MORNING NEWS CALL TOP NEWS • Morgan Stanley profit rises 19 pct on equity trading strength Morgan Stanley reported a 19 percent increase in quarterly profit, with strong performance in its equities trading business outweighing weakness in bond trading. • Johnson & Johnson profit beats, lifts forecast on cancer drug demand Johnson & Johnson reported quarterly profit above estimates and raised its full -year forecast, as demand for its cancer drugs Zytiga and Imbruvica helped offset decline in sales of blockbuster drug, Remicade. • UnitedHealth tops earnings estimates, raises 2018 forecast UnitedHealth Group added more members to its health plans in the third quarter, helping it to post a profit well above Wall Street estimates and boost its earnings forecast for the year. • BlackRock profit beats on demand for low risk funds -
BlackRock reported a better -than-expected quarterly profit, as more people poured money in its low -risk funds amid heightened trade tensions between Beijing and Washington. • Ad firm Omnicom's quarterly revenue slips marginally U.S. advertising company Omnicom Group's quarterly revenue fell marginally weighed by a s trong dollar.
BEFORE THE BELL U.S. stock futures rose modestly, as investor’s focus turned to earnings season. In Europe, shares advanced, helped by stronger defensive stocks . Asian equities also added some gains, led by Japan's blue -chip Nikkei index. The dollar edged lower against a
basket of currencies, while gold prices held steady. Oil prices, however, fell on evidence of higher U.S. oil production and increasing U.S. crude inventories. Industrial production data is due later in the day. International Business Machines, Netflix and Unit ed Continental are also scheduled to post their earnings after market closes.
STOCKS TO WATCH Results
• BlackRock Inc (BLK). The world’s biggest asset manager reported a better -than-expected quarterly profit, as more people poured money in its low-risk funds amid heightened trade tensions between Beijing and Washington. More investors, however, pulled ou t money from the asset manager's institutional index funds, while putting in more money into its low-risk iShares exchange-traded funds. Net income attributable to the company rose to $1.22 billion in the third quarter from $944 million a year earlier. On a per share basis, BlackRock earned $7.54, compared with $5.76 a year earlier. Excluding items, the company earned $7.52 per share, while analysts had expected $6.84. • Infosys Ltd (INFY). The company posted better than expected second-quarter profit, helped by a rise in big deals, and reiterated its forecast for full-year revenue growth. Having lifted its number of $100 million -plus clients to 23, compared with 19 in the same quarter last year, Infosys retained guidance for full -year revenue growth of 6 -8 percent in constant currency terms, in line with broker expectations. Profit rose 10.3 percent to 41.10 billion rupees ($558.04 million) in the quarter beating analyst estimates of 40.51 billion rupees. • Johnson & Johnson (JNJ) .The healthcare conglomerate reported a 4.5 percent rise in quarterly profit and boosted its sales and earnings per share guidance, as rising sales of its cancer drugs Zytiga and Darzalex helped offset falling sales of blockbuster arthritis drug Remicade. The company’s net earnings rose to $3.93 billion, or $1.44 per share, in the third quarter, from $3.76 billion, or $1.37 per share, a year earlier. Sales rose 3.6 percent to $20.35 billion.
MORNING NEWS CALL
• Morgan Stanley (MS). The company reported a 19 percent increase in quarterly profit, with strong performance in its equities trading business outweighing weakness in bond trading. Net income attributable to Morgan Stanley rose to $2.11 billion, or $1.17 per share, in the third quarter ended Sept. 30, from $1.78 billion, or 93 cents per share, a year ago. Analysts were expecting $1.01 per share. • Omnicom Group Inc (OMC). U.S. advertising company’s quarterly revenue fell marginally, weighed by a strong dollar. Omnicom, one of the world's "Big Four" ad companies, sai d net income available for common shares rose to $298.9 million, or $1.32 per share in the third quarter ended Sept. 30, from $263.3 million, or $1.13 per share. Revenue fell to $3.71 billion from $3.72 billion, a year earlier. • UnitedHealth Group Inc (UNH). The largest U.S. health insurer added more members to its health plans in the third quarter, help-
ing it to post a profit well above Wall Street estimates and boost its earnings forecast for the year. The company s aid it now e xpects full-year adjusted earnings per share to approach $12.80, compared with its prior forecast of between $12.50 and $12.75. UnitedHealth's insurance business added 2.8 million more members year -over -year in the third quarter and raked in revenue of $45.94 billion, 12.8 percent higher than last year. Net earnings attributable to shareholders rose 28 percent to $3.19 billion, or $3.24 per share in the quarter. Excluding items, the company earned $3.41 per share. Total revenue rose 12.4 percent to $56.56 billion.
