Professional Documents
Culture Documents
February 7, 2018
MARKET FOCUS
Futures Lower
• This morning, S&P 500 index futures are pointing to a negative market opening
OVERNIGHT UPDATES when trading begins today.
• U.S. equity market stocks were sharply higher at the end of trading yesterday, with
Europe higher. Tokyo rose the S&P 500 index settling at 2,695.14 for the close. The index saw an increase of
0.16%. Hong Kong fell 1.74 percent for the day.
0.89%. Shanghai fell
1.81%. • In its fourth-quarter results expected today, CFRA looks for Hasbro, Inc (HAS 94
****) to post earnings of $1.87 per share vs. $1.52 per share for the same period
one year earlier. Capital IQ Consensus analysts expect earnings per share of
BONDS: 10-year notes at
$1.81. We expect 6.7% sales growth in 2017, with strong box office results for Star
2.764%, 30-year bonds at
Wars: The Last Jedi and Thor: Ragnarok driving growth in Partner Brands. We see
3.037%.
further gains in Hasbro Gaming with the launch of new games and strong demand
for classic games. In addition, we expect digital gaming to continue to gain traction,
FOREIGN EXCHANGE: driving higher revenues at Backflip Studios.
Euro at $1.2348, Sterling at
$1.391, Dollar at 109.09 • O'Reilly Automotive (ORLY 255 ***) is set to report fourth-quarter results. CFRA is
yen. projecting earnings per share of $2.67, while Capital IQ Consensus expects
earnings of $2.78 per share. The company posted earnings of $2.59 for the fourth-
PRECIOUS METALS: Gold quarter last year. We look for reported sales to increase 4.4% in 2017, bolstered by
at $1,331.60. the opening of about 190 (net) new stores, a 1.0%-2.0% same-store sales increase
and acquisitions. Improved macroeconomic conditions will likely lead consumers to
ENERGY: WTI crude at increase spending on vehicle maintenance when possible. Also, industry tailwinds,
$63.28, London Brent crude such as the increasing age of vehicles, will likely support continued growth.
at $66.79. • In its fourth-quarter earnings announcement, CFRA is expecting Torchmark Corp
(TMK 83 ***) to post earnings of $1.22 vs. earnings per share of $1.03 for the like
period one year ago. Capital IQ Consensus expectations are for earnings of $1.23
per share.
U.S.
02/06/2018
Europe
02/06/2018
• CFRA RAISES OPINION ON SHARES OF RECKITT BENCKISER (RB/ LN, GBP65.55 **** )
TO BUY FROM HOLD: We keep our 12-month target price on RB at GBP75 which reflects a
2018 P/E of 20.2x. This is in line with its 5-year historical forward P/E average of 19.9x which
we think is reasonable given the resiliency of the company's consumer hygiene business and
growth potential in Health division. We think that RB's top-line growth will stabilize in 4Q 2017
onwards as the drag from cyber-attack and Scholl/Amope failure start to subside, while we
also expect performance in India to recover from the impact of GST implementation. The
severe winter flu outbreaks in the U.S. and U.K. should have boosted the sales of RB's OTC
medicine, we believe. In the longer-term, we are optimistic on the delivery of cost synergies
from Mead Johnson Nutrition, and value-creation opportunity from a potential disposal of its
Hygiene Home unit. We see around 15% upside to our target price from current share price
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analyst judgment, and the extent to which some types of data
Glossary is disclosed by companies.
STARS
Since January 1, 1987, CFRA Equity and Fund Research 12-Month Target Price
Services, and its predecessor S&P Capital IQ Equity Research The equity analyst's projection of the market price a given
has ranked a universe of U.S. common stocks, ADRs security will command 12 months hence, based on a
(American Depositary Receipts), and ADSs (American combination of intrinsic, relative, and private market
Depositary Shares) based on a given equity's potential for valuation metrics, including Fair Value.
future performance. Similarly, we have ranked Asian and
European equities since June 30, 2002. Under proprietary CFRA Equity Research
STARS (STock Appreciation Ranking System), equity CFRA Equity Research is produced and distributed by
analysts rank equities according to their individual forecast of Accounting Research & Analytics, LLC d/b/a CFRA ("CFRA
an equity's future total return potential versus the expected US"). Certain research is distributed by CFRA UK Limited
total return of a relevant benchmark (e.g., a regional index (together with CFRA US, "CFRA"). Certain research is
(S&P Asia 50 Index, S&P Europe 350® Index or S&P 500® produced by Standard & Poor's Malaysia Sdn. Bhd ("CFRA
Index)), based on a 12-month time horizon. STARS was Malaysia") under contract to CFRA US.
designed to meet the needs of investors looking to put their
investment decisions in perspective. Data used to assist in Abbreviations Used in Equity Research Reports
determining the STARS ranking may be the result of the CAGR - Compound Annual Growth Rate
analyst's own models as well as internal proprietary models CAPEX - Capital Expenditures
resulting from dynamic data inputs. CY - Calendar Year
DCF - Discounted Cash Flow
S&P Global Market Intelligence's Quality Rank DDM - Dividend Discount Model
(also known as S&P Capital IQ Earnings & Dividend EBIT - Earnings Before Interest and Taxes
Rankings) - Growth and stability of earnings and dividends EBITDA - Earnings Before Interest, Taxes, Depreciation and
are deemed key elements in establishing S&P Global Market Amortization
Intelligence's earnings and dividend rankings for common EPS - Earnings Per Share
stocks, which are designed to capsulize the nature of this EV - Enterprise Value
record in a single symbol. It should be noted, however, that FCF - Free Cash Flow
the process also takes into consideration certain adjustments FFO - Funds From Operations
and modifications deemed desirable in establishing such FY - Fiscal Year
rankings. The final score for each stock is measured against a P/E - Price/Earnings
scoring matrix determined by analysis of the scores of a large P/NAV - Price to Net Asset Value PEG Ratio - P/E-to-
and representative sample of stocks. The range of scores in Growth Ratio PV - Present Value
the array of this sample has been aligned with the following R&D - Research & Development ROCE - Return on Capital
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STARS Ranking system and definition:
★★★★★ 5-STARS (Strong Buy):
Total return is expected to outperform the total return of a
relevant benchmark, by a wide margin over the coming 12
months, with shares rising in price on an absolute basis.
★★★★★ 4-STARS (Buy):
Total return is expected to outperform the total return of a
relevant benchmark over the coming 12 months, with shares
rising in price on an absolute basis.
★★★★★ 3-STARS (Hold):
Total return is expected to closely approximate the total
return of a relevant benchmark over the coming 12 months,
with shares generally rising in price on an absolute basis.
★★★★★ 2-STARS (Sell):
Total return is expected to underperform the total return of a
relevant benchmark over the coming 12 months, and the share
price not anticipated to show a gain.
★★★★★ 1-STAR (Strong Sell):
Total return is expected to underperform the total return of a
relevant benchmark by a wide margin over the coming 12
months, with shares falling in price on an absolute basis.
Relevant benchmarks:
In North America, the relevant benchmark is the S&P 500
Index, in Europe and in Asia, the relevant benchmarks are
the S&P Europe 350 Index and the S&P Asia 50 Index,
respectively.
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FEBRUARY 07, 2018
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