Today - Monday, December 9, 2013
10:58 AMTalisman, Ecopetrol say Colombian oil field is commercially viable
- Ecopetrol (EC +0.2%) and Talisman Energy (TLM -0.6%) declare the commercial viability of the Akacias oil field they have been exploring together, which they say will add at least 35M barrels of reserves for both the companies and Colombia's dwindling supply.
- EC expects production at Akacias to reach 25K bbl/day by late 2015 from the current 5.5K bbl/day, and says the field "clearly shows the heavy crude potential in the area of Llanos, which is the focus of the exploratory campaign to reach Ecopetrol's target of producing 1M of clean barrels in 2015 and 1.3M barrels in 2020."
- Last week, EC announced the commercial viability of another oil area, Eastern Cano Sur, in the same region.
10:58 AMPrana soars as treatment phase completed in Alzheimer's trial| Comment!
10:55 AMQLogic hires EMC engineering SVP exec to be its CEO
- QLogic (QLGC +0.2%) has hired Prasad Rampalli, until now EMC's cross-business-unit engineering chief, to be its new CEO, effective Feb. 3. (PR)
- Rampalli has been with EMC for three years. Before that, he spent 27 years at Intel in various positions.
- News of Rampalli's hiring comes seven months after the resignation of Simon Biddiscombe, QLogic's last full-time CEO. CFO Jean Hu has been serving as interim CEO since then.
10:51 AMStifel sees "dramatic growth" in Tandem's future
- "Tandem (TNDM -3.5%) appears poised for dramatic growth with what we view as a compelling differentiated platform technology, and a highly visible pipeline in the large, growing, and arguably under-penetrated insulin pump market," Stifel's Rick Wise says, initiating coverage at Buy.
- "The company's impressive, deep product pipeline [should] drive well above-average growth for the foreseeable future," Wise adds.
- Price target is $30, representing upside of ~21% from Friday's close.
10:49 AMAnalysis: Wait for better entry point on Lululemon| Comment!
10:47 AMValero, HollyFrontier, Marathon upgraded by J.P. Morgan on wider oil spreads
- J.P. Morgan is the latest investment banker to turn bullish on refiners, upgrading HollyFrontier (HFC +2%), Valero Energy (VLO +1.8%) and Marathon Petroleum (MPC +0.9%) on its expectation for a larger difference between Brent and West Texas oil prices.
- The firm revises its view on oil prices, forecasting Brent prices averaging $105.50/bbl for 2014 and $100.30 for 2015 vs. WTI prices of $91.50/bbl for 2014 and $85.30 for 2015, suggesting a $14-$15 differential, which should increase U.S. refining margins.
- In particular, the firm believes HFC's inland refining system is "well positioned to benefit from growth in production of disadvantaged inland North American crudes, and expect(s) HFC to capture Brent-WTI price differentials as higher gross margins across the majority of its throughput."
- HFC is upgraded to Overweight from Underweight, VLO and MPC are raised to Neutral from Underweight, and Phillips 66 (PSX +1.5%) and Tesoro (TSO +1.2%) are maintained at Overweight.
10:45 AMHeard during Time Warner Cable's media conference presentation
- Time Warner Cable (TWC -0.6%) CEO Rob Marcus says the regional L.A. Dodgers channel will launch in February with all its distribution deals not yet in place. The exec exudes confidence, but the cable operator clearly needs to get deals done to improve subscriber counts for the sports package.
- The company expects to see stable margins despite increasing programming and capital-intensive initiatives. Service revenue could help boost margins and some tightening on SG&A spending.
- Marcus seems to dismiss the Bloomberg story from last week indicating the company was a lock to take a buyout offer in the $150-$160 range. He does note the significant positive impact consolidation in the media industry could bring as programming costs are shared.
- UBS Global Media and Communications Conference Webcast
10:43 AMThai shares firm amid political turmoil| Comment!
10:42 AMNokia reportedly makes Indian tax offer; EU issues patent warning
- Reuters reports Nokia (NOK +3%) has offered to pay the Indian government €270M ($369M) to unfreeze assets (including a Chennai plant) caught up in a tax dispute.
- Nokia threatened to pull out of India earlier this year due to frustration over its tax squabble. The government made a settlement offer in July.
- Meanwhile, EU antitrust chief Joaquin Almunia is warning Nokia not to misuse its giant patent portfolio in the wake of the Microsoft deal. A number of analysts and investors have argued the deal opens the door for Nokia to become more aggressive in monetizing its IP.
- Almunia: "If Nokia were to take illegal advantage of its patents in the future, we will open an antitrust case - but I sincerely hope we will not have to." The EU has already taken a harsh view of the use of standards-essential mobile patents (some, though not all, of Nokia's patents fall under this label) in legal disputes.
10:40 AMPositive Street initiation not enough to prevent Chegg slide
- Ebullient underwriter initiation day coverage is not enough to staunch a slide by Chegg (CHGG -5.5%). Jefferies (PT of $14) and BofAML ($11.50) initiated the learning platform maker at Buy, J.P. Morgan ($13), Piper Jaffray ($11), and Raymond James ($12) at Outperform, and BMO Capital ($11) at Perform.
- Jefferies noted, "With a focus on saving students time money and helping them to get smarter, we believe Chegg is one of the best positioned in the rapidly evolving education products & services space and that there is meaningful upside from current levels."
- BofAML is bullish Chegg's textbook market, cloud-based Student Hub, and "early leadership in digital books." The firm also thinks "the high capital requirements of book distribution serve as significant competitive moats, and we see few retailers that can effectively compete with Chegg."