Deals Of The Day
• Twilio Inc (TWLO) & SendGrid Inc (SEND). Twilio said on Monday it would buy email technology firm SendGrid in an all -stock deal valued at about $2 billion, combining two firms that handle communications between apps and their users. Twilio will offer 0. 485 share of its stock for each SendGrid Class A common share. The deal is worth about $36.92 per share, a premium of 19.4 percent to SendGrid's closing price on Monday. In Other News
• Alphabet Inc (GOOGL). Google on Monday became the latest company to drop out of a business conference in Saudi Arabia. Google said in a statement that Google Cloud Chief Executive Diane Greene would not attend the Future Investment Initiative S ummit scheduled to be held in Riyadh starting October 23. • Amazon.com Inc (AMZN). The company is likely to buy an at least 7 percent to 8 percent stake in India's Future Retail through an investment arm, CNBC-TV 18 reported, citing sources. The potential cash -and-stock deal, which is in its final stages, could be worth 25 billion rupees ($338 million) and is likely to be signed in the next two weeks, the channel said. Separately, Britain's competition regulator will include German discounters Aldi and Lidl, and online retailer Amazon, in its probe into Sainsbury's proposed takeover of Asda, as well as long-standing supermarket rivals like Tesco. • Berkshire Hathaway Inc (BRKa). NetJets, the luxury plane unit of Warren Buffett's Berkshire Hathaway, announced a deal on Monday to purchase up to 325 Cessna Citation business jets from Textron’s aviation unit, one of the biggest orders unveiled at a ma jor jet show this week in Orlando, Florida.Rob Scholl, a spokesman for Textron Textron Aviation, said he expects NetJets to firm up the orders for up to 175 super -midsize Cessna Citation Longitude aircraft and up to 150 Cessna Citation Hemisphere aircraft in the coming weeks. Deliveries are expected in the fourth quarter of 2019. • Curtiss Wright Corp (CW). Indal Technologies, a unit of Curtiss-Wright, has agreed to pay $3.5 million to resolve allegations that it -
knowingly sold defective military equipment to the U .S. Navy, the U.S. Justice Department said on Monday. Indal Technologies allegedly substituted a less-expensive type of steel used in helicopter landing systems for U.S. Navy destroyers, the department said in a press release. "When government contractors supply our armed forces with equipment that fails to meet performance standards, they not only cheat taxpayers, but they put at risk the safety of our service members," Assistant Attorney General Joseph Hunt sai d in a statement announcing the settlement. • Facebook Inc (FB).O The company will ban false information about voting requirements and fact -check fake reports of violence or long lines at polling stations ahead of next month's U.S. midterm elections, company executives told Reuters, the latest effort to reduce voter manipulation on its service. The new policy was disclosed by Facebook's cybersecurity policy chief, Nathaniel Gleicher, and other company executives. “We don’t believe we should remove things from Facebook that are shared by authentic people if they don’t violate those community standards, even if they are false,” said Tessa Lyons, product manager for Facebook's News Feed feature that shows users what friends are sharing. • Ford Motor Co (F). The U.S. carmaker unveiled a new China sport utility vehicle and said its plan to release a spate of new models will help turn around tumbling sales in the world's top auto market from the start of next year. Ford, fighting to recover from a severe sales slump in China, will start selling the entry-level SUV, called the "Territory", early next year. The car is jointly developed with lo-
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MORNING NEWS CALL
