Halister News

(Bloomberg) -- Higher-than-est. mid-mo. CPI may delay the start of a BCB rate-cut cycle, analysts say.

• While baseline scenario calls for a cut at July 20 meeting, BCB may postpone until August if the current pressure fails to cede, Roberto Padovani, economist at Banco Votorantim, says in a phone interview
• Relatively smooth swap rates reaction to CPI result is due to risk-on in external markets, which has led BRL to gain, Padovani said
  • Since political shift in Brazil materialized, local assets have been following external markets, especially the outlook on Fed rates
• High level of CPI is “concerning” as it occurred during a period of positive seasonality for inflation: Padovani
• “Complex and uncertain” inflation outlook “validates and justifies” BCB guidance that “high level of annual inflation and expectations that are still distant from the inflation target do not offer room for monetary policy easing in the near-term,” Goldman Sachs economist Alberto Ramos said in a note
• NOTE: Brazil CPI +0.86% m/m through mid-May; median est. +0.76%, highest est. +0.82%; y/y 9.62% vs est. 9.51%
• NOTE: BCB duty is to ensure CPI target is met, FinMin Meirelles told Correio, a Brazilian newspaper

Economic Release Details: {MXGCTOT Index ECOD} --PHILIP SANDERS

(Bloomberg) -- Applied Materials up 8% pre-mkt after beating on 2Q sales and earnings, and raising 3Q guidance above Street estimates; AMAT is “one of the best-positioned companies in the semiconductor equipment space,” says Pacific Crest analyst Weston Twigg. KEY DETAILS:

• 2Q adj. EPS 34c vs est. 32c
• 2Q net sales $2.45b vs est. $2.43b
• Sees 3Q adj. EPS 46c-50c vs est. 36c
• Sees 3Q sales growth 14%-18% q/q

AMAT Commentary from call/release:

• CEO: “In our second quarter we booked our highest orders in 15 years and we expect to deliver record earnings in fiscal 2016”
• CEO: “Pipeline of differentiated products that will fuel future growth”

ANALYST COMMENTARY Pacific Crest (Weston Twigg)

• AMAT “one of the best-positioned companies in the semiconductor equipment space”
• Benefits from strong 3D NAND and OLED demand in the near- term
• Has exposure to foundry/logic demand as segment improves
• Posted a “staggering” $700m in 2Q display orders, almost as much as the entire FY2015 revenue of $780m
• Reiterate buy, raise PT to $26 from $23

Goldman Sachs (Toshiya Hari)

• Expects estimates to move higher as Street begins to “appreciate the sustainability of 3D NAND and OLED capex”
• Top pick in semi cap
• Multiple technology inflections combined with broadening of customer base (ie: China) creates attractive opportunity
• Reiterate buy, raise PT to $25 from $24

Stifel (Patrick Ho)

• Growth trajectory is “stronger than expected”
• The magnitude of the strength in semi cap and display buinesses “highlights the company’s strong position in these markets and its readiness to capitalize upon key industry inflections”
• After release, “long term prospects are even brighter now”
• Opportunity in display “has sustainable legs over the next few years given the industry’s emerging shift to OLED-based consumer devices”
• Buy rating, PT $24

UBS (Stephen Chin)

• Confident the stock “has multiple ways to work”
• “Impressed” with execution in winning large OLED equipment order
• Sees an additional 50c in EPS upside if new OLED TV cycle starts
• Semicap orders in 2H should increase vs 1H on foundry strength
• Reiterate buy rating, raise PT to $28.50 from $26

DATA:

• 19 buys, 5 holds, 1 sell, avg PT $25: Bloomberg data
• AMAT shares up 6.6% YTD; up 27.3% from year low on Feb. 11
• Short interest 0.3% of float: Markit

(Bloomberg) -- Canadian retail sales seen falling 0.6% in March after rising 0.4% in Feb. (forecast range -1.1% to +0.4%)

• Ex-auto sales seen falling 0.4% after 0.2% gain in Feb.
• Consumer Price Index seen rising 1.7% y/y in April (forecast range to +1.3% to +1.9%)
  • In March, y/y inflation slowed for 2nd straight month to +1.3%, reflecting cheaper gasoline, smaller markups at auto dealers

(Bloomberg) -- Federal police carry out 4 search orders, 2 for testimony and 5 subpoenas in town of Santos, Sao Paulo state, according to e-mailed statement.

• Police investigating if Odebrecht contracts with co. linked to relatives of former govt official were used for illicit payments
• Police didn’t name other cos. or people
• Investigation involves money laundering and influence peddling
• Earlier, police spokesman said operation isn’t part of Carwash probe
  • Said there aren’t arrest orders

Economic Release Details: {SLMMRVRT Index ECOD} --NIVEDITHA RAVI