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IBERIAN DAILY 19 OCTOBER + 3Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ELECTRICITY SECTOR, FLUIDRA, IAG, INDITEX.

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 3Q’22 results to be released over the coming days in Spain.

Market consolidation?
The good start to the earnings season in the US and the easing of UK bond yields extended the rally in Europe, with the Ibex posting gains for the fourth consecutive session. Within the Euro STOXX, all sectors except Energy and Basic Resources ended with gains, with Auto and Media leading the way. On the macro side, in Germany, September’s ZEW expectations index climbed unexpectedly, although the current situation survey fell more than expected. In Spain, Funcas cut its GDP’22 forecast to 0.7% vs. 2.0% previously (vs. 2.1% Govt. and 1.5% OECD), hinting at a technical recession over the next two quarters. In the US, September’s industrial output increased more than expected, whereas October’s NAHB real estate index fell more than expected, nearing pandemic lows. Separately, Fed member Kashkari warned that rates could rise above levels of 4.75% if core inflation does not ease. On another note, according to the press, Biden would be studying the possibility of releasing more oil reserves to alleviate prices ahead of the mid-term elections. In US business results, Goldman Sachs, Netflix and State Street came in above expectations and Hasbro below.
What we expect for today
European stock markets would open with gains of around +0.5%, with technology and financials performing well. Currently, S&P futures are up +0.6% (the S&P 500 ended -0.5% higher vs. the European closing bell). Volatility in the US fell (VIX 30.50). Asian markets are mixed (China’s CSI 300 -1.3% and Japan’s Nikkei +0.5%).
Today we will learn in the Euro zone September’s final inflation, in the UK September’s inflation, in the US the Beige Book, construction permits and housing starts for September. In US business results, Baker Hughes, Prologis, Nasdaq, Tesla and Procter & Gamble, among others, will release their earnings.


COMPANY NEWS

FLUIDRA. Announces second profit warning in 3 months. BUY.
At yesterday’s closing bell the company prereleased the main figures for 3Q’22 (sales -3% below consensus and EBITDA -18%) and cut its guidance for 2022. FDR now expects sales to grow +10% (vs. +14-19% previously and +15% BS(e)) and EBITDA of more than € 500 M (previously €~615 M, consensus € 611 M), meaning an EBITDA margin of 20.8% (previously ~24%). The company justifies this downgrade with the worse macro environment than expected and the accumulation of inventories in the distribution channel. Logically, the news is negative, but we think that after falling -57% in 2022 (-47% vs. IBEX), the stock is already pricing in a negative enough scenario (trading at 8x EBITDA’22 lowered), and thus we would not sell at the current level. The company will hold a conference call at 9:00 (CET).