10:32 AMPiper still bearish on Seattle Genetics| Comment!
10:29 AMLayne Christensen swings to loss, shares -11%
- Layne Christensen (LAYN -11%) shares plunge after the drilling services company swung to a bigger than expected Q3 loss, including a 48% drop in mineral services revenue, which made up 18% of the quarter's revenue.
- The segment's results were hurt by charges from a Foreign Corrupt Practices Act investigation after the SEC had found LAYN received $4.8M in benefits from making improper payments, and made an accrual at the time.
- LAYN says the outlook for mineral services remains challenged due to continuing declines in global mineral exploration activity, which will results for at least the balance of FY 2014.
- Geoconstruction revenue fell 55% on weaker demand in the U.S. and South America, although the division gained three new contracts in the quarter.
10:25 AMBarclays names names in restaurant sector
- Barclays slices up the restaurant sector on its view that the franchised model will under-perform in 2014, but select chains with a higher mix of company-owned outlets will shine.
- The investment firm is positive on Bloomin' Brands (BLMN -0.3%), Buffalo Wild Wings (BWLD), Wendy's (WEN +0.1%), and Brinker International (EAT +0.8%) - but sees problems at Sonic (SONC +0.9%).
- Related: Weak performance by McDonald's in the U.S. an eye-opener for the industry.
10:23 AMHologic names new CEO, appoints Icahn reps to board
- Hologic (HOLX -1.1%) appoints former Stryker chief Steve MacMillan CEO. MacMillan will succeed Jack Cumming. (PR)
- "During his tenure, Steve led Stryker to strong operating performance, including nearly tripling revenue, and delivered stock price appreciation that significantly outperformed the S&P 500," HOLX notes.
- Meanwhile, the company is also appointing Jonathan Christodoro and Samuel Merksamer to the board — they are both managing directors at Icahn Capital. (PR)
10:20 AMJapan knows deflation, and it's buying Treasurys
- “There’s tremendous deflationary pressure in the U.S.,” says Mizuho Asset Management fund manager Yusuke Ito. “For bonds, the longer the maturity, the better." As U.S. investors exit duration in the domestic bond market, Japanese investors - to whom the U.S. 10-year yield of 2.84% looks positively towering - are snapping the paper up. The country's holdings of U.S. debt rose $98.2B in Q3, the 2nd largest increase since the data started becoming public 13 years ago.
- “The Japanese have experience with 15 years of disinflation,” says Hideo Shimomura, chief fund investor at Mitsubishi UFJ. “Now it is spreading to the U.S. It’s worthwhile to take long-end risk in portfolios.”
- Treasury ETFs: TBT, TLT, TMV, IEF, TBF, PST, EDV, TTT, TMF, TLH, ZROZ, SBND, IEI, DLBS, TYO, DTYS, VGLT, UST, UBT, TBX, TLO, VGIT, GSY, DTYL, LBND, SCHR, TYD, ITE, TYBS, TENZ, FIVZ, TBZ, DFVL, DLBL, DFVS, TYNS
10:17 AMThe mysterious Campbell Soup rally extends
- Share of Campbell Soup (CPB +1.2%) shoot higher again in early action and are now up over 10% over the last 5 trading sessions in the midst of a tough patch for the sector.
- The company is in the spotlight due to some unusual call option buying last week.
- Trader talk: A huge merger in the foodservice industry has just increased the chatter that Campbell Soup might be flirting with a peer.
10:16 AMMosaic to buy $2B in shares from Cargill trusts
- Mosaic (MOS -1.1%) agrees to repurchase 43.3M class A shares held by charitable trusts associated with the Cargill family with a market value of ~$2B.
- The buyback helps resolve the ownership of 128.8M MOS shares Cargill Inc. transferred to charitable trusts and Cargill family members in 2011 when it sold its 64% stake in MOS.
- "This is a major step toward our goal of a more efficient balance sheet by mid-2014,” according to MOS CEO Jim Prokopanko.
10:08 AMCasino stocks stay on hot streak
- Casino stocks start the week off in fine fashion as the sector remains hot.
- A bullish note from Wells Fargo on explosive growth of the mass-market segment in Macau is boosting sentiment. Positive forecasts on the prospects for gaming revenue in Singapore and Japan are also helping to tip sentiment.
- A solid start to online gambling in New Jersey has seen analysts lift long-term profit forecasts for some of the U.S. regional casino players as analysts weigh how the online story will play out.
- The Market Vector Gaming ETF (BJK) has trailed some of the larger U.S.-based casino stocks over the last 3 months due to its weighting toward global firms.
- Gainers: Melco Crown (MPEL) +2.3%, Caesars Entertainment (CZR) +2.3%, Boyd Gaming (BYD) +2.3%, Las Vegas Sands (LVS) +2.0%, Wynn Resorts (WYNN) +2.0%.
10:06 AMFortinet announces $200M buyback, shares rally
- Fortinet (FTNT +1.7%) is launching a $200M buyback program. At current levels, the program is good for repurchasing 6.8% of outstanding shares. (PR)
- The buyback could partly be an attempt to reassure investors following the departure of CFO/COO Ahmad Rubaie only eight months after his hiring.
- Previous: BofA/Merrill upgrades Fortinet, says Rubaie's departure not a concern
10:06 AMJefferies hikes target on Auxilium citing PD potential
- "Despite a black box warning for rare rupture events, we see the label as positive overall," Jefferies' Thomas Wei says, regarding approval for Auxilium Pharmaceuticals' (AUXL +1.8%) Xiaflex in Peyronie’s disease.
