20180612-瑞士信贷_香港_-LAST_EDITION_–_U.S._9页_313kb

U.S. Market Summary and Equity Research Highlights

U.S. Market Overview

The U.S. markets opened positively following the historic summit between President Trump and North Korean leader Kim Jong Un. Major indices remained in the green zone and advanced to new highs during the day. Crude oil prices rose, while gold prices declined. Within the S&P 500, telecom stocks outperformed.

Key Equity Research Highlights

Schlumberger (SLB)

• Current Price (CP): US$ 69.87
• Target Price (TP): US$ 80
• Capitalization (CAP): US$ 96,779.3 million
• Analyst: J. Wicklund
• Rating: OUTPERFORM

Core Content:

• SLB guided down its 2Q18 EPS growth to 10-15% (implying $0.42–$0.44) vs. consensus of $0.46 and $0.47, leading to a 7%–9% guide-down.
• The company lowered its 2018 EPS estimate to $1.92 (from $2.01), but maintained its 2019 estimate at $2.97 and target price at $80.
• The main driver of the earnings miss is higher-than-expected start-up costs for Middle East drilling projects, with 30 rigs mobilized in 2Q and 25 more expected in 3Q.
• Concerns remain about exposure to North America Midstream (NAM) completions, especially given the timing of the investment in a weak market.
• The analyst believes the issues are transitory but could last several quarters. Risks include oil prices, NAM recovery, and international pricing.

Kellogg Company (K)

• Current Price (CP): US$ 65.45
• Target Price (TP): US$ 68
• Capitalization (CAP): US$ 22,858.3 million
• Analyst: R. Moskow
• Rating: NEUTRAL

Core Content:

• The analyst raised the 2019 EPS estimate to $4.70 (from $4.60) and the target price to $68 (from $63), reflecting confidence in internal promotions and stabilization of the North America business.
• The North America business has stabilized, with Chris Hood taking over from Steve Cahillane.
• The company’s exposure to the declining breakfast cereal category (30% of sales) limits upside potential.
• The target price reflects a 14.7x P/E against the 2019 EPS estimate, which is in line with historical averages for U.S. food peers.
• Risks include sales decline stabilization and longer-than-expected recovery in the Family Dollar banner.

Dollar Tree Inc. (DLTR)

• Current Price (CP): US$ 86.68
• Target Price (TP): US$ 93
• Capitalization (CAP): US$ 19,961.3 million
• Analyst: J. Frommer
• Rating: OUTPERFORM

Core Content:

• The analyst introduced a sum-of-the-parts valuation, suggesting that Family Dollar assets are undervalued.
• The company's Dollar Tree segment is valued at 12x EBITDA, while Family Dollar is valued at 5x EBITDA.
• The target price assumes a 15.5x NTM Adj. EPS multiple, which includes a 12x EBITDA for Dollar Tree and 5x for Family Dollar.
• The analyst lowered 2020 EPS estimates to $7.11 from $7.20.
• Risks include a material change in the macroeconomic environment and a longer-than-expected turnaround for Family Dollar.

CarMax Inc. (KMX)

• Current Price (CP): US$ 73.82
• Target Price (TP): US$ 81
• Capitalization (CAP): US$ 13,189.9 million
• Analyst: S. Sigman
• Rating: OUTPERFORM

Core Content:

• The analyst remains constructive on KMX, citing improving pricing trends and positive comps.
• The company's used vehicle pricing has normalized, with May's Blackbook index showing a modest improvement.
• The analyst raised the target price to $81 (from $76) based on expected improvements in comps and EBIT margin.
• Risks include used pricing, new competition, and interest rates.

Pivotal Software, Inc. (PVTL)

• Current Price (CP): US$ 20.98
• Target Price (TP): US$ 22
• Capitalization (CAP): US$ 5,358.3 million
• Analyst: B. Zelnick
• Rating: OUTPERFORM [V]

Core Content:

• Pivotal is reporting its first results (F1Q19) after its IPO, with a press release expected shortly after market close on June 12th.
• The analyst expects financials, F2Q guidance, and commentary on PKS (Pivotal Container Service) and PFS (Pivotal Function Service).
• The stock is labeled as volatile due to significant price movements in the past.
• The analyst believes Pivotal is well-positioned to benefit from digital disruption and the shift to cloud-native applications.

U.S. Food and Retail Sales Update

• Retail sales for U.S. food companies rose 0.7% on average in the 4-week period ending June 2nd, improving from 0.2% growth in the prior period.
• Companies with fiscal quarters ending in May:
  • Conagra (+2.6%) had a strong fiscal 4Q.
  • General Mills (-0.4%) had weak results (excluding Blue Buffalo).
• Companies with fiscal quarters ending in June:
  • Kellogg, Tyson, Hormel, and Pinnacle Foods all saw sales growth.
  • Kraft Heinz declined 0.8% but improved sequentially.
  • Campbell and Hershey continued to show weakness.
  • B&G Foods remained positive, up 1%.

Auto Finance and Vehicle Pricing Trends

• Used vehicle prices showed a positive trend in May, with the Blackbook index improving modestly and the Manheim index rising significantly.
• Prime and non-prime auto credit performance was generally good, with improved DQs and lower NCO rates.
• SAAR (Seasonally Adjusted Annual Rate) declined slightly to 16.8mm in May.
• Inventory levels were lower than 4 million units for the first time in three months.
• The analyst believes used vehicle prices will remain flat to modestly down due to increased off-lease volume, but the market is absorbing these vehicles, preventing significant price pressure.

Stock Rating Definitions

• Outperform (O): Expected to outperform the relevant benchmark over the next 12 months.
• Neutral (N): Expected to be in line with the relevant benchmark over the next 12 months.
• Underperform (U): Expected to underperform the relevant benchmark over the next 12 months.
• Volatility Indicator [V]: A stock is volatile if it has moved 20% or more in a month in at least 8 of the past 24 months or if the analyst expects significant volatility.

Analyst Disclosures

• Credit Suisse analysts may have conflicts of interest due to business relationships with covered companies.
• Research reports are based on the analyst's personal views and are not influenced by compensation.
• The HOLT methodology is a quantitative tool that does not assign ratings or target prices.
• Certain regional disclosures apply, particularly for non-U.S. analysts and securities.