MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Friday, May 24
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6:25 PM News Corp. (NWS, NWSA) expects to write down the value of its soon-to-be-independent publishing business by $1.2B-$1.4B this quarter, according to an SEC filing. The media company says "certain of its goodwill and intangible assets were potentially impaired” at the publishing business, which includes newspapers such as the NY Post and WSJ. [Consumer] 1 Comment
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6:02 PM Actavis (ACT) confirms that an Appeals Court has granted an injunction to AstraZeneca (AZN) to enjoin ACT from further distribution of its generic version of Pulmicort until AZN's appeal before the Court gets resolved. ACT launched its generic version on April 1, following a ruling that AZN's patent was invalid. The following day, the Court then issued a temporary restraining order blocking ACT's generic sales to permit AstraZeneca an opportunity to seek injunctive relief with the Federal Circuit. Shares -0.3% AH. [Healthcare] Comment!
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6:00 PM On the hour: S&P flat. 10-yr +0.02%. Euro +0.02% vs. dollar. Crude -0.44% to $93.84. Gold -0.47% to $1385.25. Comment!
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5:54 PM The U.S. State Department takes the unusual step of releasing publicly the feedback it received about the controversial Keystone XL pipeline (TRP) in response to its draft environmental report. Well represented in the first batch of ~1.2M total comments are green groups like Tar Sands Action and the Sierra Club as well as advocacy groups like Americans for Tax Reform and the Institute for Energy Research. [Energy] 5 Comments
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5:42 PM Starz (STRZA) +3.2% AH after an SEC filing reveals Berkshire Hathaway (BRK.A, BRK.B) acquired ~5.62M shares, or a 5% stake, in the company. [Consumer, On the Move] 3 Comments
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5:37 PM Galena Biopharma (GALE) files a primary offering to sell up to 10,771,184 shares of common stock tied to the exercise of its warrants. Shares -2.3% AH. [Healthcare, On the Move] Comment!
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5:15 PM Google (GOOG) is developing plans to build a wireless network in emerging markets such as Africa and southeast Asia, seeking to target major cities currently lacking wired service, WSJ reports. GOOG plans to team with local companies to develop the networks and formulate business models to support them, but it's unclear whether GOOG already has lined up such deals or alliances. [Tech, Global & FX] 2 Comments
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5:00 PM On the hour: S&P 0%. 10-yr +0.02%. Euro +0.02% vs. dollar. Crude -0.44% to $93.84. Gold -0.48% to $1385.15. Comment!
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5:00 PM Here's an interesting tidbit about the Dow, which managed to edge up again today: The blue-chip average has gone 101 trading days without a three-day losing skid, the longest stretch in its history. The closest run to what we're seeing today came in 1935, when the blue-chip average went 93 days without a three-day losing blip. (video) [U.S. Economy] Comment!
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4:47 PM Problems at the Pascua-Lama mine were already factored into Barrick Gold’s (ABX -2%) share price, and the slide after today's construction halt should be considered short-term, Gold Newsletter's Brien Lundin says. The $16M fine imposed by Chile is "immaterial" when contrasted to the $8.5B currently allocated to the project, Cowen analysts say. [Commodities] 4 Comments
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4:37 PM China GengSheng Minerals (CHGS) says it received a delinquency letter from the NYSE on May 21 notifying the company that it wasn't in compliance because it has yet to file its Form 10-Q for the quarter ended March 31. It has until June 4 to submit a plan of actions it has taken, or will take, that will bring it into compliance. [Global & FX] Comment!
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4:26 PM After rising nearly 13% at the open following better than expected Q1 revenues with a jump in subscribers to its premium service, Pandora (P -4.2%) shares moved too far too fast before falling amid questions about the quality of its results. "Pandora needs to show further monetization gains in order to reach sustainable profitabilty," Dougherty's Steven Frankel says. "The mission is far from complete." [Tech, On the Move] 13 Comments
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4:17 PM DA Davidson chimes in on HEICO (HEI +1.2%) today after the company posted a solid FQ2, raising its price target from $44 to $48 and reiterating its Buy rating. The firm says the raised guidance by the company indicates strong organic growth, while the benefits from its Reinhold acquisition also appear to be gaining traction as well. Credit Suisse also upped its price target on the shares as well on the strong quarter from $43 to $50. [Earnings, On the Move] Comment!
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4:10 PM Market recap: Stocks finished mostly lower but the Dow edged higher, avoiding its first three-day slump of the year. Given the light volume and the looming holiday weekend, investors likely were mostly trimming around the edges of their portfolios. Among S&P sectors, utilities and energy paced decliners, weak earnings weighed on retailers, and P&G lifted consumer staples. [Top Stories] Comment!
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4:06 PM Lockheed Martin's (LMT) F-35 fighter will be introduced in mid-2016, a year earlier than expected, Reuters said this week. In order to expedite the jet's operational debut, the Air Force will use a "slightly less capable version" of the plane's software package at first, with an upgrade to come later. (Also: F-35 cost falls) Comment!
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4:04 PM Otelco (OTT +25%) finished higher today after the company said it has emerged from its "prepackaged" Chapter 11 bankruptcy and completed its balance sheet restructuring process, including an extension of its senior credit facility. The restructuring reduces its total debt burden by more than 50% and extends its senior credit facility through April 2016. [On the Move] Comment!
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4:00 PM At the close: Dow +0.05% to 15302. S&P -0.06% to 1650. Nasdaq -0.3% to 3449.
Treasurys: 30-year +0.16%. 10-yr 0%. 5-yr -0.02%.
Commodities: Crude -0.33% to $93.94. Gold -0.67% to $1382.45.
Currencies: Euro 0.% vs. dollar. Yen -0.91%. Pound -0.12%. Comment! -
3:57 PM Kodiak Oil & Gas (KOG) is started at Hold with an $11 price target by Deutsche Bank, which likens the company to a "young, talented player still looking for consistency." The firm sees "significant long-term asset value and peer-leading cash flow growth, but with directional risk to the price of crude and inherent risk in KOG's back-end loaded 2013 volume growth." [Energy, Quick Ideas] 3 Comments
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3:39 PM Private-equity is taking profits, with this week's 7 offerings pushing the year's total to 86, more than double the amount this time last year, according to Dealogic. The dollar amount of $34B is a triple. In addition to Oaktree (OAK) and Apollo (APO) insiders cashing in some chips this month, Bain sold chunks of Bloomin Brands and Sensata (ST), Carlyle (CG) unloaded part of Wesco Aircraft, and teamed with Blackstone (BX) to sell $1.3B of Nielsen Holdings (NLSN). [Financials] Comment!
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3:28 PM Sibanye Gold (SBGL +5.6%) bucks weakness in South African gold miners Gold Fields (GFI -2.2%), AngloGold (AU -2.4%) and Harmony Gold (HMY -1.8%), as local money manager Allan Gray raises its stake in the miner to 10.1%. SBGL shares have slipped 51% YTD. [Commodities, On the Move] 1 Comment
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3:25 PM Las Vegas Sands (LVS -0.6%) replaces PricewaterhouseCoopers as its auditor with Deloitte Touche amid some legal and regulatory issues the company is currently dealing with. According to a previous SEC filing, the company didn't have any notable disputes with PwC. [Consumer] Comment!
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3:16 PM There's no bounce today for Facebook (FB -3.5%) whose slide today takes the stock to a new YTD low. The only news of note is Google's (GOOG) rumored entry into the Waze bidding amid reports Waze isn't interested in Facebook's desire to have part of the team move to Silicon Valley. Adding Waze would make Google Maps an even more robust product while keeping Facebook off of its territory. [Tech, On the Move, M&A] 4 Comments
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3:14 PM Northrop Grumman (NOC +1%) expands its investment in Australia, saying it's awarded contracts to 3 new global supply chain partner companies who will provide products and services for a variety of missions and capabilities. The Australian companies forming part of its expanded global supply chain, are; Electro Optic Systems, CEA Technologies, and Insitec. [Global & FX] Comment!
