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

NEWS SUMMARY: BANKING SECTOR, GRIFOLS, GRUPO CATALANA OCCIDENTE.

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

Macro remains strong and the US stock market registers its biggest drop in the last 2 months
The European stock markets saw slight selloffs yesterday, with the Ibex being the best relative performer in a session marked by the PMI data, which could lead to further rate hikes by Central Banks. Thus, within the Euro STOXX, Travel & Leisure and Utilities were the best relative performers vs. the drops in Technology and Consumer Goods. On the macro side, in the Euro zone, the Services PMI climbed above expectations, whereas the Manufacturing PMI fell unexpectedly. In Germany, the ZEW index for February rose above expectations thanks to the greater recovery of the current conditions component. In the US, February’s PMIs climbed above expectations, whereas January’s second-hand home sales fell unexpectedly, exceeding Covid-19 lows. On the geopolitical front, Russia announced the suspension of the START III treaty limiting the proliferation of nuclear weapons. In US business results, Walmart came in better and Home Depot in line.
What we expect for today
European stock markets would open with losses of up to -0.5%, despite the large drops yesterday in the US. Currently, S&P futures are up +0.2% (the S&P 500 ended -0.37% lower vs. the European closing bell). Volatility in the US increased (VIX 22.87). Asian markets are falling (China’s CSI 300 -0.97% and Japan’s Nikkei -1.35%).
Today we will learn in Germany February’s IFO and January’s final inflation, and in the US the Fed minutes. In US business results, Pioneer and eBay, among others, will release their earnings. In debt auctions: Italy (€ 5.25 Bn in bonds due 2025 and I/L bonds due 2033).


COMPANY NEWS

GRIFOLS, BUY.
At yesterday’s closing bell the company announced that Steven F. Mayer has stepped down as Executive Chairman and member of the Board of Directors for health and other personal reasons. He will be replaced by Thomas Glanzmann, Board member of GRF since 2006 and non-executive vice chairman of the Board since 2017. Glanzmann has had important positions in the industry, such as Chairman of Baxter, CEO of Immuno International and Chairman of European Biotech Group.
Steven Mayer’s resignation is a surprise, as he had been in the position for only 4 months, and our view of his leading the company was positive due to the messages being conveyed (target of improving communication, focus on deleveraging and improving margins, among other things), but especially due to the measures he was implementing (cost-savings plan of €~400 M/year), which we think are on the right track. In any event, we expect GRF to maintain its strategy set out by Mayer and that the coming months will focus on executing his initiatives. Note that GRF has a NFD/EBITDA ratio of 8.6x. Since Oct’22 lows the stock has risen +72%, and +63% since Mayer was appointed (+36% vs. IBEX). GRF’s ADR shares closed yesterday with a -6.9% drop.