cal partner Jiangling Motors Corp. The car, based on a no -frills model from JMC, is aimed at appealing to consumers in China's smaller, so-called lower -tier cites, which have been a major engine of growth in the market over the last decade. • Microsoft Corp (MSFT). The company’s co-founder Paul Allen, who had been suffering from non -Hodgkin's lymphoma, a form of cancer, passed away at the age of 65 o n Monday, his family said. "Paul Allen's contributions to our company, our i ndustry and to our community are indispensable," Microsoft Chief Executive Officer Satya Nadella said in a statement. "As co -founder of Microsoft, in his own quiet and persistent way, he created magical products, experiences and institutions, and in doing so, he changed the world." • OnDeck Capital Inc (ONDK). The company has set up a subsidiary t hat will provide technology and other services to banks looking to lend to small businesses online it said. Called ODX, the new company will expand OnDeck's existing business of providing online lending software to banks, such as JPMorgan Chase, the company said. • Qualcomm Inc (QCOM). The company and the U.S. Federal Trade Commission on Monday asked a federal judge to delay a preliminary ruling in an antitrust case U.S. regulators brought against the mobile chip company in order to pursue settlement ta lks. In a joint filing in the U.S. District Court for the Northern District of California in San Jose, they asked a judge to delay ruling on the FTC's motion for partial summary judgment for 30 days. • Regeneron Pharmaceuticals Inc (REGN). Drugmakers Sanofi and Regeneron said that they received positive results for their Dupixent product, which treats eczema and is seen as a key driver of future revenues. Sanofi and Regeneron said in a j oint statement that two pivotal Phase 3 placebo -controlled trials evaluating Dupixent (dupilumab), in adults with inadequately controlled chronic rhinosinusitis with nasal polyps, had met all primary and secondary endpoints. The U.S. Food & Drug Administration regulator is expected to approve Dupixent for asthma treatment before the year -end. • Sears Holdings Corp (SHLD). A bankruptcy judge on Monday approved $300 million in financing to keep department store chain Sears open through the holiday season, giving the century -old retailer that once dominated U.S. shopping malls a chance to remain in business. "For somebody of my generation, Sears Roebuck was a big deal... Sears has been dying for many years, it has been obviously improperly run for many years, and it's a s hame," U.S. President Donald Trump told reporters on Monday. • Tesla Inc (TSLA). The company’s Chief Executive Officer Elon Musk said a new chip that improves autopilot features would be available in about six months in all of the company's new production electric cars. In a series of tweets, Musk said ..."~6 months before it is in all new production cars. No change to sensors. This is simple replacement of the Autopilot computer. Will be done free of charge for those who ordered full self -driving." Musk also tweeted that the new chip would improve the performance of Tesla's Autopilot between 500 percent and 2000 percent. • United States Steel Corp (X). The United Steelworkers (USW) union said on Monday it reached a tentative agreement with U.S. Steel Corp covering 16,000 workers across the country. The union has been negotiating with the Pittsburgh -based steelmaker for demands including higher wages. • Walmart Inc (WMT). The retailer lowered its earnings guidance for the year to include the impact from its acquisition of Indian e commerce company Flipkart. The company now expects to earn between $4.65 and $4.80 per share for fiscal 2019 from an earlier forecast of $4.90 and $5.05 per share.
COLUMN Oil prices ease as funds continue profit taking: Kemp -
Hedge fund managers have continued to take profits on their bullish positions in crude oil as the late summer rally has faded and fears about oil consumption and the state of the economy have replaced concerns over sanctions on Iran.