- "We see long-term upside to valuation from Peyronie's sales, which we think could be a larger opportunity than Dupuytren’s contracture," Wei adds, raising his price target on AUXL to $30 from $28.
10:00 AMOn the hour
- Dow +0.18%.
- 10-yr +0.15%.
- Euro +0.13% vs. dollar.
- Crude -0.23% to $97.43.
- Gold +0.57% to $1236.
9:59 AMOSI Systems issues public announcement on TSA order withdrawal
- OSI Systems (OSIS +0.8%) releases a public announcement on the TSA's $60M order cancellation: it believes the termination "results from Rapidscan's use of an upgraded component in the AT-2 detection systems. ... it did not meet the contractual approval requirement of obtaining TSA's approval in advance ... When Rapsican leadership discovered the error, they proactively informed the TSA of the configuration change."
- The X-ray generators are produced by Shanghai Advanced Non-Destructive Testing, which "According to the TSA's own preliminary test results ... shows comparable detection capability and false alarm rates."
- Shares tumbled 9.4% last Friday when the disclosure of the contract cancellation first hit. The TSA intends to issue a revised solicitation for the contract.
9:55 AMCheniere, Bechtel agree to $9.5B in contracts for Corpus Christi project
- Cheniere Energy (LNG +2.6%) agrees to two contracts worth a combined $9.5B with Bechtel to the engineering, procurement and construction of liquefied natural gas trains and facilities in Corpus Christi, Tex.
- Starting next year, Bechtel will build three LNG trains, three LNG storage tanks, and two berths to accommodate vessels with a capacity of up to 267K cubic meters.
- Besides the Corpus Christi project, Cheniere also is developing six LNG trains for the Sabine Pass Liquefaction project in Louisiana; Bechtel is a contractor on that project.
9:53 AMBarnes & Noble rallies as investors take another look
- Shares of Barnes & Noble (BKS +6.7%) take off as a couple of analysts back the company to come out the other side of a SEC probe over accounting in decent shape.
- The somewhat twisted logic is that the company's retail bookstore business may be in even better shape than realized if it's been bearing more Nook-related costs than it should have been.
9:52 AMSL Green in three retail transactions
- SL Green (SLG -0.7%) completes the "retail repositioning" of 747 Madison Avenue and brings it to 100% occupancy after signing a lease with a major European fashion house.
- SL Green is also conveying its 33.3% stake in the retail co-op at 747 Madison, valuing the asset at $160M, and conveying its 50% stake in the retail stores at 21-29 West 34th Street, valuing the entire property at $195M.
- SL Green is also making a $100M structured investment in conjunction with Jeff Sutton's JV at 530-536 Broadway.
- Press release
9:49 AMA roundup of tech ratings changes
- 3D Systems (DDD +1.8%) has been started at Outperform by Pac Crest.
- Mellanox (MLNX +4.2%) has been upgraded to Buy by Maxim. Jefferies started shares at Hold on Friday.
- Chegg (CHGG -3%) has received five bullish ratings, and one neutral rating, on underwriter coverage day.
- Ceragon (CRNT +8.3%) has been started at Strong Buy by Needham.
9:46 AMAudi gets aggressive| Comment!
9:42 AMAlpha Natural to sell its Marcellus JV for $300M, shares +5.9%
- Alpha Natural Resources (ANR +5.9%) jumps higher at the open after agreeing to sell its 50% interest in its shale joint venture to Rice Energy for $300M; ANR and Rice formed the venture in 2010 to develop a portion of ANR’s Marcellus natural gas holdings in Pennsylvania.
- Rice Energy plans an IPO that could value the company at up to $2.5B; of the $300M received by ANR in the Marcellus deal, $200M will be in the form of Rice common stock at the company's IPO price.
9:38 AMBlackRock preps new bond ETFs
- BlackRock's (BLK) iShares looks to broadly expand its fixed-income offerings, filing to launch six new bond funds,. Two are target-date funds - the iSharesBond 2019 Corporate ex-Financials Term ETF and the iSharesBond 2019 Corporate Term ETF.
- The other four look to capitalize on the idea of rising interest rates. One is a floating-rate Treasury ETF, and the other three are hedged strategies - with two of those set to be actively-managed.
9:36 AMChina Mobile indicates iPhone pre-orders to start; 5S supplies improve
- An ad on China Mobile's (CHL +0.5%) site suggests the world' biggest carrier will begin taking pre-orders for the iPhone 5S (AAPL +0.7%) on Thursday, as well as for 4G phones from Samsung and Sony. A company rep confirms 4G pre-orders will start on Thursday, and that services will launch on Dec. 18 (the day of CHL's 4G partner event).
- CHL had previously said it was still negotiating with Apple regarding iPhone sales. Analysts have estimated a deal could boost Apple's 2014 EPS by $2-$4 (or perhaps ~5-10%), as they balance CHL's enormous customer base and sales reach with its relatively low ARPUs and surging Chinese demand for cheaper/larger smartphones.
- Separately, Gene Munster reports U.S. iPhone 5S supply has finally caught up with demand: Checks at 60 U.S. Apple Stores found all of them were carrying each model of the device. Munster's late November survey had found 90% of SKUs in stock.
9:36 AMBob Evans higher after Sandell get noisy| Comment!
9:32 AMAt the open
- Dow +0.04% to 16026. S&P +0.16% to 1807. Nasdaq +0.25% to 4072.
- Treasurys: 30-year +0.05%. 10-yr +0.06%. 5-yr +0.02%.
- Commodities: Crude +0.22% to $97.86. Gold +0.34% to $1233.2.
