DE40: PBoC stance strengthens sentiment in Europe 🏛️

• European markets gain during Wednesday's trading session
• PBoC announcements support valuations of luxury goods companies
• SAP gains on wave of strong forecasts for 2024
• Puma under strong downward pressure

Overall market situation:

European stock indices are clearly gaining during Wednesday's trading session, supported by PBoC announcements following the RRR reserve requirement rate cut in China. Better news is strongly driving stocks of fashion companies, which are clearly gaining today. Investors' attention is continuously focused on the quarterly results of companies from Europe and Wall Street.

European companies listed during Wednesday's trading session are mostly gaining at the moment. Source: xStation 5

Germany's benchmark DE40 is gaining more than 1% during today's session and is breaking out to local peaks set earlier this year.  Source: xStation 5

News:

SAP's (SAP.DE) strong quarterly report lifted its shares nearly 6.5% higher intraday. Fourth-quarter earnings came in at €1.41 per share, excluding one-time items, €0.18 worse than the FactSet consensus of €1.59; revenues rose 5.0% y/y to €8.47 billion versus the FactSet consensus of €8.36 billion. 

Earnings before interest and taxes are expected to grow 17 to 21 percent in 2024 after adjusting for currency effects. The company is targeting currency-effect-adjusted revenue growth of 8 to 10 percent. The cloud division is again expected to be the driving force with a target growth of 24 to 27 percent. These values are higher than analysts had previously assumed.

Moreover, the company said it will spend €2 billion on a program to retrain employees with AI skills or replace them through voluntary layoff programs. The restructuring is expected to reach 8,000 positions. 

D1 interval. Source: xStation 

Puma (PUM.DE) shares are doing much worse today, losing nearly 7%. The company forecast that this year's results will be worse than expected, blaming the difficult macro environment and weakening demand. The company said it expects mid-single-digit growth in currency-adjusted sales this year, compared with 6.6% growth in 2023. Puma is also forecasting earnings before interest and taxes (EBIT) of 620-700 million euros, below the consensus of 726 million euros.

"We anticipate that geopolitical and macroeconomic challenges as well as highly volatile currencies will persist in 2024. This will affect consumer sentiment and demand, especially in the first half of 2024." - Arne Freundt, Puma's CEO, said in a statement.

In 2023. Puma reported sales of about €8.60 billion and EBIT of €622 million, broadly in line with its forecast of high single-digit sales growth and an EBIT forecast range of between €590 million and €670 million. 

Source: xStation 

Siemens Energy (ENR.DE) shares gained 5.5% after preliminary first-quarter results came in better than market expectations. Revenue growth was 12.6% to €7.65 billion, higher than LSEG's estimate of €7.38 billion. "First-quarter results with core orders and sales exceeded the company's consensus by 24% and 4%, respectively," - J.P. Morgan analysts commented. 

Analyst recommendations:

flatexDEGIRO (FTK.DE) upgraded to "buy" rating by Deutsche Bank. Target price at €13.

UBS downgraded shares of Siltronic (WAF.DE) to a "sell" rating.