specialty drugs and that the CPI Rx also does not accurately measure what insurers pay These so called list prices on drugs also do not take into consideration rebates and discounts and the group showed that some pharmaceutical companies are claiming that their prices are lower An opinion piece from NBC showed that Big Pharma greed is to blame for the industry s price hikes and that the status quo is unhealthy for anyone except pharmaceutical company executives In the case of Pfizer the company was shown to have its price hikes offset by higher rebates paid to insurance companies and to sales organizations Pfizer has come under fire from President Trump back in 2018 after raising prices at that time and the company ended up rolling back those price hikes before reinstating them Pfizer s loss of 10 in 2019 was versus a 19 gain for rival Merck and was versus a 25 gain for the SPDR S P Pharmaceuticals ETF XPH As of the start of 2020 Pfizer s Refinitiv consensus analyst target price of 41 91 implied a total return projection of 10 9 after taking its 3 9 dividend yield into consideration That said the 10 drop in 2019 was after a 20 5 gain in 2018 and the consensus data a year ago had been calling for upside of about 7 1
By Jon C Ogg |
PFE | Why Pfizer Is My Drug Stock of Choice | With the market at all time highs and a risk on mentality perhaps more common than not the pharmaceutical space might not seem like the most opportune sector in which to be on the prowl However there is a name in the industry that I sense deserves more than a passing glance and that s Pfizer NYSE PFE
What makes the drug giant worth a gander A couple of things stand out
Expectations are low but the future is promising
A quick look at consensus analyst figures shows that investors aren t expecting anything extraordinary on the earnings front in the near future In fact analysts are calling for the company to earn 2 97 per share this year down 1 from the prior year and that trend is set to continue with expected 2020 earnings down another 8
I know what you re thinking that s hardly inspiring But I m still upbeat when it comes to Pfizer s future earnings potential especially given its development pipeline and storied history of blockbuster products
As far as its current drug pipeline is concerned as of Oct 29th it had 96 products in varying stages of development And of that number there were 37 and 24 products in Phase II and or Phase III trials respectively some of which may bear fruit in the not too distant future For example Abrocitinib is a Phase III product for atopic dermatitis or what s more commonly known as eczema The company noted in its third quarter earnings release
In October 2019 Pfizer announced complete results from a Phase 3 12 week pivotal study JADE MONO 1 in patients aged 12 and older with moderate to severe atopic dermatitis AD Abrocitinib an investigational oral Janus kinase 1 JAK1 inhibitor met all the co primary and key secondary endpoints which were related to skin clearance and itch relief compared to placebo
For a condition that s estimated to affect as many as 10 of adults and 20 of children worldwide this is just one example of the significant markets Pfizer can serve with the products in its pipeline For a company that generated over 53 billion in revenue in the trailing 12 month period that s got my attention
So what is the company s cache of products worth
Given the competitive landscape and the fact there are always unexpected costs and risks when advancing products through clinical trials it s hard to quantify However my ears perked up when the company declared earlier in the year that there could be as many as 15 potential billion dollar drugs it says could win approval within the next five years
Another thing worth mentioning
As of Oct 29 Pfizer had some 42 oncology cancer products in its pipeline This is important because as one might surmise cancer is a serious health concern And just to put some perspective on how much cancer affects our every day lives more than 600 000 people in the United States alone were expected to die from the disease in 2018 according to the National Cancer Institute And more than 1 7 million cases were expected to be diagnosed In short Pfizer is in a good place to help in the fight against this disease for years to come
Also investors should remember that Pfizer has a strong track record Ever heard of Lipitor Xanax Dilantin Viagra or Zoloft They all fall under the Pfizer product umbrella not to mention everyday consumer products like ChapStick Centrum and Advil All are part of the company s arsenal
In nutshell Pfizer has a history of managing blockbuster products and I d wager that a respectable number of those 96 products in development could ultimately end up being household names as well
The dividend provides a bit of a cushion
To be clear Pfizer s dividend isn t some massive double digit behemoth But the stock does sport a generous yield approaching 4 as of this writing Also I d be remiss if I didn t point out that the company has impressively grown its dividend since 2010
Data by YCharts
Now as the old saying goes past performance is not necessarily indicative of future results and Pfizer s payouts will change shape following the expected Upjohn and Mylan combination But I d argue that the track record is still impressive given the economic backdrop particularly in the early part of the decade and the capital intensive nature of the pharmaceutical business in general A quick look at the company s cash flows also leaves me optimistic that it has flexibility to keep rewarding shareholders going forward
Pfizer isn t expected to grow leaps and bounds in the near term that much is clear But it does have a strong existing portfolio of big names plus a sizable pipeline of products that will drive the company s growth over the next decade With a solid dividend yield that can also serve as a cushion should the broad market experience a pullback which is not beyond the realm of possibility given its trajectory over the last 12 months ignore Pfizer at your own risk |
WFC | Fed to hike twice in 2016 undeterred by external risks Reuters poll | By Aaradhana Ramesh BENGALURU Reuters Growing concerns about weak global growth and inflation are unlikely to deter the U S Federal Reserve from tightening policy according to a Reuters poll that suggested two interest rate hikes are likely this year The Fed s December decision to raise rates for the first time in nearly a decade has been under scrutiny recently with some market players suggesting it was a mistake and that Chair Janet Yellen may have to backtrack But most economists disagree The poll of over 80 analysts predicted another hike would come in the second quarter and penciled in one more towards the end of the year which would leave rates between 0 75 and 1 00 percent That would be one less rate hike than they forecast in a survey taken last month but still more than financial markets expect further underscoring the growing divide between the two groups Unless the economy rolls over there is still a very high likelihood of at least one rate hike this year said Sam Bullard senior economist at Wells Fargo N WFC Analysts who answered an additional question assigned a 75 percent chance of at least one hike this year in contrast with markets pricing in just a 1 in 3 chance Markets predict no move until mid 2017 by which time economists expect the Fed to have raised rates four times to 1 25 1 50 percent In her testimony before U S Congressional panels last week Yellen also indicated the Fed is likely to stick to its plan of gradually raising rates this year despite persistent worries over slowing growth in China and volatile financial markets At the December policy meeting the Fed s dot plot a colloquial name for a chart in the central bank s quarterly Summary of Economic Projections suggested four rate rises in 2016 That however looked too aggressive for economists who assigned a less than 10 percent probability to that path The Fed dots are very likely to come down again in March The question is whether the Fed dots remain relevant at all said Thomas Costerg senior U S economist at Standard Chartered L STAN Costerg is the only forecaster in the survey who expects the Fed to cut rates by the end of the year and said the risk of a recession is high According to the poll median there is a 20 percent chance of a U S recession over the next 12 months up from last month s 15 percent and December s 10 percent Annual growth and inflation forecasts for 2016 were also downgraded from last month with growth expected to average 2 2 percent and CPI inflation 1 3 percent down from January s 2 5 and 1 6 percent respectively Core PCE prices the main inflation gauge monitored by the Fed will average only 1 5 percent this year and 1 8 percent next largely unchanged from January s predictions This is as good as it gets and if the Fed wants to have a buffer in the form of higher interest rates ahead of the next recession now is the time to act said Handelsbanken s U S economist Petter Lundvik For poll stories on other economies Polling by Sujith Pai Editing by Chizu Nomiyama |
WFC | Strong U S industrial output bolsters growth picture | By Lucia Mutikani WASHINGTON Reuters U S industrial production in January rose by the most in 14 months as manufacturing and utilities output increased the latest sign the economy regained some ground early in the year While other data on Wednesday showed a surprise decline in housing starts last month that was probably because of bad weather especially in the Northeast and Midwest regions of the country With building permits ahead of groundbreaking activity home construction is likely to pick up in the months ahead The first increase in industrial output in five months should help allay the fears of a recession that have roiled the stock market and eliminated bets for an interest rate hike from the Federal Reserve in March The chances of an increase in borrowing costs this year hang in the balance If we step back and view the economy from afar we see that consumers are spending manufacturing is beginning to rebound and housing though not great is hardly weak The domestic economy is fine said Joel Naroff chief economist at Naroff Economic Advisors in Holland Pennsylvania Industrial production jumped 0 9 percent last month the largest gain since November 2014 the Fed said The increase followed a 0 7 percent decline in December and was boosted by a 0 5 percent advance in manufacturing output The rise in manufacturing production reflected gains in the output of long lasting goods such as machinery furniture and primary metals Motor vehicle assembly accelerated The production of food textiles and chemicals also rose But manufacturing is not out of the woods and will continue to be buffeted by a strong dollar weak global demand and lower oil prices Industrial output was also buoyed by a 5 4 percent surge in utilities production as the return to normal winter temperatures saw a jump in demand for heating Mining output was flat after four straight months of hefty declines that averaged about 1 5 percent per month This bounce is not terribly surprising because the economy is still growing and it fits with our call that eliminating the risk of a March rate hike was a mistake said Steven Ricchiuto chief economist at Mizuho Securities in New York Minutes of the Fed s Jan 26 27 policy meeting published on Wednesday showed officials were concerned about slowing global growth and the equities rout and considered changing their planned path of interest rate increases in 2016 U S Treasury debt prices fell while U S stocks were trading higher and on course for a third straight day of gains The dollar was little changed against a basket of currencies The fairly upbeat industrial production report added to data last week showing strength in consumer spending in suggesting that economic growth picked up early in the first quarter after abruptly slowing in final months of 2015 The economy grew at a 0 7 percent annual pace in the fourth quarter Forecasting firm Macroeconomic Advisors raised its first quarter GDP growth estimate by one tenth of a percentage point to a 2 1 percent rate on the industrial production data WEAK HOUSING STARTS In a separate report the Commerce Department said groundbreaking activity on new housing projects fell 3 8 percent to a seasonally adjusted annual pace of 1 099 million units last month Starts dropped in the Northeast which was blanketed by snowstorms last month and also tumbled in the Midwest Building permits dipped 0 2 percent to a 1 202 million unit rate last month Permits remain above starts indicating that building activity will rebound in the coming months In addition housing market fundamentals remain strong with a tightening labor market starting to push up wage growth We continue to believe that the housing market will be one of the bright spots for the domestic economy in 2016 reflecting stronger job growth increased household formations and the current paucity of supply particularly in the new home market said Mark Vitner a senior economist at Wells Fargo N WFC Securities in Charlotte North Carolina Expectations that interest rates are likely to remain lower for longer should also support demand In a third report the Labor Department said its producer price index edged up 0 1 percent in January as the cost of services increased after slipping 0 2 percent in December In the 12 months through January the PPI decreased 0 2 percent after declining 1 0 percent in December A key measure of underlying producer price pressures that excludes food energy and trade services advanced 0 2 percent The so called core PPI rose 0 8 percent in the 12 months through January Overall inflation is currently running below the Fed s 2 percent target
The rate of PPI inflation has picked up The question is whether it will pick up enough to push consumer inflation toward 2 percent said Chris Low chief economist at FTN Financial in New York The modest acceleration in the index is a step in the right direction but not yet cause for confidence the Fed can reach its inflation goal |
WFC | Trump s low advertising spending weighs on U S broadcasters | By David Randall and Jessica Toonkel NEW YORK Reuters Republican frontrunner Donald Trump has upended the presidential primaries this year by relying heavily on free air time and Twitter N TWTR at the expense of local ad buying throwing into question estimates that the November presidential election could translate into 6 billion spent on TV advertising Now with no Trump TV ads scheduled going into the 11 state Super Tuesday primaries some investors and analysts are growing increasingly concerned that Trump could continue with an advertising light strategy built on bruising debate performances and large rallies often shown on cable TV even if he wins the Republican Party nomination For the broadcast industry which has pinned its 2016 on local TV ad spend you have to believe that someone who is pretty amazing at leveraging the power of social media would be a real problem for television said media analyst Rich Greenfield with New York based equity firm BTIG Research I think Trump elevates that to a whole new level So far some 10 million has been spent on advertising for Donald Trump compared with 32 million for Hillary Clinton 49 million for Marco Rubio and almost 85 million for Jeb Bush according to data from Ad Age Bush dropped out of the Republican contest earlier this month after trailing badly I would be worried if I was a broadcaster if Trump won said media industry analyst Michael Nathanson with MoffettNathanson Research Trump s decision to steer clear of political action committees and use most of his own money makes it hard to assume that he will act like a traditional candidate he said The concern over Trump s impact comes at a time when shares of many broadcasters who were counting on a strong political advertising market are hurting So far this year shares of Nexstar Broadcasting Group Inc are down 23 9 percent Gray Television Inc s stock has fallen 29 2 percent and shares of E W Scripps Co which Wells Fargo N WFC analyst Marci Ryvicker had previously pegged as one of the most likely to benefit from political spending are down 9 2 percent Wells cut its outlook for Scripps on Monday It s just not looking like the kind of environment that we were counting on said one prominent small cap fund manager who says he has been selling shares of E W Scripps because of Trump s candidacy He did not want to give his name because his trades are not yet public STILL EARLY Broadcasters like all media companies have also been hurt by the growing trend of consumers canceling their cable subscriptions a practice known as cord cutting not to mention an economy that has been less than robust To be sure some analysts caution that it is still relatively early in the election cycle and that Trump will likely pivot to a more advertising heavy campaign should he become the Republican nominee especially as he is likely to face a battery of TV ad attacks from Clinton who is widely expected to be the Democrat candidate Any pullback in spending on Trump s part will likely be offset by spending to influence votes at state and local level on various measures that will be on the November ballot as well as ad buys for other Congressional elections said Tracy Young an analyst at Evercore The death earlier this month of Supreme Court Justice Antonin Scalia has made the key Senate races more important as the next Senate is likely to play a key role in who his successor will be If New York businessman Michael Bloomberg or another prominent figure decides to stand as an independent or third party candidate it could also drive total political spending higher Bloomberg the billionaire former mayor of New York City has told his aides to draw up plans for an independent campaign for the U S presidency and has indicated he would be willing to spend at least 1 billion of his own money a source familiar with the situation said last month A total 3 8 billion was spent on all political TV advertising in 2012 the last presidential election year according to research firm Kantar Media CMAG Of that total spending by the Obama and Romney campaigns and related advocacy groups was only 953 million We view the political season as a bonus we get every two years said Salvatore Muoio whose firm New York based S Muoio Co LLC invests in a number of local broadcasters such as Tegna Nextar and Media General and is still bullish on the sector Companies meanwhile are telling investors that they are not worried A Trump nomination would not be a negative effect because once it becomes a nationwide campaign post convention money will need to be spent to win Nexstar Broadcasting which expects to bring in 100 million from political spending this cycle told analysts on its earnings call last Wednesday The Democrats and Republicans both hold their conventions in late July Nexstar owns operates or provides programming to 104 television stations reaching 62 markets across the country including Florida Texas California and West Virginia Steven Marks co chief operating officer of Sinclair Broadcast Group which has 164 stations stretching from Iowa to Ohio and Florida told analysts Thursday that I would suspect that if he s the nominee and this is just me thinking out loud the RNC Republican National Committee is going to have no choice but to back him and the money will flow The prize is too big Still little of that money will likely come from Trump s campaign itself said Steve Passwaiter business development lead at Kantar Media Intelligence
This guy is the king of earned media Passwaiter said When every tweet you send out is posted on 3 billion websites you don t have to spend a whole heck of a lot of money |
LB | Everything Jim Cramer said about the stock market on Mad Money including big earnings week L Brands predicament | CNBC s Jim Cramer broke down the looming week of earnings reports with quarterly results coming from the likes of Facebook Apple Amazon and Microsoft The coronavirus outbreak will cast a shadow over the week and could discount stocks for investors to pick from the Mad Money host said Later in the show he broke down L Brands predicament and explained why he thinks multiple analyst upgrades on the stock are misguided |
LB | Bath Body Works owner could see sales of hand sanitizer and soap rise as deadly coronavirus spreads | Soaps and sanitizers represent about 20 of L Brands overall sales Evercore has estimated A surge in demand for these items could add 2 to 4 percentage points to L Brands overall same store sales growth the firm said The Bath Body Works owner previously saw sales spike around the H1N1 swine flu outbreak |
LB | L Brands 12 as board discusses new direction | L Brands NYSE LB CEO Leslie Wexner is in talks with the board to step aside from the company sources tell The Wall Street Journal Wexner has run the business since 1963 The board discussions are also said to include unloading the Victoria s Secret chain in a full or partial sale Shares of L Brands are up 11 87 premarket to 23 00 |
LB | Victoria s Secret parent L Brands stock soars on WSJ report that it s exploring strategic alternatives Wexner to step down | L Brands Inc
LB 1 78
stock soared 12 6 in Wednesday premarket trading after The Wall Street Journal reported that the company is exploring strategic alternatives for the Victoria s Secret lingerie brand including a full or partial sale The report also says Chief Executive Les Wexner is in discussions to step down from that role though he could stay on as chairman Analysts have suspected for some time that a transaction was in Victoria s Secret s future The brand has struggled to find its footing as changing tastes took a toll on the company s earnings Wexner had also become embroiled in the Jeffrey Epstein case through a business relationship that also included a role for Epstein in the Victoria s Secret business Wexner who has run the company since 1963 said in a letter that Epstein misappropriated a large sum of Wexner s money L Brands Bath Body Works has surged even as Victoria s Secret has slumped L Brands shares are down nearly 26 over the past year while the S P 500 index
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is up 24 1 for the period
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LB | L Brands CEO in talks to step aside and sell Victoria s Secret WSJ | Reuters Victoria s Secret owner L Brands N LB Chief Executive Officer Leslie Wexner is in talks to step aside from the role and is exploring strategic alternatives for the lingerie brand the Wall street Journal reported on Wednesday Shares of the company jumped 13 in premarket trading The discussions are ongoing and could result in a full or partial sale of Victoria s Secret the WSJ reported citing people familiar with the matter Wexner 82 has been leading the company since 1963 More recently Wexner was in focus for his association with the late financier Jeffrey Epstein who was entrusted with managing the billionaire s personal finances and served as trustee of his charitable foundation Epstein was arrested and charged last year with trafficking dozens of underage girls as young as 14 from at least 2002 to 2005 L Brands did not immediately respond to Reuters request for comment Sales at Victoria s secret have fallen for at least four quarters as it grappled with rising competition and struggled to maintain a strong brand image
Victoria s Secret accounted for nearly half of the company s revenue of 13 24 billion in 2019 |
LB | Wedbush sees Wexner exit as positive for L Brands | Wedbush Securities analyst Jen Redding sees a potential exit by Les Wexner from the L Brands LB 13 1 management team as a step in the right direction for both Victoria s Secret and L Brands as a whole Redding stays on the sidelines with L Brands while she waits for the VS brand to resonate with consumer again In our view shares near historical lows may start to look attractive to long term deep value investors but we remain Neutral until we see concrete evidence of sustained markdown stabilization and product resonating with shoppers writes Redding
Previously L Brands 12 as board discusses new direction Jan 29 |
LB | L Brands LB Meets Q3 Earnings Estimates | L Brands NYSE LB came out with quarterly earnings of 0 02 per share in line with the Zacks Consensus Estimate This compares to earnings of 0 16 per share a year ago These figures are adjusted for non recurring items
A quarter ago it was expected that this owner of Victoria s Secret Bath Body Works and other chain stores would post earnings of 0 19 per share when it actually produced earnings of 0 24 delivering a surprise of 26 32
Over the last four quarters the company has surpassed consensus EPS estimates three times
L Brands which belongs to the Zacks Retail Apparel and Shoes industry posted revenues of 2 68 billion for the quarter ended October 2019 missing the Zacks Consensus Estimate by 0 46 This compares to year ago revenues of 2 77 billion The company has topped consensus revenue estimates just once over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
L Brands shares have lost about 33 1 since the beginning of the year versus the S P 500 s gain of 24 5
What s Next for L Brands
While L Brands has underperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for L Brands was unfavorable While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 4 Sell for the stock So the shares are expected to underperform the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 1 94 on 4 84 billion in revenues for the coming quarter and 2 37 on 13 05 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Retail Apparel and Shoes is currently in the top 24 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
LB | L Brands LB Q3 Earnings Meet Victoria s Secret A Drag | L Brands Inc s NYSE LB third quarter fiscal 2019 earnings met the Zacks Consensus Estimate but net sales fell short of the same for the second straight quarter Both the top and the bottom lines continued to decline year over year We note that the results of the company s Victoria s Secret business which has been battling competition and consumers changing preferences for quite some time now remained dismal However impressive performance at Bath Body Works brand did provide some cushion Notably the bottom line figure came within management s projected range of a loss of 5 cents to earnings of 5 cents Further the company s fourth quarter earnings guidance is above analysts expectations Consequently shares of this specialty retailer of women s intimate and other apparel beauty and personal care products rose more than 3 during the after market trading hours on Nov 20 L Brands envisions fourth quarter earnings to be 2 00 per share which is above the current Zacks Consensus Estimate of 1 94 But the figure indicates a decline of 6 5 from the year ago reported number For the fiscal year the company now forecast earnings of about 2 40 compared with prior view of 2 30 2 60 per share Although the new estimate is above the current consensus mark of 2 37 it suggests a decline from 2 82 in fiscal 2018 L Brands Inc Price Consensus and EPS Surprise Meanwhile shares of this Zacks Rank 3 Hold have slid 22 against the s growth of 7 6 in the past three months Detailed Quarterly DiscussionL Brands reported earnings of 2 cents a share that came in line with the Zacks Consensus Estimate However the bottom line declined sharply 16 cents reported in the year ago period We note that lower net sales hurt the bottom line Net sales came in at 2 676 7 million down 4 from 2 774 9 million reported in the prior year period The top line figure also missed the Zacks Consensus Estimate 2 689 million Comparable sales declined 2 against 4 growth witnessed in the prior year quarter Total Victoria s Secret sales dropped 8 to 1 412 2 million Comparable sales fell 7 while comparable store sales tumbled 8 owing to lower traffic and average unit retails Further total digital sales registered a decline of 6 Comps were down low double digit in the lingerie business while the metric declined in the mid single digit range at PINK Victoria s Secret Beauty comps improved in the low single digit range We note that the segment s merchandise margin rate declined Meanwhile Bath Body Works put up a stellar show Total sales grew 11 to 1 064 1 million with 9 rise in comparable sales and 5 improvement in comparable store sales Management stated that the segment benefited from favorable customer response for merchandise assortment Bath Body Works direct channel remained sturdy with sales up 30 Further merchandise margin rate declined on account of supply chain pressures including increased transportation and labor costs and tariffs We note that L Brands International sales came in at 133 4 million flat year over year Revenues and operating income grew at its partner business driven by Bath Body Works In the U K revenues fell due to continued negative comp performance Revenues in Greater China also decreased owing to the unrest in Hong Kong L Brands gross profit declined 6 to 957 6 million during the quarter We note that gross margin contracted 110 bps to 35 8 on account of buying and occupancy expense deleverage The merchandise margin rate was about flat Operating income plunged 38 from the year ago period to 96 3 million while operating margin shriveled 200 bps to 3 6 SG A expenses fell 1 to 861 3 million due to the absence of La Senza and Henri Bendel businesses As a percentage of net sales the same increased 90 bps to 32 2 Store UpdateAs of Nov 2 2019 company owned stores were 2 944 including 1 111 Victoria s Secret stores 1 744 Bath Body Works 21 Victoria s Secret U K Ireland 5 PINK U K 42 Victoria s Secret Beauty and Accessories and 21 Victoria s Secret China Total non company owned stores were 700 including 216 Victoria s Secret Beauty Accessories 62 Victoria s Secret nine Pink and 240 Bath Body Works stores Further non company owned stores comprised 158 and 15 Travel Retail stores of Victoria s Secret Beauty Accessories and Bath Body Works respectively Other Financial DetailsL Brands ended the quarter with cash and cash equivalents of 340 million down from the prior year quarter s figure of 348 4 million Long term debt decreased to 5 477 2 million from 5 814 3 million a year ago Shareholders deficit was 1 238 2 million Management incurred capital expenditures of 148 million in the quarter under review For fiscal 2019 the company projects capital expenditures to be about 500 million It anticipates free cash flow of approximately 750 million during the same period OutlookBath Body Works brand is likely to experience another solid year However management hinted that occupancy costs due to real estate initiative and direct fulfillment and sourcing costs will put pressure on gross margin in the final quarter and the near future At Bath Body Works segment management hinted at continuing its investment in the White Barn concept in 2019 The company has chalked out about 200 White Barn projects for 2019 Looking ahead the company remains committed to improve Victoria s Secret performance by staying customer focused enriching assortments and enhancing store and online experiences Management anticipates Victoria s Secret merchandise margin dollar percentage decline in the high single digit range during the final quarter of fiscal 2019 L Brands expects fourth quarter comps to be to be about flat The change in total sales will be approximately 2 points lower than the comp result due to loss of La Senza and Henri Bendel sales offset by square footage growth at Bath Body Works Further gross margin is expected to contract year over year owing to lower merchandise margin rate SG A expense rate is anticipated to be nearly flat For fiscal 2019 the company anticipates comps to be about flat to down marginally Total sales are expected to increase approximately 2 points lower than comps on account of loss of La Senza and Henri Bendel sales Gross margin rate is likely to decrease year over year primarily due to lower merchandise margin rate SG A costs are expected to be flat to down marginally while SG A rate is expected to be roughly flat Don t Miss These Solid BetsBoot Barn Holdings Inc NYSE BOOT has a long term earnings growth rate of 15 and a Zacks Rank 1 Strong Buy You can see Deckers Outdoor Corporation NYSE DECK has a long term earnings growth rate of 12 1 and a Zacks Rank 1 Shoe Carnival NYSE CCL Inc s NASDAQ SCVL bottom line has outperformed the Zacks Consensus Estimate by 16 9 on average in the trailing four quarters The stock carries a Zacks Rank 2 Buy Just Released Zacks 7 Best Stocks for TodayExperts extracted 7 stocks from the list of 220 Zacks Rank 1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of 24 5 per year These 7 were selected because of their superior potential for immediate breakout |
