By Saikat Chatterjee and Elizabeth Howcroft

LONDON (Reuters) – Currency traders are seeing increased demand for derivatives that enable holders to position for a stronger pound, as improved chances of a Brexit trade deal start to push the risk of negative interest rates off the table.

Sterling is 4% off 2020 highs of $1.35 hit last month when Britain appeared set to exit European Union trading arrangements with no alternatives in place, a catastrophe that could force the Bank of England to cut rates below 0%.

But recent positive news around Brexit talks have flipped markets into bullish mode, lifting sterling back toward $1.30.

“A month ago I would’ve said (UK Prime Minister) Boris Johnson has offended the Europeans to a point where they don’t want to negotiate with him,” said Mark Holman, CEO at TwentyFour Asset Management, adding that talks seemed to be getting “warmer and warmer”.

Goldman Sachs is advising clients to buy sterling, predicting a trade deal by November.

But many prefer to position via options — derivatives which allow holders to buy or sell at a pre-agreed price within a stipulated time period.

Last week for the first time in two months, “call” volumes for sterling surpassed “puts”, implying greater demand for options conferring the right to buy, rather than sell the pound, data from the Depository Trust & Clearing Corporation (DTCC) show.

Morgan Stanley’s proprietary tracker also showed clients bought more pound calls versus the dollar and euro last week.

Another gauge, risk reversals, which measure the ratio of pound calls over puts, showed that a month ago investors were the most bearish on sterling in six months, at 2.3. This has since halved.

(Graphic: Risk reversals https://fingfx.thomsonreuters.com/gfx/mkt/dgkplbyqepb/Pasted%20image%201601983450761.png)

And implied sterling volatility — an option market measure of expected price swings — has slipped off

Goldman Sachs upgraded Avient (AVNT +8.2%) to Buy from Neutral (PT, $32 — $39) given the stock’s “undemanding valuation; in the past 6-months, the stock has gained 52%.

Wall Street Analysts rating is Bullish (PT, $33.20).

Valuation vs. peers:

Analyst Robert Koort tells that with the Clariant Masterbatches deal closed and the acquired business “showing excellent resilience” along with synergy targets lifted, Avient’s equity price offers an attractive entry point.

Quick look at Clariant integration & synergies update:

Avient has made “significant progress in high-grading its business mix” and is on a path to deliver margin improvement through 2023, says the analyst.

The company is positioned to sustainably grow at a rate that exceeds GDP:

The cost synergies from the Clariant Masterbatch acquisition will help drive substantial margin expansion; excluding distribution segment and pro forma with synergies, EBITDA margins at Avient are seen exceeding 16%:

Previously: Avient guides Q3 above consensus (Sep. 24)

Source Article

(RTTNews) – While reporting financial results for the first quarter of fiscal 2021 on Thursday, Conagra Brands, Inc. (CAG) provided only its adjusted earnings and organic net sales growth guidance for the second quarter of fiscal 2021.

The company is still not initiating annual outlook, as is usual, as the impact of the COVID-19 pandemic on its full year fiscal 2021 consolidated results is uncertain.

The Company continues to expect demand in retail to remain elevated and demand in foodservice to remain challenged versus historical norms. However, the degree and timing of changes in retail and foodservice demand levels are difficult to predict with enough certainty to provide a full-year outlook at this time.

For the second quarter, the company expects adjusted earnings in a range of $0.70 to $0.74 per share and organic net sales growth of 6 to 8 percent.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $0.71 per share on revenue growth of 4.0 percent to $2.93 billion for the quarter. Analysts’ estimates typically exclude special items.

The company said it continues to see a significant increase in demand in its retail segments and also continues to see reduced demand in its Foodservice segment when compared to pre-COVID-19 demand levels. COVID-19-related costs have also continued to impact the business.

Looking ahead to the long-term algorithm, the company continues to project adjusted earnings for fiscal 2022 in the range of $2.66 to $2.76 per share and organic net sales growth at a 3-year CAGR ending fiscal 2022 of 1 to 2 percent. It also remains committed to achieving its leverage target of 3.5x to 3.6x by the end of fiscal 2021.

Additionally, the Company’s board of directors also approved a 29 percent higher quarterly dividend payment of $0.275 per share of