Novadaq sold for $701 million

Stryker to buy Novadaq for $701M

The transaction will be carried out by way of a court approved plan of arrangement under the Canada Business Corporations Act

PKI to buy NVDQ on Stockwinners blog

#Novadaq Technologies (NVDQ) announced that it has entered into a definitive arrangement with Stryker (SYK) pursuant to which Stryker has agreed to acquire all of the issued and outstanding shares of Novadaq for $11.75 per share in cash, implying a total equity value of approximately $701M.

Novadaq Technologies Inc. develops, manufactures, and markets fluorescence imaging products for use by surgeons in the operating room and other clinical settings in the United States and internationally. The company offers SPY Elite, a fluorescence imaging system that enables surgeons performing open procedures, such as breast and other reconstruction, gastrointestinal, and cardiothoracic surgery, to visualize microvascular blood flow and perfusion in tissue intraoperatively. It also provides PINPOINT endoscopic fluorescence imaging systems; LUNA fluorescence angiography system that provides clinicians with real-time visualization of tissue perfusion in patients.

Stryker Corporation (SYK) operates as a medical technology company.

The transaction will be carried out by way of a court approved plan of arrangement under the Canada Business Corporations Act and will require the approval of, among others, the holders of at least 66 2/3% of the Novadaq Shares present in person or represented by proxy at a special meeting of Novadaq shareholders to be called to consider the Arrangement.

The Special Meeting is expected to be held on or about August 4.

Novadaq’s board and the Special Committee have also received a fairness opinion from each of Piper Jaffray and Perella Weinberg Partners in connection with the Arrangement to the effect that, as of the date of such opinions, and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by Novadaq’s shareholders pursuant to the Arrangement is fair from a financial point of view.

In addition to shareholder and court approvals, the Arrangement is subject to applicable regulatory approvals, including Canadian Competition Act and U.S. Hart-Scott-Rodino approvals, and the satisfaction of certain other closing conditions customary in transactions of this nature. The transaction is not subject to a financing condition.

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PerkinElmer to buy EUROIMMUN for $1.3B in cash

PerkinElmer to buy Germany’s EuroImmun for $1.3B in cash

PerkinElmer reaffirms its 2017 revenue and EPS guidance

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PerkinElmer (PKI) announced that it has entered into a definitive agreement to acquire EUROIMMUN Medical Laboratory Diagnostics AG. The agreement provides that PerkinElmer will acquire up to a 100% stake in EUROIMMUN.

The total purchase price of the transaction based on all outstanding shares being acquired will be approximately $1.3B in cash.

EUROIMMUN is based in Lubeck, Germany, with approximately 2,400 employees. The company has extensive expertise and capabilities across immunology, cell biology, histology, biochemistry and molecular biology.

EUROIMMUN is expected to generate approximately $310M in revenue this year, and over the last five years, the company has averaged revenue growth of 19%.

In 2016, the company generated sales in more than 130 countries worldwide, with approximately 45% of revenues in China, 30% in Europe, Middle East & Africa, 5% in the Americas and 20% in Rest of World.

The transaction is subject to customary closing conditions and is currently anticipated to close in the fourth quarter of 2017 following the receipt of required standard regulatory approvals. The acquisition is expected to be accretive to PerkinElmer’s 2018 non-GAAP EPS results by approximately 28c-30c. Additionally, PerkinElmer is reaffirming its 2017 revenue and EPS guidance.

PerkinElmer is reaffirming its 2017 revenue and EPS guidance following the  announcement of the EUROIMMUN acquisition.

PerkinElmer, Inc. provides products, services, and solutions to the diagnostics, research, environmental, industrial, food, and laboratory services markets worldwide. The company operates through two segments, Discovery and Analytical Solutions and Diagnostics.

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Clovis Oncology reports positive ovarian cancer results, Shares Soars

Clovis Oncology  announced topline data from the confirmatory phase 3 #ARIEL3 trial of rucaparib, which successfully achieved the primary endpoint for Ovarian Cancer.