- Currencies: Euro +0.12% vs. dollar. Yen +0.27%. Pound -0.16%.
9:32 AMJefferies lifts target on Ariad as Iclusig debate continues
- Jefferies hikes its price target on Ariad Pharmaceuticals (ARIA) to $4 from $2.50. Hold rating reiterated.
- "Although timing of FDA's decision to return Iclusig to market remains uncertain, physicians expect a new label to be broader than just T315iM pts," analyst Eun Yang says.
- See also: Poster presentation (from ASH) on efficacy and safety of Iclusig following failure of nilotinib in CP-CML
- In other ARIA news: The EMA's Pharmacovigilance Risk Assessment Committee is looking into Iclusig's clotting risks
- ARIA -5.9% premarket
9:28 AMAbercrombie & Fitch backs CEO Jeffries, investors not so sure
- Abercrombie & Fitch (ANF) says it has restructured an employee agreement with embattled CEO Michael Jeffries.
- Jeffries appears to have been put on a more rigid performance-based compensation package.
- SEC Form 8-K
- Shares of ANF aren't reflecting investor confidence in the move, down 1.4% in premarket action.
9:25 AMStocks poised to add to Friday's sharp gains
- Stock futures indicate a slightly higher open, with the S&P +0.2% and Nasdaq +0.3%, as investors weigh whether the strong November jobs report may push the Fed to begin tapering its bond-buying program.
- European markets are little changed, as weaker than expected German industrial production offsets strong Chinese trade data; Asian markets are mostly higher.
- Sysco +27% premarket on news it's paying $3.5B and taking on $4.7B in debt to acquire US Foods to form a food distribution company with ~$65B in annual revenue.
- Treasury prices are edging higher, sending the yield on the 10-year note down 2 bps to 2.841%.
- No major economic data are scheduled for release, but Fed bank presidents Lacker, Fisher and Bullard will be giving speeches, potentially offering guidance on Fed policy intentions.
9:22 AMTiffany makes another splash in China| Comment!
9:17 AMP-E steps in as Lloyds unloads assets
- Lloyds (LYG) exits more noncore assets, selling a portfolio of U.K. commercial loans to Cerberus for £90M n cash.
- Late last week, the bank sold a portfolio of poorly-performing Irish mortgages to Apollo Group for £257M. This group of assets generated losses of £33M a year ago. Noncore assets at Lloyds fell by £12.6B in Q3 to about £70B, and the bank hopes to bring the figure down to £66B by year end.
9:16 AMVerizon confirms EdgeCast deal, says Vodafone deal to boost EPS
- Verizon (VZ) confirms it's acquiring CDN owner EdgeCast Networks. No price tag is given, but TechCrunch reported over the weekend Verizon is paying $350M+. The companies hope to close the deal in early 2014. (PR)
- Akamai (AKAM) investors aren't responding well to the news; shares -2.5% premarket. The deal could both strengthen an Akamai rival, and end Verizon's partnership with the CDN market leader.
- Verizon notes EdgeCast has 6K+ customers, and says the business complements that of TV Everywhere uploading/encoding service provider upLynk (acquired earlier this year).
- Separately, at a UBS conference talk (webcast), Verizon predicts its $130B purchase of Vodafone's Verizon Wireless stake (financed using both debt and equity) will boost EPS by 10%.
9:15 AMRosetta Genomics jumps on NY approval for kidney test| Comment!
9:12 AMEqual Energy to be acquired by Petroflow Energy for $5.43/share
- Equal Energy (EQU) agrees to be acquired by Petroflow Energy in a deal totaling $230M, or $5.43/share, a 23% premium to the $4.43 closing price on Nov. 18 when EQU said its strategic alternatives process had successfully resulted in exclusive negotiations for a proposed transaction.
- Montclair Energy had been attempting the acquire EQU for months but failed to come up with an acceptable offer.
9:05 AMLufthansa to strive for profits via frequent flyer reorganization| Comment!
9:00 AMon the hour
- S&P +0.15%.
- 10-yr +0.11%.
- Euro +0.12% vs. dollar.
- Crude +0.02% to $97.67.
- Gold +0.1% to $1230.2.
8:59 AMRBC boosted, Scotiabank cut at National Bank
- Following Canadian bank earnings last week, Royal Bank of Canada (RY) is boosted to Buy at National Bank, with price target hiked to $75. The team removes Scotiabank (BNS) from the Buy list, downgrading to Hold.
- Scotiabank also appears to have been downgraded by ... Scotiabank, which now rates the stock a Hold with $68 price target.
8:58 AMData from MDS subset of CC-486 study presented at ASH
- Celgene (CELG) says results (presented at ASH) from an ad hoc analysis of an MDS subset from two Phase 1/2 studies of oral azacitidine show 11 of 23 patients achieved an OR, while four of 23 achieved CR.
- Other results: 30% achieved hematologic improvement, red-blood cell TI achieved in five of 12 patients, platelet TI achieved in two of five patients.
- Four patients discontinued treatment due to AEs. (PR)
8:57 AMPetrobras could raise fuel prices in 2014, CEO says
- Petrobras (PBR) could raise fuel prices next year, CEO Maria das Gracas Foster says, after a new mechanism to bring domestic prices in line with international levels was implemented.
- The inability to push through automatic fuel price adjustments has raised questions about Foster's future at the company, but she says she "definitely had not" considered resigning; she also denies a rift between her and Brazil Finance Minister Guido Mantega, who also serves as PBR's chairman and has said any increases to domestic fuel prices can't stoke inflation.