LB | L Brands LB Surges Stock Moves 10 1 Higher | L Brands Inc NYSE LB was a big mover last session as the company saw its shares rise more than 10 on the day The move came on solid volume too with far more shares changing hands than in a normal session This stock which remained volatile and traded within the range of 15 89 18 08 in the past one month time frame witnessed a sharp increase yesterday The move came after the company met third quarter 2019 earnings and provided improved short term outlook The company has seen five negative estimate revisions in the past few weeks while its Zacks Consensus Estimate for the current quarter has also moved lower over the past few weeks suggesting there may be trouble down the road So make sure to keep an eye on this stock going forward to see if this recent move higher can last L Brands currently has a Zacks Rank 4 Sell while its is positive L Brands Inc Price A better ranked stock in the Retail Apparel and Shoes industry is Boot Barn Holdings Inc NYSE BOOT which currently carries a Zacks Rank 1 Strong Buy You can see the complete list of today s Zacks 1 Rank stocks here Is LB going up Or down Predict to see what others think Up or DownThe Hottest Tech Mega Trend of AllLast year it generated 24 billion in global revenues By 2020 it s predicted to blast through the roof to 77 6 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
LB | Why Is L Brands LB Up 7 2 Since Last Earnings Report | It has been about a month since the last earnings report for L Brands NYSE LB Shares have added about 7 2 in that time frame outperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is L Brands due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts L Brands Q3 Earnings Meet Victoria s Secret a DragL Brands Inc s third quarter fiscal 2019 earnings met the Zacks Consensus Estimate but net sales fell short of the same for the second straight quarter Both the top and the bottom lines continued to decline year over year We note that the results of the company s Victoria s Secret business which has been battling competition and consumers changing preferences for quite some time now remained dismal However impressive performance at Bath Body Works brand did provide some cushion Notably the bottom line figure came within management s projected range of a loss of 5 cents to earnings of 5 cents Detailed Quarterly DiscussionL Brands reported earnings of 2 cents a share that came in line with the Zacks Consensus Estimate However the bottom line declined sharply 16 cents reported in the year ago period We note that lower net sales hurt the bottom line Net sales came in at 2 676 7 million down 4 from 2 774 9 million reported in the prior year period The top line figure also missed the Zacks Consensus Estimate 2 689 million Comparable sales declined 2 against 4 growth witnessed in the prior year quarter Total Victoria s Secret sales dropped 8 to 1 412 2 million Comparable sales fell 7 while comparable store sales tumbled 8 owing to lower traffic and average unit retails Further total digital sales registered a decline of 6 Comps were down low double digit in the lingerie business versus the second quarter result of down mid single digit while the metric declined in the mid single digit range at PINK an improvement from the second quarter decline of low double digits Victoria s Secret Beauty comps improved in the low single digit range We note that the segment s merchandise margin rate declined Meanwhile Bath Body Works put up a stellar show Total sales grew 11 to 1 064 1 million with 9 rise in comparable sales and 5 improvement in comparable store sales Management stated that the segment benefited from favorable customer response for merchandise assortment Bath Body Works direct channel remained sturdy with sales up 30 Further merchandise margin rate declined on account of supply chain pressures including increased transportation and labor costs and tariffs We note that L Brands International sales came in at 133 4 million flat year over year Revenues and operating income grew at its partner business driven by Bath Body Works In the U K revenues fell due to continued negative comp performance Revenues in Greater China also decreased owing to the unrest in Hong Kong L Brands gross profit declined 6 to 957 6 million during the quarter We note that gross margin contracted 110 bps to 35 8 on account of buying and occupancy expense deleverage The merchandise margin rate was about flat Operating income plunged 38 from the year ago period to 96 3 million while operating margin shriveled 200 bps to 3 6 SG A expenses fell 1 to 861 3 million due to the absence of La Senza and Henri Bendel businesses As a percentage of net sales the same increased 90 bps to 32 2 Store UpdateAs of Nov 2 2019 company owned stores were 2 944 including 1 111 Victoria s Secret stores 1 744 Bath Body Works 21 Victoria s Secret U K Ireland 5 PINK U K 42 Victoria s Secret Beauty and Accessories and 21 Victoria s Secret China Total non company owned stores were 700 including 216 Victoria s Secret Beauty Accessories 62 Victoria s Secret nine Pink and 240 Bath Body Works stores Further non company owned stores comprised 158 and 15 Travel Retail stores of Victoria s Secret Beauty Accessories and Bath Body Works respectively Other Financial DetailsL Brands ended the quarter with cash and cash equivalents of 340 million down from the prior year quarter s figure of 348 4 million Long term debt decreased to 5 477 2 million from 5 814 3 million a year ago Shareholders deficit was 1 238 2 million Management incurred capital expenditures of 148 million in the quarter under review For fiscal 2019 the company projects capital expenditures to be about 500 million It anticipates free cash flow of approximately 750 million during the same period OutlookBath Body Works brand is likely to experience another solid year However management hinted that occupancy costs due to real estate initiative and direct fulfillment and sourcing costs will put pressure on gross margin in the final quarter and the near future At Bath Body Works segment management hinted at continuing its investment in the White Barn concept in 2019 The company has chalked out about 200 White Barn projects for 2019 Looking ahead the company remains committed to improve Victoria s Secret performance by staying customer focused enriching assortments and enhancing store and online experiences Management anticipates Victoria s Secret merchandise margin dollar percentage decline in the high single digit range during the final quarter of fiscal 2019 L Brands envisions fourth quarter earnings to be 2 00 per share However the figure indicates a decline of 6 5 from the year ago reported number For the fiscal year the company now forecast earnings of about 2 40 compared with prior view of 2 30 2 60 per share The new estimate suggests a decline from 2 82 in fiscal 2018 The company expects fourth quarter comps to be to be about flat The change in total sales will be approximately 2 points lower than the comp result due to loss of La Senza and Henri Bendel sales offset by square footage growth at Bath Body Works Further gross margin is expected to contract year over year owing to lower merchandise margin rate SG A expense rate is anticipated to be nearly flat For fiscal 2019 the company anticipates comps to be about flat to down marginally Total sales are expected to increase approximately 2 points lower than comps on account of loss of La Senza and Henri Bendel sales Gross margin rate is likely to decrease year over year primarily due to lower merchandise margin rate SG A costs are expected to be flat to down marginally while SG A rate is expected to be roughly flat
How Have Estimates Been Moving Since Then
It turns out estimates revision have trended downward during the past month
VGM Scores
At this time L Brands has a poor Growth Score of F however its Momentum Score is doing a lot better with an A Charting a somewhat similar path the stock was allocated a grade of B on the value side putting it in the second quintile for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been trending downward for the stock and the magnitude of these revisions has been net zero It s no surprise L Brands has a Zacks Rank 4 Sell We expect a below average return from the stock in the next few months |
PFE | Epizyme EPZM Shares Soar On Lead Candidate s Progress | Shares of Epizyme Inc NASDAQ EPZM have soared 246 2 year to date compared with the s growth of 10 3 The company s lead pipeline candidate is tazemetostat a first in class EZH2 inhibitor which is currently being evaluated for the treatment of solid tumors and hematological malignancies as a monotherapy and to treat relapsed and front line diseases as a combination therapy In December the Oncologic Drugs Advisory Committee ODAC of the FDA unanimously voted 11 0 in favor of the benefit risk profile of tazemetostat as a treatment for patients with metastatic or locally advanced epithelioid sarcoma ES that is not eligible for curative surgery ES is a rare and serious soft tissue sarcoma STS with a high rate of local recurrence and distant metastasis The committee s positive vote gives a positive signal to the candidate The new drug application NDA for tazemetostat is currently under Priority Review with the FDA with an action date of Jan 23 2020 The NDA was supported by data from the ongoing phase II study in patients with molecularly defined solid tumors The company is confident that the comprehensive clinical data package for ES which it has submitted will support tazemetostat s approval If approved tazemetostat will be the first treatment for patients with ES This is expected to significantly benefit the company It will also be the first commercial product for Epizyme which will enable it to realize sales This should boost the company s growth prospects Tazemetostat is being evaluated in multiple indications Notably the company also submitted an NDA to the FDA in December for accelerated approval of the drug for the treatment of patients with relapsed or refractory follicular lymphoma FL both with or without EZH2 activating mutations who have received at least two prior lines of systemic therapy The submission is based primarily on updated phase II efficacy and safety data on tazemetostat in this patient population To support the full approval of tazemetostat for FL Epizyme is conducting a single global randomized adaptive study The company is evaluating the chemo free combination of Roche s OTC RHHBY Rituxan and Revlimid with tazemetostat compared to the combo with placebo in patients with relapsed or refractory FL The study is expected to enroll 500 FL patients stratified based on their EZH2 mutation status Moreover the company is exploring tazemetostat to increase the clinical activity of immuno oncology therapies by combining with an anti PD 1 or PDL 1 agent Under its collaboration with Roche Epizyme is evaluating tazemetostat in a combination with anti PD L1 cancer immunotherapy Tecentriq for the treatment of patients with relapsed or refractory diffuse large B cell lymphoma DLBCL to determine the recommended phase II dose and advance into the expansion portion of the study In addition the European Commission granted orphan drug designation to tazemetostat for the treatment of patients with FL DLBCL and malignant mesothelioma The potential approval of tazmetostat will significantly boost Epizyme s growth prospects Epizyme also aims at completing IND enabling studies on EZM8266 its G9a inhibitor designed to treat patients with sickle cell disease SCD It is on track to begin the clinical development of the candidate soon with a dose finding and safety study Epizyme s proprietary product platform is used to create small molecule inhibitors of a class of enzymes known as histone methyltransferases HMTs However the company faces competition from the likes of Glaxo Novartis NYSE NVS Pfizer NYSE PFE and Constellation which are developing new epigenetic treatments for cancer targeting HMTs Epizyme currently carries a Zacks Rank 2 Buy You can see Epizyme Inc Price 5 Stocks Set o DoubleEach was hand picked by a Zacks expert as the 1 favorite stock to gain 100 or more in 2020 Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth Most of the stocks in this report are flying under Wall Street radar which provides a great opportunity to get in on the ground floor |
PFE | Novartis s 90 million Swiss factory to help solve cell therapy bottleneck | By John Miller
ZURICH Reuters Swiss drugmaker Novartis s S NOVN new 90 million cell and gene therapy factory in northern Switzerland is on track to begin commercial production of treatments including Kymriah for cancer and Zolgensma for spinal muscular atrophy in 2020
The new gene and cell therapy factory expected to employ 450 people will allow the drugmaker to make its Kymriah treatment for European patients without first having to fly their immune cells across the Atlantic Ocean
The Swiss factory as well as a separate French site also being expanded are central to Novartis s plans to transform Kymriah from a modest 250 million per year seller into a 1 billion blockbuster as European demand rises
We have already started to produce clinical batches at both sites and are on track to begin producing commercial product in 2020 Novartis said
Basel based Novartis sees cell and gene therapies eventually contributing about 15 of its revenue
T cells currently harvested from Europeans getting the 400 000 per patient Kymriah blood cancer therapy currently must be sent to a U S laboratory for re engineering Analysts have called the lack of manufacturing capacity a major bottleneck
Novartis is investing some 500 million in new facilities around the world to address production bottlenecks and drug companies including Novartis Pfizer N PFE and others have plans to spend 2 billion building out gene and cell therapy manufacturing after rapid expansion into these treatments
Novartis will also make Zolgensma at the Swiss and French factories a 2 1 million per patient spinal muscular atrophy gene therapy awaiting European and Japanese approval
Kymriah s global rollout in 20 countries plus Novartis s efforts to expand the therapy s indications make adding commercial production a priority including in China and Japan
Kymriah s 2018 approval was hailed as a breakthrough as a last ditch treatment for acute lymphoblastic leukemia and diffuse large B cell lymphoma T cells are extracted from patients modified to attack their cancer then re infused in the hope they work where other treatments failed
But its complex production tailor made for each patient poses logistical challenges compared to off the shelf treatments especially in Europe where Novartis lacked commercial manufacturing
The key factor in bringing local manufacturing to each region is to make Kymriah available as quickly as possible Novartis said |
WFC | Here comes the sun and with it U S earnings excuses | By David Randall and Marcus E Howard NEW YORK Reuters U S companies are singing the warm weather blues this corporate earnings season The long spate of warm temperatures this winter likely will have a slightly positive affect on the U S economy as a whole as construction projects can continue unabated and fewer workers will need to leave the office on account of snow said Brain Jacobsen chief portfolio strategist at Wells Fargo N WFC Funds After a December that was the warmest on record in most of the United States a total of 38 U S companies have mentioned unusually high temperatures as a factor in their most recent quarterly profit results since the start of the year according to a Thomson Reuters analysis of earnings calls transcripts That is a jump from just nine companies who said they were feeling an impact from higher than average temperatures at this point last year when a warm spell in Europe affected sales revenue at companies including Goodyear Tire Rubber Co and Deckers Outdoor Corp Companies who are feeling the heat range from the obvious like snowmobile maker Polaris Industries Inc who called its quarter difficult and disappointing and noted it was the worst year over year performance since 2009 to those farther afield Monro Muffler Brake Inc told analysts that unseasonably warm weather across the Northeast led to a 9 0 percent decline in same store sales in November while grocery store chain Supervalu Inc cited high temperatures in Florida cutting into the quality and availability of strawberries and other produce Not every company is hurting though McDonald s Corp told analysts that the mild weather added a positive contribution to sales while Petmed Express Inc said warm temperatures are helping sales because customers are administering flea and tick medication to their pets well into the winter Yet there is also the danger that consumers will start their spring and summer spending early and forgo winter related purchases entirely cutting sales of retailers said Douglas Roberts chief investment strategist at Channel Capital Research Department store chain Macy s Inc said in early January it plans to cut more than 2 000 jobs after its same store sales fell 4 7 percent in November and December It estimated that 80 percent of the sales decline was due to warm temperatures that hurt sales of sweaters coats and gloves Even with low gas prices consumers are looking for ways to save money and the weather is giving them a perfect excuse Roberts said |
LB | Deutsche Bank sees strategic action coming at L Brands upgrades to Buy | L Brands LB 2 8 moves higher just a day after reporting weak holiday sales as Deutsche Bank analyst Tiffany Kanaga upgrades shares to Buy from Hold with a 24 price target up from 22
DB analyst Tiffany Kanaga thinks LB s holiday report with Victoria s Secret reporting sales well below expectations likely tips the scale more toward a split likely triggering strategic action in the near term
LB s window of opportunity for action is fairly limited which creates a risk reward that is now skewed meaningfully to the upside Kanaga contends
In addition Barington s standstill agreement expires next month and other activists could enter the fray ahead of LB s annual meeting the analyst says
LB s average Sell Side Rating and Quant Rating are Neutral while its Seeking Alpha Authors Rating is Bullish |
LB | Why L Brands Stock Dropped 29 in 2019 | What happened
Shares of L Brands NYSE LB fell 29 4 in value last year according to data from S P Global Market Intelligence
The company continued to be a tale of two brands On one side the Bath Body Works business has been L Brands better half reporting comp sales growth of 10 through the first three quarters of fiscal 2019 That is consistent with the performance in the previous year
On the other side it s clear that Victoria s Secret is losing market share to competitors Comp sales have been ugly falling 6 in the first three quarters of fiscal 2019 which shows a worsening trend following the 1 decline in the previous year And given that Victoria s Secret makes up most of the company s revenue weak performance there is pressuring results for the whole company
Retail spending is an important trend to watch with consumer discretionary stocks The recent holiday season looks to have been a healthy environment for most retailers according to the latest data from Mastercard SpendingPulse But that doesn t appear to have helped Victoria s Secret L Brands reported a decrease in comp sales of 3 for the holidays and lowered full year earnings guidance to 1 85 from the previous guidance of 2 00
So what
Victoria s Secret used to be an iconic retail brand and in some ways it still is but the brand obviously has an image problem
Here s the deal Victoria s Secret is famous for using supermodels to market its product but sales are falling Meanwhile American Eagle Outfitter s Aerie brand is designing and marketing its product for all body types and sales are exploding Two different approaches and two completely opposite outcomes
Supermodels might have been the ticket in the 1990s but not in the 2020s The good news is that management gets it The long running Victoria s Secret Fashion Show was cancelled last year and that might be a sign that L Brands is starting to adjust its marketing approach to respond to competitors
Now what
Victoria s Secret still has tremendous brand awareness going for it It can use that to its advantage and turn itself around but it needs an entire makeover from product design to marketing but a comeback won t be easy
One problem for L Brands is that it has cornered itself by relying heavily on discounts to drive sales Once a retailer goes down that rabbit hole it s tough to dig itself out Customers become trained to wait for discounts before they buy and that makes it very difficult to keep margins firm
New managers are trying to rework the assortment and pricing strategy at Victoria s Secret Lingerie and the PINK brand but investors are probably not going to send the stock higher until Victoria s Secret proves it can string together a quarter or two of comp sales growth |
LB | Weakness at L Brands Is Likely to Continue | L Brands NYSE LB has been plagued by declining sales for both its Victoria s Secret and Pink brands The retailer announced weaker holiday sales and cut its earnings guidance for the fourth quarter Its third quarter sales results also came in below expectations Shares have dropped 28 over the last six months
While Victoria s Secret and Pink report declining sales the company s Bath Body Works business is posting higher growth rates with a 9 increase in comparable sales for the nine week holiday period ended Jan 4 In contrast Victoria s Secret s comparable store sales fell by 12 in the same period below last year s 4 decrease Victoria s Secret and Pink may be two fashion brands that have fallen out of favor with fickle consumers and strength at Bath Body Works may not be enough to keep growth going for the company
Amid recent results Bath Body Works is a bright spot
L Brands announced that sales for the two month holiday period shrank by 3 down to 3 9 billion from 4 1 billion in the prior year As a result of the weaker holiday sales management cut its earnings guidance for the fourth quarter to 1 85 per share from the prior 2 00 The revised forecast is notably well below average analyst expectations of 2 00
Victoria s Secret had weak holiday sales with store traffic down in the mid teens while higher promotional activity further hurt sales and margins Management specifically cited weakness in the sales of sleepwear and tops Sales and store traffic at Pink were also down
One bright spot was Bath Body Works which had a 9 increase in comparable sales for the holiday period The division known for its scented candles and body wash built on momentum in the third quarter which featured a 9 increase in comparable sales and 10 increase in operating income However some analysts voiced concerns over how long the strength at Bath Body Works could continue Jefferies analyst Randy Konik wrote that margins are beginning to erode and compares are daunting
Issues likely to continue at Victoria s Secret and Pink
Competition is fierce in the women s lingerie and apparel space Newer more nimble brands like ThirdLove Savage X Fenty and other specialty retailers like American Eagle s NYSE AEO Aerie are taking market share from Victoria s Secret and Pink Victoria s Secret is also developing a reputation for products that have lower quality and less comfort It also appears to have lost touch with increasing preferences from consumers for more inclusivity and mass appeal
While Victoria s Secret management launched a new advertising campaign a few months ago focused on diversity and inclusivity it may take a while for the brand to shift its image In November 2018 the brand suffered a setback when its former marketing executive stated that he didn t think transgender or plus size models should star in the annual fashion show because it s a fantasy Angry consumers called for boycotting of the brand The Victoria s Secret fashion show was canceled and the brand s image suffered
A potential catalyst for shares
L Brands stock will likely continue to be hindered by the performance of its Victoria s Secret and Pink brands However an activist investor has been pressuring the consumer discretionary company to consider strategic alternatives including a separation of Bath Body Works from the underperforming Victoria s Secret operation The company is reported to have met with bankers to discuss possible M A strategies that would help improve shareholder value L Brands also has a history of selling off selective brands including Lane Bryant and The Limited If the company were to pursue this strategy it could potentially please investors However as things currently stand the retailer will likely continue to be weighed down by Victoria s Secret s sales growth struggles |
LB | L Brands upgraded on heightened potential for a Victoria s Secret transaction | L Brands Inc
LB 1 80
was upgraded to overweight from sector weight at KeyBanc Capital Markets on the increased potential of a value creating transaction as the company s Victoria s Secret brand continues to languish KeyBanc has a 25 price target Analysts note the stark differential in performance between the lingerie brand and L Brands beauty chain Bath Body Works and the lack of any discernable turnaround at Victoria s Secret KeyBanc says Bath Body Works would be attractive on its own after eight consecutive quarters of same store sales of 5 or more and 9 same store sales growth over the holidays Analysts see the value in turning around the Victoria s Secret business which still has 2 8 billion in revenue despite recent declines a powerful brand and the Pink brand But analysts think the turnaround could be better achieved as a private entity L Brands stock has sunk 26 8 over the last year while the S P 500 index
SPX 0 13
is up 24 3 over the period
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LB | Victoria s Secret parent L Brands shares rise on Barclays upgrade We believe change is afoot | L Brands shares were upgraded by Barclays which said change is afoot The upgrade comes after L Brands reported a disappointing holiday season L Brands has struggled as its Victoria s Secret lingerie brand has fallen out of favor |
LB | Four analysts turned bullish on Victoria s Secret parent L Brands Jim Cramer isn t buying it yet | CNBC s Jim Cramer said recent bullish notes on L Brands are overzealous They have a major presence in shopping malls all over the country especially Victoria s Secret so the steady decline of the mall has crushed them the Mad Money host said Turnarounds take time and you can lose a fortune while you re waiting for an intractable management to do the right thing he said |
WFC | Conference Board Leading Economic Index Update | The Conference Board Leading Economic Index LEI for the U S increased 0 5 percent in November to 118 0 2004 100 following a 0 9 percent increase in October and a 0 1 percent increase in September Here is an excerpt from the press release Says Ataman Ozyildirim economist at The Conference Board November s increase in the LEI for the U S was widespread among the leading indicators and continues to suggest that the risk of an economic downturn in the near term has receded Interest rate spread and housing permits made the largest contributions to the LEI this month overcoming a falling average workweek in manufacturing which reversed its October gain The CEI also rose on improving employment and personal income although industrial production fell in November Says Ken Goldstein economist at The Conference Board The LEI is pointing to continued growth this winter possibly even gaining momentum by spring For the second month in a row building permits made a relatively strong contribution and there is a chance that the long decline in housing is finally slowing However this somewhat positive outlook for the domestic economy is at odds with a global economy that appears to be losing steam In particular a deeper than expected recession in Europe could easily derail the outlook for the U S economy Here is a chart of the complete LEI series from the early days when the index was reported by the Department of Commerce through its reincarnation in 1995 as a product of the Conference Board I ve also highlighted recessions as identified by the NBER A cursory glance reveals that the downward slope before recessions begins many months before recession starts but the upturns coincide closely with the ends of recessions Let s chart the data a different way to illustrate more precisely the lead time for this index in forecasting recessions The next chart uses a simple Excel formula to plot months that set new highs at 100 and the other months by the percent off the previous high The LEI has indeed begun declining in advance of all eight of the official recessions since its inception in 1959 by the substantial average of 10 5 months and the wide range of 5 to 18 months In contrast the upturns coincide with the ends of recessions often leading by a month or two Last month Neile Wolfe a managing director at Wells Fargo Advisors called my attention to a Deutsche Bank article on the LEI A key observation in the article is that the recessions don t begin unless both the 3 and 12 month rates of change ROC in this index are negative Here is a chart with an overlay of both the 3 and 12 month ROC As we can readily see both are comfortably in positive territory For a closer look at the recent contours of the rate of change here is a snapshot since 2000 |