Shares of competitor Tesaro (TSRO) tumble on the news

CLVS to submit NDA to FDAShares of Clovis Oncology (CLVS) are surging after the company this morning announced topline data from the confirmatory phase 3 ARIEL3 trial of rucaparib, which successfully achieved the primary endpoint of improved progression-free survival, or PFS, by investigator review in each of the three populations studied.

Clovis Oncology (CLVS) announced topline data from the confirmatory phase 3 #ARIEL3 trial of rucaparib, which successfully achieved the primary endpoint of improved progression-free survival, or #PFS, by investigator review in each of the three populations studied. PFS was also improved in the rucaparib group compared with placebo by blinded independent central review, or #BICR, a key secondary endpoint.

Based on these findings, the company plans to submit a supplemental New Drug Application, or sNDA, within the next four months for a second-line and later maintenance treatment indication for all women with platinum-sensitive ovarian cancer who have responded to their most recent platinum therapy. #NDA

“We are very pleased with these positive #ARIEL3 topline results that strongly demonstrate the potential of rucaparib to help women with platinum-sensitive, advanced ovarian cancer,” said Patrick Mahaffy, President and CEO of Clovis Oncology.

“These results reinforce the potentially foundational role of #rucaparib in the management of advanced ovarian cancer, as demonstrated by both investigator review and the blinded independent central review. Most importantly, we are grateful to the patients, caregivers and investigators who participated in this study. We look forward to sharing these data in greater detail at a medical meeting later this year and submitting our sNDA as rapidly as possible, with the ultimate goal of making rucaparib available to more women battling ovarian cancer.”

Possible $40 Gain

Janney Capital’s analyst Debjit #Chattopadhyay previewed some potential outcomes for the release of topline data from Clovis’ (CLVS) ARIEL3 trial, which is expected over the next two weeks. If Hazard Ratios in g+sBRCA patients are in below 0.3, he sees Clovis shares potentially trading up to $85-$100 per share, which, at the high end, would be about $40 above Clovis’ Friday closing price of $60.

In such a scenario, he thinks competitor Tesaro (TSRO) sliding to $80-$90. With HRs in the range of 0.3-0.35, which he gives a 70% probability of occurring, he sees Clovis trading at $75-$85 and Tesaro falling to $90-$100. Tesaro has a competing drug for ovarian cancer.

PRICE ACTION

In pre-market trading on Monday, CLVS is up $26 to $86.00 in heavy trading. TSRO is down $16 to $128.

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Amazon’s Move on Whole Foods Creates Opportunities

Shares of virtually every major retailer that sells food is lower

Shares of Impinj (PI) surged after Amazon’s announcement

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Shares of virtually every major retailer that sells food – including Wal-Mart (WMT), Target (TGT), Costco (COST), Kroger (KR), Sprouts Farmers Market (SFM), Dollar General (DG) and Dollar Tree (DLTR) – are down after Amazon (AMZN) announced it will acquire Whole Foods Market (WFM).

BACKGROUND

Amazon and Whole Foods announced a definitive merger agreement under which Amazon will buy the natural and organic grocery chain for $42 per share in a transaction valued at approximately $13.7B, including debt. Whole Foods Market will continue to operate stores under the Whole Foods Market brand and “source from trusted vendors and partners around the world,” the company stated. John Mackey will remain as CEO of Whole Foods Market and Whole Foods Market’s headquarters will stay in Austin, Texas. The parties expect to close the transaction during the second half of 2017.

JANA PUSH FOR SALE

The news comes after activist investor JANA Partners took an 8.3% stake in the grocery chain in April urging it to address chronic underperformance for shareholders, change the board and senior management, optimize real estate and capital allocation strategies and pursue opportunities to improve performance. Whole Foods restructured its board in May, appointing five new independent directors, which pleased JANA, but the investor remained skeptical of the company’s operational plan and had concerns about a lack of grocery experience on the board.

Speaking in an interview with Texas Monthly just this week, Whole Foods CEO John Mackey said: “Yes, we need to evolve. We need to get better, and we’re doing that. But these guys [JANA] just want to sell us, because they think they can make forty or fifty percent in a short period of time. They’re greedy bastards, and they’re putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it’s in their self-interest to do so.”