8:53 AMEssex and BRE in exclusive negotiations
- Essex Property Trust (ESS) confirms its proposal to buy BRE Properties, saying it offered $12.33 in cash and $0.2971 of ESS for each share of BRE - $58.08 based on Friday's close. Chatter last week said the offer was higher than a rejected $60 per share bid made by Land & Buildings earlier this year.
- The two companies have entered exclusive negotiations.
- BRE -2% premarket to $58.15
- Essex press release
- BRE press release
8:47 AMOil Search in talks to join InterOil, Total in Papua New Guinea project
- Oil Search International (OIS) says it is in talks about getting involved in development of the Elk and Antelope oil discoveries in Papua New Guinea, which may contain more than 5T cu. ft. of natural gas.
- Just three days ago, InterOil (IOC) agreed to sell a majority interest in the discoveries to Total (TOT) in a deal worth up to US$3.6B, depending on how much gas is confirmed to be there.
- TOT had hinted at a selldown when confirming the deal with IOC but didn’t name a prospective partner; one way to facilitate OIS’s entry into Elk-Antelope could be an equity swap involving part of its stake in the Taza oil and gas discovery in Iraq's Kurdistan.
- IOC +4.8%, TOT -0.6% premarket.
8:39 AMSources deny HSBC IPO plans
- While HSBC did consider a float of its U.K. operations in wake of the financial crisis, people familiar with the matter deny the bank is currently in the process of prepping an IPO, reports the WSJ.
- Among the issues: HSBC already has plenty of liquidity looking to find a good investment home, so what would be the plan to profitably invest the proceeds of a sale?
- Earlier coverage
8:37 AMChobani pushes back as yogurt war heats up
- Chobani plans to air advertisements during the Super Bowl in a major push by the private Greek yogurt firm.
- The yogurt market has heated up with major food companies such as General Mills (GIS), Danone (DANOY), and Muller-PepsiCo (PEP) all investing significantly in new products and marketing.
- What to watch: Chobani has an early edge in Greek with its strong brand reputation helping it command premium prices, but sees even more growth opportunities with low-calorie products.
8:37 AMCytokinetics updates Phase 2b tirasemtiv program
- Cytokinetics (CYTK) updates BENEFIT-ALS (tirasemtiv in ALS) at a conference in Italy.
- Enrollment is complete with 711 patients.
- Measures have been taken to address the study assignment error (reported earlier this year) while maintaining "the original statistical power of the trial and preserv[ing] the statistical integrity of the primary analysis of efficacy."
- The company says the presentation included "interim, double-blind, aggregate data."
- For more, see here.
- CYTK +3% premarket
8:29 AMRestaurant stocks in focus after McDonald's under-performs in the U.S.
- McDonald's (MCD) falls in early trading after the restaurant chain sees the impact of price increases and a positive mix in the U.S. dwarfed by weaker traffic trends.
- As one of the first reads on the fast-food industry for November, there could be some debate on if McDonald's lost market share in the U.S. or if the whole sector is being pulled down by cautious consumers.
- On watch: Burger chains BKW, WEN, SONC, JACK could see extra volatility due to the poor performance of McDonald's in the U.S. Starbucks (SBUX), Chipotle (CMG), and Panera Bread (PNRA) will also be watched as their performance over the same November period could trail analysts estimates with Black Friday shopping more restrained this year.
- MCD -0.6% premarket.
8:29 AMPeabody to close Wilkie Creek Mine in Australia| Comment!
8:26 AMKaryopharm presents Selinexor data at ASH
- Karyopharm Therapeutics' (KPTI) Selinexor "showed preliminary evidence of anti-cancer activity as a single agent" in most relapsed/refractory NHL and CLL patients from a cohort comprised of those with progressive disease on entry.
- Data summary from the Phase 1 trial in advanced hematologic malignancies: PRs, 27%; SD, 50%; tumor shrinkage in 17 of 18 patients. (PR)
8:22 AM3D printing hype overdone, says Nomura's Kim
- "We think recent market optimism about the 'Third Industrial Revolution' potential of 3D printing is overdone, given uncertain growth potential in the consumer market, limited pragmatic applications, and a lack of mass-production ability," says Nomura's James Kim.
- "We do not expect 3D printing to garner a meaningful share of the global manufacturing industry in the near term, with the total market size of 3D printing, as per Wohlers Associates, estimated to grow to $6B by 2017 (from $2B last year), largely falling short of the conventional manufacturing space ($93B)."
- Nevertheless, big players with consumable businesses like Stratasys (SSYS) and 3D Systems (DDD) and pure raw materials supplies could be long-term beneficiaries of 3D printing development, says Kim.
- Also mentioned is ExOne (XONE) for its binder jetting technology currently employed by Ford to create part prototypes, and Organovo (ONVO) for 3D bioprinting technology to create functional human tissue.
- On the 3D printing software side, Dassault (DASTY), Autodesk (ADSK), ANSYS (ANSS), and PTC (PMTC) get a mention, while Proto Labs (PRLB) is noted in services.
8:19 AMNoble Energy eyes new appraisal for natural gas off Cyprus
- Noble Energy (NBL) says it could launch a fresh appraisal of natural gas resources off Cyprus next year and look for new hydrocarbon sources in the same area.
- An appraisal drilling to verify the 2011 find has yielded on average 4.1T cu. ft. of gas, Noble's Israel partners Delek Drilling (DKDRF) and Avner Oil (AVOGF) said last week, lower than the 5T cu. ft. announced in October soon after the conclusion of the appraisal on the well.
- Based on the assessment of data, NBL could by April 2014 decide on where a fresh exploratory drill will take place.