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3:13 PM Oil stocks are particularly were well-positioned to take advantage of a stronger H2 economy, Edward Jones' Kate Warne tells CNBC, naming National Oilwell Varco (NOV) and Chevron (CVX) as her top energy picks. Natural gas and oil could see continued strong demand throughout 2013 and beyond, and NOV benefits either way, Warne says; she also likes CVX's "stability" in the oil sector. [Energy, Quick Ideas] Comment!
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3:12 PM Yahoo (YHOO +1.7%) throws its name into the Hulu hat to join a number of P-E firms as well as DirecTV and Time Warner Cable in the hunt. Owners Disney (DIS +0.1%), Comcast (CMCSA +0.2%), and News Corp (NWS, NWSA) will weigh the best offer, but will also want to position themselves on the content side to be protected. (Previous on Hulu-mania) [Tech, Consumer] 7 Comments
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3:00 PM After a 13% decline over the last two months and now trading about 5% below book value, Invesco Mortgage (IVR) gets its 2nd insider buy in a week, with CIO John Anzalone adding about 9% to his stake in the company with a 2,100 share purchase Wednesday at $19.61 each (previous: CEO's purchase). [Financials] 2 Comments
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3:00 PM On the hour: Dow 0%. 10-yr 0%. Euro 0.% vs. dollar. Crude -0.3% to $93.97. Gold -0.45% to $1385.55. Comment!
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2:57 PM Recent price increases announced by AK Steel (AKS -1.4%), US Steel (X -0.3%) and ArcelorMittal (MT -0.9%) are unlikely to stick, Credit Suisse believes, as the sector's fundamentals suggest steel stocks are likely to remain range bound this summer. However, the firm predicts stronger demand trends are likely to drive steel stocks higher by fall. [Commodities] Comment!
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2:51 PM Evoke Pharma has filed for a $24M IPO. The company is a specialty pharmaceutical developer focused primarily on drugs to treat gastrointestinal disorders and diseases. The marquee drug currently in its development is EVK-001, a metoclopramide nasal spray for the relief of symptoms associated with acute and recurrent diabetic gastroparesis in women with diabetes mellitus. The company plans to list its shares on Nasdaq under the symbol "EVOK." Aegis Capital is presently the sole underwriter. [Healthcare] Comment!
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2:51 PM Callaway Golf (ELY +6.8%) enjoys a strong session after earnings and revenue top estimates. More from the report: Strength in existing product lines (X Hot and Versa putters) fuels a 12% Y/Y increase in net sales (this excludes brands that were divested in 2012), and improvements in gross margins as well as lower operating expenses help the company post a 27% rise in GAAP EPS. Outlook: FY13 revenue guidance lowered to $830M from $850M, FY13 EPS guidance is reiterated at -$0.04 after accounting for a preferred dividend (consensus is $832M and -$0.05). (PR, CC transcript) [Consumer, On the Move, Earnings] 1 Comment
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2:49 PM More action from Lloyds (LYG -0.5%) on the asset sale/capital raise front: The bank reportedly plans the sale of about $8.7B in U.S. MBS next week, and will unload another 77M shares of wealth manager St. James Place for about $741M (taking its stake to 21% from 36%). The MBS sale is winning applause for its timing from at least one analyst who says the bank easily could have panicked and sold at much lower prices years ago. [Financials] Comment!
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2:41 PM Flush with profits from shorting the yen, hedge funds turn their attention to the aussie (FXA) in a bet the end of the commodities boom will drive it lower. It's not exactly a new idea and a lot of funds have gotten smoked from having to pay big carry (Oz short rates have been in the 4% area vs. near 0% here) while the currency failed to move, but the bet's paid off in the last 6 weeks as the aussie has fallen 10 handles. It's off another 1% today. [Global & FX] 1 Comment
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2:39 PM Delhaize Group (DEG +0.1%) might sell two of its U.S. grocery chains as it looks to cut losses on the continent. The Belgian company is looking at options for its Harveys and Sweetbay supermarket operations. [Consumer, Global & FX] Comment!
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2:34 PM Cooper Companies (COO +2.1%) moves up in the slipstream created from reports that its rival Bausch & Lomb is near a deal to be acquired by Valeant (VRX) for $9 billion. [On the Move, M&A] Comment!
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2:31 PM Feltl & Co. downgrades Hibbett Sports (HIBB -3.9%) to Hold from Buy (price target $60) on the heels of the company's earnings miss (previous). [Consumer, On the Move] Comment!
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2:28 PM Rail is no longer seen as just a stopgap for transporting oil until pipelines are built. Case in point: Kinder Morgan Partners' (KMP) proposed 277K bbl/day Freedom pipeline would be the first to bring light, sweet oil from Texas' Permian Basin to California, but refiners Valero (VLO), Tesoro (TSO) and Phillips 66 (PSX) won't sign contracts to use Freedom, preferring the flexibility of rail cars and barges. [Energy] 15 Comments
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2:25 PM There's some green on the screen about 90 minutes before the bell with the Dow (DIA, DOG) nosing into positive territory and the S&P 500 and Nasdaq now lower by only a hair. Today's weakest sector is the utilities (XLU -1.1%), continuing a bad month that's seen the once-leading group underperform the S&P by nearly 1000 basis points. YTD, the S&P's now ahead of utilities by about 500 bps. 2 Comments
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2:20 PM Gleacher (GLCH +1.5%) says it's CEO, Thomas J. Hughes, and COO, John Griff, have been fired. The announcement comes after shareholders yesterday backed a slate of five directors nominated by MatlinPatterson Global Advisers, the beleaguered advisory firm's biggest outside investor. [On the Move] 1 Comment
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2:19 PM Soaring volatility on the Nikkei isn't stopping investors from scooping up options "with something approaching glee," according to SIG's derivatives team (for the uninitiated, higher vols mean higher options prices). Most of the buying in the Japan ETF space is in the form of calls as dip buyers do what they've become accustomed to doing. Two popular ones, EWJ and DXJ are off nearly 10% since Wed. afternoon. [Global & FX] 2 Comments
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2:18 PM Ford (F) reaches an agreement with authorities in France to keep 1,000 employees at a Blanquefort factory. In exchange for the company's promise to retain the workers, the local government will invest €12.5M with Ford's €125M to produce gearboxes at the location. 4 Comments
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2:14 PM USEC (USU +4.7%) says it will begin stopping uranium enrichment at the end of this month after failing to conclude a deal with the U.S. Department of Energy for an extension of enrichment at the Paducah Gaseous Diffusion Plant in Kentucky. The plant is the only U.S.-owned and operated uranium enrichment facility in the U.S. [Energy, On the Move] 2 Comments
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2:11 PM There is growing evidence Bank of America (BAC), JPMorgan (JPM), Citigroup (C), and Ally Financial violated the terms of the mortgage servicing abuse settlement, according to NY AG Schneiderman. In a letter to the settlement monitor (obtained by Reuters), Schneirderman says other states "have identified similar recurring deficiencies." The AG considers the letter to have started the clock on a "waiting period" necessary before a lawsuit may be filed. [Financials] 11 Comments
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2:02 PM Judges in France are questioning the CEO of UBS' French unit in what may be a prelude to a formal investigation regarding investments "designed to cheat the taxman," sources tell Reuters. [Financials] Comment!
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2:01 PM Polypore International (PPO -2%) slips on a tepid initiation at Ascendiant Capital with a Neutral and a $45.50 price target. The firm says the stock is trading a premium to its peers, and appears fairly valued based on current metrics. Also adding to the weakness in the shares today could be the plunge in Exide (XIDE -43%). [On the Move] Comment!