STOCK TO WATCH

Shares of Impinj (PI) surged after Amazon’s announcement due to a small connection between the RFID technology maker and Amazon. Impinj manufactures non-volatile-memory chips and radio frequency chips that are used in “tags” that can be attached to objects, and it also makes wireless scanning devices to read those tags at a distances, including for inventory management for groceries. Amazon is a member of Impinj’s industry group to promote RFID tech, though it is not yet clear if Amazon will utilize the startup’s technology

PRICE ACTION

In Friday’s trading, Wal-Mart fell over 6%, Target dropped more than 10%, Costco declined 7% and Kroger, which also cut its fiscal year profit outlook along with its earnings report last night, plunged 14%. Meanwhile, Whole Foods shares are up 27% to $41.94 and Amazon has risen 3% to $993.14 per share.

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Amazon to acquire Whole Foods for $42 per share

Amazon will acquire Whole Foods Market for $13.7 billion in cash

John Mackey will remain as CEO of Whole Foods Market

Amazon to buy Whole Foods

Amazon (AMZN) and Whole Foods Market (WFM) announced that they have entered into a definitive merger agreement under which Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7B, including Whole Foods Market’s net debt.

Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world.

John Mackey will remain as CEO of Whole Foods Market and Whole Foods Market’s headquarters will stay in Austin, Texas.

Completion of the transaction is subject to approval by Whole Foods Market’s shareholders, regulatory approvals and other customary closing conditions.

The parties expect to close the transaction during the second half of 2017.

Amazon (AMZN) said Whole Foods (WFM) “will be obligated to pay a fee equal to $400M if the Merger Agreement is terminated (i) by the company because the Whole Foods Market board of directors has changed its recommendation of the Merger prior to the Whole Foods Market shareholder approval having been obtained, or (ii) by Whole Foods Market if, prior to the time the Whole Foods Market shareholder approval is obtained, Whole Foods Market enters into an Alternative Acquisition Agreement that provides for a Superior Proposal.

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Weight Watchers Higher on Insider Buy

Weight Watchers said in a regulatory filing that its general counsel purchased 7,110 shares in the company

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Weight Watchers (WTW) shares are getting a boost following a filing by the company’s general counsel showing he purchased shares in the weight loss company.

SHARE PURCHASE

Weight Watchers said in a regulatory filing on Thursday afternoon that general counsel Michael Colosi purchased 7,110 shares in the company.

RECENT COMPANY NEWS

In May, the Oprah Winfrey-backed diet company posted a surprise profit for the first quarter and reported revenue that also beat analysts’ expectations.

The company also said it ended the quarter with 3.6M subscribers, up 16% from a year ago. The gains prompted the company to raise its earnings per share view for fiscal year 2017.

Weight Watchers has been on a turnaround track since Winfrey took a stake in the company and agreed to become a company spokesperson in October 2015.

In addition to “the Oprah Effect,” CFO Nick Hotchkin said the company is retaining customers through technology investments and an improved weight loss program.

New CEO

Weight Watchers announced in late April that Mindy Grossman, CEO of HSN, Inc (HSNI), would join the company as president and CEO in July. The company had been seeking a replacement for Jim Chambers, who resigned in September 2016.

Weight Watchers recently announced results from a two-year study published in The Lancet which found that adults with obesity referred to Weight Watchers for one year lost significantly more weight and were able to keep it off for longer “compared to those who either received brief advice and self-help materials, or were referred to a 12-week Weight Watchers program.” Those on both the 12- and 52-week Weight Watchers program also had greater blood sugar control and greater reductions in body fat than those on the brief intervention program.

PRICE ACTION:

Weight Watchers closed on Thursday up 6.3% at $28.80, just off the 52-week high of $28.95 hit during the session.

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SS&C Technologies is For Sale

SS&C Technologies (SSNC) has recently reached out to several private equity firms to gauge interest

Carlyle Group LP paid about $942 million to take the company private in November 2005 and brought the company public in 2010

 

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SS&C Technologies Holdings Inc. (SSNC) has recently reached out to several private equity firms to gauge interest in a buyout of the financial software and services provider, reports Bloomberg.

