BabyRuth is For Sale!

Nestle to explore strategic options for its US confectionery business

Brands for sale include Butterfinger, BabyRuth, 100Grand, SkinnyCow, Raisinets, Chunky, OhHenry! and LaffyTaffy

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Nestle (NSRGY) to explore strategic options for its US confectionery business, including a potential sale.

The review covers the US market only and is expected to be completed by the end of this year. Nestle’s US confectionery business had sales of around CHF 900M in 2016.

It primarily includes popular local chocolate brands such as #Butterfinger, #BabyRuth, 100Grand, SkinnyCow, Raisinets, Chunky, OhHenry! and SnoCaps, as well as local sugar brands such as SweeTarts, #LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts.

It also comprises the international chocolate brand #Crunch.

The strategic review does not cover Nestle’s Toll House baking products, a strategic growth brand which the company will continue to develop in the US market.

Nestle remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand #KitKat.

Nestle’s global confectionery sales amounted to CHF 8.8B in 2016.

Potential buyers include Hershey’s (HSY), Carlisle Group Kraft-Heinz (KHC), and Warren Buffett’s Berkshire Hathaway (BRK-B).

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Adamis Shares Jump on FDA approval of its EpiPen equivalent

FDA grants Adamis Pharma. approval for generic version of Epi Pen

Mylan shares are down on the news

 

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Adamis Pharmaceuticals (ADMP) announced that the U.S. Food and Drug Administration has approved Adamis’ Epinephrin Injenction, USP, 1:1000 for the emergency treatment of allergic reactions including anaphylaxis.

The FDA has also approved the PFS trade name of #Symjepi. Symjepi provides two single dose syringes of epinephrine, which is considered the drug of choice for immediate administration in acute anaphylactic reactions to insect stings or bites, allergic reaction to foods, drugs and other allergens, as well as idiopathic or exercise-induced anaphylaxis.

Dr. Dennis J. Carlo, President and CEO of Adamis, stated, “We are very excited by this approval, and at the same time, are already preparing to submit our second NDA to the FDA.  This second submission is for the junior version of Symjepi. We are committed to helping patients by providing them with additional therapeutic choices.  With an anticipated lower cost, small size and user-friendly design, we believe Symjepi could be an attractive option for a significant portion of both the retail and non-retail (professional) sectors of the epinephrine market. We are currently in the process of exploring all of our commercialization options and in discussions with potential partners in order to facilitate broad patient access to this new epinephrine treatment option and to maximize the value of our important asset. In the interim, we expect to build inventory levels in preparation for an anticipated launch in the second half of this year.”

Mylan (MYL) shares are down 3% to $36.75. ADMP shares are up 30% to $5.00

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Wabco Could be Sold!

A tech company with autonomous truck ambitions could buy Wabco

Piper raised its price target for Wabco shares to $143

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With disruption seen in the automotive market amid the development of connected and autonomous vehicle technology, Piper Jaffray analyst Alexander Potter said he expects the trucking sector to follow suit, leaving Wabco Holdings (WBC) as the only truck stock that he views as worth owning.

BIG TECH EYES TRUCKS

As tech companies develop self-driving technology, Tesla (TSLA) and Amazon (AMZN) are making moves that analysts believe could potentially disrupt the trucking space.

In April, Tesla CEO Elon Musk tweeted, “Tesla Semi truck unveil set for September,” after originally announcing the electric truck in his “Master Plan, Part Deux,” released in July, writing it “will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate.”

Meanwhile in December, Amazon was said to be developing an app, expected to launch this summer, which will connect truckers and shippers in much the same way that Uber connects drivers and riders.

“ONLY” TRUCK STOCK WORTH OWNING

Piper’s Potter raised his price target for Wabco shares to $143 from $129 in a note to investors this morning, saying the company’s upcoming analyst day should illuminate the point that it will benefit, not be disrupted by, secular trends in the industry.

A tech company with autonomous truck ambitions could buy Wabco and then use its “dominant position” in braking/stability control to drive standardization around a suite of self-driving algorithms, the analyst argues.

However, technology companies might not consider purchasing Wabco as they have often preferred to partner with automotive suppliers in order to focus on developing software or operating systems, Potter said, but added investors underestimate the role of electronics and software/controls in Wabco products.

Ignoring a potential takeover, the analyst still believes investors should buy Wabco to benefit from growth themes like automation and connectivity. Potter said even without the self-driving, connected vehicles trend, he expects Wabco’s revenue-per-vehicle-produced to continue to rise, the European truck cycle to recover following French elections and sees upside in China during the year. He keeps an Overweight rating on the shares.

OTHERS TO WATCH

Other publicly traded companies in the trucking and logistics space include C.H. Robinson (CHRW), ArcBest (ARCB), J.B. Hunt (JBHT), Echo Global (ECHO), Expeditors (EXPD), Knight Transportation (KNX), Old Dominion (ODFL), Swift Transportation (SWFT), Werner (WERN) and XPO Logistics (XPO).

PRICE ACTION

Wabco rose 0.1% to $121.68 in early afternoon trading. Shares have a 52-week trading range of $84.48 – $126.07.

