EUR 100.00 For Business Accounts Only

IBERIAN DAILY 08 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, CHANGES IBEX, ELECTRICITY SECTOR, LOGISTA, TALGO, TELEFÓNICA.

Powell’s speech led to stock market losses and opened the door to a 50bps hike in March
The slight bullish trend of European stock markets changed after J. Powell’s speech before the US Senate where he stated that the Fed will have to raise interest rates more than expected and possibly faster to control inflation in view of the robustness of the recent macro data. Thus, in the Euro STOXX, Media and Travel&Leisure saw the best relative performance vs. the drops of Real Estate and Technology. On the macro side, in Germany, January’s factory orders dropped less than expected. In Spain, January’s industrial output fell unexpectedly. On another note, the US oil industry warned that production is reaching its limit, which could push the price for crude oil to US$ 100.00/barrel, as it would leave the OPEC too much power in a highly tightened market.
What we expect for today
European stock markets would open with drops of as much as -0.5%, with energy companies hit by the drop in crude oil prices. Currently, S&P futures are up +0.1% (the S&P 500 ended -0.4% lower vs. the European closing bell). Volatility in the US rose (VIX 19.59). Asian markets are mixed (China’s CSI 300 -0.86% and Japan’s Nikkei +0.48%).
Today in the euro zone we will learn the final 4Q’22 GDP, in Germany January’s industrial output, and in the US Powell’s speech before the Congress’ Financial S. Committee, Jolts job vacancies, ADP employment and Fed Beige book. As for auctions, Germany will issue € 4 Bn in bonds due 2029.


COMPANY NEWS
CHANGES IBEX 35. As expected, no changes after yesterday’s Technical Advisory Committee meeting.
At yesterday’s closing bell, the IBEX 35 Technical Advisory Committee held its first follow-up meeting of the year. There were no changes in either components or in weightings.

TALGO. Catalysts at the end of the tunnel. BUY.
Following the company’s results and guidance’23, we cut our estimates for 2023 and now expect +14% growth in sales vs. FY2022 (-12% vs. previously) and an adjusted EBITDA margin of 11.9% (vs. ~12% guidance’23 and -320bps vs. previously; 11.4% consensus). Long-term, we expect a CAGR’22-25e in sales of +7.3% (vs. +9.4% previously) and an adjusted EBITDA margin’25 of 12.5% (vs. 14.8% previously). Pricing into our estimates the uncertainty derived from news on problems in contracts in execution (LACMTA and Renfe), we cut our T.P. by -17% to € 4.08/sh. (+21% upside) and reiterate our BUY recommendation, awaiting further extensions of existing contracts (Deutsche Bahn, Denmark and Mecca-Medina), without forgetting the possibility of an M&A deal (divestment of Trilantic; 40% of TLGO), which is not evident in the short term.