SS&C Technologies Holdings, Inc. provides software products and software-enabled services to financial service providers in North America, Europe, Asia, Australia, and Africa. Its products and services allow its clients to automate and integrate front-office functions, such as trading and modeling; middle-office functions comprising portfolio management and reporting; and back-office functions, including accounting, performance measurement, reconciliation, reporting, processing, and clearing.

High Valuation

The company’s management team has so far failed to move beyond preliminary talks with buyout firms, which have balked at SS&C’s high valuation, the people said, asking not to be identified as the discussions aren’t public. Shares are trading close to all-time highs at $38.40, giving it a market value of about $7.8 billion.

SS&C has previously been under private equity ownership. Carlyle Group LP paid about $942 million to take the company private in November 2005. Carlyle held an initial public offering of the company in 2010, retaining a stake before fully exiting its position in 2013.

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Brookdale Senior Living is For Sale!

Brookdale entered exclusive talks with China’s Zhonghong Zhuoye Group

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Zhonghong Zhuoye Group, which acquired a stake in SeaWorld Entertainment (SEAS) last month, is in discussions to acquire Brookdale Senior Living (BKD), Reuters reports, citing people familiar with the matter.

The deal would be the largest takeover by a Chinese group in the U.S. senior care sector, and a test of the U.S. government’s openness to Chinese investments in healthcare services sectors, the report says.

Brookdale Senior Living Inc. owns and operates senior living communities in the United States. It operates through five segments: Retirement Centers, Assisted Living, CCRCs Rental, Brookdale Ancillary Services, and Management Services.

Brookdale entered exclusive talks with Zhonghong after the real estate and leisure group submitted a bid of roughly $3B, and after Brookdale drew offers from other parties that valued it at substantially below that, the report notes.

Brookdale has entered exclusive negotiations with Zhonghong after it made an offer of around $3 billion after receiving offers from other parties that valued it substantially below that, the people said on Tuesday.

BKD last traded at $14.49.

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Buy McDonald’s, Sell Sonic

Merrill Lynch raised McDonald’s price target to $175

Merrill Lynch downgraded Sonic two notches

 

Noting fast-food stocks have recently had a “strong run,” citing factors including fund flows out of retail stocks and into restaurants and positive sales trends in the category, Bank of America Merrill Lynch analyst Gregory #Francfort raised price targets across the space.

However, he downgraded Sonic (SONC) to a sell-equivalent rating, citing the increasing aggressiveness of McDonald’s (MCD), which the analyst still views as a top pick.

SELL SONIC

Francfort downgraded Sonic two notches to Underperform from Buy but raised its price target to $30 from $27. The analyst said the downgrade is not a call on the quarter, as the company reports on June 22, and he sees limited downside to Q3 and Q4.

However, he notes shares are up 29% since March 21 and Francfort is concerned about 2018 earnings as McDonald’s is becoming more aggressive. He believes shares should trade at a discount to peers due to slower unit growth and higher capital intensity.

TOP PICK

Francfort continues to view McDonald’s as a top pick and sees further upside from aggressive value plans slated for early 2018 and unit economics.

The fast-food chain announced a 55% reimage contribution to support a value menu based around $1, $2 and $3 price points, which could encourage franchisees to co-invest in price aggressiveness, Francfort writes.

The analyst said McDonald’s is one of the few restaurant companies that can increase franchisee economics through lower price points and can get more aggressive than peers due to higher margins.

He added while unit growth for the chain is now negative, McDonald’s continues “to screen cheap” on a relative basis compared to other highly franchised restaurant stocks.

Francfort raised McDonald’s price target to $175 from $165 based on FY18 earnings and reiterated his Buy rating.

OTHERS TO WATCH

Other notable stocks in the fast-food space include Domino’s Pizza (DPS), Dunkin’ Brands (DNKN), Jack in the Box (JACK), Restaurant Brands International (QSR), Wendy’s (WEN) and Yum! Brands (YUM).

PRICE ACTION

Sonic rose 0.3% to $29.38, while McDonald’s gained 0.8% to $149.65.

