Daily US Equity Opening News: BA and SPR eyed amid 737 groundings; NVDA China clients reluctant to buy downgraded chip; CHK-SWN in USD 17bln merger; SNPS in talks to acquire ANSS for USD 35bln

TODAY'S AGENDA:

• Our interactive daily calendar can be accessed here; a pdf version can be downloaded here.


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  BROKERS MOVES: DASH upgraded, while a slew of Financials (AXP, COF, C, WFC) are downgraded. To see the full list of Broker Moves, please click here.


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  DAY AHEAD: US day is quiet for scheduled events, with Employment Trends and consumer credit the notable releases. The NY Fed will release its monthly survey of consumer expectations ahead of this week’s CPI data out on Thursday. On the speaker’s slate, Fed 2024 voter Bostic will deliver remarks; speaking in December (post the Fed meeting), Bostic said he saw two rate cuts this year and a soft economic landing, though leaned back against any imminent lowering of rates (NOTE: the Fed’s projections have pencilled in three 25bps rate cuts this year).


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  WEEK AHEAD: CPI releases from the US and China are the highlights; US earnings season also gets underway. Our full week ahead briefing can be accessed here.

US EQUITY NEWS:

MACRO:

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  Fed - Logan (2026 voter) said that premature easing of financial conditions could allow demand to pick back up, and if the Fed does not maintain sufficiently tight conditions, there is a risk inflation will pick back up, reversing progress, and that could still result in a rate hike; on the balance sheet, she supports first slowing the pace, then gradually ending, the Fed's balance-sheet runoff.


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  US-China - China has sanctioned US defence companies over a USD 300mln arms deal to upgrade Taiwan's tactical information system, SCMP reports.

INDUSTRIALS:

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  Boeing (BA), Spirit AeroSystems (SPR), Alaska Air (ALK), United Airlines (UAL) - FAA directed over 170 Boeing 737 Max 9 planes to be grounded for inspections after an Alaska Airlines Flight performed an emergency landing when a panel detached midflight, CNBC reports. Reuters reports that Spirit AeroSystems (SPR) manufactured and initially installed the fuselage part on a brand-new Boeing (BA) 737 Max 9 jet that suffered the blowout, but Boeing also had a key role in the process. Consequently, both Alaska and United Airlines announced the grounding of their entire fleets of Boeing 737 Max 9 aircraft. Bloomberg reported that Boeing 737 Max's design feature involving frame cutouts likely caused the midflight detachment.


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  Airbus (EADSY) - Germany could allow sale of Eurofighter jets to Saudi Arabia, Shares Magazine reports.


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  Allison Transmission (ALSN) - UAW finalised a tentative four-year agreement with Allison Transmission, ensuring a USD 20 hourly starting wage and retroactive pay raises from November 15th, 2023, as well as two bonuses totaling USD 7,000.


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  European Firms - The Rhine River in Germany has reopened to shipping after being halted last week. The river was stopped around Koblenz due to heavy rain resulting in the water level being too high.


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  PGT Innovations (PGTI) - Have not concluded that proposed Miter transactions is superior to binding transaction with Masonite  Analysis at 12:36  Note, on Friday PGTI received an unsolicited proposal from Miter Brands to acquire all outstanding shares of PGTI's common stock for USD 41.50/shr in cash.


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  Joby Aviation (JOBY) - Has signed a definitive agreement with Clay Lacy Aviation to install Southern California's first electric air taxi charger at John Wayne Airport in Orange County, California.


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  3M (MMM) - Announced US pension plan actions; will freeze its US pension plans for non-union US employees effective 31 Dec 2028.

ENERGY:

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  Chesapeake (CHK), Southwest (SWN) - Southwestern Energy and Chesapeake Energy are nearing a merger valued at approximately USD 17bln, set to become one of the leading US natural-gas producers, WSJ reports. The deal is expected to be finalised this week, pending negotiations. WSJ added that the deal aims to fortify Chesapeake's presence in Louisiana and the Northeast.


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  Shell (SHEL) - Sees quarterly integrated gas production between 880-920k BOEPD (prev. saw 880-920k BOEPD); sees quarterly integrated LNG liquefication volumes between 6.9-7.3MT (prev. 6.6-7MT); sees quarterly upstream production between 1.83-1.93mln BOEPD (prev. 1.7-1.8mln BOEPD).


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  TotalEnergies (TTE) - Announces launch of an innovative subsea technology to separate reinject CO2-rich gas into the Mero field.

TECH:

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  Apple (AAPL) - The DoJ is nearing the end of an antitrust probe into Apple, potentially leading to a lawsuit in H1 2024, NYT reports. The investigation focuses on Apple's control over its hardware and software, targeting practices that limit consumer device switching and hinder competition. Specific scrutiny involves Apple Watch-iPhone integration, iMessage exclusivity, and the iPhone payments system blocking rivals.


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  Nvidia (NVDA) - Faces dilemma in China over US export restrictions after its newly-introduced lower-powered AI chips have seen only cool demand from Chinese buyers, including major clients, who are reluctant to purchase the downgraded versions them, posing a challenge for the company's sales in the region, WSJ reports. Elsewhere, Reuters reports that Nvidia plans to begin mass production in China-focussed AI chip in Q2.


