Investors are getting nervous about inflation. Per BofAML « Flow Show » weekly report released today, TIPS recorded their 3rd highest weekly inflows (chart) while getting out of High Yield ($9.8 bn outflows over past 4 weeks). With $1.2bn, it’s one of the highest level of inflows since Nov 2016.
Altice seems to be in a precarious financial conditions and has lost the faith of investors. Shares have lost 48%, mainly due to the deteriorating KPIs and financial indicators at SFR.
At a recent conference, Patrick Drahi took the helm to try to calm investors but so far, little results. And brokers seem to have conflicting views.
To comfort Altice, ABN Amro’s analysts have issued a « Buy » recommendation on the shares, but not all are convinced. The same day, Credit Suisse also published a report with a Neutral rating, which comes a couple of days after BofAML downgraded the stock.
Here are their arguments.
(DISCLAIMER: This information is not an investment recommendation. It is just given as an information, not an advice. You need to do your own due diligence to see if an investment fits in your Investment Policy Statement, provided you have one).
US equity market could continue its run next year with the risk that investors fall into euphoria. Continuer la lecture de « Merrill Lynch Sees S&P 500 at 2,800 end 2018… With Some Risks »
2017 has been a pretty good year for credit investors so far, and this might continue providing inflation doesn’t accelerate too much, according to Bank of America Merrill Lynch credit strategists. Continuer la lecture de « Credit : Merrill Lynch cautiously optimistic for 2018 »
Per Bank of America Merrill Lynch report published Nov 21:
« Altice shares have lost 50% of their value post results, while the CDS on the holding have increased by 300bps. Management took action with: 1/ the resignation of the CEO and the return of Patrick Drahi to full control of operations, 2/ admission of poor execution in France, now the #1 focus, and 3/ a priority on debt reduction, involving noncore assets and towers disposals. However, ATC also significantly rebased its midterm expectations on France. Although the steps taken should comfort credit holders, we think the case for the equity is balanced, with long term upside on execution, content monetization and domestic consolidation, but unclear valuation support on our reduced forecasts, and a recovery that remains largely dependent on external competitive forces. Unlike Glencore in 2015, we don’t see material valueenhancing options to drive mid term outperformance and downgrade to Neutral with a PO of €11. Our credit analyst Nick MacDonald is positive on the credit »
And leverage has been building up since the global financial crisis, contrary to most belief. So if you think the streak of bad luck Altice has been facing recently is just a one-off, think again. Continuer la lecture de « Leverage Sets the Stage for the Next Crisis »
Investors hold firm to their Eurozone equities despite growing worries about the outcome of the French presidential election, according to the latest poll on investor positioning published by Bank of America Merrill Lynch.
Investors consider a « Le Pen Win » might produce a 5-10% market correction, but the real risk would be a Europe disintegration in the case of « Frexit », which would have deeper and far more negative implications.