The equity indices went all over the place yesterday, after the Easter weekend. And if the recovery was tinged with red for European stock markets, Wall Street rebounded strongly to end at most today, thanks to cyclical stocks and technology stocks. In contrast, energy, the most consensual bet of the year 2022, fell. This renewed appetite for risk was fueled by corporate results, notably those of Johnson & Johnson. The first publications of companies in the United States are generally more robust than expected, which creates a positive feeling all the more exacerbated as the current turmoil raised fears of disappointment.
I remind you here that the results of American companies are ALWAYS better than expected, in particular because analysts are cautious in their anticipations and companies skilfully guide them to be able to surprise positively. It’s a kind of art that is currently better mastered on the other side of the Atlantic than on ours, even if more and more European companies are converting to it. Of the 50 S&P 500 companies that have already published, or 10% of the index as readers familiar with complex math will have noticed, 80% have exceeded expectations, according to data compiled by Refinitiv. This figure averages 66% over a “normal” earnings season, that is, when the estimates are wrong as they should be. Hence a rather positive feeling, especially since the forecasts are not revised downwards at this stage, or at the margin and with excuses that the market finds valid.
There is still an exception that confirms the rule in the United States, it is Netflix. The video-on-demand service released its quarterly results after the close on Wall Street last night. The advantage with the markets that offer off-session quotations with high levels of liquidity is that we know very quickly the content of a results press release. And when an action is -26%, there is a problem. Netflix lost subscribers to 1 for the first timeer trimester. To use the franchouillarde metaphor, we could speak of “TF1 syndrome”: when you are alone in the world and start from a number one position, you can only step back when powerful competitors emerge. It’s a bit like what’s happening to Netflix, with the development of Disney+ and Amazon Prime Video, which are a bit more scary than Antenne 2, FR3, Canal+, TV6 and La Cinq at the time (we don’t doesn’t get any younger, does it?). The American company was also not helped by the loss of 700,000 Russian customers with the cessation of its services in the country after the invasion of Ukraine, nor by the widespread practice of password sharing. . Netflix remains number one with 221.6 million subscribers worldwide, but its rivals are on a strong momentum, in particular Disney +, which reached the milestone of 130 million subscribers in early 2022. Amazon, for its part, argues that 200 million people have viewed content on Prime Video, but its base merges with that of the Amazon Prime service of its merchant site, which makes the comparison a little less relevant.
In the absence of major macroeconomic indicators today, investors will focus on the continuation of the publications of corporate results, in particular L’Oréal, ASML, Credit Suisse or Heineken in Europe this morning, then Tesla or Procter & Gamble later in the United States. They will also keep an eye on the situation in Ukraine, where the Russian army is tightening its grip on Mariupol, and on the debate between the two rounds in France this evening, between Marine Le Pen and Emmanuel Macron. Last night, as a good strategist, Jean-Luc Mélenchon called on the French to help him win the 3and turn, the legislative elections, to have him appointed Prime Minister in a remake of the greatest hours of cohabitation under the 5and Republic. French political developments are closely scrutinized by our neighbors and by the United States.
Meanwhile, the yield on US Treasuries continues to climb in relative indifference, perhaps a sign that financiers are increasingly integrating the new environment and the rate hikes that will follow. The 10-year debt sees its remuneration approaching 3%, which allows the transition to real rates to return to the green.
Leading indicators point to a rebound in Europe this morning, but it looks a far cry from the enthusiasm that gripped the US stock market yesterday. In Asia Pacific, Japan continued its rebound helped by a still weak yen, while Hong Kong erased a small part of its losses from the previous day. In Sydney, the ASX is pointing up minimalist.
Economic highlights of the day
The figures for old real estate (4:00 p.m.) and oil inventories (4:30 p.m.) are expected today in the United States. The whole macro diary here.
The euro recovered slightly to 1.0817 USD. The ounce of gold fell to 1944 USD. Oil is consolidating its recent gains with North Sea Brent at $107.74 a barrel and US WTI light crude at $103.7. The yield on US 10-year debt continues to climb to 2.94%. Bitcoin is recovering at 41,400 USD each.
The main changes in recommendations
- BB Biotech: Julius Bär goes from buying to holding, aiming for 71 CHF.
- Bike24: Berenberg remains long with a price target reduced from 25 to 15.10 EUR.
- Dassault Aviation: Morgan Stanley goes from overweight to weighted online by targeting EUR 151.
- DNB: Morgan Stanley moves from underweight to weighted online by targeting NOK 225.
- Ericsson: DZ Bank remains to be kept with a price target raised from 73 to 84 SEK.