LB | L Brands LB Down 2 5 Since Last Earnings Report Can It Rebound | A month has gone by since the last earnings report for L Brands NYSE LB Shares have lost about 2 5 in that time frame underperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is L Brands due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts L Brands Q2 Earnings Top Victoria s Secret Still a DragL Brands Inc s second quarter fiscal 2019 earnings surpassed the Zacks Consensus Estimate but net sales fell short of the same Both the top and the bottom lines declined year over year We note that the results of the company s Victoria s Secret business which has been battling competition and consumers changing preferences for quite some time remained dismal However impressive performance at Bath Body Works brand provided some cushion Nonetheless the company reaffirmed its fiscal 2019 earnings view of 2 30 2 60 per share which indicates a considerable decline from 2 82 earned in fiscal 2018 Management now projects third quarter bottom line to be in the range of a loss of 5 cents to earnings of 5 cents a share This is in sharp contrast to earnings of 16 cents reported in the prior year period Detailed Quarterly DiscussionL Brands reported quarterly earnings of 24 cents a share that outpaced the Zacks Consensus Estimate of 19 cents and also came above the initial guidance of 15 20 cents This was the seventh consecutive quarter of positive earnings surprise However the bottom line declined 33 from the year ago period We note that lower net sales hurt quarterly earnings Net sales came in at 2 901 5 million down 3 from 2 983 8 million reported in the prior year period The top line figure also missed the Zacks Consensus Estimate 2 960 million Comparable sales declined 1 against 3 growth witnessed in the prior year quarter Total Victoria s Secret sales dropped 7 to 1 605 6 million Comparable sales fell 6 while comparable store sales tumbled 9 due to lower traffic and average unit retails Comps were down mid single digit in the lingerie business while the metric declined in the low double digit range at PINK Victoria s Secret Beauty comps were flat Further total digital sales registered an increase of 4 On the contrary Bath Body Works delivered a solid show and surpassed management s expectations Total sales grew 10 to 1 060 9 million with 8 rise in comparable sales and 4 improvement in comparable store sales Sales were fueled by robust performance in three key categories including body care home fragrance and soaps sanitizers Bath Body Works direct channel remained sturdy with sales up 28 Further merchandise margin declined on account of higher supply chain and sourcing costs We note that L Brands International sales came in at 154 5 million up 6 year over year Revenue and operating income grew at its partner business driven by Bath Body Works In China revenues increased substantially while operating loss also narrowed L Brands gross profit fell 7 to roughly 982 2 million during the quarter We note that gross margin contracted 160 bps to 33 9 on account of lower merchandise margin rate and buying and occupancy expense deleverage Operating income declined 23 from the year ago quarter to 174 6 million while operating margin shriveled 160 bps to 6 SG A expense fell 3 to 807 6 million in the quarter As a percentage of net sales the same remained flat at 27 8 due to the absence of La Senza and Henri Bendel businesses and decline in marketing costs at Victoria s Secret unit Store UpdateAs of Aug 3 2019 company owned stores were 2 927 including 1 109 Victoria s Secret stores 1 735 Bath Body Works 21 Victoria s Secret U K Ireland 5 PINK U K 39 Victoria s Secret Beauty and Accessories and 18 Victoria s Secret China Total non company owned stores were 687 including 215 Victoria s Secret Beauty Accessories 54 Victoria s Secret nine Pink and 233 Bath Body Works stores Further non company owned stores comprised 162 and 14 Travel Retail stores of Victoria s Secret Beauty Accessories and Bath Body Works respectively Other Financial DetailsL Brands ended the quarter with cash and cash equivalents of 852 5 million up from the prior year quarter s figure of 842 7 million Long term debt decreased to 5 475 4 million from nearly 5 711 8 million a year ago Shareholders deficit was 928 7 million Management incurred capital expenditures of 120 4 million in the quarter under review For fiscal 2019 the company projects capital expenditures to be 550 million It anticipates free cash flow of approximately 750 million during the same period OutlookManagement expects Bath Body Works brand to experience another solid year However it hinted that supply chain and sourcing costs may continue to hurt merchandise margins during the third and fourth quarters At Bath Body Works segment management hinted at continuing its investment in the White Barn concept in 2019 The company has chalked out about 200 White Barn projects for 2019 Looking ahead the company remains committed to improve Victoria s Secret performance by staying customer focused enriching assortments and enhancing store and online experiences L Brands expects third quarter comps to be to be down low single digits to up slightly Further gross margin is expected to contract year over year owing to lower merchandise margin rate and buying and occupancy expense deleverage SG A expense rate is anticipated to escalate due to negative comps Management expects comps to improve in the range of 1 4 during the fourth quarter Gross margin is likely to shrivel due to moderate decrease in the merchandise margin rate SG A rate is expected to be roughly flat Earnings per share are projected to be in the band of 1 95 2 15 the mid point of which 2 05 indicates a decline from 2 14 reported in the year ago period For fiscal 2019 the company anticipates comps to rise in low single digits Total sales are expected to increase approximately 2 points lower than comps on account of loss of La Senza and Henri Bendel sales Gross margin rate is likely to decrease year over year primarily due to lower merchandise margins SG A costs are expected to be flat to down marginally while SG A rate is expected to be roughly flat
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates The consensus estimate has shifted 69 41 due to these changes
VGM Scores
At this time L Brands has a nice Growth Score of B though it is lagging a bit on the Momentum Score front with a C However the stock was allocated a grade of A on the value side putting it in the top quintile for this investment strategy
Overall the stock has an aggregate VGM Score of A If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift Notably L Brands has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
LB | L Brands Victoria s Secret Works On Revival Cuts Jobs | L Brands Inc s NYSE LB prominent brand Victoria s Secret has cut the workforce to the tune of roughly 15 of the brand s staff at its Columbus OH based headquarters per media reports The move has reduced around 50 headcounts ranging from people at senior positions to junior employees Industry experts believe that with this move the company aims to simplify the organizational structure Also the departure of Victoria s Secret s executive vice president and head of stores April Holt came as a huge blow to L Brands Early this year the company s chief marketing officer Edward Razek stepped down It has now announced new leadership positions Per sources Becky Behringer will replace Holt on an interim basis L Brands have been struggling for a while due to sluggishness in the Victoria s Secret brand which was once a popular lingerie brand in the United States Some experts believe that the problem lies in the fact that the brand has constantly stereotyped the glamourous image when body positivity is the need of the hour These apart obsolete product assortment stiff competition and brand related issues acted as headwinds Nevertheless per sources the company is trying hard to revive Victoria s Secret s performance It is considering introducing new merchandise and intends to roll out new marketing strategy ahead of the holidays Further the brand recently signed a transgender model It has also put an end to its annual fashion show owing to declining viewership The company concentrates on improving Victoria s Secret s performance by remaining customer focused enriching assortments and improving store and online experiences These apart relaunch of the swimwear category is likely to be fruitful We believe that L Brands sustained focus on cost containment inventory management merchandise and speed to market initiatives will help it compete better Moreover an increased focus on tapping international markets is likely to present the company with long term growth opportunities and generate increased sales volume We note that the company s Bath Body Works brand is the only bright spot as it continues to score high on products including body care home fragrance and soaps sanitizers During the second quarter of fiscal 2019 the brand delivered a solid show and surpassed management s expectations Total sales for the brand grew 10 to 1 060 9 million with 8 rise in comparable sales and 4 improvement in comparable store sales Management expects the Bath Body Works brand to experience another robust year which will in turn help cushion the stock Notably the Zacks Rank 3 Hold company has fallen 46 4 in a year compared with the s decline of 42 1 That said we hope that these well chalked out plans will help L Brands in regaining its sheen Check Out These Solid PickCapri Holdings NYSE CPRI has a long term earnings growth rate of 5 7 It currently sports a Zacks Rank 1 Strong Buy You can see Zumiez Inc NASDAQ ZUMZ presently has a long term earnings growth rate of 12 and sports a Zacks Rank 1 Genesco NYSE GCO has long term earnings growth rate of 5 It currently flaunts a Zacks Rank 1 Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
PFE | J J s Remicade losing ground in Quebec health plan despite court victory | By Allison Martell and Allison Lampert TORONTO MONTREAL Reuters Johnson Johnson s Remicade a blockbuster drug that treats autoimmune disorders has steadily lost market share among patients enrolled in the Canadian province of Quebec s public drug program even after a court ruling reinstated full coverage in January a Reuters analysis of government data shows The plan s administrator stopped covering Remicade J J NYSE JNJ unit Janssen s version of the drug infliximab for some new patients in February 2017 in favor of cheap near copies called biosimilars mainly Pfizer NYSE PFE Inc s version of infliximab called Inflectra In January a Quebec court ordered it to resume coverage Remicade s eroding market share underscores a gradual shift underway in Canada where biosimilars have been slowly catching on with doctors and patients The drug is under pressure elsewhere in the third quarter total global sales fell 17 6 Canadian governments have sought to boost the use of biosimilars as they try to bring down drug costs In case of infliximab biosimilars market share rose to 11 4 in January 2019 from 0 7 in February 2017 according to Reuters analysis of data provided by the Quebec plan s administrator the R gie de l assurance maladie du Qu bec RAMQ For a graphic on Biosimilars gaining market share in Quebec plan Resuming coverage of Remicade as the court ordered did not reverse Pfizer s gains By August 2019 13 4 of 2 164 patients were on the biosimilar a single patient on Merck Co Inc s biosimilar Renflexis with the rest on Pfizer s biosimilar That left some 86 6 of the market to J J down from nearly 100 About 3 7 million people are enrolled in the plan Though Canada has about 2 of global drug sales it had 16 of Remicade sales in 2017 about C 1 billion 755 8 million according to the country s Competition Bureau Janssen said Remicade s re listing was part of its commitment to preserve patient and physician choice We strongly believe the use of biosimilars in Canada should be based on what physicians determine is in the best interest of their patients rather than being driven by efforts that restrict treatment choice in any way the company said in a statement Janssen said it is proposing agreements with Canadian governments to provide the cost savings being sought TOO LATE Louis Bessette a rheumatologist and professor at Universit Laval in Quebec said doctors in Quebec have gained more experience with biosimilars and the court ruling did not change his prescribing choices We prescribe them more and more he said of biosimilars I think for Janssen it was too late and there s no coming back But Bessette noted that overall patients are generally unwilling to switch to biosimilars Those patients look to be the new frontier for Canadian governments In May the province of British Columbia said it would require thousands of patients on its public drug plan to switch to biosimilars Health Canada says biosimilars are just as safe and effective but some drugmakers and patient groups have pushed back So far Quebec has no switching policy And Pfizer remains frustrated with slow biosimilar uptake in Canada This slow uptake undermines the potential value that biosimilars can offer and the savings they can bring to the health care system Pfizer said in a statement Pfizer said its internal data shows a recent decline in the number of new patients prescribed Inflectra which the company attributes to the January court ruling Comparing March to September 2019 to March 2017 to February 2019 they said new enrollments dropped 30 The RAMQ data obtained by Reuters shows that growth prescriptions for Inflectra and Remicade leveled off in early 2018 It is not clear what is behind this trend which predates the court ruling One possible explanation is competition from new drugs Waqqas Afif a gastroenterologist at McGill University Health Center in Montreal said doctors are prescribing Takeda Pharmaceutical Co Ltd s Entyvio and Janssen s Stelara to some patients instead of infliximab Quebec s health ministry said in a statement it is working on a biosimilar policy but declined to go into detail on the options it is considering |
WFC | Ex Islanders owner wins new sentencing hearing due to procedural error | Investing com A U S federal appeals court vacated a sentence against former New York Islanders owner Paul Greenwood on Thursday ordering a new sentencing for the former money manager currently serving a 10 year sentence for participating in a scheme valued at more than 550 million
In explaining the decision a judge from the 2nd U S Circuit Court of Appeals in Manhattan said the U S district court erred procedurally when federal judge Miriam Goldman Cedarbaum based her sentencing on devastating losses suffered by investors Greenwood a former executive at WG Trading Co in Greenwich Conn was sentenced in December 2014 for securities fraud and conspiracy stemming from a decades long fraud he perpetuated with Stephen Walsh his former business partner
As part of the scheme which dates back to the early 1990s the duo misappropriated 131 million in investor funds and issued 554 million in promissory notes to conceal the company s poor performance according to federal prosecutors Greenwood used the funds in part to run a North Carolina horse farm and amass a collection of 1 000 stuffed teddy bears valued at more than 1 7 million Greenwood and Walsh also failed to disclose that they used 2 6 million in investor funds to purchase a stake in the National Hockey League s Islander franchise in 1992 before selling it four years later at a sizable profit prosecutors said
Greenwood spent several years cooperating with prosecutors following his guilty plea in July 2010 During the period he admitted bilking university endowment funds from the University of Pittsburgh and Carnegie Mellon University banks such as Wells Fargo N WFC and pension funds such as the Sacramento Employees Retirement System and the Kern County Employees Retirement Fund
While many of the funds reported losing millions due to the fraud the court ruled that the government failed to show that any of the individual victims had been devastated by actual losses that remained outstanding at the time of Greenwood s sentencing In the case of the pension funds a number of victims reported losing thousands of dollars when Greenwood was sentenced 13 months ago
Greenwood also worked with a court appointed receiver which recovered approximately 900 million or 90 of the victims investments upon his sentencing according to court filings
I ve lied I ve cheated and I ve stolen Greenwood said in court during his December 2014 sentencing hearing Words can t express my sorrow and remorse for what I have done
Greenwood who is incarcerated at a Federal medium security prison in Butner N C was initially scheduled to be released in November 2023 A date for Greenwood s resentencing was not set on Thursday |
LB | Jefferies says L Brands rally offers good sell point | An L Brands LB 7 7 rally today spurred by this morning s BofA upgrade has prompted Jefferies to urge investors to sell The firm reiterated its Underperform rating amid today s gains and noted the Bath Body Works unit has peaked and the other brands are broken
Bath Body Works was a linchpin of BofA s upgrade as the firm said it could be spun out to create value But that might be too late Jefferies Randal Konik writes with the prospect of comps turning negative And the PINK line that has boosted Victoria s Secret is a land mine with sales at a high risk of decline against hot competition Jefferies has a 14 price target now implying 26 downside |
LB | L Brands 5 after profit guidance cut | L Brands NYSE LB reports sales of 3 906B for the two month holiday period vs 4 072B a year ago
Comparable sales fell 3 0 for the period After factoring in the performance the retailer expects to report Q4 EPS of about 1 85 vs a prior outlook for 2 00 and the consensus mark of 1 98
Source Press Release
Shares of L Brands are down 5 40 premarket to 17 17 vs the 52 week range of 15 80 to 29 02 |
LB | Why Victoria s Secret s Image Is Hurting L Brands | The glamorous image of Victoria s Secret is no longer adding sparkle to owner L Brands NYSE LB earnings The company which owns the famous lingerie brand as well as bath shop chain Bath Body Works has seen sales and profit shrink as customers turn away from Victoria s Secret in favor of options like American Eagle Outfitters NYSE AEO Aerie and private companies like Harper Wilde and ThirdLove
So the question is Why is today s customer leaving Victoria s Secret It s all about image Shoppers of the 80s and 90s flocked to Victoria s Secret known for its push up bras statuesque models and extravagant annual fashion show Lingerie in silks satin and lace was in everyone s closet and the idea of comfort wasn t a big part of the bra purchase decision Instead glamor was the word
Looking for comfort
Fast forward a few years and the entire lingerie landscape has changed These days women are looking for comfort According to The NPD Group 40 of millennials say that most of their wardrobe is made up of comfort wear Millennials representing the largest share of the women s intimate apparel market in the U S were responsible for more than a third of all sales in 2017 and 2018 the data showed
L Brands has made efforts to reshape Victoria s Secret s image The brand sells popular styles including sports bras and bralettes bras without wires or cups which can be readily found on its website and has reduced its reliance on items like the push up bra In November the company also canceled the Victoria s Secret fashion show Airing annually around the holidays on primetime TV the show featured glamorous models wearing the company s lingerie and iconic angel wings On the company s third quarter earnings call Executive Vice President and Chief Financial Officer Stuart Burgdoerfer said L Brands is figuring out how to advance the positioning of the brand and that it is important to evolve the marketing of Victoria s Secret
The message shoppers want to hear
L Brands may have to think quickly to move ahead of the competition which already is pronouncing the message shoppers want to hear Aerie Harper Wilde and ThirdLove all focus on the comfort theme that s so important to millennials Inclusivity is another key point for shoppers and these brands have a handle on that trendy term too According to Accenture 42 of ethnic minority shoppers would switch to a retailer that puts a focus on inclusion and diversity and 29 of all shoppers would likely switch to a retailer that reflects the importance they place on these elements
Comfort and inclusivity are obvious as soon as a shopper visits the websites of Aerie Harper Wilde and ThirdLove The brands inform customers that their bras are all about comfort The Harper Wilde and ThirdLove websites offer a vast range of sizes and sizing information ThirdLove even has a quiz to help the shopper find their size and feature models with a natural look wearing bras in neutral tones Aerie uses words such as empowerment and feeling good
Though it seems L Brands recognizes the need to reposition Victoria s Secret the concern is this Can a brand with such a strong image linked to glamor and ostentation truly revamp to please a customer who is looking for just the opposite Can shoppers imagine a Victoria s Secret without the vision of models with angel wings strutting down the runway popping into their minds
For L Brands the answer to those questions will be a determining factor for sales earnings and therefore stock performance The company in the third quarter said sales at Victoria s Secret were at the low end of its expectations and L Brands reported related impairment charges that resulted in a loss per share
Even if L Brands is successful in its work on the Victoria s Secret brand any positive impact on earnings appears to be quite a long way down the road Though analysts expect a 12 upside in the shares after last year s 29 decline and the price to earnings ratio of about 13 is far from the highs of more than 60 a decade ago the difficulties at Victoria s Secret mean it s too early to look at this consumer discretionary stock s shares with much optimism |
WFC | Europe Growls Rattles Markets Again | The European debt crisis growls again and Intel takes tech sector lowerEurope was back on the front burner again today with threats of credit rating downgrades and bond prices rising in Italy Major U S indexes declined sharply and then held critical support levels with the Dow Jones Industrial Average declining 162 points or 1 3 The tech sector was hit by a downgrade in sales expectations from Intel Wells Fargo and major U S banks led the financial sector to a loss of 2 2 Important technical support levels held today and so will need to hold tomorrow as well Tomorrow brings Retail Sales but the most important event of the day will be the announcement from Dr Bernanke and the Federal Reserve Open Market Committee Global markets are looking for help from central bankers and will be listening carefully to what the FOMC has to say Disclaimer Wall Street Sector Selector actively trades a wide range of exchange traded funds ETFs and positions can change at any time |
WFC | NAHB Housing Market Index | It is amazing how an uptick in a number from a very depressed level brings the bullish media headlines to the surface For example from CNBC this morning Not since the spring of 2008 have the nation s homebuilders felt this good about the potential for new business An industry association survey measuring builder sentiment rose for the third straight month in December with significant gains in the component measuring traffic of perspective buyers The National Association of Home Builders Wells Fargo Housing Market Index edged up two points from a downwardly revised number to 21 Actually this isn t true at all as the index hit a recent peak of 22 in May of 2010 rising from a low 2 months earlier of 15 My point is twofold 1 we have been here before and the market turned down again and 2 we are still at some of the lowest levels of the index on record So while the headlines bleat that the the good economic news keeps rolling in let s try and keep our focus on the trend rather than the number itself However today s report will boost expectations for strength in tomorrow s housing starts report as well as Friday s report on new home sales Data on existing home sales will be posted on Wednesday While the numbers may well see a bounce going into the end of the year with individuals trying to lock things up by year end even I am trying to close on my refinance by then it is strength that is likely to be very temporary in nature As we have discussed just recently in our report on Housing The Margin Effect when a market is extremely depressed as it is now even small levels of activity at the margin will have a larger influence on the indexes as a whole There are three issues that will weigh on the housing market in the coming year The first is that there are large inventories of foreclosed properties which continue to plague the most distressed markets This inventory combined with consumer worries about job security and the challenges of selling an existing home remain significant factors The second is that foreclosure activity from banks will likely increase in the coming year which will suppress home prices even more making potential buyers back away from purchases Finally if a recession takes hold you can most assuredly expect home prices and sales to decline This combined with the difficulty in obtaining credit will be major hurdles to any type of continued recovery into the future So while the media hops on the bandwagon of hope for finding the elusive bottom in housing the reality is that the problems that have plagued homeowners and potential home buyers have not been rectified Jobs incomes credit savings and a deep lack of confidence in the housing market are all major hindrances in the housing market place today So while today s increase in the NAHB survey is certainly encouraging it has a long way to go before this patient can declared stable enough to move out of the ICU |
LB | L Brands LB Q2 Earnings Top Victoria s Secret Still A Drag | L Brands Inc s NYSE LB second quarter fiscal 2019 earnings surpassed the Zacks Consensus Estimate but net sales fell short of the same Both the top and the bottom lines declined year over year We note that the results of the company s Victoria s Secret business which has been battling competition and consumers changing preferences for quite some time remained dismal However impressive performance at Bath Body Works brand provided some cushion Notably there was not much stock price movement during the after market trading session on Aug 21 Meanwhile shares of this Zacks Rank 3 Hold have slid 16 2 in the past three months compared with the s decline of 25 Nonetheless this specialty retailer of women s intimate and other apparel beauty and personal care products reaffirmed its fiscal 2019 earnings view of 2 30 2 60 per share which indicates a considerable decline from 2 82 earned in fiscal 2018 Management now projects third quarter bottom line to be in the range of a loss of 5 cents to earnings of 5 cents a share This is in sharp contrast to earnings of 16 cents reported in the prior year period The Zacks Consensus Estimate for the third quarter and fiscal year currently stands at 9 cents and 2 40 respectively Detailed Quarterly DiscussionL Brands reported quarterly earnings of 24 cents a share that outpaced the Zacks Consensus Estimate of 19 cents and also came above the initial guidance of 15 20 cents This was the seventh consecutive quarter of positive earnings surprise However the bottom line declined 33 from the year ago period We note that lower net sales hurt quarterly earnings Net sales came in at 2 901 5 million down 3 from 2 983 8 million reported in the prior year period The top line figure also missed the Zacks Consensus Estimate 2 960 million Comparable sales declined 1 against 3 growth witnessed in the prior year quarter L Brands Inc Price Consensus and EPS Surprise Total Victoria s Secret sales dropped 7 to 1 605 6 million Comparable sales fell 6 while comparable store sales tumbled 9 due to lower traffic and average unit retails Comps were down mid single digit in the lingerie business while the metric declined in the low double digit range at PINK Victoria s Secret Beauty comps were flat Further total digital sales registered an increase of 4 On the contrary Bath Body Works delivered a solid show and surpassed management s expectations Total sales grew 10 to 1 060 9 million with 8 rise in comparable sales and 4 improvement in comparable store sales Sales were fueled by robust performance in three key categories including body care home fragrance and soaps sanitizers Bath Body Works direct channel remained sturdy with sales up 28 Further merchandise margin declined on account of higher supply chain and sourcing costs We note that L Brands International sales came in at 154 5 million up 6 year over year Revenue and operating income grew at its partner business driven by Bath Body Works In China revenues increased substantially while operating loss also narrowed L Brands gross profit fell 7 to roughly 982 2 million during the quarter We note that gross margin contracted 160 bps to 33 9 on account of lower merchandise margin rate and buying and occupancy expense deleverage Operating income declined 23 from the year ago quarter to 174 6 million while operating margin shriveled 160 bps to 6 SG A expense fell 3 to 807 6 million in the quarter As a percentage of net sales the same remained flat at 27 8 due to the absence of La Senza and Henri Bendel businesses and decline in marketing costs at Victoria s Secret unit Store UpdateAs of Aug 3 2019 company owned stores were 2 927 including 1 109 Victoria s Secret stores 1 735 Bath Body Works 21 Victoria s Secret U K Ireland 5 PINK U K 39 Victoria s Secret Beauty and Accessories and 18 Victoria s Secret China Total non company owned stores were 687 including 215 Victoria s Secret Beauty Accessories 54 Victoria s Secret nine Pink and 233 Bath Body Works stores Further non company owned stores comprised 162 and 14 Travel Retail stores of Victoria s Secret Beauty Accessories and Bath Body Works respectively Other Financial DetailsL Brands ended the quarter with cash and cash equivalents of 852 5 million up from the prior year quarter s figure of 842 7 million Long term debt decreased to 5 475 4 million from nearly 5 711 8 million a year ago Shareholders deficit was 928 7 million Management incurred capital expenditures of 120 4 million in the quarter under review For fiscal 2019 the company projects capital expenditures to be 550 million It anticipates free cash flow of approximately 750 million during the same period OutlookManagement expects Bath Body Works brand to experience another solid year However it hinted that supply chain and sourcing costs may continue to hurt merchandise margins during the third and fourth quarters At Bath Body Works segment management hinted at continuing its investment in the White Barn concept in 2019 The company has chalked out about 200 White Barn projects for 2019 Looking ahead the company remains committed to improve Victoria s Secret performance by staying customer focused enriching assortments and enhancing store and online experiences L Brands expects third quarter comps to be to be down low single digits to up slightly Further gross margin is expected to contract year over year owing to lower merchandise margin rate and buying and occupancy expense deleverage SG A expense rate is anticipated to escalate due to negative comps Management expects comps to improve in the range of 1 4 during the fourth quarter Gross margin is likely to shrivel due to moderate decrease in the merchandise margin rate SG A rate is expected to be roughly flat Earnings per share are projected to be in the band of 1 95 2 15 the mid point of which 2 05 indicates a decline from 2 14 reported in the year ago period For fiscal 2019 the company anticipates comps to rise in low single digits Total sales are expected to increase approximately 2 points lower than comps on account of loss of La Senza and Henri Bendel sales Gross margin rate is likely to decrease year over year primarily due to lower merchandise margins SG A costs are expected to be flat to down marginally while SG A rate is expected to be roughly flat Stocks to ConsiderBoot Barn Holdings NYSE BOOT has a long term earnings growth rate of 17 and a Zacks Rank 1 Strong Buy You can see Canada Goose Holdings NYSE GOOS beat estimates in each of the trailing four quarters and carries a Zacks Rank 2 Buy Fossil Group NASDAQ FOSL came up with positive earnings surprise in the last two reported quarters and holds a Zacks Rank 2 It s Illegal in 42 States But Investors Will Make Billions LegallyIn addition to the companies you read about above today you get details on the newly legalized industry that s tapping into a habit that Americans spend an estimated 150 billion on every year That s twice as much as they spend on marijuana legally or otherwise Zacks special report revealing how investors can profit from this new opportunity As more states legalize this activity the industry could expand by as much as 15X Zacks has just released a Special Report revealing 5 top stocks to watch in this space |