8:17 AMJapan and the U.S. drag down results for McDonald's in November| 1 Comment
8:13 AMHerbalife, Moelis mount offensive in Ackman battle
- "All's fair in love and activism," a securities law professor from Columbia quips, speaking to Bloomberg about an ostensibly innovative strategy being adopted by Herbalife (HLF) in the fight against Bill Ackman.
- Apparently, investment bank Moelis & Co. (which works with the company) arranged a meeting between hedge fund investment adviser Cliffwater LLC and HLF management in an effort to convince investors to withdraw their money from Pershing Square.
- Moelis has also reportedly approached New Jersey's pension fund which has not met with HLF as of yet.
8:11 AMSysco lands US Foods in large foodservice merger
- Sysco (SYY) buys U.S. Foods in a deal that has a total enterprise value of close to $8.2B inclusive of the assumption of debt.
- After the merger closes, US Foods shareholders will hold approximately 87M shares of Sysco.
- The new combined company expects to realize annual synergies of $600M.
- The deal is slated to close in Q3 of 2014.
- SYY +10.2% premarket.
8:10 AMBig drop in delinquent inventory at MGIC| Comment!
8:04 AMAmerican Airlines Group to debut today
- The largest airline in the U.S. will begin trading later today as American Airlines Group (AAL) debuts on the Nasdaq.
- Execs tell The Dallas Morning News the combined company will infuse the corporate culture of both carriers and highlight the significant synergies that can be realized.
- Analyst take: Deutsche Bank is in early with a Buy rating and $35 price target on what it sees as an "attractive" investment opportunity.
8:03 AMPreclinical studies for Ligand's G-CSFR agonist presented at ASH
- A poster presentation at ASH shows Ligand Pharmaceuticals' (LGND) G-CSF receptor agonist LGD-455 "significantly increases peripheral blood neutrophils, inhibits tumor cell growth and increases apoptosis."
- The company evaluated the treatment's ability to stimulate white blood cell counts in cynomolgus monkeys. (PR)
7:57 AMGilead reports data for investigational blood cancer drugs
- Fresh off FDA approval for the game-changing HCV treatment sofosbuvir, Gilead Sciences (GILD) reports (at ASH) interim results from a Phase 2 study of the Syk inhibitor GS-9973 in relapsed or refractory hematologic malignancies.
- Results: 97% of CLL patients receiving at least eight weeks of therapy saw lymph node reduction, 20% saw a 50% or greater reduction in their tumors, and, regarding safety, in a population of 78 CLL and NHL patients receiving at least four weeks of therapy, 64% continued treatment. (PR)
- Also at ASH, GILD reported results from a Phase 2 study of the PI3K inhibitor idelalisib in refractory iNHL.
- OR rate: 57%, medium duration 12.5 months; CRs, 6%; 63% had a partial response.
- Median PFS: 11 months; median OS, 20.3 months. (PR)
- GILD +2.7% premarket
7:50 AMDon't count out TV advertising
- ZenithOptimedia forecasts advertising will grow 5.3% in 2014 to $560B with a solid pace of growth in the U.S. and China supporting the industry.
- TV advertising (CBS, CMCSA, FOXA, DIS, AMCX, DISCA, SNI) is in decline as desktop Internet and mobile continue to draw advertising buyers, but perhaps not as rapidly as some have previously predicted. TV's share of advertising is expected to go from 40.2% of advertising this year to 39.3% in 2016, according to the research firm.
7:48 AMQEP Resources acquires Permain Basin properties for ~$950M
- QEP Resources (QEP) agrees to acquire oil and gas properties in the Permian Basin from an unnamed seller for ~$950M.
- Current net production of the acquired properties is ~6,700 boe/day (68% crude oil) with total estimated net recoverable resources of up to 300M boe.
- QEP plans to fund the purchases with proceeds from its revolving credit facility and cash on hand, and expects to sell various non-core E&P assets during H1 2014.
7:47 AMCME to launch Edmonton Sweet contract| Comment!
7:40 AMFDA to review failed Acura study; shares soar
- Acura's (ACUR) shares surge 18% after the FDA agrees to review the results of the failed Phase II trial of a painkiller that was made with the company's Aversion technology, which is designed to deter drug abuse.
- The results of the study showed that Acura's tablet did not significantly lower likability among abusers.
- The FDA has now agreed to provide a definitive response regarding the suitability of the study that will be used to consider authorization of Acura's product. The agency has requested extra data, although the company doesn't believe it will need to carry out additional studies. (PR)
7:37 AMCoverage underway for Brixmor
- Coverage gets underway at a number of shops for Blackstone's (BX) recently gone-public shopping center owner Brixmor Property Group (BRX).
- Initiating with Buys are KeyCorp, Wells Fargo, BAML, and RBC Capital. Citigroup starts with a Hold.
- The stock is about flat since its mid-October IPO. Blackstone still holds a 73% stake.
7:32 AMNII Holdings announces headcount cuts
- In connection with the recently-announced Project Accelerate initiative, NII Holdings (NIHD) plans reductions of more than 25% of its HQ staff and the elimination of more than 1.4K market operations positions.
- Cash costs related to the severance will be $25M-$35M, but that includes $8.6M in restructuring charges that were already expensed in Q3. Most of the rest of the cost should be taken in Q4. Annualized cost savings are expected to be $50M-$55M.
- Separately, the company expects a higher level of prepaid subscriber deactivations in Mexico after modifying its deactivation policy for inactive prepaid subscribers. THe net subscriber loss in Mexico should run to 400K in Q4.