- Fashionette: Berenberg remains long with a price target reduced from 46 to 23.20 EUR.
- Geberit: Jefferies remains underperforming with a price target reduced from 549 to 473 CHF.
- Givaudan: Julius Bär goes from buy to hold aiming for 4000 CHF.
- Home24: Berenberg remains long with a price target reduced from 15.90 to 9.20 EUR.
- Intercos: Jefferies goes from holding to buying, targeting EUR 16.
- Leifheit: Berenberg went from buy to hold, aiming for EUR 26.20.
- Leonardo: Morgan Stanley goes from online weight to overweight by targeting EUR 11.80.
- Randstad: Morgan Stanley goes from underweight to weighted online by targeting EUR 55.
- Rheinmetall: Morgan Stanley goes from overweight to weighted online by targeting EUR 211.
- Telefonica: New Street Research goes from buy to neutral targeting 5 EUR.
- Thales: Morgan Stanley goes from overweight to weighted online by targeting EUR 110.
- Virbac: Jefferies remains on the buy side with a reduced price target of EUR 480 to 450.
- Vitesco: Oddo BHF starts tracking at neutral, targeting EUR 40.
- Westwing: Berenberg remains long with a price target reduced from 45 to 20.90 EUR.
- Wizz Air: Berenberg remains to be held with a price target reduced from 4400 to 3500 GBp.
- Xilam: Oddo BHF starts tracking outperformance by targeting EUR 53.
In France
Company results
- Aramis: the turnover of 1er fiscal semester is growing strongly by 47% and the annual target has been raised to €1.7 billion, but EBITDA will be “significantly lower” than the initial margin target of 1.5% but will be positive.
- Danone: the objectives are confirmed after the Q1 figures, which show organic growth of 7.1%, a little more robust than expected.
- L’Oréal: organic growth in Q1 is above expectations.
- Teleperformance: Q1 organic growth reached 11.1%. The 2022 objectives are confirmed.
Important (and less important) announcements
- Alstom and its consortium partners have been selected for the GO Expansion project to transform collective mobility in Toronto, Canada.
- Saint-Gobain and Roctool are combining their technologies to accelerate the manufacturing of composite and thermoplastic parts from 3D textile preforms.
- Dassault Aviation receives the first installment of the contract for the acquisition by the United Arab Emirates of 80 Rafale.
- Gaztransport & Technigaz receives an order from DSME for the design of the tanks of three new LNG carriers.
- Voltalia produces its first megawatt hours on SSM1&2, its largest solar project in Brazil.
- Thermador will acquire AFY.
- Adecco owns 96.97% of Akka Technologies after its takeover bid.
- Lacroix buys the American Firstronics.
- Metabolic Explorer launches its Inneus animal range.
- Mare Nostrum confirms the acquisition of Agence Unique.
- Arcure achieves two commercial successes in the American market.
- Devernois is out of receivership.
- Agrogeneration, still affected by the crisis in Ukraine, postpones the publication of its results.
- MedinCell and Teva will have to bring additional elements to the FDA concerning TV-46000/mdc-IRM.
- La Française de l’Energie buys Cryopur.
- Manutan, Société Foncière Lyonnaise, Adocia, HF Company, Implanet, Groupe Berkem, Kumulus Vape, Cnova, Esker, Prodways, Haulotte, Pierre & Vacances have published their accounts.
In the world
Company results
- ASML: Q2 revenues will be between €5.1 and €5.3 billion, below expectations due to production constraints. Q1 exceeded expectations and the order book is full.
- Credit Suisse: the bank expects a loss in Q1, after 700 MCHF of provisions taken on ongoing litigation.
- International Business Machines: the quarterly are a little stronger than expected, the title gained 1.4% post-session.
- Just Eat Takeaway: Q1 orders lower than expected and full year guidance lowered. The group is studying the future of GrubHub.
- Netflix: poor reception for the results, so that the action plunges 26% outside the session.
- Vale: the Brazilian group’s iron ore production is below expectations in Q1.
Important announcements (and others)
- Apparently the big investment funds are reluctant to sign Elon Musk a blank check for Twitter.
- Dufry and Autogrill are considering getting married, according to Bloomberg.
- Royal DSM sells its Protective Materials division to Avient for €1.44bn.
- Ramsay Health Care received a takeover offer denominated at AUD 88 per share from a consortium led by KKR.
- Deliveroo is appealing its conviction for concealed work in France.
- Main results publications: Tesla, Procter & Gamble, ASML, Abbott, Rio Tinto, Heineken, Danone, CRH, Sandvik, Carrefour, ASM International, Just Eat, Royal Vopak… The full agenda here.
Readings