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IBERIAN DAILY 17 JULY + 2Q’23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: FERROVIAL, GRIFOLS.

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 2Q’23 results to be released over the coming days in Spain.

Stock market euphoria on the US inflation data
Fears about further tightening in the monetary policy eased last week after the moderation in US inflation, which led to falling expectations of official rate rises by the market and of public debt yields. With this in mind, stock exchanges pay close attention to the 2Q’23 earnings season in the US. Thus, the Euro STOXX 50 ended last week up around +4.00% and returning to 4,400 points, with core stock markets faring better. In the Euro STOXX, Real Estate and Consumer Goods were the best performers whereas Automobiles and Household saw the worst relative performance last week. On the macro side, in the US, the University the Michigan consumer confidence for July rose above expectations to Sept’21 highs. In China, the YoY growth in the 2Q’23 GDP speeded up less than expected (although with an unexpected rise in the QoQ growth), whereas June’s retail sales slowed down more than expected, as opposed to industrial output and the investment in fixed assts that rose unexpectedly. The annual pace of home prices stagnated again in June. On the geopolitical front, Yellen admitted a more constructive message with China although ruling out an ease in the restrictions imposed during Trump’s mandate. In US 2Q’23 Results, JP Morgan, BlackRock, State Steet and Citigroup came in above expectations.
What we expect for today
European stock markets would see drops of -0.5%, dragged down by the weak recovery of China’s GDP. Currently, S&P futures are down -0.08% (the S&P 500 ended -0.29% lower vs. the European closing bell). Volatility in the US dropped (VIX 13.34). Asian stock markets are sliding (China’s CSI 300 -1.01%, Japan’s Nikkei -0.36%).
Today in the US we will learn July’s manufacturing Empire index. As for auctions, Germany will issue € 4 Bn in 12M T-bills.



COMPANY NEWS

GRIFOLS, Argenx presents positive phase III results for CIDP. BUY
Argenx has just announced positive results for Adhere, its phase III (Vyvgart Hytrulo) recombinant treatment (FcRn) for CIDP (chronic inflammatory demyelinating polyneuropathy). Specifically, the data shows a -61% reduction in the risk of a relapse in patients vs. a placebo, with positive safety and tolerability levels, in line with those shown in previous phases. Negative news for GRD, as this treatment could erode sales from its own CIDP franchise, which accounts for ~12% of GRF’s total revenues BS(e). We expect a negative reaction today, although we think this competitive threat would already be partly priced in, with the stock trading -61% below its pre-pandemic level (in 2023 it has outperformed the IBEX by +1%). We continue to see growth potential for GRF’s immunoglobulin sales (>55% of sales; more than +5% CAGR BS(e)), driven by the treatment’s greater penetration in new regions, as well as its application to new secondary immunodeficiencies (SID). Separately, we welcome the fact this risk is eliminated, as it meant a source of uncertainty in the stock, and we still see appealing upside potential as the company achieves its targets in growing margins and reducing leverage.