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Mallinckrodt is In Play

Mallinckrodt continues to look at a range of strategic options to deliver shareholder value

Management detailed Mallinckrodt’s relationship with Express Scripts and explained that it is not strained

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After hosting Mallinckrodt’s CEO Mark Trudeau for an open Q&A session, Wells Fargo analyst David Maris says Mallinckrodt (MNK) continues to look at a range of strategic options to deliver shareholder value, and that all options, including going private, are on the table.

Mallinckrodt develops, manufactures, markets, and distributes branded and generic specialty pharmaceutical products and therapies in the United States, Europe, the Middle East, Africa, and internationally.

Management did an “excellent job” in correcting the record following “erroneous” short-seller presentations, Maris tells investors in a research note.

Management detailed Mallinckrodt’s relationship with Express Scripts (ESRX) and explained that it is not strained, Maris writes.

The analyst notes Trudeau spoke with Express Scripts CEO Timothy Wentworth a week ago about the relationship and that it seems “solid and mutually positive,” despite recent negative comments about Acthar from the pharmacy benefit manager’s Chief Medical Officer.

Maris has an Outperform rating on Mallinckrodt with an $83.50 price target.

As the Wall Street Journal’s Charley Grant points out on Twitter, Mallinckrodt said last month at a conference that it is exploring options to drive shareholder value.

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Apple is building an autonomous car system

Apple CEO Tim Cook said the company is focusing on developing an autonomous car system

The iPhone maker had hired more than 1,000 engineers to work on Project Titan

 

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Apple (AAPL) CEO Tim Cook said the company is focusing on developing an autonomous car system in his most detailed comments on the tech giant’s automotive plans after hiring roughly 1,000 engineers to work on ‘Project Titan,’ in 2014, Bloomberg reports, citing an interview with Cook.

The company, which originally sought to build its own self-driving car, is shifting its focus to the underlying technology as Alphabet’s (GOOG, GOOGL) Waymo unit has partnered with Fiat Chrysler Automobiles (FCAU) and Lyft to develop the technology and automakers from BMW (BMWYY) to General Motors (GM) seek to acquire autonomous vehicle startups.

The iPhone maker had hired more than 1,000 engineers to work on Project Titan, as the car team is known internally, after it started in 2014.  Apple secured a permit from the California Department of Motor Vehicles in April to test three self-driving sports-utility vehicles, photos of which emerged several weeks later.

A half-dozen vehicles had been surreptitiously testing the autonomous technology on public roads in and around the San Francisco Bay area for at least a year, according to someone familiar with Project Titan.

In December, Steve Kenner, Apple’s director of product integrity, wrote a letter to the National Highway Traffic Safety Administration revealing the company’s interest in automotive technology. In the letter, Kenner wrote about the company’s excitement surrounding the potential for automated systems in fields like transportation.

Stocks to Watch

Shares to watch include: GOOG, TSLA, AAPL, INTC, and NVDA.

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U.S. Silica to Expand in West Texas

The $225M project will be funded from cash on hand and cash flow

The 3,200-acre site has over 30 years of reserves of fine grade 40/70 and 100 mesh sand

 

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U.S. Silica Holdings announced that its Board of Directors has approved the construction of a new, state-of-the-art frac sand mine and plant in West Texas to serve the rapidly-growing Permian Basin.

The new facility is expected to produce approximately 4M tons annually and is part of the company’s previously announced plan to add approximately 8M-10M tons of new Brownfield and Greenfield capacity to meet surging frac sand demand.

The $225M project will be funded from cash on hand and cash flow from operations and is expected to be supported by long-term supply contracts with leading oilfield companies, which include cash pre-payments.

Construction will begin immediately and initial production is scheduled for late in the fourth quarter of 2017.

The 3,200-acre site has over 30 years of reserves of fine grade 40/70 and 100 mesh sand with excellent physical properties.

“We believe we’ve selected one of the most advantaged sites in West Texas with good availability of water, easy access to Interstate 20 and a location that is equidistant to the hearts of both the Delaware and Midland Basins,” said Bryan Shinn, president and chief executive officer.

“Our focus is serving our customers.  Those customers told us clearly that they want more local sand supply in the Permian to support future well completions.  Their willingness to negotiate long-term supply agreements for this new capacity and to potentially commit their own capital to the project demonstrates the confidence they have in U.S. Silica and the tightness of the frac sand market now and in the future.”