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  OpenAI (not listed) - WSJ reports that Microsoft (MSFT)-backed OpenAI's leadership turmoil in November served as a warning about overdependence on one company's technology. Companies utilising OpenAI's software now seek alternative technologies to mitigate risks of being reliant on one company. OpenAI's rivals are capitalising on this opportunity by attracting cautious customers. Separately, Bloomberg reports that Microsoft picked Dee Templeton as OpenAI Board Observer; Templeton has already begun attending board meetings.


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  Samsung Electronics (SSNGY) - Expected to report its smallest profit drop in 6 quarters owing to a rebound in semiconductor prices, SCMP reports. The world’s biggest maker of memory chips, smartphones and televisions is expected to show a 14% fall in Q4 profit, and its chip division likely reduced its quarterly loss to around KRW 1.2trln, according to analysts.


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  Ansys (ANSS), Synopsys (SNPS) - Synopsys is in advanced talks to acquire Ansys for approximately USD 35bln in a stock-and-cash deal, marking a potential major transaction at the beginning of the year. Exclusive negotiations are underway, and if successful, the deal may materialise by the middle of the following week, pending the continuation of discussions, WSJ reports.

COMMUNICATIONS:

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  Comcast (CMCSA) - Positive mention in Barron's; said it was among the forgotten value stocks, poised to recover in the year ahead.


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  Disney (DIS) - Positive mention in Barron's; said themedia giant was beating back activist investors, and its future looks brighter.


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  Gaming Names - China is taking measures to ease fears of another regulatory crackdown on the video game industry, FT reports. Measures include firing a key official and discussions on new measures with limited notice.

CONSUMER CYCLICALS:

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  Stellantis (STLA) - Will not advertise during the NFL Super Bowl this year due to tough US automotive market conditions, Reuters reports. The news follows General Motors' (GM) earlier decision to also abstain from Super Bowl ads as part of cost-cutting measures. Stellantis recently also announced it would not be participating in forthcoming auto shows in Chicago and Washington.


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  Honda Motor (HMC) - Mulls constructing an EV plant in Canada, potentially including battery production, with an estimated project spending of around USD 14bln, Nikkei reports, marking one of its major investments to help compete with US and European EV manufacturers. Final decision due late 2024, operations planned to commence by 2028.


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  Abercrombie & Fitch (ANF) - Positive mention in Barron's; noted strong 2023 performance, adds that inflation and inventories declining helped ANF regain its footing, and after a solid holiday season, analysts expect it can continue its momentum in Q4. In other news, raised Q4 sales and operating margin outlook, following better-than-expected holiday period. Q4 net sales in high-teens. FY23 net sales growth of 14-15% (prev. 12-14%), Operating Margin ~11%.


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  Dollar General (DG) - Announced updates to its store operations leadership; Steve Sunderland will leave the company; Steve Deckard transitions to Executive Vice President, Store Operations and Development.


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  Boot Barn (BOOT) - Sees Q3 revenue -9.7% Y/Y (exp. -9.1%), but sees EPS at the higher-end of previously provided guidance; analysts said that could mean EPS above 1.79 (exp. 1.74).


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  Tesla (TSLA) - CEO Musk is subject to a negative profile in the WSJ, which claims that Musk has used illegal drugs — including LSD, cocaine, ecstasy, mushrooms and ketamine — worrying leaders at Tesla and SpaceX, as some executives and board members fear use of these drugs could harm his companies.


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  Lululemon (LULU) - Raises Q4 revenue view to between USD 3.17-3.19bln (prev. 3.135-3.17bln, exp. 3.18bln); diluted EPS seen between 4.96-5.00 (prev. 4.85-4.93, exp. 4.97).


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  US Foods (USFD) - Reaffirmed FY23 guidance; adj. EPS USD 2.60-2.70 (exp. 2.65), still sees adj. EBITDA 1.54-1.56bln (exp. 1.55bln), still sees CapEx 410-430mln (exp. 294.4mln).


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  Five Below (FIVE) - Reiterated Q4 and FY23 guidance; Q4 net sales view USD 1.32-1.35bln and FY23 between 3.54-3.57bln.


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  Papa John's (PZZA) - Q4 '23 global system-wide sales were c. USD 1.3bln, +5% for FY23 on 21 net new units.


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  American Eagle Outfitters (AEO) - Raised Q4 guidance reflecting record holiday sales; Q4-to-date revenue is +8%; sees Q4 revenue to be up low double digits and operating profit to be approx. USD 130mln (prev. 105-115mln).

HEALTHCARE:

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  Bayer AG (BAYRY) - Comes under further pressure to breakup, as a major investor Harris Associates urges it to restructure, Bloomberg reports. Harris Associates suggests Bayer separates its crop science, pharma, and consumer health divisions, and called for a clearer ownership plan by the company's capital markets day in March.


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  AstraZeneca (AZN) - Omniose announces scientific collaboration with AstraZeneca to research vaccines for serious bacterial diseases.