LB | ULTA Reporting After The Bell Thursday Will It Remain A Retail Jewel | Ulta Beauty NASDAQ ULTA is a retail gem that has somehow defied the broader retail trends returning investors 35 year to date and more than doubling the broader retail markets average returns This jewel in the retail space is reporting earnings after market close Thursday August 29th and analysts are estimating Ulta s robust growth won t falter
ULTA is typically a big mover on earning releases with an average move of 7 16 over the past 8 quarters 4 up 4 down Zacks Consensus Estimates for the July Quarter reflect an EPS of 2 79 on revenues of 1 68 billion which would represent year over year growth of 13 4 and 12 6 respectively
Management sentiment and guidance drive ULTA on quarterly reports more than surprises on top or bottom line metrics
The Business
Ulta Beauty is the largest beauty retailer in the United States offering customers more than 25 000 products across roughly 500 brands They are one of the only pure play beauty businesses in the retail space with no close publicly traded competitors
As other retailers are closing their doors Ulta has been able to expand its footprint It s opened 99 stores or more annually for 7 consecutive years increasing the number of stores by 2 6x since 2011
The retail space has been closing stores at an exponential rate with more than 7000 announced to close in 2019 This is good news for Ulta who will be filling some of this brick and mortar retail void expecting to open 70 80 new stores annually for the next several years Currently operating 1 196 stores analysts are projecting this could hit 1 600 with the potential of expanding its operations internationally
E Commerce Focus
Ulta has been able to pivot with the shifting retail industry investing in its digital technology so that modern omnichannel consumer demands are met Omnichannel customers spend almost 3 times more than store only customers according to Ulta s latest annual report
Their e commerce business has been the fastest growing channel currently making up only 11 of revenues but expected to make up a more substantial portion of the business as Ulta continues to invest in its digital innovation ecosystem Ulta management is anticipating to grow its e commerce business by 20 30 for fiscal 2019
At the end of the past year Ulta acquired two tech start ups that focus on AI and augmented reality This might sound like a strange move for a beauty retailer but these acquisitions are going to improve their digital platform
AI is projected to strengthen the firm s understanding of consumer patterns and personalize buyers preferences Augmented reality is becoming more widely used in digital retail helping consumers try on products without leaving their homes These should enhance Ulta s product offering and further advance their e com presence
Outlook
Ulta Beauty is expected to see double digit top and bottom line growth for the next two years as this business continues to expand rapidly Sell side analysts have been increasing full year EPS estimates for ULTA and I believe that this will continue as the firm continues to over deliver ULTA is currently sitting at a Zacks Rank 2 Buy
ULTA is currently trading at a forward PEG of 1 25x significantly below its 5 year median and below the nonfood retail industries PEG of 1 82x UTLA s forward P E tells a similar story demonstrating very reasonable valuations If Ulta s ostensible future growth can come to fruition the shares are a buy right now
Comps
There are no publicly traded pure play beauty competitors for me to use as a direct comparison L Brands NYSE LB which owns Victoria Secret and Bath Body Works has a similar customer base to ULTA but have not been able to achieve the same results LB has lost 74 of its market value over the last 5 years with losses exceeding 35 year to date L Brands announced they would be closing another 53 Victoria Secret stores this year following the 30 that were closed in 2018 This is a quintessential retailer that hasn t been able to adapt to the changing consumer
Lululemon NASDAQ LULU also has a comparable consumer base to Ulta but has been following a very different narrative than L Brands LULU is a prime example of retail gem and has shown investors over 50 returns since the beginning of 2019
Take Away
Earnings after the bell tomorrow should prove to illustrate another robust quarter for Ulta as US retail sales remain strong in Q2 This stock has a ton of potential with its business model catering to all generations Ulta s ability to evolve to millennial and now Gen Z consumer needs has given it the leverage to take control of the space domestically and potentially internationally
Look for changes in management guidance moving forward as well as management sentiment in the earnings call This would not be a bad stock to put a small position on before the release considering that the last two earnings have had a strong positive price action If you are a risk averse investor wait till after the dust settles to get in
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LB | L Brands Down Nearly 35 YTD Victoria s Secret Remains Dull | Shares of L Brands Inc NYSE LB have fallen 34 9 year to date underperforming the s decline of 28 5 as it is struggling to find its feet amid a tumultuous backdrop wherein Victoria s Secret is grappling with its sales numbers Notably Victoria s Secret sales dropped 7 to 1 605 6 million in the second quarter fiscal 2019
Comparable sales fell 6 while comparable store sales tumbled 9 due to lower traffic and average unit retails Some experts believe that the problem lies in product assortment while some feel stiff competition and brand related issues is taking a toll on the brand
Further going by the media reports the company s chief marketing officer Edward Razek is stepping down He was credited for establishing an uber glamorous image for Victoria s Secret which once proved to be a prime time television hit
The same image now seems primitive as consumers are changing preference increasingly To this end L Brands have been highly criticized for its inability to keep up with women and modern beauty ideals in the era of body positivity per media reports Moving on comps declined to the tune of low double digit at PINK targeted towards the youth along with slowing store traffic are acting as deterrents Per Euromonitor Victoria s Secret s share of the United States women s underwear market fell to 25 in fiscal 2018 However the company is leaving no stone unturned to revive its Victoria s Secret brand In this regard it is considering new merchandises and also intends to roll out new marketing strategy ahead of the holidays as per sources Further the company is on track with its heavy promotions that will continue through the fall season
Moreover the brand has recently signed its first openly transgender model It has also put an end to its annual fashion show owing to declining viewership Also it will close 53 underperforming stores in North America as part of its turnaround plans Other Side of the StorySolid performance at Bath Body Works brand is providing some cushion to the stock During the quarter Bath Body Works delivered a solid show and surpassed management s expectations Total sales grew 10 to 1 060 9 million with 8 rise in comparable sales and 4 improvement in comparable store sales
Sales were fueled by robust performance in three key categories including body care home fragrance and soaps sanitizers Per sources the brand has also impressed customers by bringing in new products to the shelves such as bath bombs and face masks among others Management expects Bath Body Works brand to experience another solid year and remains committed to improve Victoria s Secret performance Overall comps are likely to show improvement from the fourth quarter Management expects overall comps to improve in the range of 1 4 during the final quarter For fiscal 2019 the company anticipates comps to rise in low single digits Stocks to ConsiderBoot Barn Holdings NYSE BOOT has a long term earnings growth rate of 17 and a Zacks Rank 1 Strong Buy You can see Zumiez NASDAQ ZUMZ has a long term earnings growth rate of 13 5 and a Zacks Rank 1 Canada Goose Holdings NYSE GOOS has a long term earnings growth rate of 28 5 and a Zacks Rank 2 Buy Today s Best Stocks from ZacksWould you like to see the updated picks from our best market beating strategies From 2017 through 2018 while the S P 500 gained 15 8 five of our screens returned 38 0 61 3 61 6 68 1 and 98 3 This outperformance has not just been a recent phenomenon From 2000 2018 while the S P averaged 4 8 per year our top strategies averaged up to 56 2 per year |
PFE | Iterum Down As Sulopenem Antibiotic Fails In Phase III Study | Shares of Iterum Therapeutics plc NASDAQ ITRM crashed 35 7 on Dec 11 following the announcement of disappointing data from a phase III study evaluating its antibiotic candidate sulopenem The company s shares have decreased 37 8 so far this year against the s increase of 11 1 The late stage study was evaluating oral and intravenous administration of the candidate in patients with complicated intra abdominal infections cIAI compared to Merck s MRK Invanz ertapenem for injection Data from the study showed that the candidate failed to meet the primary endpoint on non inferiority of clinical response to Invanz as measured on day 28 in the micro MITT population Detailed data showed that 85 5 of the micro MITT patient population achieved a clinical response upon treatment with sulopenem compared to 90 2 for Invanz The median difference in clinical response was 4 7 for sulopenem We note that the FDA requires that the lower limit of the difference in the actual outcome rates be 10 to support non inferiority However the highest difference in outcomes was measured to be 10 3 Although the study missed the primary endpoint by a very small margin it will not be able to support an approval for sulopenem as a treatment for patients with cIAI However Iterum stated in its release that imputing an outcome for the patients with missing data and the secondary supporting analyses demonstrate potential of the candidate in treating multi drug resistant infections Please note that Iterum in licensed sulopenem from Pfizer NYSE PFE in 2015 Apart from cIAI the company is also developing sulopenem for the treatment of complicated and uncomplicated urinary tract infections UTI and complicated intra abdominal infections Separate phase III studies are evaluating the candidate in patients with either complicated or uncomplicated UTI Data from these studies are expected in the first quarter of 2020 A new drug application seeking approval for sulopenem as a treatment for complicated and uncomplicated UTI is planned to be filed with the FDA in the first half of 2020 following a positive data readout However any setback in the UTI phase III studies will bring the share price down further We note that several other pharma biotech companies are also developing candidates targeting UTI patients including gepotidacin from GlaxoSmithKline NYSE GSK tebipenem pivoxil from Spero Therapeutics Inc NASDAQ SPRO delafloxacin from Melinta Therapeutics Inc among others Successful development of these candidates will increase competition for the company if sulopenem is approved for treating UTI Iterum Therapeutics PLC Price
Zacks RankIterum currently carries a Zacks Rank 3 Hold You can see Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
PFE | Pfizer Rises 3 | Investing com Pfizer NYSE PFE rose by 3 09 to trade at 38 42 by 09 33 13 33 GMT on Tuesday on the NYSE exchange
The volume of Pfizer shares traded since the start of the session was 2 07M Pfizer has traded in a range of 37 99 to 38 42 on the day
The stock has traded at 38 4200 at its highest and 36 2200 at its lowest during the past seven days |
PFE | Ex FDA chief Gottlieb sees investment opportunity in unloved antibiotics | By Rebecca Spalding
NEW YORK Reuters As a private investor former U S Food and Drug Administration Commissioner Scott Gottlieb is focused on an area where few have found success in recent years developing new antibiotics
Since leaving the FDA in April Gottlieb has revealed little about what types of investments he would make in his new role at New Enterprise Associates one of the country s largest venture capital firms where he worked prior to his time in government
But in an interview Gottlieb said he intends to use his expertise to back therapeutic areas that other healthcare investors have overlooked due to concerns over how the treatments are paid for
Near the top of his list are companies researching new kinds of antibiotics an issue he advocated for while at the FDA
I m very interested in finding opportunities in the anti infective space particularly around multi drug resistant organisms Gottlieb said in an interview Anti infectives have been unloved for a very long time There s a huge clinical need
In many ways it s a contrarian bet Global health officials have repeatedly warned about the rise of bacteria and other microbes that are resistant to most available drugs raising the specter of untreatable infectious diseases that could spread rapidly
But few large drugmakers are researching new medicines that can combat these so called superbugs because the economics often work against them Drugmakers earn more revenue the more drugs they sell However antibiotics are more effective the less they are used
Last year pharmaceutical giant Novartis AG S NOVN said it would abandon its antibiotic research following similar moves made by peers AstraZeneca Plc L AZN and Sanofi SA PA SASY
Pfizer Inc N PFE whose board Gottlieb joined in June after leaving government is one of the few remaining large players still in the space along with GlaxoSmithKline Plc L GSK which this week begun late stage testing of an experimental antibiotic in patients with urinary tract infections and gonorrhea
Smaller players meanwhile have struggled to find financing Achaogen Inc said earlier this year that it would file for bankruptcy despite having brought a novel antibiotic through FDA approval Tetraphase Pharmaceuticals Inc O TTPH plummeted earlier this month after it gave a disappointing sales forecast for its antibiotic treatment
Gottlieb said the sector s low valuations create an opportunity to roll up therapies into a larger company focused on making antibiotics
After the Achaogen episode a lot of valuations have been driven down quite dramatically I think there s an opportunity to try to find some existing assets and maybe build a company around those assets he said
That s what I think I d be interested in doing Gottlieb said There are other investors that are interested in this as well I think the capital is out there to do that
While at the FDA Gottlieb advocated finding new ways to pay for antibiotics such as a licensing model that would charge hospitals upfront for access to new kinds of anti infective drugs rather than paying for them on a per unit basis
In the past Gottlieb was criticized over potential conflicts of interest between his government and private sector work including an investment in Kure Corp a privately held vaping company Gottlieb promised to divest that interest prior to joining the FDA where he assumed oversight of the burgeoning e cigarette market |
WFC | U S labor market strengthening factories struggling | By Lucia Mutikani WASHINGTON Reuters The number of Americans filing for unemployment benefits last week fell from a five month high suggesting sustained labor market healing that could lead to further Federal Reserve interest rate hikes next year The sign of underlying economic strength came a day after the U S central bank raised its benchmark overnight interest rate by 25 basis points to between 0 25 percent and 0 50 percent the first increase in nearly a decade The labor market continues to stay tight with demand for workers strong and pockets of actual shortages in many industries The Fed has achieved the employment part of its dual mandate and this is what triggered the rates liftoff yesterday said Chris Rupkey chief financial economist at MUFG Union Bank in New York Initial claims for state unemployment benefits dropped 11 000 to a seasonally adjusted 271 000 for the week ended Dec 12 the Labor Department said on Thursday It was the 41st straight week that claims remained below 300 000 a threshold associated with strong labor market conditions That is the longest such run since the early 1970s The four week moving average of claims considered abetter measure of labor market trends as it strips outweek to week volatility slipped 250 to 270 500 last week The Fed said in its policy statement on Wednesday that there had been further improvement in the labor market and that underutilization of labor resources had diminished appreciably since the beginning of the year Despite the labor market momentum there remains no respite for the manufacturing sector which has been slammed by a robust dollar deep spending cuts by energy firms weak global demand and efforts by businesses to reduce an inventory glut A separate report from the Philadelphia Federal Reserve showed its gauge of manufacturing activity in the region fell to 5 9 this month from 1 9 in November It was the third negative reading in the past four months Factories in the mid Atlantic region reported that new orders continued to decline this month though there was an increase in shipments Order books shrunk while inventories increased for the first time in four months The intense headwinds facing the U S manufacturing sector continue to linger said Millan Mulraine deputy chief economist at TD Securities in New York A survey early this month showed manufacturing which accounts for 12 percent of the U S economy contracted in November for the first time in three years The weak Philadelphia Fed survey brought it in line with other regional surveys that have been mired in contractionary territory U S stocks fell while the dollar jumped to a fresh two week high against a basket of currencies U S government debt prices rose JOBS MARKET STRENGTH The claims data covered the survey period for December nonfarm payrolls The four week average of claims dipped 500 between the November and December survey periods suggesting another strong month of job gains Payrolls increased by 211 000 in November We expect a 200 000 December nonfarm payroll increase with limited upside risk from a tight claims path said Michael Englund chief economist at Action Economics in Boulder Colorado Dollar strength which has eroded exports and the profits of multinational corporations helped to push the current account deficit in the third quarter to its highest level in nearly seven years another report from the Commerce Department showed The current account deficit which measures the flow of goods services and investments into and out of the country increased 11 7 percent to 124 1 billion the largest shortfall since the fourth quarter of 2008 The current account was also pressured by an increase in remittances government grants and pensions and dividend payments to foreign individuals and entities The deficit represented 2 7 percent of gross domestic product the biggest share since the second quarter of 2012 up from 2 5 percent in the second quarter The current account shortfall however is not a problem as the United States continues to attract ample income from overseas
With rates of return in foreign economies likely to remain depressed for the foreseeable future we look for the dollar to strengthen further in the coming quarters said Jay Bryson global economist at Wells Fargo N WFC in Charlotte North Carolina |
WFC | Zurich to buy U S crop insurer RCIS in 1 billion deal | By John Miller and Brenna Hughes Neghaiwi ZURICH Reuters Zurich Insurance Group AG will pay up to 1 05 billion to buy a U S agricultural crop insurer from Wells Fargo N WFC Co the Swiss company said on Friday Zurich will buy Rural Community Insurance Services RCIS for 675 million plus excess capital at the date of closing an amount now estimated at up to 375 million Wells Fargo had previously launched an auction for RCIS with about 2 1 billion in gross written premiums in 2014 after it piled up losses related to extreme weather in recent years analysts said Zurich s purchase of the business deploys a share of the 3 billion in spare cash that the Swiss insurer has pledged to use for small scale acquisitions and returns to investors It had abandoned a more ambitious bid for Britain s RSA Insurance Group Plc L RSA earlier this year The acquisition of RCIS will increase risk diversity of our general insurance business by leveraging the crop exposure which has low correlation to the rest of our book General Insurance Chief Executive Kristof Terryn said RCIS insures one in six U S farmers Zurich said providing risk management for more than 130 crops on over 90 million acres roughly nine times the land area of Switzerland While Zurich said buying the crop insurance business will help diversify its risks analysts said the U S based insurer has been saddled by losses linked to recent extreme weather In the last four years the profitability of the business being purchased had an average gross combined ratio of 102 2 percent and an average loss of 26 million analysts from DZ Bank AG said in a note The reason at least in part was unusually high crop damage caused by drought This acquisition may make sense strategically but given RCIS s recent results it is expensive A ratio over 100 percent means the insurer pays out more in claims than it reaps in premiums In addition to extreme weather including drought and flooding low interest rates also contributed to making crop insurance businesses less attractive to banks Wells Fargo has been looking to unload the crop insurance unit since at least August as regulatory restrictions on U S banks were also forcing some of them to reconsider underwriting insurance policies The deal is expected to close by the end of the first quarter of 2016 Zurich said Shares in Zurich Insurance were up 0 6 percent at 1330 GMT outperforming a 0 1 percent lower European sector index |
WFC | Fed to raise rates again in March follow up with fewer hikes Reuters poll | By Sumanta Dey Reuters The U S Federal Reserve will raise interest rates again in the next three months according to two thirds of economists polled by Reuters although many say rates won t rise as quickly next year as policymakers have suggested The Fed hiked rates for the first time in nearly a decade on Dec 16 confident the U S economy can stand higher borrowing costs after years of stimulus and near zero rates although Janet Yellen who chairs the rate setting Federal Open Market Committee made clear future increases would be gradual Considering the muted outlook for inflation and oil prices a strong dollar hurting U S manufacturers and the continued fragile state of the global economy the Fed may have to be cautious with future rate hikes Still 77 of 120 economists in a snap poll conducted a couple of days after the meeting said rates will next move higher by March And all others but two said it would happen in the second quarter Defining gradual and divining how the FOMC will implement a gradual rate increase will become the new parlor game for financial markets and monetary policy wonks William Lee head of North American Economics at Citi wrote in a note We are confident that the actual pace of interest rate increases likely will be slower than that implied by the FOMC dots Not only are there downside risks to the outlook but the FOMC s own predilection for responding to financial market distractions likely will dampen the pace of rate increases Fed policymakers whose views are visually plotted and published by the Fed as dots currently estimate rates at 1 25 1 50 percent by the end of 2016 100 basis points higher than the current rate The median forecast among economists polled by Reuters however is that the fed funds target rate would be 1 00 1 25 percent by then HAWKS AND DOVES The most hawkish prediction in the poll is that rates would reach 1 75 2 00 percent by the end of next year and the most dovish said the Fed will not hike rates again at all in 2016 Just seven of the 106 economists who gave end year forecasts said rates would move higher than the Fed s own dot plot while only 2 of all the 22 primary dealers thought the FOMC dots were about right for the end year fed funds rate The rest said rates would be lower Bets in the futures market 0 FF indicate traders are currently pricing in higher rates only in June The risk however is that inflation fails to rise as predicted Core PCE inflation which the Fed watches closely is forecast around 1 5 1 7 percent through 2016 similar to what Fed policymakers expect but lower than the 2 percent target With oil prices likely to stay low through next year those expectations may be optimistic That s especially true considering the strong dollar which is predicted to remain firm makes imports cheaper in the U S EUR POLL Low inflation expectations reflect the persistent realities about the current recovery where lower commodity prices and competition from abroad have kept a lid on price pressures wrote John Silva chief economist at Wells Fargo N WFC Inflation measured by the PCE deflator has averaged slightly less than 2 percent since 1994 This brings into question the value of having a 2 percent target when it has not been achieved for what could be considered the long run
The outlook for growth is also tame expected at a steady 2 4 2 5 percent annualized pace in each quarter over the coming year ECILT US Additional reporting and polling by Kailash Bathija Editing by Ross Finley Jeremy Gaunt |
WFC | Stocks post pre holiday gains as bruised oil sees cheer | By Lewis Krauskopf NEW YORK Reuters U S and European stocks pushed higher in pre holiday trading on Wednesday helped by energy shares as an unexpected drop in crude inventories lifted beaten down oil prices U S Treasuries yields rose and the dollar edged higher putting it on track to snap a three session losing streak as investors digested mixed economic data With oil s 1 1 2 year slide worsening for most of this month Wall Street s performance has been closely tied to the price of crude raising some concerns that weakness in the commodity would derail typical year end strength in stocks Benchmark Brent crude LCOc1 rose 3 6 percent to 37 41 a barrel while U S crude CLc1 prices settled up 3 8 percent to 37 50 a barrel although trading was thin U S crude inventories fell 5 88 million barrels to 484 78 million barrels last week the Energy Information Administration said compared with a forecast rise of 1 4 million barrels As oil has weakened and stayed weak it has become less about oil and more about an indication of generalized global weakness or not said Jim Paulsen chief investment strategist at Wells Capital Management in Minneapolis The Dow Jones industrial average DJI was rising 169 37 points or 0 97 percent at 17 586 64 the S P 500 SPX was gaining 24 37 points or 1 2 percent at 2 063 34 and the Nasdaq Composite IXIC was adding 42 36 points or 0 85 percent at 5 043 47 The S P energy sector surged 3 8 percent tracking to its biggest one day gain in nearly three months U S stock indexes were set for their third straight day of gains after declining following the Federal Reserve s interest rate hike last week The selloff that we had coming into the Christmas week here is probably more than anything responsible for the bounce back Paulsen said The pan European FTSEurofirst 300 index FTEU3 rose 2 8 percent Mining stocks rallied with Anglo American L AAL and Glencore L GLEN each up more than 8 percent helped by a 1 1 percent rise in copper prices Resource shares continue to lead the bounce back Brent crude above 35 per barrel and copper above 2 per pound should be enough to fend off commodity sector bears into the year end said Jasper Lawler analyst at CMC Markets MSCI s all country world stocks index MIWD00000PUS rose 1 2 percent and also was on track to gain for a third consecutive session New orders for U S manufactured capital goods fell in November and the prior month s increase was revised sharply lower But other U S data showed consumer sentiment at a five month high in December and personal income rising for an eighth straight month in November U S Treasury yields rose with the economic data supporting a swift pace of Fed rate increases next year and gains in oil prices suggesting higher inflation Benchmark 10 year U S Treasury notes US10YT RR were down 6 32 in price to yield 2 261 percent while 30 year Treasury notes US30YT RR dropped 19 32 in price to yield 2 994 percent We ve been in somewhat of a down cycle in economic numbers and they are starting to gather a little bit of steam said Ellis Phifer market strategist at Raymond James in Memphis Tennessee The dollar index DXY which measures the greenback versus a group of six currencies was up 0 2 percent Higher U S Treasuries yields is providing some support for the dollar said Eric Viloria currency strategist at Wells Fargo N WFC Securities in New York Data on the margin are somewhat helping the dollar as well
Spot gold edged down 0 3 percent in thin trade |
