Good morning, here’s your morning equity research roundup from the Street:
- Credit Card Data: Bank of America, Citi, Capital One and J.P. Morgan released better than expected August credit card master trust data. Delinquencies fell for three of the four, for a range of 2.48% (JPM) to 3.96% (BAC).
- Gaming: Louisiana gaming revenue fell 4.0% last month. The drop reverses a 2.3% gain in July and 2.4% increase in 2Q11. The state is an important revenue contributor for Boyd Gaming and Pinnacle Entertainment.
- Discover Financial: Barclays joins Goldman and Citi in raising expectations after the company reported lower net charge offs and delinquencies. DFS reports earnings next week.
- UPS: Asia demand weaker with capacity coming down
- GM & Ford Contract Commentary: The Street views contract negotiations as increasingly important for the two firms to control pension obligations. Barclays notes, extensively, that had GM and Ford not amended pension plans during past labour agreements, both would be fully funded. Since 1998, these amendments have increased GM US pension liabilities by $28 billion and Ford US pension liabilities by $12 billion.
- Netflix: Following news of slower subscriber growth, Barclays expects Netflix to report its first new subscriber quarter on quarter decline since 2007. Notes that this likely followed a rapid consumer transition from mail to streaming that Netflix did not anticipate.
- Initiating Coverage on 10 Internet Stocks: Shutterfly, LinkedIn, IAC/InterActiveCorp and Demand Media as Overweights, HomeAway, Vistaprint and QuinStreet as Equal Weight, and OpenTable, ReachLocal and WebMD as Underweight.
- US Large Cap Regional Bank Preview: Expecting better than expected Q3 reports when banks report, but concerned that 2012 and 2013 EPS estimates are 5 to 7% too high
- Abercrombie: With unprofitable store closings & promotions coming to an end, and better strength out of the U.S. (on the back of massive numbers the company posts from the few international flagships it has), Abercrombie seems poised to return to form.
- Research in Motion: Missed earnings last night. Believes new QNX operating system has potential to be late to market (passed originally anticipated 1Q12). Citi thinks these are structural issues that will be difficult to right.
- August Existing Home Sales: Forecasts sales will come in around 4.9 million homes, representing a 4.9% m/m increase. This is ahead of the consensus forecast out of Bloomberg of 4.75 million sales. The National Association of Realtors will report actual figures on Wednesday, September 21.
- Autos: Early channel checks on U.S. sales point to possible increases in the seasonally adjusted annual rate of sales to high 12 million. Notes 13 million may be achievable.
- Chemical Industry: Lowering Q4 and 2012 estimates on 20 chemical companies on macroeconomic concerns
- Clean Energy: Maybe Solyndra didn’t kill the industry. DB is initiating coverage on a number of green/solar firms with pretty healthy targets, expecting volumes across biofuels and LED sub-sectors to outperform — some by 15% annually — over the coming five years.
Goldman Sachs & Co.:
- Equity and Debt Funds: Equity funds saw $1.2 billion of outflows this week, reversing $712 million of inflows last week. Debt has been more stable, $2.5 billion inflows this week, bringing Q3 to +$8.3 billion.
- General Electric: Optimistic energy business is turning around. Declining credit losses at GE Capital are also expected to boost the bottom line.
- Philip Morris: Tobacco sales are down for the firm which has seen similar trends in 1993 and 2002, before steep drop offs. Goldman believes the market is not viewing this critically enough.
- Research in Motion: Adding to the sell-off, Goldman notes that international sales were unable to make up for declines in the U.S.
- Simon Property Group: Took majority stake in King of Prussia Mall, the fourth largest mall in the U.S., and one of the most productive.
- Carnival: 2012 bookings sustaining momentum, but down slightly in last month. EPS lowered a penny.
- Charles Schwab: Remains a powerhouse in bringing in funds against a tough economic backdrop. Current assets at $1.65 trillion, up 19% year on year, but flat from July ’11.
- Walt Disney: Pricing at Parks division is up (3% at value hotel subdivision, low single digits at mid subdivision) but occupancy likely down. Higher programming costs at ABC and ESPN to increasing overall expenses.
- Machinery Sales: Holding up/flat for U.S. market. Asia saw the first drop in 23 months following a 10% slowdown in orders from China.
Sources: Barclays Capital, Citi, Deutsche Bank, Goldman Sachs & Co., UBS
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