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  Merck (MRK) Harpoon Therapeutics (HARP) - Confirmed it is to acquire HARP for USD 23/shr in cash for a total equity value of USD 680mln. Note, HARP closed Friday at USD 10.55/shr.


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  Novartis (NVS) - Shanghai Argo announces multi-program RNAI licenses and strategic collaborations with Co. Scemblix ASC4First phase 3 trials met both primary endpoints. Shows superior MMR rates for patients with chronic myeloid leukaemia.


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  Qiagen (QGEN) - Plans to return UDS 300mln to shareholders via a synthetic share repurchase, utilising a direct capital repayment and reverse stock split, following unanimous approval at their 2023 AGM.


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  Exelixis (EXEL) - Reports prelim FY23 revenue of USD 1.83bln (exp. 1.84bln), sees FY24 revenue between 1.83-1.93bln (exp. 2.06bln). Appoints Mary Beckerle and Gail Eckhardt to the Board. Board authorised USD 450mln share repurchase in 2024, after the completion of its USD 550mln buyback in 2023.


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  Hologic (HOLX) - Sees Q1 revenue -5.7% Y/Y (-6.4% FXN) at USD 1.01bln (exp. 0.979mln; vs guidance of USD 960-985mln). Sees Q1 adj. diluted EPS at the high-end of its 0.92-0.97 guidance range (exp. 0.94).


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  Exact Sciences (EXAS) - Prelim Q4 revenue seen between USD 645.5-647.5mln (exp. 631.5mln), Screening revenue seen between USD 486-487mln, Precision Oncology revenue seen between 159.5-160.5mln. Sees FY23 sales of USD 2.5bln (exp. 2.48bln), and FY24 sales of USD 2.83bln (exp. 2.83bln). Jeff Elliott to step down as executive VP, CFO due to personal reasons; company initiates search for next CFO.


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  Evotec (EVO), Bristol Myers Squibb (BMY) - Evotec announced progress in its strategic neuroscience partnership with Bristol Myers, and receives a payment of USD 25mln for further research. Phase II study for BMS-986419 scheduled for 2024.


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  Regeneron Pharmaceuticals (REGN) - Prelim Q4'23 US net product sales of Eylea injection of about USD 1.34bln (exp. 1.47bln); expects acquired IPR&D charge to negative impact each of shr and adj. shr for Q4 by about USD 0.21.


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  Moderna (MRNA) - Achieved 2023 COVID-19 vaccine sales of ~USD 6.7bln (exp. at least 6bln), which includes USD 0.6mln of deferred revenue; reiterated 2024 expected product sales of about USD 4bln. Forecasts returning to sales growth in 2025 and break even in 2026.


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  Boston Scientific Corp (BSX) Axonics (AXNX) - BSX agrees to acquire AXNX for USD 71/shr in cash. Note, AXNX closed Friday at 57.57.


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  Johnson & Johnson (JNJ) Ambrx (AMAM) - JNJ to acquire AMAM for an equity value of USD 2.0bln, or USD 1.9bln net of estimated cash acquired.


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  DexCom (DXCM) - Prelim Q4 revenue view of at least USD 1.03bln (exp. 1.00bln); FY24 revenue view 4.15-4.35bln (exp. 4.32bln). Announced Stelo, its new glucose sensor for people with type 2 diabetes who do not use insulin, has been submitted to the US FDA for review and is expected to launch in the US in summer 2024.

FINANCIALS:

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  Crypto - Firms looking to launch spot-Bitcoin ETFs last week cleared a major hurdle on getting sign-off from US regulators in the coming days, Bloomberg reports. SEC told several exchanges and issuers seeking to list ETFs that they should submit a final version of a key documents as soon on Friday, and a flood of these documents were posted Friday evening. SEC is expected to soon vote on the exchange-rule filings this week.


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  Coinbase (COIN) - Coinbase told CNBC that it is pursuing an acquisition of an undisclosed holding company possessing a Mifid II license. This license will enable Coinbase to provide regulated derivatives in the EU, expanding its offerings from spot trading in cryptocurrencies.


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  Berkshire Hathaway (BRK) - Berkshire and Pilot Sunday reached an agreement to settle a Delaware lawsuit, resolving a dispute over the valuation of billionaire Jimmy Haslam's truck stop chain.


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  BlackRock (BLK) - Set to announce layoffs of around 600 employees (3% of its global workforce), NY Post reports, described internally as routine and akin to last year's performance-based cuts.


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  Goldman Sachs (GS) - Ahead of earnings season, kicked-off by Big Banks later this week Barron's says this year could be strong one for Goldman Sachs, after it has shed much of its money-losing consumer businesses, allowing it to focus on investment banking.


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  UBS (UBS) - Aiming to grow its Chinese wealth and asset management business, despite the slowing economy, Bloomberg reports.


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  Bank of America (BAC) - Recognized a non-cash pretax charge of around USD 1.6bln in Q4; charge reduced CET1 ratio by 8bps as of December 31st 2023.

08 Jan 2024 - 13:45- CryptocurrencyExclusive- Source: Newsquawk