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2:00 PM On the hour: Dow -0.05%. 10-yr +0.05%. Euro -0.1% vs. dollar. Crude -0.1% to $94.16. Gold -0.36% to $1386.85. Comment!
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1:50 PM More on Bausch & Lomb/ Valeant (VRX +12.8%): Warburg Pincus may agree to terms with VRX as early as next week, but sources tell WSJ the deal could still fall apart. If the deal fails to come to fruition, Warburg may opt for an IPO of Bausch & Lomb instead, something the private-equity firm has mulled since early this year. [Healthcare, M&A, On the Move] Comment!
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1:40 PM Add KKR and Silver Lake Management to the list of bidders for Hulu (CMCSA, DIS, NWS), according to Bloomberg. Earlier reports indicated Time Warner Cable (TWC -0.8%), Guggenheim Digital, and DirecTV (DTV -0.6%) are in the hunt. What to watch: Some analysts think Hulu could evolve into a payment authentication system for the cable industry, while others bet that a single media/tech company will snap up the firm to create a unique position for itself in video - either as a premium streaming service or an ad-supported content monster. Either way Netflix (NFLX -0.5%) is watching. [Consumer, Tech] 1 Comment
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1:39 PM Hydrogenics (HYGS +14%) adds to yesterday's gains for a two-day rally of ~28% as SA Pro author Joe Springer's article comes out of embargo. (previous) [Energy, On the Move] 4 Comments
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1:37 PM Shares of Exide Technologies (XIDE -43%) collapse to a nine year low on a report that it's hired Lazard and Akin Gump Strauss Hauer & Feld to advise on a restructuring, including a possible Chapter 11 filing. The company had initially engaged Deutsche Bank last year to lead a global refinancing, but the effort failed, and management is now pursuing more aggressive restructuring alternatives amid a looming September maturity on its convertible notes. [On the Move] 5 Comments
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1:27 PM American Superconductor (AMSC -2.2%) slides after saying earlier that China's Supreme People's Court has scheduled a hearing for May 29 to review the jurisdiction of the company's software copyright infringement cases against Sinovel Wind Group and Guotong Electric. These are just two of the four legal cases that AMSC filed against Sinovel regarding its alleged contractual breaches and alleged discovery of intellectual property theft by Sinovel. AMSC is seeking a cease and desist order and damages totaling $6M. [Tech, Global & FX, On the Move] Comment!
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1:25 PM Japanese automakers (TM, HMC, NSANY.OB, MZDAY.PK, SZKMY.PK) could see the tide turning in China as consumer demand continues to pick up. Even with rhetoric and military exercises over the islands in the East China Sea continuing, new data shows 16K cars were shipped from Japan to China in April - 3X what was exported last Oct. when the flareup started - and Japanese brands now account for 16% of the market after dipping to as low as 7%. The big picture: Though the overall pie keeps getting larger, General Motors (GM -0.1%) and Ford (F +0.1%) would just as soon that the Japanese automakers keep their slice of the China auto market small. [Consumer, Global & FX] 2 Comments
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1:11 PM Medical device maker Derma Sciences (DSCI +0.7%) trades higher today after appointing industry veteran Amy Paul to its Board of Directors effective immediately. Ms. Paul retired from C.R. Bard after 26 years with the company. [Healthcare, On the Move] Comment!
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1:02 PM General Motors (GM -0.2%) has a nice little insurance policy to help it create shareholder value just in case the forecasts for strong U.S. auto sales don't pan out. The connectivity value of the Onstar service from the automaker makes the asset worth close to a whopping $8B to $10B, according to a bullish take from Citigroup. Though speculation on an Onstar spinoff has been going on for more than a decade, the high penetration rate of communication/security services also makes the stand-alone concept more enticing than ever. [Consumer] 2 Comments
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1:00 PM On the hour: Dow -0.25%. 10-yr +0.04%. Euro -0.11% vs. dollar. Crude -0.45% to $93.83. Gold -0.43% to $1385.85. Comment!
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12:52 PM The slide in Fluor (FLR -3.1%) shares is attributed to Chile's halt on the Pascua-Lama mining project. On Feb. 18, Barrick Gold (ABX) awarded contracts to FLR involving construction management for the project; FLR booked the undisclosed value into its Q4 2012 backlog. [Commodities, On the Move] Comment!
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12:47 PM Radcom (RDCM +1.3%) recovers from nearly a 3% drop in early trading after the company announced that it's cancelled its extraordinary general meeting of shareholders scheduled for Wednesday, June 5, and whil hold its annual shareholders meeting June 30 instead. The agenda of the meeting includes the re-election of Board Members, approval of compensation, and a discussion of its auditors' report, as well as other company business. [On the Move, Tech] Comment!
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12:45 PM Multi-asset income ETFs are here to stay, writes Paul Britt, as Guggenheim's CVY crosses $1B in AUM. It's been around since 2006, but a new entrant, MDIV has pulled in $440M in less than a year. These income funds have no mandate in their search for yield and roam across dividends (DVY), high-yield (HYG), REITs (IYR, VNQ), and MLPs (AMJ) as necessary. One drawback is their somewhat high expense ratios - in the 60-80 bp range, compared, for example, to DVY at 40 bps. Other M-A ETFs: INKM, IYLD, GYLD, HGI. 2 Comments
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12:43 PM Volkswagen (VLKAY.PK) could see a production halt in South Africa with the main automobile workers union in the nation threatening to tell members to stop working due to the dismissal of members. Ford had its own answer to high labors costs in Australia with a mass exit and a plan to import. [Consumer, Global & FX] Comment!
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12:42 PM Silver Wheaton (SLW +0.9%) also is halted on news that Chile fined Barrick Gold (ABX) and stopped construction on the Pascua-Lama mine. In addition to being a key growth asset for ABX, Pascua-Lama significantly increases SLW's long-term growth profile, Briefing.com says; SLW's 25% share of the estimated average annual silver production for the project's first full five years is 9M oz. [Commodities] 1 Comment
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12:38 PM Heard during Foot Locker's (FL -6.1%) earnings call: 1) Execs say products are "right" at Foot Locker stores, but due to weather patterns more sales will shift to Q2 from Q1. 2) In Q1, traffic was down, but ASPs were higher. 3) The planned acquisition of Runners Point Group appears to be a bet on Germany - not the continent as a whole. 4) The retailer says comparable store sales are flat this month. That's not great news for Nike (NKE -1.4%), Under Armour (UA -1.3%), or Finish Line (FINL -2.2%) - unless the catch-up that Foot Locker points to materializes. (webcast) [Consumer, Earnings] Comment!
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12:32 PM Vanda Pharmaceuticals (VNDA +16.7%) pops today after the Tech Council of Maryland named the company Life Science Firm of the Year, outlining its encouraging research on tasimelteon, a circadian regulator for the treatment of Non-24-Hour Disorder. The disorder is a rare condition that affects blind people, for which there are currently no FDA-approved drugs. [Healthcare, On the Move] Comment!