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Nike to reduce its styles by 25%

Nike to cut 2% of global workforce

Under Armour estimates lowered at Susquehanna

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Nike ( $NKE ), a Dow Jones industrial average component, is in focus today after the company announced a new business structure, which involves cutting 2% of its overall workforce. Nike had more than 70,000 employees at the end of fiscal 2016.

#Nike intends to boost its revenue to $50 billion by the end of fiscal 2020, with North America making up 40% of that target.

REALIGNMENT

Nike announced a new alignment structure called the Consumer Direct Offense, which includes cutting its global workforce by approximately 2%.

“Nike’s leadership and organizational changes will streamline and speed up strategic execution,” the company said in a statement.

 

As a result of the new alignment, Nike will reduce its styles by 25% and attempt to cut product creation cycle times in half.

Nike also said it will create the Nike Direct organization, which will be led by Heidi O’Neill, President of Nike Direct, and Adam Sussman, Chief Digital Officer.

The changes are intended to “streamline and speed up strategic execution,” said Nike in a press release. Its new “consumer direct offense” targets a dozen cities — New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan — that are seen accounting for over 80% of its growth through 2020.

WHAT’S NOTABLE

Piper Jaffray analyst Erinn Murphy said earlier this month that she believes Nike’s innovation pipeline “has paused” while competition “remains fierce.”

In April, Nike posted third quarter revenue slightly below consensus expectations and said worldwide futures orders were down 1%, excluding the impact of currency.

The apparel maker, however, beat earnings per share estimates for the quarter. Nike is expected to report fourth quarter earnings on June 29.

COMPETITION

Nike competes most directly in the space with adidas (ADDYY) and Under Armour (UAA, UA). Separately, Under Armour got an estimate cut as one analyst says stores are “likely canceling” product orders.

#Susquehanna analyst Sam Poser told investors to sell Under Armour due to poor product segmentation in the moderate channel, which he sees pressuring its top line and margins. The analyst said sports retailers are planning the Under Armour business down because of the poor product segmentation and he said the top line may be pressured even if the Curry 4 sneaker lives up to expectations.

Nike (NKE) shares are down 2.7% in Thursday’s trading to $53.18.

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Qatar to Buy 36 F-15 for $12 billion

Qatar signed a deal to buy as many as 36 F-15 Boeing jets

Congress last year approved sale of as many as 72 F-15s to Qatar

 

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Qatar signed a deal to buy as many as 36 F-15 jets from the U.S. as the two countries navigate tensions over President Donald Trump’s backing for a Saudi-led coalition’s move to isolate the country for supporting terrorism.

The sale “will give Qatar a state of the art capability and increase security cooperation and interoperability between the United States and Qatar,” the Defense Department said in a statement.

Congress last year approved sale of as many as 72 F-15s in an agreement valued at as much as $21 billion, providing authorization for the deal completed yesterday. But that was before Qatar’s neighbors, including Saudi Arabia and United Arab Emirates, severed diplomatic, trade and transport links last week in a move they said was aimed at isolating the country for its support of terrorist groups and Iran.

The F-15 sale highlights the complex position the Trump administration finds itself in, forced to balance its focus on fighting terrorism against regional rivalries between key allies. Qatar hosts the regional headquarters for U.S. Central Command, which includes a state-of-the-art air base the U.S. depends on to target Islamic State.

Qatar’s Defense Ministry said the deal would create 60,000 jobs in 42 U.S. states while reducing the burden on U.S. forces. The F-15 accord will lead to “closer strategic collaboration in our fight to counter violent extremism and promote peace and stability in our region and beyond,” the ministry said in a statement.

Last year, after the State Department approved the jet sale, the Defense Security Cooperation Agency issued a report saying that the proposed sale “enhances the foreign policy and national security of the United State by helping to improve the security of a friendly country and strengthening our strategically important relationship.”

The McDonnell Douglas F-15 Eagle is now owned by Boeing (BA) has been exported to Israel, Japan, and Saudi Arabia.

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Bank of England keeps rates unchanged

The Bank of England’s kept rates unchanged at 0.25%

Bond Buyback to continue at GBP 10B

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The Bank of England’s Monetary Policy Committee voted by a majority of 5-3 to maintain Bank Rate at 0.25%.

The split among Bank of England policy makers widened this month as three officials called for a rate increase, warning that inflation could rise more than previously thought.

The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at GBP 10B.

The Committee also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at GBP 435B.

The pound jumped after the decision and was up 0.24 percent at $1.2781. Bonds fell, with the 10-year gilt yield rising 9 basis points to 1.01 percent.

Citing the pound’s recent decline, the BOE said inflation could overshoot the 2 percent target by more than previously thought. The three hawks also said that slack in the labor market appeared to have diminished.

For the majority, reasons for keeping policy unchanged included slowing consumer spending and economic growth.

The outcome of the U.K. vote complicates the prospects for Brexit talks. When the BOE updated its economic forecasts last month, it assumed that Britain’s adjustment to a new relationship with the European Union will be “smooth” — avoiding a so-called cliff edge.

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