- Press release
7:24 AMUnited Therapeutics handed subpoena for three treatments
- United Therapeutics (UTHR) has received a subpoena from the Department of Health & Human Services requesting documents related to the company's marketing of three treatments for pulmonary arterial hypertension (PAH).
- The drugs involved, which are United Therapeutics' Remodulin injection, its Tyvaso inhalation solution and its Adcirca tablets, are the firm's only therapies that have received FDA approval.
- The subpoena follows an investigation by the DOJ. (PR)
7:11 AMTerex to offload truck unit to Volvo for $160M
- Terex (TEX) has agreed to sell its truck business, which sells off-highway rigid and articulated haul trucks, to Volvo Construction Equipment for $160M.
- "Trucks no longer fit within our changing portfolio of lifting and material handling businesses," said Terex CEO Ron DeFeo. The deal reflects the company's strategy to "focus on those businesses that provide the greatest returns for our shareholders."
- Terex plans to use the proceeds from the deal to help finance a stock buyback program and dividend payouts. (PR)
7:10 AMAdvantage Rent A Car lands in bankruptcy auction
- The Advantage Rent A Car brand goes for sale in bankruptcy court today after it said a lease agreement with former parent Hertz (HTZ) put it at a competitive disadvantage.
- The FTC forced Hertz to sell off Advantage as a condition for approval of a merger with Dollar Thrifty.
- A Canadian P-E firm and German car-rental company Sixt SE are expected to be bidders at the auction.
7:01 AMJ&J drug for rare cancer performs well in Phase II study
- Johnson & Johnson's (JNJ) Siltuximab drug reduced tumors in a Phase II trial of 79 patients with Castleman disease, a very rare condition that is characterized by enlarged lymph nodes and for which there are no approved therapies.
- A third of the subjects who received siltuximab responded vs none who were given a placebo. A quarter had all symptoms of the disease completely resolved for a median period of 1.3 years.
7:00 AMOn the hour
- S&P +0.02%.
- 10-yr +0.1%.
- Euro +0.09% vs. dollar.
- Crude -0.1% to $97.56.
- Gold -0.16% to $1227.
6:47 AMWhiteWave to acquire Earthbound Farm for $600M in cash
- WhiteWave Foods (WWAV) is acquiring Earthbound Farm - the largest organic produce brand in North America - for $600M in cash
- The acquisition is expected to be accretive to EPS (+$0.07 before transaction costs) in the first year after close. Subject to regulatory approvals etc., it is expected to be completed during Q1 2014. WhiteWave plans to operate Earthbound Farm as a separate business unit.
- Earthbound's anticipated 2013 net sales are over $500M.
- WhiteWave will fund the acquisition with borrowings under its existing credit facilities, and intends to increase its credit facilities by $500M to fund further growth.
- Japan +2.29%.
- Hong Kong +0.29%.
- China +0.05%.
- India +1.57%.
- London -0.22%.
- Paris -0.18%.
- Frankfurt +0.04%.
5:18 AMAsian stocks higher, Europe mixed
- Asian shares rise following strong U.S. jobs data last week, as well as better-than-expected export data from China and inflation that remains relatively tame.
- U.S. stock futures are also higher, albeit not by much, while European shares are mixed.
- Japan +2.3%, Hong Kong +0.3%, Shanghai +0.05%, India +1.4%.
- EU Stoxx 50 -0.05%, London -0.1%, Paris -0.2%, Frankfurt +0.3%, Milan +0.4%, Madrid +0.5%.
- U.S. stock futures: Dow flat. S&P +0.1%. Nasdaq +0.15%
4:56 AMTech giants call on government to limit spying campaign
- Google (GOOG) and Microsoft (MSFT) are among eight technology giants that have started a campaign to limit government online surveillance. The other companies are Apple (AAPL), Yahoo (YHOO), Facebook (FB), Twitter (TWTR), AOL (AOL) and LinkedIn (LNKD).
- The move appears to represent an attempt by the companies to prevent a loss of business because of Edward Snowden's revelations about the scope of the National Security Agency's spying campaign. Forrester estimates that the disclosures could cost the U.S. cloud computing industry $180B by 2016.
- While the firms want limits on governmental authority to collect user information, as well as increased oversight, given the tech industry's own data practices, some might say that there's more than a whiff of the pots calling the kettles black.
4:34 AMActivist investor to turn heat up on Bob Evans
- Sandell Asset Management reportedly intends to announce today that it will begin a consent solicitation at Bob Evans (BOBE), which will enable shareholders to vote on changes at the restauranteur outside an annual meeting.
- Sandell will also reveal that it has heard that Bob Evan has rebuffed buyout interest from at least one private-equity firm.
- The fund's expected move will come after Bob Evans, in which Sandell owns 6.5%, rejected proposals that the latter has made. These include splitting up the company's restaurant and packaged-food businesses, borrowing against its real-estate holdings, and even selling those assets.
- Sandell reckons Bob Evans could be worth above $80 a share, well above Friday's close of $51.31.
4:15 AMKKR, Bain bid for $1.6B Tyco security unit
- Tyco International (TYC) has reportedly attracted initial bids from KKR (KKR) and Bain Capital for ADT Caps, its South Korean security systems unit, which is valued at around $1.6B.
- Other suitors for ADT Caps include CVC Capital Partners, Hong Kong-based Affinity Equity Partners and South Korea's MBK Partners.
- The $1.6B valuation is based on an EBITDA multiple of 10, above the 8X that other deals in the sector attracted.
4:05 AMEADS to axe up to 6,000 jobs
- EADS (EADSF) reportedly plans to reduce headcount by 5,000-6,000, or 5% of the total, and sell its Parisian headquarters as part of a restructuring that also includes renaming the company Airbus.