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12:30 PM Three lunchtime reads:
1) The deeper agenda behind "Abenomics"
2) Five key things about the SAC insider case
3) Banks' lobbyists help in drafting financial bills Comment! -
12:30 PM Stocks bounce from a sizable early loss, the S&P 500 and Nasdaq each off 0.35% in the noon hour. It's a broad decline with no sector in the green and the only big S&P 500 gainers being P&G and Intuitive Surgical. Has Apple become a Treasury bond? It's up today and seems to outperform every time there's a selloff. 7 Comments
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12:28 PM Barrick Gold (ABX -0.5%) is halted on news Chile's environmental regulator has imposed a $16M fine - the maximum allowed under Chilean law - and stopped construction on its $8.5B Pascua-Lama project, citing "serious violations" of its environmental permit. [Commodities, Breaking News] 9 Comments
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12:22 PM The pressure on reinsurance pricing isn't set to dissipate anytime soon, says Credit Suisse, after talking with 9 of the firms this week. Faring best will be those with higher exposure to Florida (say ACE) - where price pressure will ease somewhat - as opposed to those with more of a national presence (say RNR). Rated Outperform are Aspen (AHL) - with less than 25% of the portfolio exposed to industry headwinds - and Validus (VR) - trading near book despite a more diverse revenue line. [Financials] Comment!
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12:21 PM Solar stocks (TAN +0.8%; KWT +1.5%) wrap up a banner week, as Chinese solar panel makers begin to shift emphasis from their overcrowded home market in favor of lucrative exports. The rally was sparked by JA Solar's better than expected shipments, but analysts call for caution: The stocks are addicted to momentum, and stock moves are often disconnected from dire market prospects most of the companies face. [Tech, Energy] Comment!
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12:21 PM Valeant (VRX +12.3%) is nearing a deal to acquire Bausch & Lomb for ~$9B, WSJ says. [Healthcare, M&A, Breaking News] Comment!
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12:20 PM Shares of Melco Crown (MPEL) shrug off a downgrade from Macquarie to trade higher than their opening level as traders bet yesterday's selloff on worries about China's economy was a bit overdone. Though it's not up and running in the Philippines just yet, Melco Crown will be more than a pure Macau play in the future. [Consumer, On the Move] 2 Comments
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12:06 PM Cubist Pharmaceuticals (CBST -1.5%) slips on a downgrade to Neutral on valuation at Janney Capital. Despite the downgrade - not to mention a 36% runup in the shares since last November - the firm raises its price target on the stock by another 10% to $55 from $50. Separately, CBST's CEO Mike Bonney is scheduled to present at Jefferies 2013 Global Healthcare Conference on Monday, June 3, to discuss it's pipeline, financial outlook, and recentdevelopments. Tune into the live presentation here: (Webcast) [Healthcare, On the Move] Comment!
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12:00 PM On the hour: Dow -0.23%. 10-yr +0.06%. Euro -0.12% vs. dollar. Crude -0.48% to $93.8. Gold -0.39% to $1386.35. Comment!
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11:57 AM Gasoline prices in Minnesota are the highest in the continental U.S., a dubious honor usually reserved for California and odd considering the state borders North Dakota, now the no. 2 U.S. oil producer. Minnesota drivers were paying $4.29/gal. on May 20, $0.62 above the U.S. average. Planned and unplanned maintenance at Midwest refineries have cut into gasoline production and available supplies are depleted, the EIA says. [Energy, Consumer] 5 Comments
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11:54 AM A bit of selling by investors in high-yield ETFs (HYG, JNK) has Wall Street banks stepping in - their holdings of junk paper rising 37% to $7.7B in the last 2 weeks. Also at work suggests JPMorgan's team is banks' - used to being cautious the past few years - becoming a little more comfortable with trading activity. [Financials] Comment!
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11:52 AM Venaxis (APPY -5%) slips today after pricing its 10M shares and related warrants to purchase 3.5M shares at a combined public price of $1.25 per share with an exercise price of $1.36. The offering is expected to close on May 30. Venaxis should realize approximately $11.1M in net proceeds from the sale, for which it intends to use primarily for funding of further clinical development and seeking FDA clearance for APPY1, as well as for initial commercialization of the drug in the U.S. and the E.U. [Healthcare, On the Move] Comment!
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11:48 AM AirAsia, which has already ordered 475 Airbus (EADSF.PK +1%) A320s, may order 50 more, CEO Tony Fernandes says. The airline has "bought a lot of planes but [is] still short" as far as supplying aircraft to its Indian subsidiary which will launch in Q4. Comment!
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11:46 AM Iranian hackers have escalated a campaign of cyberassaults against U.S. companies and were able to gain access to control-system software that could allow them to manipulate oil or gas pipelines, proceeding "far enough to worry people," WSJ reports. Sources don't name the companies targeted but were energy companies along the Canadian border, where many firms have operations. [Energy, U.S. Economy] 2 Comments
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11:24 AM Brazil plans to auction off its largest-ever offshore oil discovery in October at the country's first presalt-bid round, selling exploration and production rights for the Libra prospect estimated to hold 8B-12B barrels of recoverable crude oil. Petrobras (PBR) will be required to take a minimum 30% stake in any winning bid group - unrealistic, critics say, since it lacks the necessary personnel and financial resources. [Energy, Global & FX] Comment!
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11:22 AM China Biologic (CBPO -5.3%) slides on the news that on May 21 two of its shareholders sold its competitor, Shanghai RAAS, about 2.7M of its shares representing 9.9% of equity. CBPO says it had no knowledge of the deal, nor had there been any discussions with Shanghai RAAS. The sale looks to be questionable at best, considering that one of the shareholders' shareholding status was under dispute in a pending case in Hong Kong, and Shanghai RAAS was aware of that fact. [Global & FX, Healthcare] Comment!
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11:14 AM Fast-casual chain Noodles files for IPO of an undetermined size. In its released financials, the company indicated revenue grew from $170M in 2008 to $300M in 2012. At current growth rates, Noodles could expand to 2.5K restaurants over the next 15 to 20 years and eventually give Panera (PNRA -0.5%), Qdoba (JACK -0.4%), and Chipotle (CMG -1.3%) something to think about. Noodles is expected to trade under the symbol NDLS. (S-1) [Consumer] Comment!
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11:11 AM Hibbett Sports (HIBB -4.1%) sinks after Q1 earnings and revenue miss estimates. From the report: Sales and comps rise 3% and 0.8% Y/Y respectively (Q1 2012 comps were +12%). Product margin was up during the period, but an 18 basis point rise in warehouse expenses hurt HIBB's gross margin, which fell slightly (10 basis points Y/Y). FY14 EPS outlook is reiterated at $2.85-3.05 versus consensus of $3.03. (PR) [Consumer, Earnings, On the Move] Comment!
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11:05 AM Heard during Abercrombie & Fitch's (ANF -10.1%) earnings call: 1) The biggest takeaway is that ten percentage points of the large drop in comparable store sale is attributable to inventory issues. 2) China isn't the problem behind slumping sales. Comp sales in the nation were +40% despite difficult inventory issues. 3) On share buybacks, the retailer says it will remain consistent with past policy - but will have a goal of maintaining a cash position of $350M. 4) Analysts take a pass on asking about the recent flap over the stance of CEO Michael Jefferies on plus sizes. (webcast) [Consumer] Comment!
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11:03 AM National Bank of Greece (NBG) may have to up its offers after results of tenders for 5 preferred securities show decent, but not fantastic participation, with about €80M of the paper set to still be outstanding after the May 27 settlement date. Shares (and presumably the ADRs) are halted from trading until May 30. (PR) [Financials] Comment!
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11:01 AM Taro Pharmaceutical (TARO -7%) slides after earlier reporting Q1 earnings of $1.10 per share on net sales of $165.1M, an increase of 13.8%, from a year ago. Gross margin grew to 72.4% from 68.3%, offsetting an increase in Research and development expenses by 23.9% to $12.2M. Settlements and loss contingencies totalled $33.3M, dragging down operating income to $63.1M, or 38.2% of net sales, compared to $66.2 million, or 45.6% the year prior. [Healthcare, Earnings, On the Move] 4 Comments
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11:00 AM On the hour: Dow -0.3%. 10-yr +0.12%. Euro -0.03% vs. dollar. Crude -0.75% to $93.54. Gold -0.38% to $1386.45. Comment!
