EUR 100.00 For Business Accounts Only

IBERIAN DAILY 10 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING SECTOR, CELLNEX, EUSKALTEL, MAPFRE, ROVI.

MARKETS YESTERDAY AND TODAY

Fears of Covid-19 not subsiding
It was the third straight session of losses in the main European markets in view of the fear that new coronavirus cases could delay economic recovery. In the Euro STOXX, all the sectors except Technology closed in the red, with Energy and Basic Resources the worst relative performers. On the macro side, from the ECB H. De Cos, also governor of the Bank of Spain, stated that the EU reconstruction fund should be the first step towards a permanent fiscal stability mechanism within the union. In the euro zone, Paschal Donohoe (Ireland) beat Nadia Calviño to take the presidency of the Eurogroup, reflecting the opposition of some countries such as the Netherlands to the imposition of a Europen reconstruction fund. In the US, weekly jobless claims fell more than expected, although they remain extremely high, whereas May’s final wholesale inventories confirmed the drop in the preliminary data. In Mexico, inflation rose more than expected. In US business results, Walgreen’s and Bassett Furniture came in below expectations.
What we expect for today
The market correction would continue on the European stock markets, which would open with drops of less than -1%. Currently, S&P futures are down -0.43% (the S&P 500 was up +0.7% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 29.26%). Asian markets are falling (Japan -0.41% and Hong Kong -1.15%).
Today in France and Mexico we will learn industrial output and in the US production prices. In debt auctions, Italy placed € 10 Bn in 6M and 12M t-bills. In US business results, Dell, Aura Systems and Firebrand will release their earnings. In ratings, Fitch will review that of Italy (BBB-, stable).


COMPANY NEWS

MAPFRE. Everything has a price. BUY
MAP must continue to restructure (meaning volatility/risk in Net Profit) and reduce debt. Thus, we expect the DPS’20 to be cut by -26% (€ 0.107/sh. BS(e), € 0.12/sh. consensus), which would still leave a yield of around 7%. Since March the stock has only recovered around +16% (-4% vs. IBEX), underperforming its sector by -24%, and trading at 70% in MAP) is defensive against Covid-19 and an economic downturn. We cut Net Profit’20e by -7% and by around -1.5% in 2021, with a T.P. of € 2.17/sh. (-1.3% vs. previous; >30% upside).

ROVI. Agreement with Moderna for the filling and packaging of a Covid-19 vaccine. SELL.
Yesterday ROVI announced an agreement with Moderna for the filling and packaging of a potential Covid-19 vaccine (ARNm-1273) outside of the US starting in early 2021. Positive news, the impact of which is difficult to assess. We welcome the agreement with Moderna, as its vaccine is one of the most advanced in terms of development. The company has not given any details on the agreement or its potential impact on its business due to the uncertainties surrounding the success of the vaccine and the expected sales if coexisting with other vaccines. Yesterday’s +7% rise prices in a recurring positive impact of €~7 M in EBITDA (11% of EBITDA’19) and more than € 30 M in sales (+8% vs. sales’19), although this would be premature considering the current level of uncertainty.