Finadvantage Market Report: 2019-04-09

Added 2019-04-10


American Airlines issued an investor update in which the company cut revenue guidance for Q1 2019. American now projects cargo revenues of $218 million and total revenue growth per available seat miles of flat to up 1%. In the previous guidance, the company projected $235 million of cargo revenues and flat to up 2% of total revenue growth per ASM. American cited the government shutdown, the grounding of the company’s MAX fleet, and the removal from service of the 14 737-800 aircraft as reasons for the cut.

Aerospace & Defense:

Boeing reported Q1 2019 deliveries. Not surprisingly, 737 deliveries slumped with only 89 aircraft delivered compared with 132 in Q1 2018. On a positive note, 767 deliveries stood at 12 compared with 4 in Q1 2018. Demand for 767 is buoyed by continuing growth in the air cargo segment. Retired 767 is a popular choice for cargo conversion. Boeing has also delivered 22 remanufactured AH-64 Apache helicopters compared with only 6 in Q1 2018. This is a welcoming development for Boeing as DoD plans to replace half of its Apache fleet with Future Attack Reconnaissance Aircraft.

Boeing has also announced the signing of a Statement of Strategic Intent with Australian Space Agency. The agreement is more of a proclamation than a binding document. The Statement is focused on R&D, innovation, STEM education and government programs aligned with the Australian Space Agency’s priorities. Boeing is finding it harder and harder to compete with a string of commercial space companies for launches and sees a collaboration with government space agencies as a priority for Defense, Space & Security segment.


Amgen announced that FDA has approved Evenity for the treatment of osteoporosis in postmenopausal women at high risk for fracture. According to the company’s statement, Evenity is a bone builder with a unique dual effect that both increases bone formation and to a lesser extent reduces bone resorption (or bone loss) to rapidly reduce the risk of fracture. The announcement is timely as patent for Amgen’s similar treatment for postmenopausal osteoporosis, Prolia, is only a few years away from expiration. However, Evenity may increase the risk of heart attack, stroke and cardiovascular death which will make it harder for the treatment to replicate Prolia’s success.

Casinos & Gaming:

Wynn Resorts withdrew $7.1 billion acquisition bid for Australia’s Crown Resorts Ltd after the details of negotiations were leaked. In back to back 8-K filings, the company first announced that it is in preliminary discussions with Crown Resorts but underlined that no agreement has been reached and there is no assurance that negotiations will result in a transaction, and then stated in the second filing that following the premature disclosure, the company has terminated all discussions with Crown.

Communications Equipment:

France's Canal+ decided to base its new Content Delivery Network (CDN) on the Cisco NCS 5516 Series platform, using Cisco IOS XR software. In 2018, Canal+ had traffic peak of 500Gb/s, while Cisco's CDN infrastructure has been designed to deliver 1Tb/s+.


Freeport-McMoRan CEO Richard Adkerson ruled out debt reductions, higher dividends, and investments in new projects for the next two years. According to Adkerson, during this period Freeport will be solely focused on Grasberg mine expansion. The Grasberg mine is the largest gold mine and the second largest copper mine in the world.

Health Care Equipment:

Baxter announced that it has received FDA approval for faster preparation of its leading hemostatic product, Floseal Hemostatic Matrix. The new version of Floseal has 20% fewer components and steps to prepare, making it easier and faster for operating room or nurses to get Floseal in the hands of surgeons to help stop bleeding during procedures.

Health Care Technology:

Cerner entered into a cooperation agreement with Starboard that includes a board refreshment plan, operational improvement initiatives, commitments for operating margin targets, a new Finance and Strategy Committee of the Board and an expanded capital return program to drive the next phase of profitable growth and value creation. Cerner’s stock jumped 10.3% following the announcement.

Industrial Machinery:

Pentair provided preliminary Q1 2019 results and updated full year guidance. The company reported EPS on an adjusted basis of $0.43 compared to $0.49 in the first quarter of 2018. Sales slumped 6% year-over-year, while organic sales declined 4%. Pentair claims that negative performance is mostly due to the impact of cold and wet weather on aquatics and agriculture segments.

Insurance Brokers:

Arthur J. Gallagher completed the acquisition of specialist UK insurance broker Stackhouse Poland Group Limited. Stackhouse Poland specializes in high-net-worth private clients, real estate, commercial, healthcare and a wide range of specialist insurance sectors. Arthur J. Gallagher pursues an aggressive acquisitions strategy. This year alone the company has announced 14 acquisitions.

Interactive Media & Services:

Google announced Anthos, a major rebranding of Google Cloud Platform. Anthos will serve as both a hybrid cloud, allowing customers to deploy Google Cloud in their own data centers, and a multi-cloud, running on third-party clouds, such as AWS and Azure. “It brings together the simplicity of open source platforms and the freedom to choose the right cloud partner for your job,” Google CEO, Sundar Pichai noted. Simultaneously, Citrix Systems announced that it will make Citrix SD-WAN and Citrix ADC available on Google Cloud Platform.

Morgan Stanley raised Facebook price target from $190 to $195. The firm is "most optimistic about Instagram given its leading reach, data set/targeting, and ability to innovate to drive engagement and monetization." This March, Facebook added 'Checkout with Instagram' feature that will give Instagram users the opportunity to purchase products directly from the Instagram app.

Life & Health Insurance:

Principal Financial announced an agreement with Wells Fargo to acquire its Institutional Retirement & Trust business in a deal worth $1.2 billion.  Through this acquisition, Principal will double the size of its U.S. retirement business by the number of total recordkeeping assets.

Movies & Entertainment:

Cowen upgraded Disney stock to Outperform and raised price target from $102 to $131. Cowen cited a strong film pipeline in 2019 and upcoming Star Wars: Galaxy's Edge theme park as reasons for the upgrade. Simultaneously, MoffettNathanson maintained its buy recommendation and raised Disney price target from $132 to $134 citing "the potential asset value that Disney will create from launching Disney+ and controlling Hulu."

Research & Consulting Services:

Equifax is in hot waters with Canada's Privacy Commissioner, an ombudsman that investigates privacy rights violations. "Given the vast amounts of highly sensitive personal information Equifax holds, and its pivotal role in the financial sector as a credit reporting agency, it was completely unacceptable to find such significant shortcomings in the company’s privacy and security practices," said Commissioner Daniel Therrien. As a result, Equifax Canada has signed a compliance agreement committing to undertake a range of corrective measures, including extended credit monitoring of at least 4 years.


Qualcomm announced a new chip, Cloud AI 100 chip, designed specifically for AI inference processing in the cloud. The company claims that Cloud AI 100 will deliver more than 10x performance per watt over the industry’s most advanced AI inference solutions deployed today. Qualcomm is expected to begin sampling to customers in the second half of 2019. Among many others, Qualcomm is in direct competition for AI inference market with Nvidia (Tesla T4 inference accelerator) and Intel (Nervana Neural Network Processor for Inference).

Technology Hardware, Storage & Peripherals:

Wedbush Securities raised Apple price target from $215 to $225. While maintaining that “Apple continues to face a ‘code red’ situation in China,” the firm argues that recent iPhone price cuts in China are a positive sign. Finadvantage has previously reported that recent macroeconomic trends in China may provide some relief to Apple.


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