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10:59 AM Statoil (STO) says its plans for the Johan Castberg oilfield in the Barents Sea are being undermined by unexpected regulatory changes that threaten to limit development in the far north, as the project needs new infrastructure and already was a challenge in terms of costs. CEO Helge Lund says a stable political and regulatory environment has been Norway’s “most important competitive advantage" during the past 20 years. [Energy] Comment!
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10:51 AM Vivus Pharmaceuticals (VVUS +3.6%) extends yesterday's gains, bringing its two-day run to ~13% as Carl Icahn's former head of health care investments Alex Denner is added to First Manhattan's proposed slate of directors. Denner and First Manhattan, who own some 12% of the outstanding shares between them, are critical of VVUS' handling of Qsymia (I, II), and want to get "the best people behind a great asset," First Manhattan says. SA contributor Brian Wilson thinks any weakness in the business is "unlikely to be reflected in the stock price as short sellers worry about a potential bidding war between activist shareholders and management." [Healthcare, On the Move] Comment!
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10:47 AM Marvell's (MRVL +0.3%) price target is lifted $2 to $15 by RBC's Doug Freedman post-earnings, noting the low-end of FQ2 guidance is above both his and Street estimates. Needham ups its PT $3 to $15. Both maintain Buy ratings. Something didn't sit well with JMP Securities which cuts to Sell with $8 PT. Perhaps the stock's 57% YTD run has priced the good news in. Shares have given up big premarket gains. [Tech, On the Move] Comment!
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10:46 AM Luxury retail companies seem to be seeing something more than economists do as they ramp up investments and marketing on expectations for increased high-end spending in the U.S. Even with all the focus on the growth potential for the luxury sector in China and Hong Kong, by sales the U.S. market is still twice as big and has plenty of upside, according to industry insiders. A wildcard in the mix is the impact from some relaxed rules on visa approvals for wealthier tourists from emerging markets. On watch: Hermes, LVMH Moet Hennessy (MAGOF.PK), Gucci (GUCG.PK), Louis Vuitton (LVMUY.PK), Coach (COH), Tiffany (TIF), Ralph Lauren (RL), Burberry (BURBY.PK), Saks (SKS), Hugo Boss, Christian Dior (CHDRF.PK). [Consumer, Global & FX] Comment!
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10:38 AM Reliance Industries (RLNIY.OB), BP and Niko Resources say they made a significant gas and condensate discovery at their Krisha Godavari D6 deepwater block off eastern India. Reliance, which operates the venture and holds a 60% interest with BP holding 30%, says the data suggests good flow potential and will evaluate development options. [Energy] Comment!
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10:33 AM Ziopharm Oncology (ZIOP +39.1%) soars on huge volume. The stock is now up ~68% since Wednesday. [Healthcare, On the Move] Comment!
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10:32 AM Salesforce.com (CRM -7.8%) is cut to Hold with price target reduced $9 to $42 at Wedbush post-earnings. Analyst Steve Koenig views "deferred commission expenditures" as the best indicator of new sales activity, and they fell 46% Y/Y. Asked about it on the CC (transcript), CFO Graham Smith suggests a tough comp as the reason for the big dip. Needham's Mike Huang reiterates his Buy and $50 PT: "We don't detect any meaningful deterioration of sales cycles or close rates." [Tech, On the Move] 6 Comments
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10:30 AM An opinion piece titled "The Other Government Motors" from the WSJ isn't too subtle about taking apart the Q1 profit Tesla Motors (TSLA +1.4%) reported as it hitched a free ride with U.S. taxpayers. The zero-emission tax credits Tesla can sell to other automakers and the generous $7.5K federal tax credits to motivate buyers are the big two complaints. But what isn't entirely clear is why other car companies selling EVs aren't lumped into the same discourse? [Consumer] 47 Comments
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10:27 AM Shoe Carnival (SCVL +10%) hits a 52-week high after Q1 results top estimates. From the report: Q1 was challenging thanks to colder weather, but trends improved in April helping comps growth which, although still negative (-0.8%), was better than the company anticipated. Revenues rise 4.3% Y/Y, profit margin falls 130 basis points, SG&A falls $2.8M. Guidance: Q2 revenue of $217-220 and EPS of $0.26-0.30 against consensus of $218.88 and $0.28/share. (PR) [Consumer, Earnings, On the Move] Comment!
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10:20 AM Pandora (P +6.2%) gets a couple of more sell side boosts post-earnings, with Wells Fargo maintaining a Buy and upping its price target to $20-$22 from $15-$17. "Conversion of consumers impacted by mobile cap exceeded company estimates." Needham ups its FY14 EPS estimate a penny to $0.05 and reiterates its Buy and $20 PT. [Tech, On the Move] Comment!
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10:18 AM A group of broadcasters including Fox (NWS), NBCU (CMCSA), ABC (DIS), and Telemundo filed a copyright infringement lawsuit in Washington DC against a similar outfit to Aereo that is also offering re-transmission services to consumers. The target, subtly called Aereokiller, appears to be an easier case for the broadcasting companies to win a decision over - right in the backyard of politicians. [Consumer] Comment!
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10:15 AM Campbell's Soup (CPB -0.8%) trades lower after announcing it will acquire Plum Organics, a maker of organic foods for kids, for an undisclosed amount. CPB is apparently looking to cash in on a growing market for premium and organic baby food and says that with the addition, the company's "portfolio of kids-focused soups, beverages and snacks will have annual sales of more than $1B." Plum is the No. 4 baby food brand in the country, with $93M in gross sales during 2012. (PR) [Consumer, M&A] Comment!
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10:11 AM Should there be a cap on oil spill payouts? A group of accounting professors essentially says yes and is backing BP's fight to cap the U.S. oil spill compensation payouts it must fund, which threatens to add billions of dollars to its bill for the 2010 Gulf of Mexico oil spill. "Identifying revenues and expenses requires more than a mere consideration of cash receipts and disbursements," the profs say. [Energy] 11 Comments
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10:05 AM Wal-Mart (WMT +0.5%) thinks it has the answer on how to keep its shelves stocked adequately at stores as it introduces a new measure to link executive compensation to the issue. In the past, the company audited its on-shelf performance internally but will now turn it over to outside auditors. What started as anecdotal complaints on a lack of items at stores has turned into a larger flap which was even addressed during the firm's recent earnings call. (transcript). [Consumer] 3 Comments
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10:00 AM On the hour: Dow -0.45%. 10-yr +0.13%. Euro +0.15% vs. dollar. Crude -1.09% to $93.22. Gold -0.25% to $1388.35. Comment!
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9:57 AM Dow Chemical (DOW -0.3%) announces plans to deploy part of its recent payment from Kuwait's chemicals company to reduce up to $2B in debt in 2013. Dow says its current and planned actions should deliver more than $100M in annual interest expense savings, and are expected to bring its net debt to total capital ratio to well below 40%. [Commodities] Comment!
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9:52 AM AUM at the year-old Global X Top Guru Holdings ETF (GURU) are up more than 1,000% YTD as its strong performance (up more than 40% since inception vs. about 30% for the SPY) lures investors. The fund invests by studying 13F filings and rebalances quarterly. Other funds based on hedge fund positions - ALFA and QAI - are also trailing GURU. Comment!
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9:51 AM Microsoft (MSFT -0.3%) and other publishers will take a cut of every sale on pre-owned Xbox One games, according to gaming website MCV. Under a new arrangement, retailers will tap into Microsoft's cloud servers for a transfer of rights on sales of pre-owned games. Though the games can be sold at any price the retailers wish, estimates on the percentage of the sale they can keep are drifting steadily lower. Shares of GameStop (GME -2.4%) are lower on the day. [Tech, Consumer] Comment!
