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Good morning,
Markets are called to open flat in Europe. This is what's happening today:
A nice turn-around in the markets after Tuesday's sell off and as it seems, the rally continues today. Infact the Nikkei is up 4% this morning after Toyota raised its earning forecast and the yen sank to the weakest level in almost three years. Toyota, the world’s largest carmaker, raised its profit forecast to a five-year high. Lifted by strong sales in the United States and a weaker yen, Toyota raised its profit forecast for the full financial year by 10%, to 860 billion yen, as the company, (the world’s largest automaker) recorded a return to profit levels it has not seen in years. In 2013, Toyota expects to sell 9.91 million vehicles, improving on its record of 9.75 million last year, which helped it regain its crown as the world’s top-selling automaker from General Motors. Those sales figures include Daihatsu Motor and Hino Motors, which are part of Toyota Group. 64% of the 94 companies in the Nikkei 225 to have reported quarterly earnings beat estimates.
Walt Disney, the world’s largest entertainment company, posted Q113 earnings that beat analysts’ estimates as the interactive unit registered its first profit and new theme-park attractions drew more tourists. Barclays comments on Walt Disney – Disney reported results that beat our estimate on the bottom line by $0.02 owing to upside to ESPN/ Cable Networks, Interactive Media profitability, and lower-thanexpected interest expense and taxes, offset by modest compression in Parks margins, and modest downside in Studio results. We have awaited clarity on ESPN cost trajectory and Parks margins to become more constructive, and last night we did find some reassurance on ESPN ad/ affiliate trends. As such, we are raising our FY13 estimate to $3.49 from $3.31, and our target P/E multiple to 16.0x from 15.7x, which translates to a price target of $56 from $52.
Syngenta also reported results which beat expectations this morning. The company expects to generate “significant free cash flow,” while continuing to invest in realization of crop-based pipelines in 2013. Syngenta increase the dividend from CHF8.6 to CHF9.5 per share. The Q412 seeds sales were reported at $600mln compared to an expected $542mln. Deutsche Bank are bullish on the stock – Syngenta has a robust growth profile. We forecast the group to deliver 14% CAGR EPS growth in 2012-2014E supported by a further step up in the Seeds margin and ongoing market share gains in the attractive Crop Protection market. This is due to Syngenta's leading innovation, high exposure to fast growing emerging markets and increasingly the top line synergies from its new integrated strategy of CP and Seeds. Given the group's strong growth profile increasingly backed by technology, we see the current valuation as unchallenging. BUY
For more information on Toyota, Walt Disney, Syngenta or other stocks and bonds we follow, contact our offices on 25688688.
Good day and happy trading!
Kristian Camenzuli
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