Morning Briefing - Standard & Poor's
Morning Briefing - Standard & Poor's Morning Briefing - Standard & Poor's
On The Move Overseas• European stocks remain under pressure on Thursday, as rising tensions in North Africacontinue to quash sentiment. Crude prices soar, with WTI crossing the US$100/bbl mark,hitting transport and automobile stocks. The S&P Euro 350 is down 0.55%, extending itslosing streak to four sessions. Saudi Arabia's King Abdullah has announced financial supportworth c.GBP22bn in an attempt to avoid unrest in the country, the world's number one oilproducer, reports the FInancial Times.• In earnings updates, Royal Bank of Scotland (RBS LN GBP0.4559 ****) reports a FYoperating profit of GBP1.9bn,compared to 2009's loss of GBP6.1bn. FY attributable net losscame in at GBP1.125bn, as Irish impairments dragged numbers lower, although the bankmade a small profit in 4Q. The results fail to inspire investors, especially with major concernsremaining over Ireland.• On a more upbeat note, French bank Credit Agricole (ACA F EUR 12.26 ***) unveils asmaller-than-expected 4Q10 net loss of EUR 328m (vs. a profit of EUR 433m y/y) -consensus had seen a loss of EUR 402m. Says its solutions to meet Basel III rules will notrequire a capital increase.• Germany offers up some big name earnings. Among highlights, Allianz (ALV GY EUR 101.6*****) reports 2010 net profit of EUR 5.2bn, up 12% y/y, on revenues 9.3% higher at EUR106.5bn. The insurance behemoth proposes a dividend of EUR 4.50 per share, up 9.8%.Allianz shares are down over 3%.• In London, Capita (CPI LN GBP7.195 **) is a rare gainer as it reports FY PTP up 12%, withstrong forward visibility.S&P EQUITY RESEARCHOpinion on Shares of Concur Technologies UpgradedU.S.02/23/2011-02:17 PM ET--Pawan Girglani, S&P EditorialFEBRUARY 24, 2011 MORNING BRIEFING• S&P RAISES OPINION ON SHARES OF CONCUR TECHNOLOGIES (CNQR 50 ***) TOHOLD FROM SELL: CNQR shares recently traded near our 12-month target price of $50,and we now consider them as fairly valued. CNQR continues to invest in growth initiativeswhose benefit will likely aid growth in FY 12 (Sep.) and beyond. We still expect near-termsales growth to remain below the company's long-term 25% target, with sales projected torise 20% in FY 11 (Sep.) and 21% in FY 12. We expect near-term margins to be impacted byplanned investments and acquisition. We keep our non-GAAP EPS estimates of $0.48 in FY11 and $0.70 in FY 12, both after stock-compensation costs./Z. BokhariS&P U.S. equity research is available on the Research Notes page on MarketScope Advisor athttp://advisor.marketscope.com.2 OF 7
Europe02/23/2011-01:52 PM ET• OPINION ON SHARES OF FERROVIAL SA (FER SM EUR8.70 ***) UPPED: We upgradeour recommendation to Hold (***) from Strong Sell and increase our SOTP-based 12-monthtarget price to EUR9.00 (EUR6.80) after Ferrovial’s Q4 and FY 10 results beat our andBloomberg consensus estimates. Ferrovial’s ongoing asset sales to reduce project debtimprove potential for future infrastructure project investment. Higher asset prices raise ourestimate of Ferrovial’s equity stake in its portfolio of infrastructure assets (toll roads andairports), and along with increased estimates drive our target price higher. However, despitea EUR10.1 bln construction backlog, we think Ferrovial lags its European peers in theinternational arena. We expect curtailed services growth from European austerity measures,which combined with double-digit declines in domestic construction will likely cap share priceupside. Nevertheless, improving gearing and brighter long-term infrastructure prospects anda proposed DPS of EUR 0.30, mitigate downside risk, supporting our investment opinion./J.HingoraniAsia02/22/2011-01:52 PM ET• S&P LIFTS OPINION ON SHARES OF CAPITALAND (CAPL SP, SGD3.31 *****): We raiseour recommendation for CapitaLand (CAPL) a notch to 5-STARS (Strong Buy) with anunchanged 12-month target price of SGD5.00. The upgrade is based on valuation groundsand we maintain our positive view on the group’s medium-term earnings prospects. Webelieve CAPL offers investors an attractive value proposition, with multisector