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9:47 AM Exxon's (XOM -0.4%) arrival as a tentative partner gives InterOil's (IOC +6.9%) Elk/Antelope resource a blue chip "stamp of approval," Raymond James writes, but "the market's enthusiasm will be tempered by the fact that a deal has yet to be finalized." Still unknown: how much of the resource will be monetized; the timing of a final deal; and "most importantly," the purchase price. [Energy, On the Move] 1 Comment
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9:41 AM Sherwin-Williams (SHW +0.7%) gets an upgrade from Baird to Outperform from Neutral (price target $205). Q2 margins in the Global Finishes segment were "very, very strong" in 2012, analyst Ghansham Panjabi noted on the most recent CC, before asking management if they believed they could beat the tough comp next quarter. "Yes, [but] we don't give guidance by segment," CFO Sean Hennessy said, before turning the conversation back to Q1. (transcript) [Consumer] Comment!
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9:38 AM Phillips 66 (PSX) says it plans to use more domestic shale oil at its New Jersey Bayway refinery and could consider exporting gasoline from the facility thanks to lower costs and as U.S. fuel demand wanes. PSX is in the process of building an offloading facility that will allow it to receive 75K bbl/day of additional Bakken crude directly to the refinery. [Energy] Comment!
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9:37 AM Polar Capital's Brad Ginesin indicates the read-through for J.C. Penney (JCP -0.7%) from Sears Holdings' (SHLD -17.4%) shoddy quarter isn't too pretty. The hedge fund manager's laundry list of JCP/SHLD headaches: "...no consumer traction, drifting strategy, murky profit outlook, victim to strong competition." [Consumer, On the Move] 1 Comment
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9:31 AM "Apple's (AAPL) sorta cheap," says Jeff Gundlach, admitting he's now long the stock he famously shorted 100-200 points ago. He doesn't seem terribly excited about the company's business prospects, but - selling for 7x earnings (excluding cash) - a hot new product isn't necessary to make the investment profitable. "(Apple) can keep selling a whole bunch of expensive new phones and iPads, and they'll be a cash cow." [Tech] 20 Comments
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9:31 AM At the open: Dow -0.41% to 15232. S&P -0.63% to 1640. Nasdaq -0.56% to 3449.
Treasurys: 30-year +0.22%. 10-yr +0.08%. 5-yr +0.03%.
Commodities: Crude -1.06% to $93.25. Gold -0.43% to $1385.85.
Currencies: Euro +0.04% vs. dollar. Yen -0.96%. Pound +0.06%. 6 Comments -
9:29 AM Beer market winners and losers: Tracking data from Citi Research showed Boston Beer was the big winner over the four-week period ending May 11, although Craft Brew Alliance (BREW) and Heineken (HINKY.PK) also made solid gains, sales up 10.7% and 7.1% respectively. The market share gains came at the expense of Anheuser-Busch InBev (BUD) and MillerCoors (SBMRY.PK, TAP) which saw sales slip during the same period. [Consumer, Global & FX] Comment!
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9:28 AM Deutsche Bank starts Alnylam Pharmaceuticals (ALNY) at Buy with a $40 price target representing a 42.5% premium to Thursday's close. Analyst Alethia Young says the company "has the chance to unlock significant long-term value as they commercialize their assets in the clinic during 2017 and beyond, leading to $4B+ in unadjusted sales." [Healthcare] Comment!
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9:28 AM Petrobras (PBR) agrees to sell a stake in an oil and gas exploration block offshore Tanzania to Statoil (STO) for an unspecified amount. PBR will continue to operate the block with a 38% stake, while Shell (RDS.A, RDS.B) will retain a 50% share and STO 12%. The deal is part of $9.9B in planned divestments as PBR focuses on developing offshore fields in Brazil. [Energy] 1 Comment
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9:24 AM Boston Beer (SAM) increased sales by over 40% during a four-week tracking period, according to Citi Research. A combination of seasonal specials, higher promotional spending, and attractive pricing helped beer sales shoot up 18% in dollar terms. [Consumer] 1 Comment
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9:19 AM Bank lobbyists cut out the middleman, writing legislation softening financial regulations on their own instead of leaving it to lawmakers to draft the paperwork. A bill exempting broad swathes of trades from new regulation - which cruised through the House Financial Services Committee this month - was essentially written by Citigroup (C), according to emails reviewed by the NYT. Is this even news? Fans of The Aviator have seen it before. [Financials] 4 Comments
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9:15 AM Market preview: Stock futures are off early lows following a durable goods report that was stronger than expected, but remain on the defensive amid uncertainty over the Fed's future course. S&P -0.6%. Investors may be inclined to book profits ahead of the long weekend, and Japan's volatile session adds to the sense of unease. Sears and ANF are lower after deep Q1 losses; P&G +3.8% after a change at the top. Comment!
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9:15 AM Shares of Intuitive Surgical (ISRG) look set to post solid gains for a second straight day after a jury determined the company was not negligent in its training of surgeons. The $8.45M civil suit revolved around one Fred Taylor who passed away four years after having his prostate removed by ISRG's da Vinci robot. Shares +3.67% premarket. [Healthcare, On the Move] 1 Comment
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9:06 AM After spending years and billions eliminating their hedge books, gold producers (GDX) may need to return to their old habit - selling production forward - thanks to the metal's (GLD) sharp decline. "We think producers are under pressure to put on hedging," says SocGen's Robin Bhar. "The problem is it needs a cultural change ... Guys who used to hedge have lost their jobs." Renewed producer selling could put even more pressure on prices. [Commodities] 9 Comments
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9:04 AM Stocks in the Philippines (EPHE) add 0.62% to yesterday's losses, bringing Thursday/Friday's decline to 1.6%, erasing Tuesday/Wednesday's combined gains entirely (I, II). Indonesian equities (IDX) rise 0.66% as the JCI closes the week at 5,155, down 1.1% from Monday's close (See: IDX rises on new Fin. Min.). Elsewhere in the region, Vietnamese stocks (VNM) rise 0.41% and Thailand, Malaysia, and Singapore are closed for a local holiday. [Global & FX] Comment!
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9:00 AM On the hour: S&P -0.48%. 10-yr +0.1%. Euro -0.01% vs. dollar. Crude -0.71% to $93.59. Gold -0.09% to $1390.55. Comment!
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8:58 AM News Corp. (NWS, NWSA) says its board of directors formally approved the split of the company into two entities to be called 21st Century Fox and the new News Corporation. After the separation, the new News Corp. will be have an authorization to buy back $500M in stock in its back pocket. A rights agreement was also adopted to protect shareholder interests. NWS +0.6% premarket. (PR) [Consumer] Comment!
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8:57 AM Whiting Petroleum (WLL) is upgraded to Buy from Neutral with a $58 price target, up from $51, at SunTrust, due to valuation and upcoming catalysts that include results from its first Bakken Silt and Sanish down-spacing tests, Niobrara results and potential monetization of its Potle EOR field. Shares +1.5% premarket. [Energy, Quick Ideas, On the Move] Comment!
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8:54 AM Morgan Stanley (MS) shakes up its Asia equities team, naming Jerome Leleu and Mille Cheng as co-heads of the business to replace Justin Jaik who's moving to a new role. Cheng is rejoining Morgan from Barclays - where she headed the China equity business since 2011. [Financials] Comment!
