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Lowe's 12-08 06:20 GMT  
(Report with Analyst's Data Sheet) 
When Lowe's reported third-quarter results recently, it lowered its guidance for the second time this year. Comparable sales fell 7.4%, far worse than Home Depot's...
More Of The Same by Carol Levenson, CFA
Companhia Siderurgica Nacional 12-08 06:20 GMT  
(Report with Analyst's Data Sheet) 
Last week, Companhia Siderurgica Nacional (CSN, CSNABZ) issued $500 million of 7-year senior unsecured bonds via its subsidiary CSN...
Building Up Reserves by Alexandre Dray
MGM Resorts International 12-07 06:02 GMT  
(Report with Analyst's Data Sheet) 
MGM Resorts (MGM), an international gaming and hotel company, suffered a cyber security incident in mid-September that hurt its...
Cyber Insecurity by Kim Noland
Kraft Heinz 12-07 06:02 GMT  
(Report with Analyst's Data Sheet) 
Kraft Heinz recently announced that its Board authorized a $3 billion share repurchase program. The buybacks will be made over the next three years. So...
Stock Buybacks Return by Dave Novosel, CFA
AbbVie 12-07 00:08 GMT
(Comment)
They're at it again. After the market closed today and amid press reports about the transaction, AbbVie...
Acquisition by Carol Levenson, CFA
They're at it again. After the market closed today and amid press reports about the transaction, AbbVie said it would acquire clinical stage biotech firm Cerevel Therapeutics for $8.7 billion in cash. This would be on top of the $10.1 billion cash acquisition of ImmunoGen announced less than a week ago. In our report about that acquisition, we noted that management insisted that it would still have the financial capacity to do another similar sized deal. Obviously management knew the Cerevel announcement was imminent and we wouldn't be surprised if the rating agencies were also informed of the possibility. Cerevel is a much higher risk asset than ImmunoGen but AbbVie is paying nearly as high a premium. As Cerevel states in its SEC filings "We have never generated revenue from product sales and may never be profitable." Its pipeline of neuroscience drug candidates is led by the antipsychotic emraclidine, which is in early testing to treat schizophrenia and other psychiatric conditions, potentially with superior efficacy and fewer side effects than drugs currently on the market. AbbVie is paying a 73% premium to the unaffected share price and nearly quadruple Cerevel's most recent common stock offering price (sold in October). The acquisition is not expected to be accretive to adjusted E.P.S. until 2030, assuming a mid 2024 closing. Pro forma for both acquisitions, assuming all debt funding, we estimate debt/EBITDA would increase to 3x, with net leverage rising to 2.5x. AbbVie does not expect its ratings to be downgraded. It can pay down all the acquisition debt with its strong free cash flow, but it would likely take two years or more. We're glad we stuck with our "underperform."
Cisco Systems 11-16 14:33 GMT
(Comment)
Cisco's fiscal first quarter (ended October 28th) results contained some good news and some bad...
Earnings by Dave Novosel, CFA
Cisco's fiscal first quarter (ended October 28th) results contained some good news and some bad news. The good news is that revenue rose 8%, setting a Q1 record, while EBITDA margins increased almost 300 basis points. In the Networking segment, by far the largest of its newly configured segments, revenue rose 10% because of double-digit increases in campus and data center switching. Collaboration revenue was up 3% due to growth in calling and contact center. Security revenue increased 4% attributable mainly to strength in threat intelligence, detection, and response offerings. Software revenue was up 13%, as was software subscription revenue. The margin expansion reflected lower freight, logistics, and component costs, higher pricing, and a more favorable mix. Now to the bad news. Management's guidance suggests that revenue is likely to decline roughly 6% in the second quarter. Worse yet, revenue in the third and fourth quarters will probably drop approximately 9%. That would leave revenue down about 4.5% for the full year. To be fair the comps are very difficult as revenue rose 17% in Q4 of last year and 14% in Q3. Management pointed to the fact that customers are now focused on installing and implementing products that have been recently purchased. Management did note that CSCO has gained market share. If the company can maintain similar margins over the second half of the year, margins will be up modestly for all of FY24 because of the Q1 performance. Leverage at the beginning of the year was 0.5x. CSCO slashed debt by $750 million in Q1. Therefore we expect leverage to remain at 0.5x through year-end, which is extremely low.
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