ANALYSTS' RECOMMENDATION • Aclaris Therapeutics Inc (ACRS). Jefferies raises price target to $33 from $30 expecting the company to benefit from its purchase of Rhofade drug from Allergan, used in the treatment of facial redness associated with rosacea in adults. • Bank of America Corp (BAC). KBW cuts target price to $34 from $35 saying that the despite beating expectations, the bank’s loan growth in the third-quarter was softer than expected and weighed on the stock. • Ceva Inc (CEVA): Canaccord Genuity raises target price to $40 from $36 anticipating improvement in the company’s royalty growth trends in 2019 and 2020. • Cummins Inc (CMI): Credit Suisse raises target price to $177 from $171 following the company’s announcement of an additional share repurchase worth $2 billion. • Netflix Inc (NFLX): Morgan Stanley cuts target price to $450 from $480 citing forex headwinds and higher marketing expenditure.
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MORNING NEWS CALL
ECONOMIC EVENTS (All timings in U.S. Eastern Time) 0915 Industrial production mm for Sep: Expected 0.2 pct; Prior 0.4 pct 0915 Capacity utilization SA for Sep: Expected 78.2 pct; Prior 78.1 pct 0915 Manufacturing output mm for Sep: Expected 0.2 pct; Prior 0.2 pct 0915 Industrial production (approx) year on year for Sep: Prior 4.88 pct 1000 JOLTS job openings for Aug: Expected 6.945 mln; Prior 6.939 mln -
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1000 NAHB Housing Market Index for Oct: Expected 67; Prior 67 1600 Net L T flows exswaps for Aug: Prior $74.8 bln 1600 Foreign buying, T bonds for Aug: Prior $18.9 bln -
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1600 Overall net capital flows for Aug: Prior $52.2 bln 1600 Net L T flows, including swaps for Aug: Prior $56.6 bln -
COMPANIES REPORTING RESULTS CSX Corp (CSX). Expected Q3 earnings of 94 cents per share Goldman Sachs Group Inc (GS). Expected Q3 earnings of $5.38 per share International Business Machines Corp (IBM). Expected Q3 earnings of $3.40 per share Lam Research Corp (LRCX). Expected Q1 earnings of $3.22 per share Netflix Inc (NFLX). Expected Q3 earnings of 68 cents per share Progressive Corp (PGR). Expected Se earnings of $1.12 per share United Continental Holdings Inc (UAL). Expected Q3 earnings of $3.07 per share W W Grainger Inc (GWW). Expected Q3 earnings of $3.94 per share
CORPORATE EVENTS (All timings in U.S. Eastern Time) 0800 Altaba Inc (AABA). Annual Shareholders Meeting 0800 Comerica Inc (CMA). Q3 earnings conference call 0830 BlackRock Inc (BLK). Q3 earnings conference call 0830 Johnson & Johnson (JNJ). Q3 earnings conference call 0830 Morgan Stanley (MS). Q3 earnings conference call 0830 Omnicom Group Inc (OMC). Q3 earnings conference call 0845 UnitedHealth Group Inc (UNH). Q3 earnings conference call 0930 First Horizon National Corp (FHN). Q3 earnings conference call 0930 Goldman Sachs Group Inc (GS). Q3 earnings conference call 1000 Domino's Pizza Inc (DPZ). Q3 earnings conference call 1100 W W Grainger Inc (GWW). Q3 earnings conference call 1200 Prologis Inc (PLD). Q3 earnings conference call 1630 CSX Corp (CSX). Q3 earnings conference call 1630 Interactive Brokers Group Inc (IBKR). Q3 earnings conference call 1700 International Business Machines Corp (IBM). Q3 earnings conference call 1700 Lam Research Corp (LRCX). Q1 earnings conference call 1800 Netflix Inc (NFLX). Q3 earnings conference call
EXDIVIDENDS Conagra Brands Inc (CAG). Amount $0.21 EOG Resources Inc (EOG). Amount $0.22 PNC Financial Services Group Inc (PNC). Amount $0.95
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MORNING NEWS CALL
PICTURE OF THE DAY
U.S. Secretary of State Mike Pompeo meets with Saudi Foreign Minister Adel al -Jubeir in Riyadh, Saudi Arabia, October 16. REUTERS/Leah Millis
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