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8:49 AM More on Tsakos Energy's (TNP) Q1 results: Profit improvement was primarily driven by a 6% increase in the average time charter rate per vessel, and a drop in the fleet's overall expenses of 7.4% Y/Y on a per-ship basis while the fleet's total voyage expenses fell 24.1% Y/Y. Utilization rate was 98%. Shares +22.8% premarket. [Energy, Earnings, On the Move] 1 Comment
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8:46 AM Douglas Kass cuts against the grain on the wave of analyst love following Procter & Gamble's (PG) move to bring back A.G. Lafley as its CEO, saying he will short P&G between $81.50 and $82 based on an over-reation to the news and the lower guidance he thinks is coming from the company. PG +2.6% to $81.33, nearing Kass' entry point. [Consumer] 2 Comments
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8:41 AM Annual shareholder meeting headaches: An increasing trend at this year's round of shareholder meeting for major companies is a rash of negative publicity from loud activist shareholders looking to score points on political issues. McDonald's (MCD) had to engage in spirited debate and a shareholder vote on childhood obesity - while CBS (CBS) had its meeting nearly taken over by a pro-Israel group. During the Q&A session of Time Warner's (TWX) meeting, CEO Jeff Bewkes was bombarded with complaints over CNN's coverage on major issues. Though the companies won all the important shareholder votes, execs appeared a little more bedraggled than normal. [Consumer] 13 Comments
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8:39 AM Gramercy Property Trust (GPT) closes on a $14.5M 5-year mortgage at 3.28% on its recently-acquired (for $27.1M) 540K square foot industrial property portfolio in the Indianapolis area. (PR) [Financials] 4 Comments
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8:36 AM Yingli Green Energy (YGE) +13.5% premarket after announcing it will supply 10.269 MW of multicrystalline photovoltaic modules to Amcorp Power in Malaysia in what the company calls the country's largest single site PV power plant. The plant will be able to generate ~13.6M kWh of clean electricity per year. [Energy, Tech, On the Move] 1 Comment
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8:35 AM Procter & Gamble's (PG) new (or "old," depending on how you look at it) CEO A.G. Lafley will get a base salary of $2M annually. Comment!
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8:33 AM What's Fannie Mae (FNMA.OB) up to? It's snatching profits away from banks as it increasingly purchases loans directly from lenders, cutting out those used to making good money by packaging mortgages into securities. "We don't play this big of a role because we want to," modestly says CEO Tim Mayopoulos. "(We have) no goal relative to market share, except to reduce it," says another spokesman. The lenders (JPM, WFC) seeing profits vanish aren't so sure. [Financials] 9 Comments
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8:31 AM Shares of Foot Locker (FL) slip 2.2% premarket after the retailer's Q1 earnings came in just ahead of estimates but it didn't give investors any meaty guidance to bite on. The quarter from Foot Locker doesn't appear to raise any alarm bells for Nike (NKE) or Under Armour (UA), although the firm's conference call could tip off some buying trends for the athletic apparel sector. [Consumer, On the Move] Comment!
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8:31 AM Apr. Durable Goods: +3.3% vs. +1.1% expected, -5.9% prior (revised). Ex-transport +1.3% vs. +0.4% expected, -1.7% prior (revised). [U.S. Economy] Comment!
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8:30 AM Baird downgrades Titan Machinery (TITN) to Neutral from Outperform and lowers its price target to $23 from $28. It seems likely the stock won't "outperform" much of anything today as Thursday's AH profit warning has the shares under pressure to the tune of 13.47% premarket. [On the Move] Comment!
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8:27 AM Eni (E) could spend more on acquisitions in Belgium as it looks to close the gap on the power retail leader in the country, GDF Suez-owned Electrabel. CEO Paolo Scaroni isn't deterred by the 2008 purchase of Belgium's Distrigas; Eni overpaid but only in the context of the global economic meltdown, Scaroni says. [Energy] Comment!
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8:21 AM Speculation over Google (GOOG) making a bid for Waze doesn't ring true to TechCrunch with its sources indicating no plans of a Google acquisition of the sat-nav smartphone app are in the works. If anything, TechCrunch ponders if Waze investors aren't trying to leverage more out of talks with Facebook. [Tech, M&A] 1 Comment
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8:19 AM There's new life in ING's attempt to sell its South Korean life insurance unit as Kyobo Life Insurance - SK's 3rd largest - says it has made a bid. The country's 2nd largest insurer - Hanwha - is also expected to make a bid, as are at least 2 P-E funds. KB Financial had been lined up to buy the unit for $2.1B last year, but dropped out. [Financials] Comment!
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8:18 AM Janney Montgomery Scott cuts Cubist Pharmaceuticals (CBST) to Neutral and takes its price target to $50 from $55, bringing its rating and PT largely in line with those of Cantor's Irina Rivkind who upgraded the stock to Hold from Sell (price target $49) on Tuesday. [Healthcare] Comment!
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8:14 AM Precision Castparts (PCP) declares $0.03/share quarterly dividend, 71.42% decrease from prior dividend of $0.105. Forward yield 1.02%. For shareholders of record June 7. Payable July 1. Ex-div date June 5. (PR) [Dividends] 2 Comments
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8:11 AM Canaccord Genuity downgrades Cirrus Logic (CRUS) to Hold from Buy and lowers its price target to $18 from $25. For clarification, the gross margin forecast of "mid- 40s" from yesterday's investor conference disappointed those expecting 50-52% and Stifel downgraded the shares to Hold from Buy ($32 price target removed), citing customer AAPL's "significant challenges [and] headwinds." Nevertheless, investors (perhaps sensing a buying opportunity) have bid the stock up 1.3% premarket. [Tech, On the Move] Comment!
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8:11 AM Tsakos Energy (TNP): Q1 EPS of $0.02 beats by $0.10. Revenue of $97.69M beats by $29.96M. (PR) [Earnings, Breaking News] Comment!
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8:10 AM Rio Tinto (RIO) cuts ~100 jobs at its Kennecott copper operation in Utah and warns more positions will be cut to reduce operating costs after April's pit-wall collapse. Rio estimates more than 165M tons of earth slid into its open-pit Bingham Canyon mine, and will reduce planned copper production there by about 50% this year. RIO -1.2% premarket. [Commodities] Comment!
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8:07 AM Shares of Wendy's (WEN) are up 2.6% premarket after a juicy upgrade from Janney Montgomery Scott to a Buy rating. The company's new store design has been drawing praise and is viewed by some as a differentiator between the chain and the beaten-down look of some other rivals. [Consumer, On the Move] 1 Comment
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8:07 AM Oil traders might have an opportunity in the recently-narrowed spread between WTI crude (USO) and Brent (BNO), says Goldman. Though expecting further narrowing in the near-term, the team recommends selling WTI Dec. 2014 contracts and buying equivalent Brent as rising Gulf Coast supplies later this year and in 2014 should pressure WTI prices. [Commodities] Comment!
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8:00 AM On the hour: S&P -0.46%. 10-yr +0.07%. Euro +0.19% vs. dollar. Crude -0.65% to $93.64. Gold -0.08% to $1390.65. Comment!
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7:58 AM Astellas (ALPMY.PK) and Medivation (MDVN) say a marketing approval application for enzalutamide (its friends call it XTANDI and it's FDA approved) has been submitted to Japan's Ministry of Health, Labour, and Welfare for the treatment of prostate cancer. (PR) [Healthcare] Comment!
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7:58 AM Chrysler (FIATY.PK) says software issues held up production this year which led to a nasty cut of the automaker's profits, but a bigger issue could be lying under the surface. Sources tell the Detroit News that the large number of rookie workers on the assembly line were the real bug in the system. [Consumer, Global & FX] Comment!
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7:54 AM JPMorgan wins some work from the Russian government, beating out a number of banks for a contract to help boost the country's credit rating. The last agency move on Russia was Fitch cutting to BBB amid the February 2009 panic and Putin in the past has called his country's ratings an "outrage" boosting borrowing costs for the government and corporations. RSX -9.3% YTD. [Global & FX] Comment!