exposure toresidential, commercial, hospitality and retail segments as well as geographicaldiversification. / K. ChanS&P TRENDS & IDEASWaddell & Reed Advisors Value Fund02/23/2011-02:19 PM ETFEBRUARY 24, 2011 MORNING BRIEFING• Everyone loves a good deal, but finding one in the stock market isn't easy, especially with theDow Jones Industrial Average and S&P 500 Index both hovering near highs not seen sinceJune 2008. That's where people like Matthew Norris can be of help. For the past seven and ahalf years, Norris has managed the Waddell & Reed Advisors Value Fund, a mutual fundwhose winning performance versus its peer group, management tenure, and other factorshave garnered it a five-star ranking by S&P.• "I'm a traditional value investor," says Norris, who utilizes primarily a bottom-up analysis inselecting securities for the fund ("75% bottom up, 25% top down," he notes, to be morespecific). Backed by an assistant portfolio manager and a team of about 20 analysts whospecialize in various sectors, Norris seeks companies whose stocks are trading at prices atleast 30% below their intrinsic value. "When you're a value stock, there's something wrong,"he explains with regard to a gap that can develop between a security's market price and itsintrinsic value -- for any number of reasons. And here lies the field from which he minespotential candidates for the fund.This is an excerpt of the story, for the rest please visit the Trends & Ideas page on MarketScopeAdvisor at http://advisor.marketscope.com.3 OF 7
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On The Move Overseas• European stocks remain under pressure on Thursday, as rising tensions in North Africacontinue to quash sentiment. Crude prices soar, with WTI crossing the US$100/bbl mark,hitting transport and automobile stocks. The S&P Euro 350 is down 0.55%, extending itslosing streak to four sessions. Saudi Arabia's King Abdullah has announced financial supportworth c.GBP22bn in an attempt to avoid unrest in the country, the world's number one oilproducer, reports the FInancial Times.• In earnings updates, Royal Bank of Scotland (RBS LN GBP0.4559 ****) reports a FYoperating profit of GBP1.9bn,compared to 2009's loss of GBP6.1bn. FY attributable net losscame in at GBP1.125bn, as Irish impairments dragged numbers lower, although the bankmade a small profit in 4Q. The results fail to inspire investors, especially with major concernsremaining over Ireland.• On a more upbeat note, French bank Credit Agricole (ACA F EUR 12.26 ***) unveils asmaller-than-expected 4Q10 net loss of EUR 328m (vs. a profit of EUR 433m y/y) -consensus had seen a loss of EUR 402m. Says its solutions to meet Basel III rules will notrequire a capital increase.• Germany offers up some big name earnings. Among highlights, Allianz (ALV GY EUR 101.6*****) reports 2010 net profit of EUR 5.2bn, up 12% y/y, on revenues 9.3% higher at EUR106.5bn. The insurance behemoth proposes a dividend of EUR 4.50 per share, up 9.8%.Allianz shares are down over 3%.• In London, Capita (CPI LN GBP7.195 **) is a rare gainer as it reports FY PTP up 12%, withstrong forward visibility.S&P EQUITY RESEARCHOpinion on Shares of Concur Technologies UpgradedU.S.02/23/2011-02:17 PM ET--Pawan Girglani, S&P EditorialFEBRUARY 24, 2011 MORNING BRIEFING• S&P RAISES OPINION ON SHARES OF CONCUR TECHNOLOGIES (CNQR 50 ***) TOHOLD FROM SELL: CNQR shares recently traded near our 12-month target price of $50,and we now consider them as fairly valued. CNQR continues to invest in growth initiativeswhose benefit will likely aid growth in FY 12 (Sep.) and beyond. We still expect near-termsales growth to remain below the company's long-term 25% target, with sales projected torise 20% in FY 11 (Sep.) and 21% in FY 12. We expect near-term margins to be impacted byplanned investments and acquisition. We keep our non-GAAP EPS estimates of $0.48 in FY11 and $0.70 in FY 12, both after stock-compensation costs./Z. BokhariS&P U.S. equity research is available on the Research Notes page on MarketScope Advisor athttp://advisor.marketscope.com.2 OF 7
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