EUR 100.00 For Business Accounts Only

IBERIAN DAILY 20 FEBRUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: FERROVIAL, IAG, MEDIASET ESPAÑA, TELEFÓNICA.

MARKETS YESTERDAY AND TODAY

The market is back in the green
There were gains on the market, with all European indices benefiting. In the Euro Stoxx, the best-performing sectors were Consumer Goods and Technology, with Banks and Insurance the only sectors posting losses. On the macro side, in the euro zone some € 20 Bn/year will be earmarked to push the digital revolution. In the UK, inflation rose more than expected in January (1.8% for the general figure and 1.6% for the core figure). In the US, housing starts fell less than expected and building permits rose more than expected. January’s production prices rose more than expected. The minutes from the Fed’s 29 January meeting showed a gradual withdrawal of t-bill purchases and 2Q’20 debt auctions. In this regard, R. Bostic defended the strength of the US economy. In China, the PBoC cut the 1-year loan rate by -10bps to 4.05% (expected). In US business results, Garmin beat expectations.
What we expect for today
Stock markets would show slight drops. Currently, S&P futures are +0.11% higher (the S&P 500 closed -0.13% lower vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 14.38%). The Asian markets that are open are trading with mixed results (Japan +0.34% and Hong Kong -0.33%).
Today in the euro zone we will learn the ECB meeting minutes and in the US February’s Philadelphia Fed and weekly jobless claims. In US Results, Viacomm, American Electric and Cabot Oil, among others, will release their earnings. Debt auctions: France (€ 1.5 Bn in I/L bonds due 2025, 2029 and 2036).


COMPANY NEWS

TELEFÓNICA. Results below expectations due to one-offs in Mexico and Argentina. Organic growth accelerated. BUY.
The results came in below expectations due to negative one-offs (€ -239 M in Mexico from the operational transformation of the business and € -206 M from goodwill impairments in Argentina). Excluding these impacts, EBITDA would have beaten expectations, with organic growth in 4Q’19 of +4.0% (vs. +3.6% BS(e)), leaving 2019 with +1.9% growth (vs. +1.1% in 9M’19). NFD fell -8.1% in 2019 to € 37.74 Bn (€ 37 Bn including asset sales, 2.43x NFD/EBITDA). We highlight the organic improvement to EBITDA and the conservative guidance with few surprises, which would mean the market will pay close attention to the asset sales to continue reducing debt. We reiterate our BUY recommendation, as we expect drivers along these lines.