WFC | Euro Pares Gain as Italian Vote Fails to Quell European Turmoil | Nov 8 Bloomberg The euro pared its advance versus the dollar after Italian Prime Minister Silvio Berlusconi won a vote today in parliament on last year s budget report without an absolute majority fueling more calls for him to quit The yen gained to its strongest level against the dollar since Japan intervened Oct 31 to stem its rise The franc rose versus the euro as Swiss National Bank Vice President Thomas Jordan said the SNB is not weakening it to gain export advantage Australia s dollar fell against the greenback after the nation s trade surplus shrank more than forecast There is a deficit of trust toward the current policy makers in Italy on behalf of the markets said Vassili Serebriakov a currency strategist in New York at Wells Fargo Co There is the view that the optimal way right now is a technocrat led government that s not sensitive to electorate pressures A negative vote would have been good for the euro The euro gained less than 0 1 percent to 1 3786 at 11 55 a m New York time after rising earlier to as high as 1 3844 It declined 0 3 percent to 107 22 yen The Japanese currency rose 0 4 percent to 77 78 per dollar and touched 77 60 The yen reached a post World War II high of 75 35 on Oct 31 threatening exporters and the Bank of Japan sold the currency to weaken it The franc appreciated 0 4 percent to 1 2359 per euro and gained 0 4 percent to 89 65 centimes per dollar Italian VoteItaly s 630 seat Chamber of Deputies approved the routine budget report today with 308 votes Speaker Gianfranco Fini said in Rome Berlusconi s failure to muster an absolute majority spurred further calls for his resignation as Italy struggles to convince investors it can fund itself The chamber had failed to pass the report in an initial ballot last month prompting a confidence motion won by Berlusconi on Oct 14 with 316 votes Since then he has faced defections that reduced his majority Even in the best case scenarios that there are we are still going to be driving along the side of a cliff for the euro zone said David Mann regional head of research for the Americas at Standard Chartered in New York When we veer slightly away from the cliff there is this sense of relief just because there s so much short euro positioning out there already A short position is a bet a currency will weaken Wagers by hedge funds and other large speculators on a drop in the euro fell to 60 060 on Nov 1 compared with net shorts of 76 512 a week earlier according to figures from the Washington based Commodity Futures Trading Commission Talks in GreeceIn Greece Prime Minister George Papandreou resumed talks with his opposition rival in Athens as they moved closer to agreement on naming the premier of a Greek unity government Papandreou said a Greek national unity government will be named soon and told his ministers to get ready to resign spokesman Elias Mosialos said today in Athens The euro gained 0 7 percent in the past month against nine developed nation counterparts according to Bloomberg Correlation Weighted Currency Indexes The dollar fell 3 percent and the yen tumbled 6 percent Japan the second largest foreign lender to the U S may boost its Treasuries holdings to an all time high after selling yen and buying dollars Oct 31 to weaken its currency The U S Treasury Department is scheduled to auction 32 billion of three year debt today and sell another 40 billion of notes and bonds later this week Japan Holdings SurgedJapanese holdings of Treasuries surged after the previous three interventions starting in September 2010 After its record 4 51 trillion in yen sales Aug 4 the holdings rose 2 4 percent to 936 6 billion in August according to U S Treasury Department data The franc depreciated after the SNB s Jordan said the franc must weaken further It reversed declines after he said the central bank will not pursue a competitive devaluation policy The central bank imposed a ceiling of 1 20 francs per euro in September amid signs that the currency s gains had started to damp economic growth The SNB has been credible in maintaining the euro franc floor said Aroop Chatterjee a currency strategist at Barclays Plc in New York The SNB s Thomas Jordan reiterated that the floor setting was not a move to competitively devalue their currency but rather to stem market dislocations and extreme currency overvaluation Australia s dollar weakened after statistics bureau data showed exports exceeded imports by A 2 56 billion 2 64 billion compared with a revised A 2 95 billion surplus in August The median estimate in a Bloomberg News survey of economists was for a surplus of A 3 billion The currency fell 0 5 percent to 1 0332 and dropped 0 8 percent to 80 33 yen |
WFC | Technical Analysis EUR USD GBP USD USD JPY and USD CAD | EUR USDGermany failed to get bids for 35 percent of the 10 year bonds offered for sale today propelling borrowing costs in Europe higher and the euro lower on concern the region s debt crisis is driving away investors This auction is nothing short of a disaster for Germany Mark Grant a managing director at Southwest Securities Inc in Fort Lauderdale Florida said by e mail If the strongest nation in Europe has this kind of difficulty raising capital one shudders concerning the upcoming auctions in other European nations Turmoil that began more than two years ago in Greece and snared Ireland Portugal Italy and Spain has closed in on France and now risks engulfing Germany the region s biggest economy Political leaders are struggling to find a fix for the crisis with German Chancellor Angela Merkel rejecting proposals for common currency area bonds while the European Central Bank resists calls to boost sovereign debt purchases The yield on Germany s 2 25 percent securities maturing in September 2021 climbed 15 basis points to 2 06 percent at 4 46 p m London time The price of the bonds slid 1 370 or 13 70 Euros per 1 000 euro 1 335 face amount to 101 550 The cost of credit default swaps on German debt rose seven basis points to 108 according to CMA prices The euro weakened as much as 1 3 percent to 1 3327 GBP USDBarclays Plc will spin off its capital arbitrage team led by Philip Rosenstrach as a hedge fund on Jan 1 with the London based bank and other investors providing about 150 million in funding according to two people familiar with the matter The fund will be called Pomelo Capital and be based in New York said the people who asked not to be identified because the information is private Rosenstrach 40 and his five team members will run the relative value credit and equity strategy which will trade fixed income derivatives and try to profit from price inefficiencies The fund seeks to raise about 500 million by the end of next year the people said The move is prompted by the Volcker rule the people said and a provision of last year s Dodd Frank law that would ban deposit taking banks from engaging in proprietary trading Barclays is Britain s second largest bank with 390 billion pounds 605 5 billion in risk weighted assets Rosenstrach a Barclays director was formerly a portfolio manager at Talek Investments LLC a Greenwich Connecticut based hedge fund He has run the capital structure arbitrage portfolio at Barclays in New York for five years posting positive returns every year including a 20 percent gain in 2008 The portfolio climbed 7 percent this year the people said Mark Lane a spokesman for Barclays declined to comment on the spin investors are buying more bonds in the U K than in any other nation overseas this year as Europe s struggle to control its debt crisis spurs a flight out of the region s bonds Money managers in Japan scooped up 1 53 trillion yen 19 9 billion of U K gilts in 2011 through Sept 30 set for the biggest annual purchase since 2008 Ministry of Finance data showed on Nov 9 in Tokyo Japanese investors unloaded the most debt in Germany totaling almost 1 46 trillion yen followed by sales in Italy and France the figures show From 2008 through 2010 the U S drew the largest amounts Demand for gilts has pushed 10 year yields on the debt to the least in three months relative to German bunds and to levels unseen in two decades against Japanese government debt last week Nissay Asset Management Corp Mitsubishi UFJ Asset Management Co and Mizuho Asset Management Co which manage a combined 192 billion are all bullish on U K bonds after investors pulling money out of Europe sent Italian and Spanish yields euro era highs We prefer U K gilts as a safe haven said Shinji Kunibe Tokyo based the chief portfolio manager for fixed income at Nissay which manages the equivalent of 71 billion The flight to quality looks quite rushed If this kind of movement continues Germany will not be immune Nissay part of Nippon Life Insurance Co Japan s largest life insurer is swapping euro denominated bonds for U K gilts Kunibe said in a telephone call Nov dollar slid to the lowest level in seven weeks versus its U S counterpart after Germany s failure to get the full amount of bids in a debt auction sparked a selloff in higher yielding assets The currency has fallen 4 5 percent against the greenback this month as crude oil Canada s largest export failed to sustain a rally above 100 a barrel and stocks retreated Raw materials such as gold and copper that account for about half the nation s export revenue declined after manufacturing in China slowed The momentum is certainly for a weaker Canadian dollar Nick Bennenbroek head of currency strategy at Wells Fargo Co in New York said in a telephone interview The current market mood is very pessimistic Canada s currency also known as the loonie dropped 1 percent to C 1 0486 per U S dollar at 5 p m in Toronto after falling to C 1 0498 its weakest level since Oct 5 One Canadian dollar buys 95 37 U S cents There s potential for the loonie to depreciate toward C 1 06 by the end of this week Bennenbroek said Canada auctioned C 3 5 billion 3 3 billion of 1 5 percent notes maturing in March 2017 today fetching an average yield of 1 441 percent and a ratio of bids to the amount on offer of 2 225 times Yields on Oct 12 the last time the government sold five year bonds averaged 1 73 percent and demand exceeded supply by 2 32 times |
LB | Skechers SKX Stock Up On Q2 Earnings Beat Upbeat View | Shares of Skechers USA Inc NYSE SKX surged 12 7 during the after market trading session on Jul 18 following the company s remarkable second quarter 2019 results Both the top and bottom lines surpassed the Zacks Consensus Estimate as well as increased year over year In fact this was the fourth straight quarter of positive earnings surprise Impressive performance prompted management to provide an upbeat view for the third quarter This designer developer marketer and distributor of footwear posted quarterly earnings of 49 cents a share The figure not only outpaced the Zacks Consensus Estimate of 33 cents but also increased substantially from 29 cents reported in the year ago period Management guided third quarter 2019 earnings in the range of 65 70 cents a share whose mid point of 67 5 cents is above the current Zacks Consensus Estimate of 65 cents The company had reported earnings of 58 cents in the third quarter of 2018 This Zacks Rank 1 Strong Buy company generated net sales of 1 258 6 million that increased 10 9 or 13 7 on a constant currency basis from the year ago quarter and also beat the Zacks Consensus Estimate of 1 217 million The company now anticipates third quarter 2019 net sales in the band of 1 325 1 350 billion up from 1 176 billion reported in the prior year quarter The Zacks Consensus Estimate for sales for the third quarter is 1 31 billion The company s international wholesale and direct to consumer businesses acted as the primary catalysts Management informed that the company witnessed growth across all regions with prominent markets being India the Middle East and China Moreover the joint venture in Mexico with its distribution partner is performing well The company is making strategic investments to improve its infrastructure worldwide primarily e commerce platforms and distribution centers The company is also focusing on designing and developing of new products for the next year Certainly the earnings beat streak and strategic endeavors have led the shares of Skechers to surge 31 in the past six months comfortably outperforming the s growth of 9 Skechers U S A Inc Price Consensus and EPS Surprise Let s Delve DeepSkechers witnessed sales growth of 19 8 across its international business and 1 5 in its domestic business The company s international wholesale business grew 18 2 while company owned global direct to consumer business rose 14 4 The company s international wholesale business improved on account of 30 7 increase in distributor business a 13 4 jump in joint ventures and an 18 5 growth in wholly owned subsidiaries Management expects international and direct to consumer businesses to sustain growth momentum and increase at a mid teen and high single digit rate respectively in the remaining part of the year The company s domestic wholesale business fell 3 8 However we note that the rate of decline has decelerated from 10 9 witnessed in the preceding quarter The company anticipates domestic wholesale business to be flat to slightly positive on a full year basis Comparable store sales in company owned stores and e commerce jumped 4 9 comprising 4 2 in the United States and 6 7 internationally Gross profit for the reported quarter grew 8 7 to 609 8 million However gross margin contracted 90 basis points to 48 5 on account of promotional efforts to clear seasonal merchandise in select international markets This was to an extent offset by higher domestic margins due to improved retail pricing and product mix in direct to consumer and domestic wholesale businesses Operating income came in at 111 1 million up 36 5 from the prior year quarter while operating margin increased 160 basis points to 8 8 Other Financial AspectsSkechers ended the reported quarter with cash and cash equivalents of 779 3 million long term borrowings net of current installments of 100 million and shareholders equity of 2 132 9 million excluding non controlling interest of 190 8 million During the quarter the company bought back roughly 511 000 shares at a cost of 15 million under its existing share buyback program The company still has approximately 20 million as of Jun 30 2019 Management incurred capital expenditures of roughly 86 2 million during the quarter and plans to spend approximately 150 175 million in the remaining part of the year Store UpdateDuring the quarter Skechers opened four company owned domestic stores and closed one taking the total count to 477 Again eight company owned international stores were opened while one was shuttered which took the count to 291 Further the company ended the quarter with 306 joint venture stores and 2 098 distributor licensee and franchise stores Total store count at the end of the quarter was 3 172 Looking for High Performance StocksBoot Barn Holdings NYSE BOOT has a long term earnings growth rate of 17 and a Zacks Rank 1 You can see Zumiez Inc NASDAQ ZUMZ has a long term earnings growth rate of 13 5 and a Zacks Rank 1 L Brands NYSE LB has a long term earnings growth rate of 11 and carries a Zacks Rank 2 Buy Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
LB | Wolverine WWW To Post Q2 Earnings What s In The Offing | Wolverine World Wide Inc NYSE WWW is scheduled to report second quarter 2019 numbers on Aug 7 before the opening bell We note that the company surpassed the Zacks Consensus Estimate in the trailing four quarters the average beat being 10 3 In the last reported quarter it delivered a positive earnings surprise of 4 3 Let s see how the company is positioned ahead of the upcoming quarterly results Earnings and Revenue EstimatesThe Zacks Consensus Estimate for the second quarter is pegged at 50 cents indicating a decline of 7 4 from the year ago period The consensus mark has remained stable over the past 30 days The consensus mark for revenues is pegged at 575 6 million suggesting a growth of 1 5 from the year ago quarter s figure Wolverine World Wide Inc Price Consensus and EPS Surprise Factors to ConsiderWolverine s e commerce business is gaining traction The company has been utilizing its digital capabilities to boost social presence and enhance speed of information and better manage consumer database and product flow In order to support growth in the digital arena it is investing toward strengthening of distribution centers Notably the company s e commerce business remained sturdy in the first quarter owing to such dedicated growth strategies Management expects this channel to significantly contribute to its performance in the impending quarter Further the company has been progressing well with its WAY FORWARD transformation initiative that aims at driving growth and profitability amid a competitive market scenario The agenda encompasses three key strategies Powerful Product Creation Engine Digital Direct Offense and International Expansion Speaking of powerful product development the company plans to develop brands that suit consumers needs more aptly on the back of advanced technologies and accurate market insights Such well chalked plans are likely to boost revenues in the to be reported quarter However the company is exposed to currency woes which is likely to persist in the second quarter Management expects low single digit revenue growth including adverse impacts of currency in the to be reported quarter Furthermore the company expects to incur roughly 5 million of incremental start up costs in the same quarter with respect to the acquired Saucony operations in Italy store openings and joining of a new member in the executive team These expenses might hurt Wolverine s operating margin and profitability What Our Model SaysOur proven model does not conclusively show that Wolverine is likely to beat bottom line estimates this quarter For this to happen a stock needs to have a positive and a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold You can uncover the best stocks to buy or sell before they re reported with our Wolverine s Earnings ESP of 1 67 combined with its Zacks Rank 4 Sell makes us apprehensive about an earnings beat Markedly we caution against sell rated stocks Zacks Rank 4 or 5 going into earnings announcement You can see Stocks With Favorable CombinationHere are some companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat Boot Barn Holdings Inc NYSE BOOT has an Earnings ESP of 7 33 and a Zacks Rank 1 L Brands Inc NYSE LB has an Earnings ESP of 0 89 and a Zacks Rank 2 Rent A Center Inc NASDAQ RCII has an Earnings ESP of 3 88 and a Zacks Rank 2 Today s Best Stocks from ZacksWould you like to see the updated picks from our best market beating strategies From 2017 through 2018 while the S P 500 gained 15 8 five of our screens returned 38 0 61 3 61 6 68 1 and 98 3 This outperformance has not just been a recent phenomenon From 2000 2018 while the S P averaged 4 8 per year our top strategies averaged up to 56 2 per year |
PFE | Why Is Pfizer PFE Up 0 4 Since Last Earnings Report | It has been about a month since the last earnings report for Pfizer PFE Shares have added about 0 4 in that time frame underperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is Pfizer due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts Pfizer Q3 Earnings Sales Beat Ups EPS ViewPfizer beat estimates for both earnings and sales in the third quarter while raising its guidance for earnings and tightening the same for revenues Third quarter 2019 adjusted earnings per share of 75 cents beat the Zacks Consensus Estimate of 63 cents Earnings declined 2 year over year due to lower revenues and higher taxes which offset the impact of lower costs in the quarter Currency changes had a negative impact of 2 cents per share on adjusted earnings Revenues of 12 68 billion beat the Zacks Consensus Estimate of 12 15 billion Revenues declined 5 from the year ago quarter on a reported basis On an operational basis excluding the 2 negative impact of currency revenues declined 3 year over year as higher sales of some key brands in Pfizer s Biopharmaceuticals group was offset by a decline of revenues in the Upjohn segment The segment was hurt mainly by the loss of Lyrica exclusivity in July 2019 in the United States Excluding the spin off of the Consumer Healthcare unit third quarter revenues were flat operationally International revenues declined 2 to 6 83 billion However on an operational basis international sales rose 2 in the quarter U S revenues declined 8 to 5 85 billion Adjusted selling informational and administrative SI A expenses declined 7 operationally in the quarter to 3 2 billion Adjusted R D expenses declined 2 to 1 94 billion Segment DiscussionPfizer Biopharma sales grew 7 on a reported basis up 9 an operational basis from the year ago period to 10 1 billion driven by volume growth Higher sales of brands like Eliquis Ibrance Inlyta and Xeljanz and a strong emerging markets performance up 15 drove this segment s sales growth Weaker sales of Prevnar 13 Prevenar 13 and Enbrel internationally offset the increase Within the Biopharma group Oncology revenues increased 30 on an operational basis to 2 35 billion Vaccine revenues declined 1 to 1 81 billion Internal Medicine rose 3 to 2 21 billion The Inflammation Immunology franchise rose 6 to 1 23 billion The portfolio of Rare Disease rose 16 to 601 million The newly added Hospital sub segment s sales rose 6 to 1 92 billion Pfizer s Upjohn group s sales declined 28 down 26 on an operational basis to 2 2 billion mainly due to U S loss of exclusivity of Lyrica in July 2019 Excluding the unfavorable impact of Lyrica in the United States Upjohn sales declined 6 operationally as continued generic competition for certain off patent products offset sales growth in China Revenues from the Consumer Healthcare unit declined 55 54 on an operational basis to 377 million as a result of the completion of the JV transaction with Glaxo Consumer Healthcare s third quarter revenues reflect only one month of domestic operations and two months of international operations Performance of Key DrugsIbrance revenues rose 27 year over year to 1 28 billion on continued strong uptake in international markets and consistent growth in the United States Xeljanz sales rose 40 to 599 million driven by continued growth in rheumatoid arthritis RA revenues and contributions from the drug s 2018 launches for psoriatic arthritis and ulcerative colitis in the United States and only ulcerative colitis indication in certain developed markets In July Xeljanz s prescribing information in the United States was updated by the FDA to include two additional boxed warnings as well as changes to the indication and dosing for UC following review of a post marketing study Regarding this update Pfizer mentioned on the call that it was not sure how the label update will affect prescribing trends of the drug in the future quarters Inlyta revenues increased 98 to 139 million driven mainly by 240 growth in the United States U S sales gained from increased uptake resulting from recent FDA approvals for the combination of Inlyta plus Bavencio and Inlyta plus Keytruda in first line treatment of advanced renal cell carcinoma patients Global Prevnar 13 Prevenar 13 revenues declined 3 to 1 60 billion Prevnar 13 revenues declined 7 in the United States reflecting decreased government purchases for the pediatric indication and continued decline in revenues for the adult indication Prevenar 13 revenues rose 7 in international markets Meanwhile owing to some unfavorable revisions in ACIP s pneumococcal vaccination guidelines for Prevnar 13 in adults in the United States there may be some decline in demand for Prevnar which can hurt sales in the future quarters Enbrel revenues declined 19 to 415 million in key European markets due to continued biosimilar competition Xalkori sales rose 5 to 130 million Sutent sales declined 7 to 224 million Eliquis alliance revenues and direct sales rose 20 to 1 03 billion Chantix sales rose 7 to 276 million in the quarter Xtandi recorded alliance revenues of 225 million in the quarter up 25 year over year Importantly new drug Vyndaqel which was launched in the United States in May 2019 for the treatment of the transthyretin amyloid cardiomyopathy recorded sales of 156 million in the quarter with 79 million in the United States Total biosimilar revenues were 236 million up 22 year over year Inflectra Remsima recorded sales of 155 million globally down 5 year over year New biosimilar product Retacrit a biosimilar of Epogen and Procrit is off to a good start in the United States recording 64 million of revenues in the third quarter of 2019 versus 30 million in the second quarter In sterile injectables global revenues increased 3 operationally and U S revenues increased 1 operationally as Pfizer s manufacturing recovery efforts start taking shape In the Upjohn segment sales of key drug Lyrica declined 57 to 527 million due to multi source generic competition that began in July 2019 Viagra sales declined 11 to 120 million due to generic competition that began in December 2017 2019 GuidancePfizer raised its previously issued 2019 guidance for earnings while tightening its range for revenues Expectations for better operational growth were offset by more onerous currency headwinds than guided previously Foreign exchange is expected to have an unfavorable impact of 1 4 billion on revenues and 10 cents on adjusted EPS for the year which indicates more onerous negative impact than guided previously Revenues are expected in the range of 51 2 billion to 52 2 billion compared with 50 5 billion to 52 5 billion expected previously Adjusted earnings per share are expected in the range of 2 94 3 00 versus the previous expectation of 2 76 2 86 Research and development expense is expected in the range of 7 7 8 1 billion versus 7 9 8 3 billion while SI A spending is projected in the range of 13 5 14 0 billion versus 13 0 14 0 billion expected earlier Adjusted tax rate is still expected to be approximately 16 in 2019
How Have Estimates Been Moving Since Then
It turns out estimates review have trended upward during the past month The consensus estimate has shifted 8 18 due to these changes
VGM Scores
Currently Pfizer has a poor Growth Score of F however its Momentum Score is doing a lot better with an A Charting a somewhat similar path the stock was allocated a grade of B on the value side putting it in the second quintile for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising It comes with little surprise Pfizer has a Zacks Rank 2 Buy We expect an above average return from the stock in the next few months |
PFE | Italy business leaders urge government to restore investment scheme | By Valentina Za and Giancarlo Navach
CERNOBBIO Italy Reuters Italian business leaders called on the country s new government on Friday to restore incentives for investment and to support economic growth while keeping public finances in check
The country s economy flirted with recession under the previous ruling coalition which collapsed last month after infighting and repeated confrontations with Brussels over increased budget spending
Business leaders gathered on the shores of Lake Como for the annual Ambrosetti forum were cautiously hopeful that conditions could improve under the new coalition between the center left Democratic Party PD and anti establishment 5 Star Movement
This government will definitely do more than the previous one that s not at all hard said Alberto Bombassei chairman of brake maker Brembo urging the executive to unblock public works
Italy s investment spending is equivalent to 2 of gross domestic product a third less than at the start of the decade Private investments are also below pre crisis levels having shrunk by 30 between 2007 and 2013 according to the Bank of Italy
Businesses said they hoped for a new version of an incentive scheme for investment and innovation introduced by the former center left government which was phased out by the recently collapsed coalition in order to raise money to send people into early retirement and provide a basic income for the poor
The government needs to pay closer attention to both foreign and domestic investments in the country said Claudio Brandolino chief financial officer at the Italian arm of French IT services firm Atos
The Industry 4 0 package was a good starting point he said in reference to the center left s incentive scheme
The PD 5 Star coalition however has little room for maneuver It must cut spending or find alternative revenues for 23 billion euros to defray a scheduled sales tax increase next year which businessmen in Cernobbio said had to be avoided at all costs
It has promised the 2020 budget a draft of which must be presented to Brussels by mid October will be expansionary without jeopardizing public finances
Fiscal discipline is necessary to keep the cost of refinancing Italy s 2 3 trillion euro public debt near the record lows it hit this week when markets welcomed the new pro European government
The fall in bond yield spreads is a positive sign but public debt must be reined in said Andrea Costantini vice president of Agrati Group a family owned maker of fastening systems for the automotive sector based north of Milan
With a question mark hanging over how workable a coalition comprising two former bitter enemies will turn out to be the desire for political stability topped some people s wish list
Political stability is the key element for foreign investments even more than incentives which you could not otherwise be sure are there to stay Pfizer NYSE PFE Italia CEO Massimo Visentin said |
WFC | Well Fargo s Sales Practices Probed | By
Wells Fargo s customer centered reputation is at risk as questions arise over the bank s sales culture title Reuters Eduardo Munoz Wells Fargo s customer centered reputation is at risk as questions arise over the bank s sales culture rel external image
Wells Fargo NYSE WFC may be a boring bank but that hasn t shielded it from scrutiny Financial regulators are now probing the San Francisco bank over concerns that its pressure cooker sales tactics have harmed customers the Wall Street Journal reports citing people familiar with the matter Investigators are peering into the bank s sales culture and its oversight over potentially questionable practices sources told the Journal Those practices have generated complaints within and outside the company and have inspired a major lawsuit Filed by the city of Los Angeles the lawsuit alleges that due to its high pressure sales environment Wells Fargo has generated a virtual fee generating machine through which its customers are harmed its employees take the blame and Wells Fargo reaps the profit The reported investigation comes in the midst of a long winning streak for Wells The bank has set itself apart from fellow financial goliaths in the post crisis era by emphasizing bread and butter consumer banking services over high flying investment banking But that focus on the ordinary customer which has helped the lender become the highest valued financial institution in the world could now damage the bank s reputation The lawsuit follows a 2013 investigation by the L A Times in which former employees described being subject to difficult sales quotas Other former bankers told the newspaper that they illegally opened new customer accounts or ordered credit cards for clients without their permission all in an attempt to meet sales goals Former employees told the Journal that they would have multiple meetings a day to review sales quotas The bank meanwhile said the actions of a few rogue employees do not represent the bank as a whole Wells Fargo s culture is focused on the best interests of its customers and creating a supportive caring and ethical environment spokeswoman Mary Eshet told the Journal Some company sales quotas have been dropped employees told the newspaper Wells Fargo is an industry leader in generating revenues from ordinary consumers The bank supplies an average of six products to its average retail customer company filings show For clients who use Wells Fargo s retirement and wealth management services that number rises to more than 10 products per customer Both the Office of the Comptroller of the Currency and the San Francisco Federal Reserve are currently looking into the bank s practices the report said |
