In today’s briefing:
- Allkem+Livent=Arcadium : Expected Index Flows
- Nippon Steel/United States Steel Corp: Knock-Out Offer
- The First Semi Micron to Guide 1Q24; Conservative Now but Likely Raise Later
- Pfizer Inc (PFE US) – Continue to Lose Its Way in the Post-Pandemic Era
- Steelcase, Inc. – Tweaking Estimates: Margins Improve, Sales Moderate
- Steelcase, Inc. – 3QFY24 Earnings: Margins Drive EPS Upside
- MillerKnoll, Inc. – 2QFY24 Earnings After Close
Allkem+Livent=Arcadium : Expected Index Flows
- Yesterday during the day, Allkem Ltd (AKE AU) shareholders approved the Scheme and Livent (LTHM US) shareholders approved the merger. The deal is done. Allkem last trades 21 Dec.
- NEWCO starts trading 4 January in the US but the Arcadium Lithium CDIs start trading 22 Dec in Australia. S&P/ASX announced they will replace Allkem in the ASX200.
- But I have been asked for a breakdown of flows and timing again, so I have put it into a handy table which I hope makes it less confusing.
Nippon Steel/United States Steel Corp: Knock-Out Offer
- Nippon Steel Corporation (5401 JP) and United States Steel (X US) have agreed an all-cash $55.00/share offer, 142% premium to where X traded before Cliff’s approach, a very generous 7x EV/24e EBITDA.
- A determined buyer seeks market share in the lucrative US market, with no meaningful synergies expected and willingness to keep all US Steel jobs and (greener) growth projects.
- Although unions and some lawmakers are voicing concerns, CFIUS shouldn’t pose a big hurdle. Spread is 12.04%/17.93% (gross/annualised, assuming late settlement by end of Q3 2024). Long.
The First Semi Micron to Guide 1Q24; Conservative Now but Likely Raise Later
- Driven by stronger PC/networking DRAM sales, Micron reports 5% stronger 4Q23 sales, 10-13ppts q/q margin improvement and 34% y/y decline in MOI to 5.2 months;
- Micron guides 1Q24 sales growth 8-16% q/q and 38-49% y/y and gross margin of 12%, beating Bloomberg consensus estimates by 6ppts;
- Rooms to raise: 1. 1Q24 sales of 18% q/q likely; 2. Turning profits sooner than expected; 3. +Free cash flow in 2024; 4. HBM3E for GH200/H200 to improve mix, margin.
Pfizer Inc (PFE US) – Continue to Lose Its Way in the Post-Pandemic Era
- Pfizer seems to be the worst-performing large pharma stock of 2023 after it lowered 2024 forecast. The Company continues to grapple with plummeting demand for its COVID products
- The acquisition of Seagen can’t turn things around. Except a few products that are still able to maintain growth, sales of vast majority products that we’re familiar with are declining.
- The growth engine of Pfizer in post-pandemic era is still uncertain. Even though Pfizer’s share price has fallen sharply, this may still not be the time for bottom fishing.
Steelcase, Inc. – Tweaking Estimates: Margins Improve, Sales Moderate
- This note revises our estimates for Steelcase following its 3QFY24 earnings call.
- In short, for 4QFY24, we up our margin assumption, moderate our revenue assumption slightly, and shave our adjusted EPS estimate by $0.01.
- Steelcase reported strong margins and steady orders in the 3QFY24 on Tuesday evening.
Steelcase, Inc. – 3QFY24 Earnings: Margins Drive EPS Upside
- After Tuesday’s close, Steelcase reported 3QFY24 adjusted EPS of $0.30, ahead of our $0.25 estimate and consensus of $0.23.
- Revenue came in lighter than expected at $778 million versus our $804 million estimate and consensus of $796 million.
- Steelcase delivered another quarter of gross margin improvement at 32.4%, up 370 bps versus 3QFY23, and 46 bps above our estimate.
MillerKnoll, Inc. – 2QFY24 Earnings After Close
- MillerKnoll reports 2QFY24 earnings after market close on Wednesday, December 20, and will host its management conference call at 5:00 pm ET.
- WTR is modeling EPS of $0.55, the midpoint of guidance, on revenue of $987 million. Consensus is $0.54, with an estimate range of $0.52-0.56.
- Order trends. We are modeling orders in the Americas at +13.9% versus a poor year-ago quarter of -17.3%.
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