Watch these bank earnings

What to watch in bank space earnings reports

What to watch in bank earnings. Stockwinners.com
What to watch in bank earnings.

Bank of America (BAC) and Goldman Sachs (GS) are scheduled to report quarterly results on January 17, while Morgan Stanley (MS) is expected to report on January 18.

What to watch for:

1. TAX REFORM:

Goldman Sachs estimates that the enactment of the new tax legislation will result in a reduction of approximately $5B in the firm’s earnings for Q4 and year ending December 31, 2017, approximately two-thirds of which is due to the repatriation tax.

The remainder includes the effects of the implementation of the territorial tax system and the re-measurement of U.S. deferred tax assets at lower enacted corporate tax rates.

Earlier this month, Morgan Stanley (MS) said it also estimates the net income for the quarter ending December 31, 2017 will include an aggregate net discrete tax provision of approximately $1.25B, comprised of an approximate $1.4B net discrete tax provision as a result of the enactment of the Tax Cuts and Jobs Act, primarily from the re-measurement of certain net deferred tax assets using the lower enacted corporate tax rate, partially offset by an approximate $160M net discrete tax benefit, primarily associated with the re-measurement of reserves and related interest relating to the status of multi-year Internal Revenue Service tax examinations.

2. CRYPTOCURRENCY:

On December 14, Bloomberg reported that Goldman Sachs is seeking a 100% margin on some bitcoin future trades deterring some customers from looking to clear their trades through the bank and resulting in some taking their business elsewhere.

A week later, the publication said the bank was establishing a trading desk to make markets in digital currencies such as bitcoin. The company intends to get the business running by the end of June, if not earlier, the report added.

Also last month, Morgan Stanley said in a regulatory filing that it had purchased an 11.4% stake in Overstock (OSTK), which launched cryptocurrency trading with its tZERO subsidiary.

3. FAVORABLE OUTLOOK:

On November 29, JPMorgan analyst Kian Abouhossein raised his price target for Goldman Sachs to $270 from $263 and called it his top investment banking pick for 2018.

The analyst said he is more positive around the strength of the franchise and believes its fixed income, currencies and commodities business revenue growth opportunity of $1B-plus is more likely to be achieved. Goldman has shown “excellent progress” when it comes to delivering shareholder value, #Abouhossein contended.

Last month, BofA/Merrill analyst Michael #Carrier added Goldman Sachs to the U.S. 1 List, citing an increasing favorable outlook with rising GDP growth, favorable risk/reward, low expectations, and potential catalysts from de-regulation, tax reform, and increased volatility.

Carrier reiterated a Buy rating on the stock and raised his price target on the shares to $300 from $290.

4. BREXIT

On November 20, Goldman Sachs CEO Lloyd Blankfein said the bank will have two EU hubs, in Frankfurt and Paris, post-Brexit, according to Reuters. “We will have more employees on the continent. Some, if they want to, would come from London, we will hire others,” Blankfein said.

“Brexit pushes us to decentralize our activities. In the end, it’s the people who will largely decide where they prefer to live.”


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Blackhawk Network sold for $3.5 billion

Blackhawk to be acquired by Silver Lake, P2 Capital Partners for $45.25 a share

 

Blackhawk Network sold for $3.5 billion. Stockwinners.com
Blackhawk Network sold for $3.5 billion

Blackhawk Network (HAWK) announced that Silver Lake, the global leader in technology investing, and P2 Capital Partners have agreed to acquire Blackhawk in an all-cash transaction for a total consideration of approximately $3.5 billion, which includes Blackhawk’s debt.

Under the terms of the agreement, Blackhawk stockholders will receive $45.25 per share in cash upon closing of the transaction, representing a premium of 24.0% over Blackhawk’s closing share price of $36.50 on January 12, 2018 and a premium of 29.3% over the average closing share price during the 90 calendar days ended January 12, 2018.

Blackhawk operates a leading physical and digital gift card and prepaid payments network with global scale, connecting more than 1,000 brands to over 244,000 retail distribution locations and online channels.

Upon completion of the transaction Blackhawk will operate as a private company under the leadership of the current management team.