- However, EADS doesn't intend to lay staff off; rather, it will use voluntary redundancy and transfers to lower the job count, and it will refrain from replacing some of those who leave.
- The overhaul will allow EADS to save an estimated €300-500M from 2014-2016. It will mainly affect the company's defense and space operations, which have suffered from a fall in bookings due to defense cuts by governments.
- EADS is expected to disclose the details of the restructure at a shareholders meeting on Wednesday.
3:58 AMIberdrola gets a €66M contract with Pemex
- Iberdrola (IBDSF, IBDRY) has been awarded a €66M contract in Mexico to build an interconnection system that will join Salamanca’s cogeneration plant to Ingeniero Antonio M. Amor refinery. It is the first agreement between Iberdrola and Pemex.
- The project will be developed during the course of 18 months on a turnkey basis method, and it will include building a concrete rack of over 2.5 kilometers long which will carry high and medium pressure steam generated by Salamanca’s cogeneration plant to the aforementioned refinery, both located in Guanajuato state, central Mexico.
- The initiative also involves implementing a large plant for the treatment of condensation water, a degasification system, several pumping mechanisms and other auxiliary infrastructures.
- Source: press release
3:47 AMGM to slash S Korea output, end Australian production
- GM (GM) is reportedly planning to reduce production in South Korea by up to 20% by 2016 and close its two factories in Australia, where the high dollar has hurt the carmarker's competitiveness. In Korea, the company has had to deal with high wages and labor unrest.
- The cutbacks would add to the shutting of a factory in Germany and GM's decision to significantly scale back Chevrolet sales in Europe.
- The ending of Australian manufacturing would follow similar moves by Ford and Mitsubishi, and would come after the new government indicated it would phase out support for the auto industry.
- "They (GM) are starting to act like a global organization and are breaking up the fiefdoms," says Morgan Stanley auto analyst Adam Jonas. "The financial controls have been changed and there is more accountability to Detroit."
3:32 AMHSBC mulls listing U.K. operations
- HSBC (HSBC) has reportedly asked investors if they would support the bank selling up to 30% of its U.K. unit in an IPO that could value the subsidiary at an estimated £20B.
- A listing of the business would help HSBC comply with the terms of the incoming Vickers rules, which require U.K. banks to ring-fence their domestic retail banking operations. Increasing capital requirements may also make the flotation logical, while it could unlock shareholder value as well, given investor optimism towards the U.K. and its banking sector.
- The news comes as other banks prepare to list subsidiaries in the U.K., including Lloyds, RBS and Santander.
- HSBC's shares are +0.4% in London.
3:14 AMGerman trade surplus falls
- Germany's trade surplus dropped to a seasonally adjusted €16.8B in October from €18.7B in September and missed consensus of €18B.
- Exports rose 0.2% on month, sharply down from +1.6% in September but above forecasts of +0.15%.
- Unadjusted exports increased 0.6% to a record €99.1B, a figure that may add strength to those in Europe who have criticized Germany for relying too much on foreign trade.
- Adjusted imports +2.9% vs -1.9% and +1.6%.
- Current account surplus €19.1B vs €20B. (PR)
- The DAX is +0.4% and the euro is flat at $1.3708.
2:58 AMChina inflation edges closer to 2% handle
- China’s CPI will likely break below 3% in December and fluctuate towards mid-2% in Q1, Reorient analyst Steve Wang notes. CPI eased to 3% in Nov. as food inflation slid to 5.9% from 6.5%. "Unless food prices, especially meat and vegetables, surge beyond reason during the coming holiday season... China faces minimal inflation risk in the months ahead."
- "Non-food CPI was again a non-event at 1.6%, but the strong housing market is beginning to sting, with rental inflation edging higher to 4.7%, the highest in nearly a year and half," suggesting policymakers will likely maintain existing curbs on property markets in order to stem the spillover effect of high housing prices on inflation.
- ETFs: FXI, PGJ, GXC, FXP, HAO, CYB, YINN, CNY, TAO, CHIQ, CHIX, MCHI, YANG, PEK, CQQQ, XPP, QQQC, DSUM, YAO, ASHR, CHXX, CHII, FXCH, CHXF, ECNS, CHIE, YXI, CHIM, KWEB, KFYP, TCHI, FCA, CHLC, CHNA
2:55 AMJapanese Q3 GDP growth weaker than first thought
- Japan's Q3 GDP has been revised down to +0.3% on quarter from a previous estimate of +0.5% and +0.5% in Q2.
- On year, GDP +1.1% vs +1.9% and +1.9%. (PR)
- Bank lending +2.2% in November vs +2% in October. (PR)
- Current account deficit ¥127.9B ($1.24B) in October vs surplus of ¥587.3B in September and consensus of ¥153B. (PR)
- "A downward revision in capital expenditure was what weighed on the revised figures," says RBS Securities Japan chief economist Junko Nishioka. However, the figures mark the bottom of the capex cycle, Nishioka says. "I expect capital spending to return to a recovery trend in the October-December quarter," she predicts.
- The Nikkei is +2.3% and the USD-JPY is +0.2% at ¥103.05, with the stock index and the dollar boosted by the strong U.S. jobs report on Friday.
- ETFs: DXJ, EWJ, FXY, YCS, JGBS, JGBD, DFJ, JYN, NKY, DBJP, EZJ, EWV, YCL, SCJ, JSC, JPP, JGBL, ITF, DXJS, JGBT, JPNL, JPNS, FJP
12:00 AMMonday's economic calendar
- No events scheduled.