WFC | U S debt limit threat defanged on Wall Street | By David Lawder WASHINGTON Reuters Wall Street trembled when Republicans first began threatening to force the United States into default by not raising the federal debt limit but after four years of fiscal standoffs the threat looks increasingly like a bluff and the markets are calling it A Reuters analysis tracking short term Treasury yields credit default swaps and market volatility data showed traders are increasingly less likely to respond to repeated ultimatums from Republicans in the U S Congress about the debt limit That could spell trouble in the future if politicians see little market consequence from precipitating an unprecedented default but some analysts were doubtful it would come to that The near death experience we had in 2011 has given us the sense that we re not going to do that again said Mark Vitner senior economist at Wells Fargo N WFC Securities in Charlotte North Carolina It s taken some of the fear out of the market For now after five years of fighting the debt limit battles on Capitol Hill have gone quiet That s due to a 17 month truce forged by former U S House of Representatives Speaker John Boehner just before he resigned a few weeks ago That has silenced the issue as Boehner hoped during the 2016 presidential and congressional election campaigns But hostilities could be renewed in mid March 2017 just as the next U S president will be settling into the White House Indeed some Republican fiscal hawks are itching for another chance to demand cuts in federal spending as a condition for raising the debt limit saying Boehner sold them out Did we get much out of it No We got nothing We did a clean debt ceiling increase said Representative David Brat a Virginia member of the House Freedom Caucus a hard right Republican faction known for fiscal brinkmanship CREDIT DOWNGRADE The United States is one of few nations worldwide in which the legislature must approve periodic increases in the legal limit on how much money the federal government can borrow Until recent years Congress generally rubber stamped such approvals When Republicans started threatening to force a federal default if their demands for reduced government spending were not met the goal was to scare their political rivals As it turned out the Democrats never flinched but the markets did In August 2011 congressional Republicans demanded that the projected federal budget deficit be cut by 4 trillion over 10 years or they would not vote to raise the debt limit Democrats defending pet spending programs resisted Talks to end the dispute collapsed and the U S Treasury came close to the first debt default in U S history This was averted by a last minute deal that was closely followed by Standard and Poor s decision to cut the U S credit rating below its top tier for the first time The episode triggered the highest reading in the CBOE Volatility Index VIX sometimes known as the fear index since the 2008 2009 financial crisis In October 2013 when another debt limit fight coincided with a 17 day government shutdown the VIX was more muted Just a month ago another episode barely registered on it A similar pattern of declining market impact is evident in yields on one month Treasury bills US1MT RR the debt security most vulnerable to short term payments disruptions Closing yields measured in thousandths of a percentage point in recent years with short term rates effectively at zero spiked to just under two tenths of a percentage point during the 2011 episode They jumped to a third of a point during the 2013 shutdown as uncertainty reigned but this year s debt limit debate in late October saw a rise of only a tenth of a point Spikes in the cost of insuring U S government debt against default also moderated with each recurring dispute even in 2013 for both one year and five year credit default swaps RYAN TAKES OVER Reduced financial market worry about the debt limit has coincided with increased hesitancy among some Republicans to create standoffs over the issue though demand for spending cuts remains high in the party Brat and other fiscal hawks said they expected new House Speaker Paul Ryan to approach the next debt limit deadline more aggressively and with more advance planning One of my high hopes for serving under Paul Ryan is that we re not going to let these deadlines creep up on us again said Blake Farenthold a conservative Texas Republican Ryan in October voted for a bill that would prioritize debt payments in the event the debt ceiling is not increased indicating he does not consider such a scenario unthinkable The measure derided by Democrats as the Pay China First Act because Beijing holds 1 2 trillion in U S Treasury debt drew a veto threat from the White House which said the proposal would force defaults on other obligations including payments to Medicare and veterans programs
Even the few remaining moderate Republicans said there will always be threats over the debt limit I don t think that has gone away said Republican Senator Susan Collins of Maine |
WFC | Fed s Yellen faces battle in 2016 after getting all clear for December hike | By Jason Lange Lindsay Dunsmuir and Jonathan Spicer WASHINGTON PHILADELPHIA Reuters Federal Reserve Chair Janet Yellen has the evidence of U S labor market health she wanted in order to raise benchmark interest rates for the first time in a decade this month but she may have a tougher time selling further hikes Yellen s arguments against potential dissenters at the Dec 15 16 Fed policy meeting were strengthened by Labor Department data on Friday that showed employers hired 211 000 people in November while even greater numbers joined the workforce Federal funds futures contracts imply a 79 percent chance that the Fed will end seven years of near zero interest rates at its December meeting and about even odds of a second rate rise by March Beyond that the outlook is more mixed Interest rate futures maturing in the second half of next year are rising slightly showing traders are wagering the Fed will manage no more than two further hikes before the end of next year The differences among Fed policy makers were on display at a Philadelphia Federal Reserve conference on Friday where Narayana Kocherlakota in his last speech as president of the Minneapolis Fed gave a sharp critique of a central bank that he said was too anxious to begin raising rates and thus would fail to create perhaps millions of jobs in a timely manner James Bullard the more hawkish head of the St Louis Fed followed that presentation with one that argued it is time to raise rates and to begin shrinking the central bank s 4 5 trillion balance sheet which was bulked up in recent years to boost the economy You have an open debate between doves and hawks as to what the pace of increases should look like said Art Hogan chief market strategist at Wunderlich Securities in New York referring to the divisions within the Fed over readiness to tighten monetary policy The Fed has appeared gun shy on tightening policy twice already this year in June and September Its key policy rate has been 0 0 25 percent since the depths of the financial crisis in late 2008 MIXED MESSAGES Wall Street s top banks said in a Reuters poll on Friday that they expect the central bank to maintain a slow pace of rate hikes with the median forecast for the fed funds rate for mid 2016 about 0 75 percent and 1 125 percent for the end of the year The Fed s policymakers hold very different views of where the central bank s benchmark rate will end next year ranging from less than zero to 3 0 percent according to projections released in September that were based on their views of appropriate policy The median outlook was for four quarter point rises next year while their views of the long term normal level range from between 3 0 percent and 4 0 percent Worryingly for a consensus seeking Yellen it is not just traditional doves such as Governor Lael Brainard who are questioning the pace of rate rises Even some of the hawks who would typically worry more about inflation risks than weak economic growth are weighing a possibility that they may face a long spell of below normal economic growth and low inflation Bullard noted that rates have remained low in most advanced economies If that persists it may be leading us to an outcome with low nominal interest rates and low inflation that can last for a very long time he said adding the Fed needs to be willing to pause and also to speed up its pace of tightening Earlier this week Yellen said the process of rate increases could be gradual but she has yet to spell out what gradual means One driver for the pace of rate rises will be whether inflation picks up next year and Friday s data suggested workers might not be getting big enough raises for businesses to raise prices much Average hourly earnings rose 2 3 percent in November from a year earlier down from 2 5 percent in October Without more inflationary pressures policymakers likely want to raise rates more gradually Friday s jobs report also highlighted Brainard s argument that weakness in the global economy could constrain U S growth more than policymakers currently expect Manufacturing jobs which are among the most exposed to the global economy actually fell by 1 000 in November the third drop in the last four months
While this report can help justify a rate hike in December it can t justify anything more than a very gradual path of rate hikes said Brian Jacobsen a portfolio strategist at Wells Fargo N WFC Funds Management in Menomonee Falls Wisconsin |
WFC | Wells Fargo to move securities arm to New York s West Side | Reuters Wells Fargo N WFC Co is moving the New York headquarters of its Wells Fargo Securities arm to Manhattan s West Side to 30 Hudson Yards which is currently under development the company said in a statement The company said it will buy about 500 000 square feet of office space with a plan to move into the towers in 2020 |
LB | Zumiez ZUMZ Stock Up 32 Year To Date Outpaces Industry | Zumiez Inc NASDAQ ZUMZ looks quite disciplined in its approach of tackling prevailing headwinds in the retail landscape stiff competition from online retailers and aggressive pricing strategy Despite the ultra competitive retail scenario shares of this Lynnwood WA based company have surged approximately 32 so far in the year outpacing the s decline of 15 8 The company s shares have also outperformed the sector that advanced 16 1 during the aforementioned period In the changing environment Zumiez has been able to create a niche for itself on the back of e commerce strategies omni channel presence store expansion integration of sales channels and other initiatives In fact these factors have aided the company in sustaining decent comparable store sales comps trend
Notably comps grew 3 3 in the first quarter of fiscal 2019 marking the company s 11th straight quarter of positive comps The metric benefited from higher transaction volume and growth in dollars per transaction Strength in the footwear accessories and hard goods categories also aided comps
Prior to this comps increased 3 9 4 8 6 3 and 8 3 in the fourth third second and first quarter of fiscal 2018 respectively For fiscal 2019 the company expects comps growth in low single digit range Apart from robust comps the company s focus on providing differentiated assortments is impressive Zumiez has invested much resources to boost localized merchandising assortments Additionally it is making investments in logistics managing costs and taking technology strides In a bid to provide consumers with quick and easy access to its products and brands the company is striving to expand its e commerce and omni channel platforms In this regard Zumiez has considerably improved customers experience by integrating its physical and digital networks This allows customers to access inventories through all channels alongside availing facilities like buy online pick up in store reserve online and pay in store We believe that the company s well balanced store expansion and e commerce strategies will help it keep track of the evolving patterns and drive top line growth Currently the company has a long term earnings growth rate of 13 5 and carries a Zacks Rank 2 Buy Also the company delivered average positive earnings surprise of 46 3 in the trailing four quarters and flaunts a of B These show that the stock has more room to run Other Key Picks The Children s Place Inc NASDAQ PLCE has a long term earnings growth rate of 8 and a Zacks Rank 1 Strong Buy You can see Deckers Outdoor Corp NYSE DECK has a long term earnings growth rate of 11 6 and a Zacks Rank 2 L Brands Inc NYSE LB has a long term earnings growth rate of 11 and a Zacks Rank 2 Breakout Biotech Stocks with Triple Digit Profit PotentialThe biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
LB | Will L Brands Continue To Surge Higher | As of late it has definitely been a great time to be an investor L Brands Inc NYSE LB The stock has moved higher by 0 4 in the past month while it is also above its 20 Day SMA too This combination of strong price performance and favorable technical could suggest that the stock may be on the right path We certainly think that this might be the case particularly if you consider LB s recent earnings estimate revision activity From this look the company s future is quite favorable as LB has earned itself a Zacks Rank 2 Buy meaning that its recent run may continue for a bit longer and that this isn t the top for the in focus company You can see Today s Best Stocks from Zacks Would you like to see the updated picks from our best market beating strategies From 2017 through 2018 while the S P 500 gained 15 8 five of our screens returned 38 0 61 3 61 6 68 1 and 98 3 This outperformance has not just been a recent phenomenon From 2000 2018 while the S P averaged 4 8 per year our top strategies averaged up to 56 2 per year |
LB | Here s Why Children s Place Appears To Be A Solid Pick Now | The Children s Place Inc NASDAQ PLCE appears to be a preferred pick given its sturdy efforts to remain on growth trajectory We expect the company to continue gaining from its focus on multi year strategic growth initiatives comprising product alternate channels of distribution digital transformation fleet optimization and international expansion These efforts also helped the company to post better than expected first quarter fiscal 2019 results prompting management to lift fiscal 2019 view All said let s delve deeper into the factors which have been driving this Zacks Rank 1 Strong Buy stock Shares of this Secaucus NJ based company have increased approximately 6 in the past six months against the s decline of 15 2 Factors Driving Children s Place PerformanceChildren s Place is leaving no stone unturned to improve the top line performance and expand customer base The company is making efforts to expand footprint not only in the U S market but also globally This is evident from its license agreement with Zhejiang Semir Garment Co Ltd Semir for the Greater China market which covers Mainland China Taiwan Hong Kong and Macau Also the company is focusing on digital transformation It had rolled out BOPIS Buy Online Pick Up in Store Ship from Store and mobile POS to all its U S stores Further the company launched SMS texting capabilities and is implementing BOSS Buy Online Ship to Store Notably e commerce penetration expanded 270 basis points to 29 of net sales during the first quarter of fiscal 2019 E commerce penetration is projected to increase more than 30 of net sales in fiscal 2019 from approximately 28 in fiscal 2018 Apart from these the company s store fleet optimization plan focuses on striking the right balance between digital and physical stores Thus it had closed 213 stores since 2013 till the end of the first quarter of fiscal 2019 and targets a closure of 300 stores by 2020 The company closed 42 stores in fiscal 2018 and plans to close 40 45 stores in fiscal 2019 and again roughly 45 stores in fiscal 2020 Children s Place has also planned 1000 lease renewals over the next three years The company had earlier informed that this fleet optimization initiative will help it to achieve a 200 basis point improvement in operating margin from 2013 to 2020 As a result of Gymboree s bankruptcy Children s Place intends to open 25 stores in centers with high productivity within a span of two years The company entered into an Asset Purchase Agreement with Gymboree Group Inc and related entities to buy intellectual property assets of Gymboree and Crazy 8 the Gymboree Assets for 76 million This buyout is likely to be accretive to fiscal 2020 adjusted earnings per share Further the company remains on track for an early 2020 rollout of the Gymboree product line 3 Stocks to WatchSkechers U S A Inc NYSE SKX has a long term earnings growth rate of 7 and a Zacks Rank 2 Buy You can see L Brands Inc NYSE LB has a long term earnings growth rate of 11 and a Zacks Rank 2 Stitch Fix Inc NASDAQ SFIX has a long term earnings growth rate of 22 5 and a Zacks Rank 2 Breakout Biotech Stocks with Triple Digit Profit PotentialThe biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
LB | Buckle BKE Cheers Investors With Fantastic June Comps | The Buckle Inc NYSE BKE came out with its comparable store net sales comps results for the five week period ended Jul 6 2019 Notably comps increased 6 2 after reporting a decrease of 0 8 in the preceding month Net sales for the month improved by 5 5 to 74 8 million This has been a fantastic performance for the company so far in 2019 at least in terms of comps Consequently shares of this Zacks Rank 2 Buy company rose more than 3 during the trading session on Jul 11 Although shares of this Kearney NE based company have lost 5 2 in the past three months yesterday s gain led the stock to rise 7 2 in the past one month outperforming the s rise of 2 6 In June total sales at the men s unit which contributed nearly 56 to sales jumped 6 5 year over year Also Buckle was able to revive the performance of the struggling women s business Sales in the women s category which represented 44 of sales grew 5 year over year during the said period The company s accessory and footwear sales are included within the men s and women s units Accessory sales for June increased around 5 5 while footwear sales grew approximately 20 5 Additionally management revealed sales information for the 22 week period ended Jul 6 During this period comps improved 0 4 year over year while net sales decreased 0 1 to 337 6 million Buckle is also on track with efforts such as enhancing marketing efficiency store remodeling and technology upgrades These are likely to aid the company s performance in the forthcoming periods thereby boosting investors sentiments Currently Buckle operates 448 retail stores across 42 states 3 More Stocks to Watch The Children s Place Inc NASDAQ PLCE has a long term earnings growth rate of 8 and a Zacks Rank 2 You can see L Brands Inc NYSE LB has a long term earnings growth rate of 11 and a Zacks Rank 2 Stitch Fix Inc NASDAQ SFIX has a long term earnings growth rate of 22 5 and a Zacks Rank 2 The Hottest Tech Mega Trend of AllLast year it generated 8 billion in global revenues By 2020 it s predicted to blast through the roof to 47 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
WFC | Wells Fargo to pay 81 6 million to bankrupt U S homeowners DOJ | By Suzanne Barlyn Reuters Wells Fargo Co N WFC will pay 81 6 million to homeowners for denying them a chance to challenge mortgage payment increases imposed during their bankruptcy proceedings the U S Justice Department said on Thursday Wells violated a 2011 U S bankruptcy law by failing to send a type of legal notice about homeowners mortgage payment increases to bankruptcy courts The law requires the notice to include disclosures to ensure that fees and charges by banks to homeowners in bankruptcy proceedings are accurate the Justice Department said The settlement between Wells Fargo and the Justice Department s U S Trustee Program which oversees the U S bankruptcy system also requires Wells to hire an independent compliance monitor and change its internal procedures to prevent a recurrence of the problem the Justice Department said The settlement is subject to approval by the U S Bankruptcy Court for the District of Maryland If approved the Justice Department said it will distribute the funds to groups of homeowners who were in bankruptcy proceedings from late 2011 through March 2015 We believe we have made the necessary investments and improvements in our systems and processes to ensure that payment change notices for the bankruptcy court and escrow analyses for customers in bankruptcy are properly prepared and delivered in a timely fashion Michael DeVito executive vice president for Wells Fargo Home Mortgage said in a statement The bank will work with the U S Trustee s office and independent compliance reviewer to demonstrate the effectiveness of its changes and make payments to customers DeVito said Wells previously put aside reserves for the settlement it said
The bank was late in providing more than 100 000 notices to homeowners about mortgage payment changes and also did not timely perform more than 18 000 escrow analyses in cases involving nearly 68 000 accounts of bankrupt homeowners during the period the Justice Department said |
WFC | Dollar at three month high as pre payrolls paralysis sets in | By Marc Jones LONDON Reuters The dollar reached a three month high on Friday and world shares headed for their fifth week of gains out of six before U S jobs data that may nudge the Federal Reserve towards its first interest rate increase in almost a decade Bets on a Fed move in December are back on after the U S central bank s last meeting The dollar s DXY strength combined with the highest 2 year U S government bond yields US2YT RR since 2011 showed hopes were high for the jobs numbers The health of U S employment is a key to the Fed s thinking Economists polled by Reuters expect the data at 0830 ET to show 180 000 jobs were added last month and the overall unemployment rate remained 5 1 percent Investors in both Europe and Asia used the wait for the data to skim off some of the week s profits in global stock markets MSCI s 45 country All World index MIWD00000PUS is at its highest since August and Wall Street is near a record high The S P 500 ESc1 and Dow Industrial 1YMc1 were expected to open lower although the payrolls outcome may change that Europe s main markets in London FTSE Frankfurt GDAXI and Paris FCHI dipped 0 1 to 0 6 percent after similar moves in Asia overnight MIAPJ0000PUS The key from the payrolls today is not only the print but also whether there is also a revision to last month s weak number said Chris Wightman a senior portfolio manager at Wells Fargo N WFC Asset management And everyone is going to look whether we see below 5 percent for overall unemployment rate The main market action remained in currencies The dollar was near 1 08 to the euro for the first time since April It held steady at 121 90 yen after touching a 2 1 2 month high of 122 01 on Thursday FRX Traders and positioning data say money has piled in behind another rally for the dollar over the past two weeks Whether it can build on a rise of more than 4 percent in the past month depends the expectations of a December rate move Elsewhere Britain s sterling was close to a six month low against the dollar and slipped against the euro a day after it was sent tumbling when the Bank of England put off a UK rate increase It was last at 1 5129 down 0 5 percent on day while the euro was up 0 4 percent at 71 90 pence EURGBP D4 With a near term hiking cycle off the table the rationale for being long sterling has disappeared We recommend turning short sterling against the dollar said Deutsche Bank DE DBKGn currency strategist Oliver Harvey CHINA REBOUND Asian markets were largely subdued despite signals from Japan s central bank that it may need more stimulus if China s recent troubles hurt its economy If Japanese companies hold strong concerns over the outlook due to developments in emerging economies they may forgo capital expenditure or narrow the margin of wage hikes BoJ Governor Haruhiko Kuroda said in a speech MSCI s broadest index of Asia Pacific shares outside Japan MIAPJ0000PUS ended down about 0 4 percent though it still managed a 0 8 percent weekly rise Japan s Nikkei N225 closed up 0 8 percent ending the week up almost 1 percent The Shanghai Composite extended earlier gains to climb almost 2 percent and gain 6 2 percent for the week In China the securities regulator said it would allow initial public offerings to resume They were suspended in July as regulators tried to slow a stock market crash Compared to one or two months ago people realize that the no hard landing scenario has become increasingly likely said Sebastien Barbe head of emerging markets strategy at Credit Agricole PA CAGR The stronger dollar added further pressure to crude oil futures which were already dragged down by oversupply concerns and to the currencies of oil producing countries Russia s rouble was down 1 percent while the Kazakh tenge fell 2 5 percent to a record low extending Thursday s 4 percent loss Authorities ended market interventions to conserve central bank reserves Brent hovered at 48 50 a barrel U S crude CLc1 edged up about 0 6 percent to 45 50 a barrel after falling over 2 percent in the previous session It was still on track to lose 2 4 percent for the week Other commodities also struggled with London copper sliding to its lowest level in a month overnight It sagged 0 3 percent to 5 000 a tonne it is set to end the week 1 3 percent lower its third consecutive weekly loss
Spot gold recovered to 1 109 4 an ounce from an eight week low on Thursday but it too was on track for a 2 8 percent loss for the week |
WFC | Stock futures extend Friday losses in the wake of Paris attacks | By Rodrigo Campos NEW YORK Reuters U S equity futures opened lower on Sunday following coordinated attacks in Paris on Friday that killed more than 130 people The attacks unfolded after markets closed in the United States but equity futures added to losses in light volume in after hours Friday trading after reports hit the news and images were shared on social media Analysts expected a so called run to safety as a knee jerk reaction to the uncertainty caused by the attacks and the slide in equity futures partly confirmed expectations Stock indexes on Wall Street logged their largest weekly losses since August on Friday before the news out of Paris on the back of weak economic data and following six weeks of gains on the S P 500 The market was already weak prior to Paris this will reinforce the defensive rotation that was already starting said Michael O Rourke chief market strategist at JonesTrading in Greenwich Connecticut You will notice the Utilities were the only sector to close higher last week he said Amid the expectation of an escalation in attacks from the United States and its allies against Islamic State who claimed responsibility for the attacks in Paris as well as twin bombings in Beirut on Thursday there was focus on the stocks of weapons manufacturers and others in the defense sector Defense company stocks in the U S did have a very good first half of the year but got pulled into the global selloff in August said Nicholas Colas chief market strategist at the ConvergEx Group in New York They are still doing better than the market as a whole he said The prospect of more military action in Syria may help this group in the week ahead Other analysts called for patience to avoid being whipsawed by likely volatile markets The market moves can be short and mixed said Brian Jacobsen chief portfolio strategist at Wells Fargo N WFC Funds Management in Menomonee Falls Wisconsin It doesn t pay to react in an emotional way The New York Stock Exchange and Nasdaq said on Sunday they would observe a minute of silence at 9 25 a m 1425 GMT on Monday to honor the victims of the attacks Futures snapshot at 18 40 EST 2340 GMT S P 500 e minis ESc1 were down 12 points or 0 59 percent with 32 350 contracts changing hands Nasdaq 100 e minis NQc1 were down 31 25 points or 0 69 percent in volume of 4 050 contracts
Dow e minis 1YMc1 were down 98 points or 0 57 percent with 4 335 contracts changing hands |
WFC | Wells Fargo names Tim Sloan as its president Chief Operating Officer | Investing com Wells Fargo Company N WFC announced on Tuesday that its Board of Directors has named Timothy Sloan as its president and chief operating officer in a position where he will report directly to CEO John Stumpf effective immediately
Sloan a 28 year company veteran has served as Wells Fargo s head of wholesale banking since 2014 a position he will retain in his new role Sloan will also remain on the company s Operating Committee which is headed by Stumpf Before heading the company s wholesale banking division Sloan spent four years as the company s Chief Financial Officer from 2011 to 2014
As we prepare for Wells Fargo s future Tim is an ideal choice to lead one of the best teams in banking as they accelerate investments and drive change that position us for growth and enhance the many ways in which we help our customers succeed financially Stumpf said Tim has been a go to leader throughout the post financial crisis period and our historic Wachovia merger having served as our CFO and CAO and leading top businesses and organizations He has earned the respect of his peers and our stakeholders by demonstrating his passion for putting customers first and for the kind of relationship building that has been a hallmark of Wells Fargo s finest leaders
For a 20 year period from 1991 until 2010 Sloan served in a variety of leadership roles in wholesale banking including head of Commercial Banking Real Estate and Specialized Financial Services Sloan earned a B A in economics and history and his M B A in finance and accounting both from the University of Michigan
I look forward to working with Tim and the rest of our senior leadership team because there has never been a more exciting time to be in banking Stumpf added Wells Fargo is becoming more agile and more innovative while keeping its focus on what customers demand from their financial institution a trusted relationship We will pursue Wells Fargo s future without ever losing sight of the needs of our customers team members investors and communities
In mid October Wells Fargo reported third quarter revenue of 21 9 billion and net profit of 5 8 billion both up by at least 1 from the same quarter in 2014
Shares in Wells Fargo closed at 54 96 down 0 30 or 0 54 on the session |
