In today’s briefing:
- Hollysys (HOLI US): Keep Calm as Closing Date Slips
- The Pullback Finally Begins; SPX and NDX Testing 2-Month Supports; Market Dynamics Shifting
- Prysmian/Encore Wire: Agreed Offer
- Columbia Sportswear Company: Enhancing DTC Experience & Strengthening Its Retail Presence Across The Globe! – Major Drivers
- DXC Technology Company: Will Its Enhanced Go-to-Market Strategy and Business Execution Catalyze Growth? – Major Drivers
- Illumina Inc: Will Its Market Dominance In Genetic Analysis Last In The Long Term? – Major Drivers
- FMC Corporation: Performance of Diamides Business and Other Portfolios Driving Growth? – Major Drivers
- Conagra Brands: Investments in the Frozen Segment & 5 Pivotal Factors Driving Growth! – Financial Forecasts
- CarMax Inc: How Are They Embracing Generative AI For Improving Efficiency & Strategic Expansion? – Major Drivers
- Constellation Brands: What Is Its Portfolio Transformation Strategy in Wine and Spirits? – Major Drivers
Hollysys (HOLI US): Keep Calm as Closing Date Slips
- On 15 April, Hollysys Automation Technologies (HOLI US) issued a 6-K filing stating that Ascendent remains in the process of obtaining regulatory approvals.
- The gross spread has widened to 8% as the closing date has slipped from the end of March guidance, and an updated timeline is lacking.
- A delay in securing regulatory approvals is not uncommon. However, regulatory approvals should be forthcoming as the transaction involves Chinese entities (including a SASAC entity) acquiring a Chinese-focused company.
The Pullback Finally Begins; SPX and NDX Testing 2-Month Supports; Market Dynamics Shifting
- We’ve discussed for months that we’ll need to see SPX and NDX (QQQ) close below their 20-day MAs/21-dayEMAs for more than 2-3 consecutive days in order to get more cautious.
- Today (Tuesday) marks 3 consecutive days as the DXY climbs to test major $106 resistance, and amid 10- and 30-year Treasury yields breaking above long-term resistances. Caution is warranted.
- Still, in order for there to be a meaningful pullback, important 2-month supports that are currently being tested would need to break, including 4983-5050 on SPX and $425-$433 on QQQ.
Prysmian/Encore Wire: Agreed Offer
- Prysmian SpA (PRY IM) agreed to acquire Encore Wire (WIRE US) for $290/share in cash, 29% premium to 90-day VWAP, implied EV of €4,264 million, 11x EV/NTM EBITDA and 16.9x Fwd P/E.
- Encore wire has traded at an average 6.4x EV/EBITDA and 10.6x P/E over the last 5 years. I set my TP at $290. Synergies could be valued at $51/share.
- The shares are trading slightly above the offer price. Gross spread is +0.2%. The volume traded since announcement has been very strong. There is room for some sweetening. Long.
Columbia Sportswear Company: Enhancing DTC Experience & Strengthening Its Retail Presence Across The Globe! – Major Drivers
- In the recent fourth quarter 2023 financial results, Columbia Sportswear highlighted some key achievements and challenges they faced throughout the year.
- This provides an informative insight into both the company’s strengths and weaknesses moving forward, forming a neutral foundation for an investment thesis and resulting summary analysis.
- A cornerstone of Columbia Sportwear’s strategy in 2023 was their inventory reduction plan.
DXC Technology Company: Will Its Enhanced Go-to-Market Strategy and Business Execution Catalyze Growth? – Major Drivers
- During Q3, DXC Technology was observed to have solid performance with the company’s organic revenue growth falling within the guidance range.
- The free cash flow saw an increase of 26% compared to the prior year, amounting to an impressive $585 million.
- However, the report points to declines in various areas such as organic revenue growth, a 4.5% year-over-year decrease, mainly due to the decline in resale revenues.
Illumina Inc: Will Its Market Dominance In Genetic Analysis Last In The Long Term? – Major Drivers
- Illumina reports a successful 2023 but is bracing for a challenging 2024 amid continued macroeconomic hurdles.
- The company delivered a higher-than-expected consolidated revenue of approximately $1.12 billion in the fourth quarter, marking an increase of 4% year over year.
- CEO Jacob Thaysen highlighted the latest product, NovaSeq X, as the most successful high-throughput product launch in the company’s history.
FMC Corporation: Performance of Diamides Business and Other Portfolios Driving Growth? – Major Drivers
- Based on the fourth-quarter 2023 earnings, FMC Corporation’s performance suggests a mixed investment climate.
- Although the company’s plan largely revolves around elements they manage, such as NPI sales and restructuring initiatives, the transition of the crop chemicals market implies a challenging year ahead.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
Conagra Brands: Investments in the Frozen Segment & 5 Pivotal Factors Driving Growth! – Financial Forecasts
- Conagra Brands maintained an overall positive tone regarding its performance and future prospects in its latest earnings.
- While there were signs of optimism and forward-looking strategies, there were also concerns about certain aspects of its operations and broader market conditions.
- The company was seen focusing heavily on volume as being crucial for growth.
CarMax Inc: How Are They Embracing Generative AI For Improving Efficiency & Strategic Expansion? – Major Drivers
- CarMax, a leading used car retailer in the United States, reported its Q3 fiscal year 2024 results indicating a continuation of a strategic plan that has led to sequential year-over-year improvements across key business areas for four consecutive quarters.
- Total sales for Q3 FY ’24 were $6.1 billion, down by 5% compared to the previous year due to lower retail and wholesale prices and lower retail volume, partially offset by higher wholesale volume.
- Retail unit sales declined by 2.9% while used unit comps were down by 4.1%.
Constellation Brands: What Is Its Portfolio Transformation Strategy in Wine and Spirits? – Major Drivers
- Constellation Brands reported strong Q3 results, driven by robust performance in their beer business, achieving over 8% depletion growth for its beer portfolio.
- This performance is a testament to continued strong consumer demand and contributed to the company’s 55th consecutive quarter of depletion growth and tenth leading share gains.
- The company also executed $215 million of share repurchases in Q3, maintaining its net leverage ratio at 3.2x, excluding Canopy equity and earnings.
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