Shinn added that the Company expects to enter into similar agreements for other capacity expansion projects currently underway.

Stocks to Watch

SLCA last tradad at $36.31. Hi-Crush Partners (HCLP) and Emerge Energy (EMES), and Smart Sand Inc. (SND).

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New Changes to S&P 400, 500, 600 Indices

S&P MidCap 400 constituent Everest Re (RE) will be added to the S&P 500

S&P SmallCap 600 constituent Pinnacle Financial Partners (PNFP) will replace Everest Re

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S&P Dow Jones Indices will make the following changes to the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices effective prior to the open of trading on Monday, June 19:

S&P MidCap 400 constituent Everest Re (RE) will replace Mead Johnson Nutrition (MJN) in the S&P 500.

S&P SmallCap 600 constituent Pinnacle Financial Partners (PNFP) will replace Everest Re Group in the S&P MidCap 400, and Armada Hoffler Properties (AHH) will replace Pinnacle Financial Partners in the S&P SmallCap 600.

Reckitt Benckiser Group (RBGLY) is acquiring Mead Johnson Nutrition in a deal expected to be completed soon, pending final conditions.

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Morgan Stanley Cuts U.S. Auto Sales

Morgan Stanley cuts 2017 US auto industry sales forecast to 17.3M units from 18.3M units

In Q1 2017, 10.2 million vehicles were sold in the used market, a decrease of 1.3% versus the previous year

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New Car Sales

The US auto industry has witnessed high demand for heavyweight vehicles in the past few years. In 2016, auto sales in the US were at their highest, with about 17.6 million vehicles sold during the year.

However, weakness in the first four months of 2017 also ignited the debate whether US auto sales have already peaked.  US Vehicle Sales at May reported at 16.96M, down from 17.21M last month and down from 17.52M one year ago. This is a change of -1.43% from last month and -3.16% from one year ago.

Used Autos

In Q1 2017, 10.2 million vehicles were sold in the used market, a decrease of 1.3% versus the previous year. Franchise used sales also showed a reduced number of units sold, with a 0.3% decrease versus 2016. Fewer consumers trading in their existing vehicle upon their new purchase could be sidestepping inventory from dealers. The average vehicle on American roads is nearly 12 years old.

The average retail used vehicle sold for $19,227 in Q1 2017, an increase of 2.1% year over year. This record-breaking high can partially be attributed to a higher mix of vehicles being sold that are only 3 years old or newer (53% of sales in Q1 2017) and these 3-year-old vehicles began with much higher MSRPs versus years prior. One caveat is that, while the MSRPs are up and so is the share, these vehicles aren’t retaining nearly as much value as before.

Cautious Comments

Morgan Stanley analyst Adam Jonas made “big” cuts to his US auto industry sales  forecast, reducing his 2017 US #SAAR forecast to 17.3M units from 18.3M units, 2018 to 16.4M units from 18.9M units, 2019 to 15M units from 19.2M units, and 2020 to 15M units from 18.7M units.

Jonas believes the auto cycle may be hitting a point of diminishing returns following 8 years into the biggest cycle on record as used car values erode, pressuring conditions for selling new vehicles, and said new vehicle inventory levels continue to rise.

Additionally, the analyst expects electrical margins to face increasing competition from new entrants and higher development costs.

#SAAR = seasonally adjusted annual rate

He lowered his price targets on 15 companies, cutting his targets for the following companies by 10% or more: Adient (ADNT), Ford (F), Group 1 Automotive (GPI). Specifically, he cut his target on Adient to $85 from $95, on Ford to $9 from $10, and on Group 1 Automotive to $53 from $60. Jonas kept an Overweight rating on Adient, and Underweight ratings on Ford and Group 1. LEAR: Jonas downgraded Lear to Underweight from Equal Weight and reduced its price target to $134 from $149. He expects Lear’s earnings to peak this year and to fall by 20% by 2021.

He also expects its Electrical business margins to disappoint investors due to higher development costs, increased competition, and potential lost market share.

Stocks to Watch:

GM, F, HMC, TM, LEA, TSLA, AN, FCAU, and GPI

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