LB | L Brands Earnings inline Revenue Misses In Q3 | Investing com L Brands NYSE LB reported third quarter earnings that matched analysts expectations on Wednesday and revenue that fell short of forecasts
The firm reported earnings per share of 0 02 on revenue of 2 68B Analysts polled by Investing com anticipated EPS of 0 02 on revenue of 2 69B That compared to EPS of 0 16 on revenue of 2 77B in the same period a year earlier The company had reported EPS of 0 24 on revenue of 2 9B in the previous quarter
L Brands follows other major Services sector earnings this monthOn October 24 Amazon com reported third quarter EPS of 4 23 on revenue of 69 98B compared to forecasts of EPS of 4 61 on revenue of 68 83B
Alibaba ADR earnings beat analysts expectations on November 1 with second quarter EPS of 13 1 on revenue of 119 02B Investing com analysts expected EPS of 10 75 on revenue of 116 96B
Stay up to date on all of the upcoming earnings reports by visiting Investing com s earnings calendar |
LB | Skechers Up More Than 23 In 6 Months Growth Plans Pay Off | Skechers U S A Inc NYSE SKX is focused on its new line of products corporate upgrades and store remodeling projects cost containment efforts inventory management and global distribution platform The company s domestic e commerce business is also performing well Such well chalked plans have helped this Zacks Rank 3 Hold company gain 23 8 in the past six months outperforming the s growth of 11 7 That said let s delve deeper into the other factors aiding the stock A Brief IntrospectionAlthough the stock came under pressure for a moment due to the third successive quarter of sales miss and soft second quarter earnings view it is now back on track In this regard solid performance in the international wholesale and the global retail businesses acts as a catalyst Further Skechers completed the transition of Indian joint venture to a wholly owned subsidiary and entered a deal to form a joint venture in Mexico with its current distribution partner Both investments are expected to be accretive to 2019 earnings Moreover Skechers domestic e commerce business registered an increase of 35 3 during the first quarter of 2019 This apart the company is making efforts to boost sales and profitability In sync with this efforts toward product innovation additional store openings and expanding distribution channels through distribution agreements bode well for the stock Skechers international business is a significant sales growth driver with Europe and China being important markets outside the United States Notably the company witnessed sales growth of 9 3 during the first quarter of 2019 across its international business representing 57 8 of total sales Skechers international wholesale business grew 8 7 while the direct to consumer business grew 13 2 Management expects the international business to sustain growth momentum and increase at a mid teen rate both in the second quarter and full year 2019 However the company is grappling with elevated general administrative expenses In the first second third and fourth quarters of 2018 general administrative expenses rose 25 8 21 5 11 9 and 10 respectively During the first quarter of 2019 the same increased 1 2 on account of extra spending of 7 8 million to support continued growth in China and 8 million in retail to support the operations of 40 new stores including 12 opened in the quarter Persistence of this trend may weigh on margins in the near future Additionally domestic wholesale business fell 10 9 during the first quarter of 2019 following a decline of 4 8 in the preceding quarter As a result Skechers witnessed a decline of 6 3 in its domestic business Going ahead management expects domestic wholesale business to be down mid single digits in the second quarter and flat on a full year basis All said we hope that these above mentioned strategies will help provide some support to Skechers top line in the near term 3 Stocks to Bank OnChildren s Place NASDAQ PLCE with a long term earnings per share growth rate of 8 carries a Zacks Rank 1 Strong Buy You can see L Brands NYSE LB with a long term earnings per share growth rate of 11 carries a Zacks Rank 2 Buy Kering PA PRTP SA OTC PPRUY with a long term earnings per share growth rate of 10 carries a Zacks Rank 2 Will you retire a millionaire One out of every six people retires a multimillionaire Get smart tips you can do today to become one of them in a new Special Report 7 Things You Can Do Now to Retire a Multimillionaire |
LB | Here s What Has Led Children s Place Beyond The Industry Mark | Shares of The Children s Place Inc NASDAQ PLCE have gained approximately 8 against the s decline of 22 8 and he overall s rise of 1 7 in the past three months This may be attributed to multi year growth initiatives comprising productivity efforts alternate channels of distribution digital transformation fleet optimization and international expansion These helped this Zacks Rank 1 Strong Buy stock post better than expected first quarter fiscal 2019 results that also came ahead of management s expectations Following the results the company raised fiscal 2019 view Consequently there has been an upward revision in the Zacks Consensus Estimate Notably the Zacks Consensus Estimate for the current quarter and fiscal 2019 has increased 9 cents and 65 cents to 15 cents and 6 37 respectively in the past 30 days Factors Propelling the StockChildren s Place is leaving no stone unturned to improve the top line performance and expand customer base The company is making efforts to expand footprint not only in the U S market but also globally This is evident from the company s license agreement with Zhejiang Semir Garment Co Ltd Semir for the Greater China market which covers Mainland China Taiwan Hong Kong and Macau Further in an effort to provide a hassle free shopping experience the company is focusing on digital transformation It had rolled out BOPIS Buy Online Pick Up in Store Ship from Store and mobile POS to all its U S stores Further the company launched SMS texting capabilities and is implementing BOSS Buy Online Ship to Store Notably e commerce penetration expanded 270 basis points to 29 of net sales during the first quarter of fiscal 2019 E commerce penetration is projected to increase more than 30 of net sales in fiscal 2019 from approximately 28 in fiscal 2018 Additionally the company is focusing on striking a balance between digital and physical stores To this end the company had closed 213 stores since 2013 till the end of the first quarter of fiscal 2019 and targets to close 300 by 2020 The company closed 42 stores in fiscal 2018 It plans to close 40 45 stores in fiscal 2019 and roughly 45 in fiscal 2020 The company had earlier informed that this fleet optimization initiative will help it achieve a 200 basis point improvement in operating margin from 2013 to 2020 As a result of Gymboree Group Inc s bankruptcy the company intends to open 25 stores in centers with high productivity within a span of two years It entered an Asset Purchase Agreement with Gymboree and related entities to buy intellectual property assets of the latter and Crazy 8 the Gymboree Assets for 76 million This buyout is likely to be accretive to fiscal 2020 adjusted earnings per share 3 Other Stocks to Bank OnStitch Fix NASDAQ SFIX with a long term earnings per share growth rate of 22 5 carries a Zacks Rank 2 Buy You can see L Brands NYSE LB with a long term earnings per share growth rate of 11 carries a Zacks Rank 2 Kering PA PRTP SA OTC PPRUY with a long term earnings per share growth rate of 10 carries a Zacks Rank 2 Will you retire a millionaire One out of every six people retires a multimillionaire Get smart tips you can do today to become one of them in a new Special Report 7 Things You Can Do Now to Retire a Multimillionaire |
LB | Why Is L Brands LB Down 1 4 Since Last Earnings Report | It has been about a month since the last earnings report for L Brands NYSE LB Shares have lost about 1 4 in that time frame underperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is L Brands due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts L Brands Q1 Earnings Top Bath Body Works Aid ResultsL Brands Inc reported better than expected first quarter results that also prompted management to lift the lower end of fiscal 2019 earnings view range We note that impressive performance at Bath Body Works brand aided the quarterly results However results remained dismal in the company s Victoria s Secret business which has been battling competition and consumers changing preferences for quite some time This specialty retailer of women s intimate and other apparel beauty and personal care products now envisions fiscal 2019 earnings in the band of 2 30 2 60 compared with 2 20 2 60 previously anticipated Management now projects second quarter earnings per share between 15 cents and 20 cents Detailed Quarterly DiscussionL Brands reported quarterly earnings of 14 cents a share that outpaced the Zacks Consensus Estimate of a break even figure This was the sixth consecutive quarter that this Zacks Rank 3 Hold company has registered positive earnings surprise However the bottom line declined 18 from the year ago period We note that higher costs of goods sold buying and occupancy and increased interest expenses hurt the quarterly earnings Net sales came in at 2 628 8 million up marginally from 2 625 8 million reported in the prior year period The top line figure also surpassed the Zacks Consensus Estimate 2 557 million However comparable sales were flat compared with growth of 3 witnessed in the prior year quarter Total Victoria s Secret sales dropped 5 to 1 510 9 million Comparable sales fell 5 while comparable store sales tumbled 7 Comps were down low single digits in the lingerie business while the metric declined in the low double digit range at PINK Victoria s Secret Beauty comps were about flat Further total digital sales registered an increase of 2 On the contrary Bath Body Works BBW delivered a solid show and surpassed management s expectations Total sales grew 15 to 870 7 million with 13 rise in comparable sales and 7 improvement in comparable store sales Sales were fueled by robust performance in the three key categories including body care home fragrance and soaps sanitizers BBW direct channel remained sturdy with sales up 40 Further merchandise margin rose on the back of lower promotions We note that L Brands International sales came in at 135 million almost flat year over year The increase in revenue and reduction in the China operating loss was offset by fall in partner businesses L Brands gross profit fell 1 to roughly 934 million during the quarter We note that gross margin contracted 40 bps to 35 5 on account of lower merchandise margin rate which was partly mitigated by buying and occupancy expense leverage Operating income declined to 153 3 million from 154 8 million in the year ago quarter while operating margin shriveled 10 bps to 5 8 SG A expense fell 1 to 780 7 million while as a percentage of net sales the same leveraged by 30 bps due to fall in marketing expense at Victoria s Secret unit Store UpdateDuring the quarter L Brands opened one Victoria s Secret store and shuttered 35 taking the total count to 1 109 In the same period 14 Bath Body Works stores were inaugurated and three were closed which took the count to 1 732 stores At the end of the quarter the company operated 79 international stores As of May 4 2019 L Brands operated 2 920 stores Total non company owned stores as of May 4 2019 were 680 including 217 Victoria s Secret Beauty Accessories 50 Victoria s Secret nine Pink and 230 Bath Body Works stores Further non company owned stores comprised 161 and 13 Travel Retail stores of Victoria s Secret Beauty Accessories and Bath Body Works respectively Other Financial DetailsL Brands ended the quarter with cash and cash equivalents of 1 145 6 million up from the prior year quarter s figure of 1 031 5 million Long term debt increased to 5 748 7 million from nearly 5 718 6 million a year ago Shareholders deficit came in at 897 9 million Management incurred capital expenditures of 123 3 million during the quarter under review For fiscal 2019 the company projects capital expenditures to be 575 600 million It anticipates generating free cash flow of approximately 700 million during the same period GuidanceManagement expects Bath Body Works brand to experience another solid year and remains committed to improve Victoria s Secret performance by staying customer focused enriching assortments and enhancing store and online experiences At Bath Body Works segment management hinted at continuing its investment in the White Barn concept in 2019 The company has chalked out about 200 White Barn projects for 2019 L Brands expects second quarter comps to be about flat Further gross margin is expected to contract year over year owing to lower merchandise margin rate SG A expense rate is anticipated to escalate on account of flat sales For fiscal 2019 the company anticipates comps to rise in low single digits Gross margin rate is likely to decrease year over year primarily due to lower merchandise margins SG A costs are expected to increase year over year stemming from higher wage rate and expense associated to technology initiatives undertaken
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates The consensus estimate has shifted 21 51 due to these changes
VGM Scores
Currently L Brands has a poor Growth Score of F however its Momentum Score is doing a lot better with a C Charting a somewhat similar path the stock was allocated a grade of B on the value side putting it in the second quintile for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift Notably L Brands has a Zacks Rank 2 Buy We expect an above average return from the stock in the next few months |
LB | Will L Brands Revival Plans Help To Keep The Stock Afloat | L Brands Inc NYSE LB is leaving no stone unturned to get back on track In this regard the company s sustained focus on cost containment inventory management merchandise and speed to market initiatives bode well Furthermore the company s focus on tapping international markets is likely to provide long term growth opportunities and generate increased sales volumes Management is committed to improve Victoria s Secret s performance in North America Buoyed by such well chalked efforts this specialty retailer of women s intimate and other apparel beauty and personal care products home fragrance products and accessories retained its positive earnings surprise history in the first quarter of fiscal 2019 as well We note that impressive performance at Bath Body Works brand aided the quarterly results In fact this brand has been touted as the knight in shining armor During the quarter Bath Body Works sales improved 15 to 870 7 million with 13 rise in comparable sales and 7 in comparable store sales Sales were fueled by robust performance in the three key categories body care home fragrance and soaps sanitizers Per sources the brand has also impressed customers by bringing in new products to the shelves such as bath bombs and face masks among others With growing popularity of organic skincare among women mostly the company opened 14 Bath Body Works stores during the quarter Going ahead management expects the positive momentum to continue and aid the company s top line That said there s more to the story as L Brands fate depends on the recovery of its largest brand Victoria s Secret The company focuses on improving Victoria s Secret s performance by staying customer focused enriching assortments and improving store and online experiences These apart the relaunch of swimwear category have given investors a measure of comfort Also the CEO of Victoria Secret s lingerie John Mehas has revealed plans of revamping marketing and pricing strategies along with remodeling stores In a bid to focus on its core brands L Brands have off loaded La Senza its luxury lingerie brand and announced plans to close operations at luxury fashion accessories store Henri Bendel We note that the stock has lost 6 4 in the past six months compared with the s decline of 12 9 Hence this Zacks Rank 2 Buy company have certainly showed modest signs of progress Additionally management lifted the lower end of fiscal 2019 earnings view range It now envisions fiscal 2019 earnings of 2 30 2 60 per share compared with 2 20 2 60 previously anticipated All said L Brands is expected to regain its lost glory with these measures Check Out These Solid PickChildren s Place NASDAQ PLCE has long term earnings growth rate of 8 and a Zacks Rank 1 Strong Buy You can see Genesco NYSE GCO has long term earnings growth rate of 5 and a Zacks Rank 1 Kering PA PRTP SA OTC PPRUY has long term earnings growth rate of 10 and a Zacks Rank 2 Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
PFE | Pfizer Falls 3 | Investing com Pfizer NYSE PFE fell by 3 04 to trade at 36 83 by 12 56 16 56 GMT on Monday on the NYSE exchange
The volume of Pfizer shares traded since the start of the session was 18 07M Pfizer has traded in a range of 36 84 to 37 82 on the day
The stock has traded at 43 1700 at its highest and 36 8300 at its lowest during the past seven days |
PFE | Pfizer Falls 3 | Investing com Pfizer NYSE PFE fell by 3 05 to trade at 35 24 by 13 00 17 00 GMT on Monday on the NYSE exchange
The volume of Pfizer shares traded since the start of the session was 15 08M Pfizer has traded in a range of 35 22 to 36 32 on the day
The stock has traded at 38 5400 at its highest and 35 2300 at its lowest during the past seven days |
WFC | September housing data eyed after August disappointed | By Sinead Carew Reuters U S housing stocks could be in for a boost if September data due out next week confirms strength that market watchers expect Home buyers returned from summer vacations to lower mortgage rates and increasing rents and may have moved back into the market after staying away in August Shares in the sector fell in mid to late September after August data missed expectations The NAHB National Association of Homebuilders housing market index measuring seller sentiment is due out Monday to be followed during the week by data that includes building permits and housing starts mortgages and home prices and sales While the PHLX index of housing stocks has risen more than 6 4 percent so far this year it has fallen 3 6 percent in the last month The index fell 9 9 percent from Sept 16 to Sept 29 the week when August data was released Strength in June and July housing data may have boosted investor expectations to unrealistic levels for August typically a slower month for housing according to Susan Maklari housing equities analyst at UBS in New York Since the Labor Day holiday in early September Maklari has seen signs of improvement in channel checks around the country You re going to see growth year over year coming through It s probably going to be in line with what people would expect for September maybe a little bit better than that she said Maklari cited strength in western U S markets such as California where the technology sector is boosting employment and salaries Weaker markets include the Washington D C area where stringent government spending is causing uncertainty among potential home buyers In Texas sales have weakened for homes in the 350 000 and above range but demand is strong for homes priced at 200 000 and below according to the analyst Mortgage rate increases in both June and July when rates for 30 year fixed rate loans were at 4 25 percent likely helped to dampen sales in August according to Sameer Samana global quantitative strategist at Wells Fargo N WFC in St Louis But he noted that the rate has since come down to 3 88 percent which could influence people who were close to but on the fence about buying a home That s one of the things that could lead to an upside surprise in next week s numbers said Samana Many potential buyers also closely listen to comments by Federal Reserve Chair Janet Yellen about the U S economy and short term interest rates Since many economists had expected a rate increase announcement on Sept 17 this may have encouraged some buyers anxious to lock in a lower rate said Jack Ablin chief investment officer at BMO Private Bank in Chicago Not everyone is as upbeat There has been a noticeable uptick in options traders appetite for owning protection on the SPDR S P Homebuilders ETF down 2 percent from mid June But even an eventual increase in rates may not dim housing prospects quickly if it is accompanied by positive talk from the Fed said Samana If they come out with a confident positive message when they start to raise interest rates a lot of folks might take that as a sign of confidence he said |
LB | Ulta Beauty A Diamond In The Retail Rough | Ulta Beauty NASDAQ ULTA is another retail gem that has somehow defied the broader retail trend Over the past decade Ulta has grown its top line by more than 6 fold and its bottom line has grown over 2400 in the same time frame Over the past 10 years the stock has surged 3845 beating every benchmark by an astronomical amount
Ulta Beauty is the largest beauty retailer in the United States offering customers more than 25 000 products across roughly 500 brands They are one of the only pure play beauty businesses in the retail space with no close publicly traded competitors
As other retailers are closing their doors Ulta has been able to expand its footprint They have opened 99 stores or more annually for 7 consecutive years increasing the number of stores by 2 6x since 2011 The retail space has been closing stores at an exponential rate with more than 7000 announced to close in 2019 This is good news for Ulta who will be filling some of this brick and mortar retail void expecting to open 70 80 new stores annual for the next several years
E Commerce Focus
Ulta has been able to pivot with the shifting retail industry investing in its digital technology so that modern omnichannel consumer demands can be met Omnichannel customers spend almost 3 times more than retail only customers according to Ulta s latest annual report Their e commerce business has been the fastest growing channel currently making up only 11 of revenue but expected to make up a larger portion of the business as Ulta continues to invest in its digital innovation ecosystem
At the end of last year Ulta acquired two tech start ups that focus on AI and augmented reality This might sound like a strange move for a beauty retailer but these acquisitions are expected to improve their digital platform AI is projected to strengthen the firm s understanding of consumer patterns and personalize buyers preferences Augmented reality is becoming more widely used in digital retail helping consumers try on products without leaving their homes These should enhance Ulta s omnichannel platforms and further advance their e com presence
Outlook
Ulta Beauty is expected to see double digit top and bottom line growth for the next two years as this business continues to expand rapidly Sell side analysts have been increasing full year EPS estimates for ULTA and I believe that this will continue as the firm continues to over deliver ULTA is currently sitting at a Zacks Rank 2 Buy
Be cautious with this stock considering its beta is very close to 1 meaning it is expected to follow the broader markets performance closely Ulta Beauty is in the consumer discretionary space implying that the company does better when consumers have a larger disposable income which will trace the US s economic performance
ULTA is currently trading at a forward PEG of 1 35x which is below its 5 year median and below the nonfood retail industries PEG of 1 84x I use price to earnings to growth PEG for this firm s valuation because of how quickly it is expected to continue growing It appears that ULTA is trading at a discount and could make a savvy buy if you believe the equity markets will continue the decade long bull rally
Comps
As I mentioned earlier there are no publicly traded pure play beauty competitors for me to use as a direct comparable L Brands NYSE LB which owns Victoria Secret and Bath Body Works has a similar customer base to ULTA but have not been able to achieve the same results LB has lost investors more than 44 over the last 5 years with losses exceeding 26 in just the last 52 weeks They announced they will be closing 53 Victoria Secret stores this year following the 30 that were closed in 2018 This is a quintessential retailer that hasn t been able to adapt to the changing consumer
Lululemon NASDAQ LULU also has a comparable consumer base to Ulta but has been following a very different narrative than L Brands LULU is a prime example of retail gem and has shown investors over 64 returns in the past 52 weeks Analysts have continued to raise EPS estimates for the next couple years pushing this stock into a Zacks Rank 2 Buy
Earnings Preview
Ulta is releasing its Q1 financial results after market close on Thursday and investors are expecting double digit growth figures EPS estimates sit at 3 06 per share representing a 23 increase from Q1 last year ULTA has beaten EPS estimates over 92 of the time since 2012 with an average upside surprise of about 3 Revenue is expected to be 1 7 billion for Q1 which would illustrate over 14 growth from the same quarter last year
Take Away
ULTA closing today at 334 85 has shown investors 36 8 returns since the first of the year and is just 7 off its all time high of 359 69 that it hit at the end of April I believe that this firm could bust through the 360 level to new highs if they can continue their prolific expansion and the equity market economy don t fall apart ULTA would make a good retail sector addition to your portfolio
Breakout Biotech Stocks with Triple Digit Profit PotentialThe biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
LB | Tech Data TECD Q1 Earnings Beat Estimates Increase Y Y | Shares of Tech Data Corporation NASDAQ TECD increased roughly 6 during the trading session on May 30 following the first quarter fiscal 2020 results which marked the third straight quarter of earnings beat The company s bottom line also registered double digit growth year over year despite a decline in the top line This increase can be attributed to lower costs of products sold and reduced operating expenses Moreover management now envisions earnings of 2 15 2 45 per share for second quarter fiscal 2020 The midpoint of 2 30 is in line with the Zacks Consensus Estimate and indicates a sharp improvement from 2 01 reported in the year ago period We also noticed that while Americas and Asia Pacific regions witnessed net sales growth Europe encountered soft sales This led to a year over year decline in the overall net sales that also fell short of the Zacks Consensus Estimate We note that shares of this Zacks Rank 2 Buy company have gained 14 2 year to date compared with the s growth of 17 1
Q1 DetailsThe company reported adjusted earnings of 2 04 per share in the reported quarter The figure not only surpassed the Zacks Consensus Estimate of 1 98 but also increased 11 on a year over year basis However net sales of 8 406 4 million decreased 2 year over year Also the figure lagged the consensus mark of 8 453 million Net sales rose 3 on a constant currency cc basis Net sales from the Americas 45 1 of global net sales rose 5 to 3 789 2 million Sales from Europe 51 3 of global net sales declined 8 to 4 309 5 million Sales from Asia Pacific 3 6 of global net sales increased 15 to 307 7 million MarginsThe company s gross profit fell 2 6 to 509 4 million in the reported quarter Gross margin shrunk 6 bps to 6 1 Adjusted selling general administrative SG A expenses declined 3 6 to 384 6 million in the quarter under review Adjusted selling general administrative expenses as percentage of revenues contracted 9 bps to 4 6 Adjusted operating income came in at 124 8 million up 0 6 from 124 1 million in the year ago quarter Adjusted operating margin expanded 3 bps to 1 5 Segment wise operating margin contracted 14 bps to 2 2 for the Americas while the metric expanded 12 bps to 1 1 for Europe and 51 bps to 0 9 for Asia Pacific Balance Sheet and Cash FlowAs of Apr 30 2019 Tech Data had cash and cash equivalents of approximately 797 5 million long term debt of 1 297 9 million and total stockholders equity of 2 915 9 million During the quarter the company bought back 346 000 shares worth 36 million Tech Data generated cash from operations of 63 2 million
Tech Data Corporation Price Consensus and EPS Surprise
OutlookTech Data issued second quarter fiscal 2020 view wherein the company anticipates sales to be 8 6 8 9 billion Although growth in IT market has slowed down going ahead management sees robust demand for its products Looking for More Check These Solid PicksChildren s Place NASDAQ PLCE with long term earnings per share growth rate of 8 carries a Zacks Rank 1 Strong Buy You can see L Brands NYSE LB with long term earnings per share growth rate of 11 carries a Zacks Rank 2 Zumiez NASDAQ ZUMZ with long term earnings per share growth rate of 13 5 carries a Zacks Rank 2 This Could Be the Fastest Way to Grow Wealth in 2019Research indicates one sector is poised to deliver a crop of the best performing stocks you ll find anywhere in the market Breaking news in this space frequently creates quick double and triple digit profit opportunities These companies are changing the world and owning their stocks could transform your portfolio in 2019 and beyond Recent trades from this sector have generated 98 119 and 164 gains in as little as 1 month |
LB | Why L Brands LB Could Be A Top Value Stock Pick | Value investing is always a very popular strategy and for good reason After all who doesn t want to find stocks that have low PEs solid outlooks and decent dividends Fortunately for investors looking for this combination we have identified a strong candidate which may be an impressive value L Brands Inc NYSE LB L Brands in FocusLB may be an interesting play thanks to its forward PE of 10 its P S ratio of 0 5 and its decent dividend yield of 5 These factors suggest that L Brands is a pretty good value pick as investors have to pay a relatively low level for each dollar of earnings and that LB has decent revenue metrics to back up its earnings L Brands Inc PE Ratio TTM But before you think that L Brands is just a pure value play it is important to note that it has been seeing solid activity on the earnings estimate front as well For current year earnings the consensus has gone up by 1 7 in the past 30 days thanks to seven upward revisions in the past one month compared to one lower This estimate strength is actually enough to push LB to a Zacks Rank 2 Buy suggesting it is poised to outperform You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here So really L Brands is looking great from a number of angles thanks to its PE below 20 a P S ratio below one and a strong Zacks Rank meaning that this company could be a great choice for value investors at this time Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