Blackhawk’s Board of Directors has unanimously approved the definitive merger agreement and recommends that stockholders vote in favor of the transaction.

The definitive agreement has fully committed debt and equity financing, including an approximately $1.7 billion equity commitment from Silver Lake.

P2 Capital Partners, which beneficially owns approximately 5.4% of Blackhawk’s outstanding common stock, has committed to vote in favor of the proposed transaction.


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Worldwide IT spending to reach $3.7T in 2018

Gartner says worldwide IT spending to reach $3.7T in 2018 

worldwide IT spending to reach $3.7T in 2018. Stockwinners.com
Worldwide IT spending to reach $3.7T in 2018

Worldwide IT spending is projected to total $3.7 trillion in 2018, an increase of 4.5 percent from 2017, according to the latest forecast by Gartner, Inc.  (IT)

“Global IT spending growth began to turn around in 2017, with continued growth expected over the next few years. However, uncertainty looms as organizations consider the potential impacts of Brexit, currency fluctuations, and a possible global recession,” said John-David Lovelock, research vice president at Gartner.

“Despite this uncertainty, businesses will continue to invest in IT as they anticipate revenue growth, but their spending patterns will shift.

Projects in digital business, blockchain, Internet of Things, and progression from big data to algorithms to machine learning to artificial intelligence (AI) will continue to be main drivers of growth.”

The devices segment is expected to grow 5.6 percent in 2018. In 2017, the devices segment experienced growth for the first time in two years with an increase of 5.7 percent.

End-user spending on mobile phones is expected to increase marginally as average selling prices continue to creep upward even as unit sales are forecast to be lower.

PC growth is expected to be flat in 2018 even as continued Windows 10 migration is expected to drive positive growth in the business market in China, Latin America and Eastern Europe.

The impact of the iPhone 8 and iPhone X was minimal in 2017, as expected. However, iOS shipments are expected to grow 9.1 percent in 2018.


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MGM Growth offers to buy VICI Properties for $19.50 per share

MGM Growth offers to buy VICI Properties for $19.50 per share

MGM Growth offers to buy VICI Properties for $19.50 per share. Stockwinners.com
MGM Growth offers to buy VICI Properties for $19.50 per share

MGM Growth Properties (MGM) announced that it sent a letter to the CEO and the Chairman of the Board of Directors of VICI Properties (VICI) proposing to acquire 100% of VICI’s outstanding common stock for $19.50 per share, and to date, VICI has elected not to engage in meaningful discussions.

MGP believes that a proposed combination is extremely attractive strategically and financially for both VICI and MGP. MGP is making its proposal public in an effort to engage and move forward quickly to consummate a transaction.

Under the terms of the proposal, the consideration would be in the form of MGP shares, with the exchange ratio fixed at signing of a definitive agreement.

If desired by VICI shareholders, MGP would be willing to offer a portion of the consideration in the form of cash. Upon completion of the proposed transaction, VICI shareholders would own approximately 43% of the combined company assuming an all-stock transaction and based on MGP’s current share price.

MGM Growth Properties has substantial financial resources to complete the transaction and its offer is not contingent on any financing condition.

Any transaction would be subject to regulatory and shareholder approvals and other customary closing conditions.

MGM Growth Properties believes that a combination with VICI would be accretive to AFFO and represents a compelling opportunity to create significant value for both companies’ respective shareholders.

The combination of the Company and VICI would create the largest triple-net lease REIT and a Top 15 public REIT in the RMZ by enterprise value.

The combined company will have a leading portfolio of premier large scale destination leisure, entertainment and hospitality assets with even greater geographic, asset and tenant diversity.

The combination would also establish a larger combined company with greater efficiencies and an enhanced financial profile that in our view will provide a better path toward maximizing the value of future growth opportunities.

In addition, the ownership in the combined company would enable VICI shareholders to participate meaningfully in the benefits of the transaction, including synergies, a potential trading multiple expansion, more efficient cost of capital and additional liquidity in a significantly larger company.

Furthermore, MGM Growth Properties strongly believes that its proposal provides VICI shareholders with clear value without the execution risk associated with VICI’s proposed public offering, particularly given the fees, discounts, dilution, lock-ups, risks and uncertainties associated with such an offering.


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