Let’s take a look at analysts’ morning notes.
- CITI: Solid. We are encouraged by improving underlying sales trends at the core retail footprint, more operation margin per cent expansion year over year, continued growth in higher margin e-commerce sales and indications of further market share growth.
- BARCLAYS: Japan won’t impact Apple too much. Japan accounts for 6% of revenue and 8% of operating income. Our initial checks in Asia indicate certain key components could see some disruption from recent events. While it is difficult to assess how Apple will be impacted, we would be surprised if Apple felt increased concerns vs. others in our space given its supply chain relationships. We continue to believe Apple’s valuation is attractive and that the shares can benefit from strong iPad and iPhone demand.
TIFFANY & CO. (TIF):
- GOLDMAN SACHS: Japan will overshadow 4Q earnings. While Tiffany has capitalised on the recovery of the high end consumer and jewelry category, we expect Japanese events to take on approximately 18% of sales and 25% of profits. Japan was on track to deliver a positive low-single-digit-comp in local currency, the first since 2006.
- MORGAN STANLEY: A top pick. We expect upward earnings revisions to drive the stock higher over the next 12 months. There’s a lot to like about the JWN story: consumer strength at the high-end, pricing power in an inflationary environment, continued improvement in credit trends and superior internet/mobile platform.
- UBS: Maintain buy. PEP is going through a period of high input cost inflation, difficult macros and an investment step-up, while simultaneously trying to transition its portfolio to healthier products. We believe it will be difficult to achieve sustained alpha during this period. However at present levels, we see a favourable risk/reward in PEP due to valuation and 3% dividend yield, along with guidance that we view as beatable.
MADISON SQUARE GARDEN (MSG):
- MORGAN STANLEY: Some risks. We see limited growth this year with the networks facing tough comps after losing DISH distribution plus the renovation related reduction in events at Entertainment, a consumer backlash to higher ticket prices next season and reinvestment risk, particularly as management looks at the LA forum.
- BARCLAYS: Constructive stock. Though its CFO departure does heighten concerns of the company’s outlook, business appears to be tracking broadly in-line, with GeForce business steady and Quadro coming back this quarter. However, we recognise that uncertainty may prompt some pressure on the shares.
- CITI: Bullish. Despite the stock’s year-to-date relative strength, we continue to view OPEN as one of the best Small/Mid-Cap longs in the internet sector.
UNIVERSAL HEALTH SERVICES (UHS):
- CITI: Bullish. UHS announced the anticipated amendment to its credit agreement, effectively lowering borrowing costs by 100 bps. Resulting interest savings leads to a 15c boost in EPC guidance. With appropriate Medicaid fears now largely discounted, UHS is our favourite hospital story.