LB | PriceSmart s PSMT May Comps Down On Currency Headwinds | PriceSmart Inc NASDAQ PSMT comparable warehouse sales comps for the five week period ended Jun 2 2019 for 40 warehouse clubs fell 0 9 following a 0 5 decline in April Comps for March February and January dropped 1 1 9 and 1 4 respectively We note that foreign currency exchange rate fluctuations adversely impacted comps by 3 9 For the 39 week period ended Jun 2 2019 comps declined 1 3 Foreign currency exchange rate fluctuations negatively impacted comps by 3 3 Nevertheless net merchandise sales increased 0 8 to 251 million from 248 7 million in the year ago period However the metric was adversely impacted by currency rate fluctuations to the tune of 9 6 million or 3 8 In the preceding month the company posted net merchandise sales growth of 0 9 while for March the metric inched up 0 1 In February it remained flat and improved 0 3 in January Net merchandise sales advanced 0 4 to 2 322 6 million for the nine months ended May 31 2019 from 2 312 2 million in the same period last year Foreign currency exchange rate fluctuations hurt net merchandise sales by 77 1 million or 3 3 We note that comparable net merchandise sales in the second quarter of fiscal 2019 dipped 0 9 Adverse currency fluctuations negatively impacted comparable net merchandise sales by 3 7 Brighter Side of the StoryDespite weak comps performance this Zacks Rank 2 Buy company s total sales grew 1 8 to 839 6 million on a year over year basis in the second quarter of fiscal 2019 Total revenues included a 9 9 million contribution from the Aeropost acquisition Net merchandise sales rose 0 5 PriceSmart s strategy to sell limited products at lower prices has helped it generate member loyalty and higher sales Interested in the Retail Space Check TheseChildren s Place NASDAQ PLCE with a long term earnings per share growth rate of 8 sports a Zacks Rank 1 Strong Buy You can see L Brands NYSE LB with a long term earnings per share growth rate of 11 carries a Zacks Rank 2 Kering PA PRTP SA OTC PPRUY with a long term earnings per share growth rate of 10 carries a Zacks Rank 2 Breakout Biotech Stocks with Triple Digit Profit PotentialThe biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
LB | Top Ranked Value Stocks To Buy For June 10th | Here are four stocks with buy rank and strong value characteristics for investors to consider today June 10th
China Yuchai International Limited CYD This diesel and natural gas engines manufacturer has a Zacks Rank 1 Strong Buy and seen the Zacks Consensus Estimate for its current year earnings rising 5 2 over the last 60 days China Yuchai International Limited Price and Consensus China Yuchai International has a price to earnings ratio P E of 5 49 compared with 7 00 for the industry The company possesses a of A China Yuchai International Limited PE Ratio TTM Meritor Inc MTOR This manufacturer of integrated systems modules and components to original equipment manufacturers has a Zacks Rank 2 Buy and seen the Zacks Consensus Estimate for its current year earnings rising 5 4 over the last 60 days Meritor Inc Price and Consensus Meritor has a price to earnings ratio P E of 6 19 compared with 7 00 for the industry The company possesses a Value Score of A Meritor Inc PE Ratio TTM L Brands NYSE LB Inc LB This specialty retailer has a Zacks Rank 2 and seen the Zacks Consensus Estimate for its current year earnings rising 2 1 over the last 60 days L Brands Inc Price and Consensus L Brands has a price to earnings ratio P E of 9 44 compared with 11 50 for the industry The company possesses a Value Score of B L Brands Inc PE Ratio TTM China Distance Education Holdings Limited DL This online and offline education services provider has a Zacks Rank 2 and seen the Zacks Consensus Estimate for its current year earnings rising 1 7 over the last 60 days China Distance Education Holdings Limited Price and Consensus China Distance Education has a price to earnings ratio P E of 9 03 compared with 17 40 for the industry The company possesses a Value Score of A China Distance Education Holdings Limited PE Ratio TTM See the
Learn more about the
Breakout Biotech Stocks with Triple Digit Profit Potential
The biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases
Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
PFE | Pfizer Falls 3 | Investing com Pfizer NYSE PFE fell by 3 02 to trade at 41 78 by 15 09 19 09 GMT on Monday on the NYSE exchange
The volume of Pfizer shares traded since the start of the session was 43 48M Pfizer has traded in a range of 41 75 to 43 00 on the day
The stock has traded at 43 2300 at its highest and 41 7500 at its lowest during the past seven days |
PFE | Pfizer Falls 7 | Investing com Pfizer NYSE PFE fell by 6 61 to trade at 38 70 by 15 10 19 10 GMT on Tuesday on the NYSE exchange
The volume of Pfizer shares traded since the start of the session was 75 00M Pfizer has traded in a range of 38 64 to 40 20 on the day
The stock has traded at 43 2300 at its highest and 38 6300 at its lowest during the past seven days |
WFC | U S firms blur investment picture by going lightweight | By Timothy Aeppel NEW YORK Reuters Kim Beck once considered owning his factory s big production machines a big part of being a manufacturer Not anymore The chief executive of Automatic Feed Co an 80 worker Ohio company that makes machines for auto plants now leases most of his factory and its heavy equipment to another company that welds and cuts metal for him on the spot That has freed up cash for him to hire engineers and programmers to design a new line of laser driven products This is a much better way to do business he says Beck s change of heart about heavy metal is part of a larger and lasting shift in how U S corporations invest Instead of spending on buildings and big machines companies are investing more in software and hi tech equipment that is often lighter and less expensive than the monuments of the past Many firms for instance are shifting to cloud services for back office operations that once required them to buy and maintain their own systems This shift is happening so rapidly that the official investment figures simply do not capture the full scope of what companies are doing to expand and upgrade their capacity Federal Reserve Chair Janet Yellen and other officials have been noting only a modest recovery in investment spending while they continue to debate whether to lift rates from the floor but it might be less of a concern than the headline data would suggest The Department of Commerce tracks spending on software research and development and artistic originals such as books movies music and even greeting cards But it does not include for example the cost of training workers to use new machines or hiring better paid specialists to maintain them Investment figures also are faulted for failing to capture the full impact of falling prices For decades economists assumed that jobs grew in step with investment Now despite high profits and healthy balance sheets companies are not increasing spending as rapidly as in past recoveries even as they keep hiring Tim Quinlin an economist at Wells Fargo N WFC Securities notes that equipment spending today is only 15 percent above its pre recession peak In the three previous cycles that lasted long enough to compare them equipment spending increased on average by nearly two thirds above previous peaks The shift has caught the attention of Washington Jason Furman chairman of the White House s Council of Economic Advisers said in a speech last month that since 2010 most of the slowdown in investment that troubles many policymakers and economists can be attributed to slower growth in equipment spending However investments in intellectual property and other non physical assets have been accelerating And unlike spending on machinery investment in new technology and know how tends to yield results that also benefit other businesses Furman told Reuters We know it has positive spillovers Graphic Not everyone is a winner though SHEDDING WEIGHT Nicholas Bloom a Stanford economist who studies trends in business investment said spending in areas such as research and development and software tends to favor higher skilled workers It does help productivity he said but it could also make low skilled workers easier to replace Many old style equipment makers also have had to either upgrade their products shift production overseas or make up for weaker demand at home by exporting more to developing markets Bloom says Buehler Aeroglide a maker of industrial dryers used in dog food and cereal factories is an example of a company that has shed some weight Customers definitely want smaller machines says Andrew Sharpe chief executive of the U S subsidiary of Switzerland s Buehler Group The company has shrunk the size of some devices by a fifth by making air run through them faster Interviews with manufacturers representing a broad range of industries and regions show that many have no plans to go back to their old ways They may invest more when growth perks up they say but they will keep spending more on so called intangibles such as patents and new product development Madison Industries a Chicago based manufacturer with about 5 billion in sales that makes filtration and medical equipment among other things is one example Its chief executive Larry Gies says his customers increasingly demand smaller runs of specialized products not masses of identical goods When you need flexibility like that you often need more labor rather than a machine pumping out the same thing over and over Falling prices also play a role The unit cost of everything I buy software robots machines you name it has gone down says Gies So I can get the same result but at half the cost Mark Bissell chief executive of vacuum maker Bissell Homecare Inc figures he is spending 10 to 15 percent less on equipment now than he was just three years ago The reason Basic technology for making vacuums plastic molding for instance has not changed much so there is no need to splurge on new machines Our investment has actually gone up but the composition has shifted he says noting that he is spending more than ever on patents and engineering work as his industry races to integrate new electronic features and wireless technology Some business leaders say the depth of the last recession is what changed the way they invest Buildings and machines last for years and can quickly become an albatross in a downturn Beck the CEO of Automatic Feed said he was forced to lay off 70 employees most of his staff in a single day in 2010 after the auto industry his company supplies had gone into a free fall Even before the recession Beck had looked into upgrading his equipment and realized the money would be better spent developing a machine that uses lasers rather than steel knives to cut metal We really don t have a budget for capital equipment anymore he says and I like it that way |
LB | L Brands Earnings Beat Revenue Misses In Q2 | Investing com L Brands NYSE LB reported second quarter earnings that beat analysts expectations on Wednesday and revenue that fell short of forecasts
The firm reported earnings per share of 0 24 on revenue of 2 9B Analysts polled by Investing com anticipated EPS of 0 19 on revenue of 2 95B That compared to EPS of 0 36 on revenue of 2 98B in the same period a year earlier The company had reported EPS of 0 14 on revenue of 2 63B in the previous quarter
L Brands follows other major Services sector earnings this monthOn July 25 Amazon com reported second quarter EPS of 5 22 on revenue of 63 4B compared to forecasts of EPS of 5 56 on revenue of 62 52B
Alibaba ADR earnings beat analysts expectations on August 15 with first quarter EPS of 12 55 on revenue of 114 92B Investing com analysts expected EPS of 10 3 on revenue of 111 83B
Stay up to date on all of the upcoming earnings reports by visiting Investing com s earnings calendar |
LB | Analysts Estimate L Brands LB To Report A Decline In Earnings What To Look Out For | The market expects L Brands NYSE LB to deliver a year over year decline in earnings on lower revenues when it reports results for the quarter ended April 2019 This widely known consensus outlook is important in assessing the company s earnings picture but a powerful factor that might influence its near term stock price is how the actual results compare to these estimates
The earnings report which is expected to be released on May 22 2019 might help the stock move higher if these key numbers are better than expectations On the other hand if they miss the stock may move lower
While management s discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations it s worth having a handicapping insight into the odds of a positive EPS surprise
Zacks Consensus Estimate
This owner of Victoria s Secret Bath Body Works and other chain stores is expected to post break even quarterly earnings per share in its upcoming report which represents a year over year change of 100
Revenues are expected to be 2 56 billion down 2 6 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 1 67 higher over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out This insight is at the core of our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for L Brands
For L Brands the Most Accurate Estimate is the same as the Zacks Consensus Estimate suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate This has resulted in an Earnings ESP of 0
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that L Brands will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that L Brands would post earnings of 2 07 per share when it actually produced earnings of 2 14 delivering a surprise of 3 38
Over the last four quarters the company has beaten consensus EPS estimates four times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
L Brands doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
PFE | Glaxo GSK Beats Earnings Revenue Estimates In Q3 | GlaxoSmithKline plc NYSE GSK one of the largest health care companies reshaped its business following the March 2015 completion of the three part inter conditional transaction with Novartis related to its Consumer Healthcare Vaccines and Oncology businesses Under the deal Glaxo sold its oncology assets to Novartis and acquired Novartis Vaccines business excluding influenza vaccines Glaxo has created a joint venture JV with Pfizer NYSE PFE earlier in 2019 thereby combining their consumer healthcare unit Following the completion of the deal the UK based company now focuses on its three core businesses Pharmaceuticals respiratory HIV Vaccines pediatric adolescent adult and travel vaccines and Consumer Healthcare wellness oral health nutrition and skin health products However Glaxo is currently focusing on its core assets and divesting non core assets Meanwhile like many of its peers Glaxo is facing challenges in the form of stiff competition genericization and pricing pressure In this scenario investor focus remains on late stage pipeline candidates and their commercial potential restructuring and cost cutting initiatives and performance of new products apart from the usual top and bottom line numbers Glaxo s performance has been mixed so far with the company s earnings beating expectations thrice in the trailing four quarters while missed once Overall the company has delivered an average positive surprise of 12 74 Currently Glaxo has a Zacks Rank 2 Buy but that could definitely change following the company s earnings report which was just released We have highlighted some of the key stats from this just revealed announcement below Earnings Beat Glaxo reported core earnings of 95 cents per American depositary share in the third quarter of 2019 which beat our consensus estimate of 83 cents The company s focus on cost control initiative has boosted margins Revenues Beat Revenues were up 11 year over year at constant exchange rate CER to 11 56 billion 9 4 billion Revenues beat the Zacks Consensus Estimate of 11 34 billion Key Stats Sales in Vaccines segment surged 15 at CER while Consumer Healthcare sales increased 25 Pharmaceuticals sales were up 3 at CER The Respiratory segment increased 19 at CER HIV product sales remained flat at CER 2019 Guidance Glaxo provided an improved earnings guidance for 2019 Adjusted EPS is expected to remain flat at CER previously decline by 3 5 in 2019 The new guidance reflects improvement in operating performance increased investment in R D and priority assets and expected lower effective tax rate Share Price Impact Shares rose almost 2 4 in pre market trading Check back later for our full write up on GSK earnings report later Today s Best Stocks from ZacksWould you like to see the updated picks from our best market beating strategies From 2017 through 2018 while the S P 500 gained 15 8 five of our screens returned 38 0 61 3 61 6 68 1 and 98 3 This outperformance has not just been a recent phenomenon From 2000 2018 while the S P averaged 4 8 per year our top strategies averaged up to 56 2 per year |
WFC | U S job growth stumbles raising doubts on economy | By Jason Lange
WASHINGTON Reuters U S employers slammed the brakes on hiring over the last two months and wages fell in September raising new doubts the economy is strong enough for the Federal Reserve to raise interest rates by the end of this year
Payrolls outside of farming rose by 142 000 last month and August figures were revised sharply lower to show only 136 000 jobs added that month the Labor Department said on Friday
That marked the smallest two month gain in employment in over a year and could fuel fears that the China led global economic slowdown is sapping America s strength
You can t throw lipstick on this pig of a report said Brian Jacobsen a portfolio strategist at Wells Fargo NYSE WFC Funds Management in Menomonee Falls Wisconsin
The weak job growth took Wall Street by surprise and U S stocks sold off sharply The dollar also weakened and yields for government bonds fell
Bets on interest rate futures showed investors only saw a 27 percent chance of a Fed rate hike in December down from around 44 percent before the job report s release
With a weak report here in combination with some of the other weakness that we are seeing across the globe the odds get dinged for December said Tom Porcelli an economist at RBC Capital Markets
Investors saw virtually no chance the Fed would end its near zero interest rate policy at its only other scheduled meeting this year to be held later in October
U S factories are feeling the global chill and shed 9 000 jobs in September after losing 18 000 in August according to the Labor Department s survey of employers
There is no doubt that the events happening in the rest of the world are affecting the U S economy White House chief economist Jason Furman told CNBC
The recent pace of job growth should have been enough to push the unemployment rate lower because only around 100 000 new jobs are needed a month to keep up with population growth
But the jobless rate held steady at 5 1 percent The unemployment rate is derived from a separate survey of households that showed 350 000 workers dropping out of the labor force last month as well as a lower level of employment
The share of the population in the work force which includes people who have jobs or are looking for one fell to 62 4 percent the lowest level since 1977
Average hourly wages fell by a cent to 25 09 during the month and were up only 2 2 percent from the same month in 2014 holding around the same levels seen all year and pointing to marginal inflationary pressures
The report did have a few bright spots that might be welcomed by Fed chief Janet Yellen who said last week the economy was doing well enough to warrant higher rates this year
The number of workers with part time jobs but who want more hours fell by 447 000 in September to 6 0 million
Yellen has signaled that the elevated number of these workers points to hidden slack in the labor market that isn t captured by the jobless rate A measure of joblessness that includes these workers and is closely followed by the Fed fell to 10 percent its lowest level since May 2008
Economists polled by Reuters had expected job growth of 203 000 in September
All told revised estimates meant 59 000 fewer jobs were created in July and August than previously believed
In another grim sign the number of hours worked in the country fell 0 2 percent raising the specter that some broader softness might have gripped the economy last month
One of the biggest lodestones on America s economy was in the commodity sector which has slowed in part because of weaker demand from China
The price of oil has fallen nearly 50 percent over the last year and U S mining payrolls which include energy sector jobs fell by 10 000 in September the ninth straight month of declines |
LB | L Brands says hedge fund to withdraw board nominees after reaching agreement | Reuters L Brands NYSE LB said on Thursday activist investor Barington Capital has agreed to withdraw its proposed board nominees and instead will serve as a special adviser as part of an agreement with the company The agreement comes a month after Barington urged the company to either explore a spin off of the underperforming Victoria s Secret brand or take the much financially stronger Bath Body Works public Barington would now vote in favor of the entire L Brands board nominees at its 2019 annual shareholder meeting the company said As a special adviser Barington would provide consulting and advisory services to the company for its business operations strategic and financial matters the composition of the board and potential candidates for nomination L Brands also announced on Thursday a slate of director nominees for election to the board which includes three independent directors The company s nominees include its Chairman and Chief Executive Officer Leslie Wexner In March Barington had also suggested that the role of chairman and chief executive officer be held by separate individuals an increasingly popular demand by activist investors who feel it would help companies run better |
LB | L Brands Earnings Revenue Beat in Q1 | Investing com L Brands NYSE LB reported first quarter earnings that beat analysts expectations on Wednesday and revenue that topped forecasts
The firm reported earnings per share of 0 14 on revenue of 2 63B Analysts polled by Investing com expected EPS of 0 on revenue of 2 56B That compared to EPS of 0 17 on revenue of 2 63B in the same period a year earlier The company had reported EPS of 2 14 on revenue of 4 85B in the previous quarter
L Brands follows other major Services sector earnings this month
On April 25 Amazon com reported first quarter EPS of 7 09 on revenue of 59 7B compared to forecasts of EPS of 4 7 on revenue of 59 7B
Alibaba ADR earnings beat analysts expectations on May 15 with fourth quarter EPS of 8 57 on revenue of 93 5B Investing com analysts expected EPS of 6 56 on revenue of 91 54B
Stay up to date on all of the upcoming earnings reports by visiting Investing com s earnings calendar |
LB | L Brands LB Catches Eye Stock Jumps 5 2 | L Brands Inc NYSE LB was a big mover last session as the company saw its shares rise more than 5 on the day The move came on solid volume too with far more shares changing hands than in a normal session This stock which remained volatile and traded within the range of 26 14 27 67 in the past one month time frame witnessed a sharp increase on Friday The company has seen three positive estimate revisions in the past few weeks while its Zacks Consensus Estimate for the current quarter has also moved higher over the past few weeks suggesting that more solid trading could be ahead for L Brands So make sure to keep an eye on this stock going forward to see if this recent jump can turn into more strength down the road L Brands currently has a Zacks Rank 3 Hold while its is negative L Brands Inc Price Investors interested in the Retail Apparel and Shoes industry may consider Boot Barn Holdings Inc NYSE BOOT which has a Zacks Rank 1 Strong Buy You can see Is LB going up Or down Predict to see what others think Up or DownZacks Top 10 Stocks for 2019In addition to the stocks discussed above wouldn t you like to know about our 10 finest buy and holds for the year From more than 4 000 companies covered by the Zacks Rank these 10 were picked by a process that consistently beats the market Even during 2018 while the market dropped 5 2 our Top 10s were up well into double digits And during bullish 2012 2017 they soared far above the market s 126 3 reaching 181 9 This year the portfolio features a player that thrives on volatility an AI comer and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs |
LB | L Brands LB Up 6 9 Since Last Earnings Report Can It Continue | It has been about a month since the last earnings report for L Brands NYSE LB Shares have added about 6 9 in that time frame outperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is L Brands due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts L Brands Q4 Earnings Beat Estimates Sales in LineL Brands reported fourth quarter fiscal 2018 results wherein top and bottom lines improved year over year and the latter marked its fifth consecutive quarter of positive surprise However results remained dismal in the company s Victoria s Secret business which has long been battling competition and consumers changing preferences In the quarter under review L Brands adjusted earnings came in at 2 14 per share which outpaced the Zacks Consensus Estimate of 2 07 Also the bottom line improved 1 4 year over year Solid performance by Bath Body Works was the primary driving factor Net sales climbed marginally to 4 85 billion The top line figure came in line with the Zacks Consensus Estimate Furthermore L Brands total comparable sales climbed 3 in the quarter Victoria s Secret sales dropped 5 to 2 532 million Comparable sales fell 3 while comparable store sales comps tumbled 7 Comps remained flat in the lingerie business whereas the same declined low double digits at PINK On the brighter side Victoria s Secret Beauty comps saw a mid single digit jump Also total digital sales registered an increase of 8 Management stated that Victoria s Secret results in this segment lagged expectations as comps declined and merchandise margins fell considerably in all core categories The fall in margins stemmed from elevated promotions to boost traffic and clear inventories On the contrary Bath Body Works BBW delivered a solid show and surpassed management s expectations Total sales here improved 9 to 1 951 million with 12 rise in comparable sales and 8 growth in comparable store sales Sales were fuelled by robust improvements in the three key categories including home fragrance soap and body care Notably product acceptance for the Fall and Holiday season items aided results BBW direct channel remained sturdy with sales up 30 Also merchandise margin rose on the back of lower promotions We also note that L Brands International sales rallied 12 in the fourth quarter to 190 7 million courtesy of strength across both Victoria s Secret and BBW L Brands adjusted gross profit dropped 3 6 to roughly 1 967 7 million while the adjusted gross margin contracted 170 basis points bps to 40 6 Reduction in merchandise margin rate and higher occupancy costs led to gross margin decline Adjusted operating income declined from 986 6 million to 898 7 million as strength in Bath and Body Works was more than offset by softness in Victoria s Secret Adjusted operating margin collapsed 200 bps to 18 5 Store UpdateIn fiscal 2018 L Brands opened three Victoria s Secret stores and shuttered 30 taking the total count to 1 143 In the same period 55 Bath Body Works stores were inaugurated and 28 were closed which totaled to 1 721 stores At the end of fiscal 2018 this specialty retailer of women s intimate and other apparel had 79 international stores The company sold its La Senza stores United States and Canada to an affiliate on Regent LP this January As of Feb 2 2019 L Brands operated 2 943 stores Total franchised stores as of Feb 2 2019 were 674 including 219 Victoria s Secret Beauty Accessories 47 Victoria s Secret nine Pink and 223 Bath Body Works stores The company sold its La Senza stores Also the franchised stores comprised 164 and 12 Travel Retail stores of Victoria s Secret Beauty Accessories and Bath Body Works respectively Other Financial DetailsL Brands exited the quarter with cash and cash equivalents of 1 413 5 million down from the prior year quarter s 1 514 9 million Long term debt increased marginally to 5 739 4 million from nearly 5 707 million a year ago Shareholders deficit came in at 865 6 million For fiscal 2019 the company projects capital expenditures to be 575 600 million It anticipates free cash flow of 700 million for the same period In fiscal 2018 L Brands repurchased 5 4 million shares for 196 1 million As of Feb 2 2019 the company had shares worth 78 7 million remaining under its existing 250 million buyback plan GuidanceToward the end of fiscal 2018 management decided to shut its Henri Bendel business sell off La Senza and reset its dividend These actions are likely to help the company focus on the core areas with higher growth potential In fiscal 2019 management intends to remain committed toward improving Victoria s Secret s performance by staying customer focused enriching assortments and enhancing store and online experiences Further the company focuses on efficient management of costs capital and inventory Additionally the company announced that it will stop reporting monthly sales and only report quarterly sales data henceforth In fiscal 2019 sales are likely to be hurt by La Senza s sale and closure of Henri Bendel business Moreover soft merchandise margins are likely to hit gross margin rate All said L Brands anticipates first quarter fiscal 2019 comps to fall low single digits Total sales growth is expected to be roughly 1 point lower than comps This can be accountable to La Senza s and Henri Bendel s loss Further gross margin is expected to contract year over year due to lower merchandise margins SG A costs are anticipated to escalate as a percentage of sales on account of lower sales Earnings per share are envisioned to be breakeven in the first quarter compared with 17 cents recorded in the year ago period This includes nearly 5 cents adverse impact from higher tax rate Also the earnings guidance for the first quarter falls way below the Zacks Consensus Estimate of 12 cents For fiscal 2019 the company anticipates comps to rise low single digits Total sales growth is likely to lag comps by about 2 points due to the same factors impacting the first quarter sales Gross margin rate is likely to decrease year over year mainly due to lower merchandise margins SG A costs are expected to increase year over year stemming from higher wage rate and inflation related pressure Further management envisions fiscal 2019 earnings per share to be 2 20 2 60 The guidance includes nearly 14 cents impact from greater tax rate Moreover earnings per share are envisioned to be breakeven in the first quarter
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates The consensus estimate has shifted 101 05 due to these changes
VGM Scores
Currently L Brands has a poor Growth Score of F however its Momentum Score is doing a lot better with a C Charting a somewhat similar path the stock was allocated a grade of B on the value side putting it in the top 40 for this investment strategy
Overall the stock has an aggregate VGM Score of D If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift It s no surprise L Brands has a Zacks Rank 4 Sell We expect a below average return from the stock in the next few months |
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