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IBERIAN DAILY 22 FEBRUARY + 4Q’20 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ALMIRALL.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 4Q’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Europe ends the week with gains
Following Friday’s positive closing, global stock exchanges ended the week with gains thanks to the earnings surprises and prospects on the world economy after the first leading indicators. Thus, the rise in the yield curve is starting to show pressure given the high valuations of the Euro STOXX, with value sectors such as Media (following Vivendi’s rise), Banks and Energy as beneficiaries while bond proxies such as Real Estate and Utilities ended with the biggest drops. On the macroeconomic level, February’s manufacturing PMI provided a positive surprise in France and Germany last Friday, with the euro zone PMI rising unexpectedly to 57.7 points. However, the preliminary services PMI deteriorated slightly. The control implemented in Feb-March should result in a significant improvement starting in the 2Q’21. In the UK, retail sales deteriorated more than expected in January while the manufacturing and services PMI recovered more than expected in March. In the US, January’s existing home sales remained in positive territory, but worse than expected. As for the pandemic, Israel’s studies confirm that just one dose of Pfizer’s vaccine has an 85% effectiveness. In China, the PBoC toughened the lending rules for Fintech companies. In US Results, DISH Network, Deere and DTE Energy came in better than expected.
What we expect for today
The sharp increase in the debt curve and rising crude oil prices would lead to some profit-taking on the world’s stock markets, with a better performance of financial and cyclical stocks vs. defensive ones. Currently, S&P futures are down -0.26% (the S&P 500 closed down -0.45% vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 22.05). Asian markets are mixed (CSI 300 -2.8%, Japan +0.5%).
Today in Germany we will learn February’s IFO and in the US January’s Chicago Fed activity index. In debt auctions: Germany (€ 4 Bn in 12M T-bills) and France (€ 6.6 Bn in3M, 6M & 12M T-bills). In US business results, DISH Network, Discovery andONEOK, among others, will release their earnings.


COMPANY NEWS

ALMIRALL. Poor 4Q’20 results. Guidance’21 below expectations. BUY.
The 4Q’20 results came in below expectations in EBITDA (-28% vs. -17% BS(e) and -23% consensus) due to lower sales (-10% vs. -8% BS(e) and -5% consensus) and margins (25% vs. 28.5% BS(e) vs. 25.4% consensus). Better performance in Net Profit, which grew +4% (vs. +3% consensus) thanks to a lower tax rate in the US and the good news on net debt (-17% to € 307 M vs. € 355 M BS(e); 1.3x NFD/EBITDA excl. pension plans). The company has cut the DPS’20 to € 0.19/sh.; 1.6% yield (-4% vs. 2019 vs. 0.20 expected) and has announced a guidance’21 of medium single-digit growth in sales and between € 215 M and € 235 M of EBITDA, which stands below our estimates and those of the consensus (€ 279 M BS(e) vs. € 251 M consensus). We expect a negative market reaction following the stock’s recent performance (+9% in 2021; +8% vs. IBEX).