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IBERIAN DAILY 09 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, ENDESA, FERROVIAL, INDITEX.

The Ibex regained 9,4000 points
The European stock markets posted slight gains (with the Ibex leading the way) following the losses of the previous session, although the ADP private employment and JOLTS (Job Openings and Labour Turnover Survey) data in the US backed expectations of a 50bps hike at the next Fed meeting. Thus, within the Euro STOXX, Basic Resources and Technology were the best relative performers vs. the drops in Real Estate and Travel & Leisure. On the macro side, in the Euro zone, the 4Q’22 GDP was lowered, with Germany showing a -0.4% drop in QoQ terms vs. -0.10% EU from positive territory (Spain +0.20%). On another note, Brussels resumes the tax rules and demands deficit and debt adjustments from 2024, setting levels below 3% and 60% for 2026, respectively. In the US, February’s ADP private employment data beat expectations, doubling the job creation levels recorded in the previous month, whereas January’s JOLTS fell less than expected, hinting at significant wage pressure. The Fed’s Beige Book depicted an economy growing at a pace between lacklustre and moderate with wage pressure that is expected to ease. In his second speech before Congress, J. Powell moderated his message and conditioned rises to macro data, adding that no decision has been made for March’s meeting. In Japan the final 4Q’22 GDP was cut unexpectedly, underscoring growth stagnation. In China February’s inflation came as a significant surprise given the moderation reported in February in both the core (1.0% YoY) and underlying data (0.6%), whereas production prices slowed down more than expected. On another note, the US government would be analysing the possibility of banning the use of Tik Tok in the country.
What we expect for today
European stock markets would open flat with some bearish bias. Currently, S&P futures are down -0.1% (the S&P 500 ended -0.12% lower vs. the European closing bell). Volatility in the US rose (VIX 19.11). Asian markets are mixed (China’s CSI 300 -0.11% and Japan’s Nikkei +0.63%).
Today in Mexico we will learn February’s inflation and, in the US, weekly jobless claims. As for auctions, Italy will issue € 6 Bn in 12M T-bills.


COMPANY NEWS

INDITEX. 4Q’22 results preview and new T.P. of € 33.00/sh. We maintain our BUY recommendation
We expect solid LfL sales performance in 4Q’22 (to be released on 15/03), rising around +13% in a quarter that improved as it progressed (strong start to Q4 and price increase) and which benefited from the impact of Omicron in 4Q’21. This will also contribute to EBIT growth (+39% in 4Q’22) and a higher EBIT margin (14.3% in 4Q’22e and ~17% in 2022e), despite the pressure on the gross margin (around -70bps in 4Q’22e or around -39bps in 2022e). The trading update (01 Feb - ~12 Mar) will be positive (although more moderate), and we expect the targets’23 to continue past trends (+/-50bps on the gross margin vs. around -25bps BS(e)). We raise our 2022-28e estimates by around +4% in sales and around +6% in EBIT due to the 2022 base effect, and we raise our T.P. to € 33.00/sh. (+14% vs. previous and +13% upside).