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7:53 AM InterOil (IOC) +10.1% premarket on news it has entered into exclusive negotiations with ExxonMobil (XOM) to develop the Elk and Antelope gas fields IOC owns in Papua New Guinea. The discussions include the possibility of XOM purchasing a stake in Petroleum Retention License 15 and providing funding to drill additional wells in the Elk and Antelope fields. [Energy, On the Move] 6 Comments
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7:46 AM Tornados striking the U.S. this week are expected to cause anywhere from $2B-$5B in insured losses, according to Eqecat, obviously with most of the damaged coming from the Moore, OK disaster. At the top end of the range, this week would rank as the 2nd worst ever, behind only the April 2011 tornados in Alabama. TRV, CB, ALL all dropped amid the tornado news early in the week and have held steady since. [Financials] Comment!
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7:45 AM The California Institute for Regenerative Medicine grants Sangamo BioSciences (SGMO) a $6.4M award to develop its ZFP-genome editing technology for the treatment of beta-thalassemia with the ultimate goal of eliminating the need for chronic blood transfusions in patients. SGMO says "the four year grant provides matching funds for preclinical work that will support an IND application and a Phase 1 clinical trial." A recent article by SA contributor Life Sciences Report favorably mentions companies (like SGMO) with platform technologies. (PR) [Healthcare] Comment!
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7:40 AM Bank of America (BAC) is seeking bids for about 40 branches in rural NY and PA, reports Bloomberg. The branches hold about $1B in deposits and could go for $20M-$30M, according to a source. On a cost-cutting drive, BofA has been closing or selling outlets for a couple of years, its branch count now at 5,389 vs. about 6K when Brian Moynihan took over in 2010. [Financials] Comment!
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7:37 AM Retail reporter Sapna Maheshwari delivers a sobering thought on Abercrombie & Fitch's (ANF) sub-par quarter (SSS -15%). She notes the rehashed "fat" comments from CEO Michael Jeffries didn't go viral until after the reporting period. The exec was trying to highlight the aspirational aspect of the ANF brand, but made a bit of a mess of it all. The conference call at 7:30 AM EST could be interesting. ANF -7.5% premarket. (webcast) [Consumer] Comment!
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7:34 AM Ellington Management hires Steven Abreu from GMAC Mortgage as the MBS specialist (EFC, EARN) founded by Mike Vranos gets into the mortgage origination business. Ellington Financial (EFC) will wade into the market with the purchase of small or medium-sized originators says CFO Larry Penn, but the goal, says Vranos, is to build a top-tier national lender with $20B/year or more in originations. [Financials] 1 Comment
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7:30 AM UBS upgrades Procter & Gamble (PG) to a Buy rating following the company's appointment of a new CEO. It could be a cavalcade of analyst upgrades and commentary as the consumer products giant gets teed up again as a growth story due to the management change. (Previous: Citi wants P&G to put the band back together) PG +2.3% premarket. [Consumer] Comment!
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7:30 AM Some details for Covidien's (COV) pharmaceuticals business spin-off (previous): Shareholders will receive one share of the new publicly traded company (Mallinckrodt) for every eight shares of COV they own. Mallinckrodt is expected to begin trading on the NYSE on July 1 (ticker: MNK). (PR) [Healthcare] 3 Comments
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7:27 AM Pfizer's (PFE) price target is hiked a buck to $29 at MKM Partners as the earlier-than-expected Zoetis (ZTS) spinoff has the team cutting their 2013 EPS forecast to $2.17 from $2.23, but raising estimates from 2014-17. The company remains a Hold however, as it's trading just above what MKM considers fair-value. [Healthcare] Comment!
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7:23 AM More on Abercrombie & Fitch (ANF): The company was selling, but not as many people were buying in Q1. Comparable store sales fell 15% including direct-to-consumer sales with Hollister off 18% and the Abercrombie & Fitch brand falling 13%. Sales weakened at the end of the quarter even with improving weather patterns. The retailer says "external pressures" led to significant inventory issues during the period. Full-year EPS guidance is taken down to $3.15-$3.25 and Q2 is adjusted to $0.28-$0.33. ANF -7.5% premarket. (PR) [Consumer, Earnings] 1 Comment
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7:18 AM Goldman Sachs (GS) has gotten the nod from the Indian government to help it raise money by creating and launching ETFs of state-run companies, according to a senior official. The government initially aims to have 15-20 state-run firms in a basket of ETFs. Remember, this program was only made necessary by the government's inability to interest P-E and other investors in buying stakes. Price matters. Caveat emptor. [Global & FX, Financials] Comment!
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7:12 AM Pandora (P) gets a post-earnings upgrade to Outperform from Sector Perform at RBC. "Is there something now that makes you think … you'll have a more subscription mix in the model going forward [considering] the increase in that Pandora One revenue?" analyst Mark Mahaney asks on the call. "From a product perspective it doesn’t change," CFO Michael Herring says, but "we will always look into optimizing our business and finding that balance between how much we want to emphasize the subscribers versus focus on ad sales." Price target to $24 from $16. Shares +11.6% premarket. (earnings summary, CC transcript) [Tech, On the Move] Comment!
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7:11 AM Remember M&T Bank's (MTB) proposed purchase of Hudson City Bancorp (HCBK)? Regulators have put the merger on ice and it's sending a chill through the executive suites of other regional banks (KRE) who were considering doing deals, but now figure it's not worth the regulatory scrutiny. In the past, conditions such as we're in - slow economy, weak loan growth - have prompted waves of bank mergers (it's happening in community banks). "I am not buying another bank for as long as I can see," sees one unnamed top executive. [Financials, M&A] Comment!
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7:06 AM Abercrombie & Fitch (ANF): Q1 EPS of -$0.09 misses by $0.04. Revenue of $838.8M (-9% Y/Y) misses by $102.86M. (PR) [Earnings, Breaking News] Comment!
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7:06 AM May is an important month for the automobile industry after the last three years saw a post-Q1 dip in sales. Industry forecasts are for May volume to top 1.4M units, which would mark a 9% Y/Y improvement. If May comes in strong, annual forecasts are likely to be raised as the threat of another late spring swoon is lifted. What to watch: A pickup in housing could help lift sales of full-sized pickups, while the average selling price for automakers (GM, F, FIATY.PK, NSANY.OB, TM, HMC, VLKAY.PK) should look strong as they take their foot off the promotional pedal. [Consumer] Comment!
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7:04 AM Destination XL Group (DXLG): Q1 EPS of $0.02 beats by $0.01. Revenue of $93.6M misses by $5.99M. (PR) [Earnings, Breaking News] Comment!
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7:04 AM Hibbett Sporting (HIBB): Q1 EPS of $1.00 misses by $0.07. Revenue of $240M (+3% Y/Y) misses by $6.41M. (PR) [Earnings, Breaking News] Comment!
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7:03 AM Foot Locker (FL): Q1 EPS of $0.91 beats by $0.03. Revenue of $1.64B (+3.8% Y/Y) beats by $0.01B. (PR) [Earnings, Breaking News] Comment!
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7:01 AM Stock index futures are shaky after an ugly session in Japan. Following its 7.3% plunge on Thursday, shares bounced nearly 4% as the yen resumed sinking. This soon reversed and shares plunged anew - dropping about 7% from their session high. The Nikkei eventually eked out a small gain as the yen (FXY) closed stronger again, dollar/yen falling 0.6% to ¥101.46. S&P 500 (SPY) futures -0.5%, Nasdaq 100 (QQQ) -0.5%. Japan: EWJ -2.6%, DXJ -3.7% premarket. Europe (FEZ) -0.5%. 2 Comments
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7:00 AM On the hour: S&P -0.52%. 10-yr +0.05%. Euro +0.19% vs. dollar. Crude -0.75% to $93.55. Gold -0.42% to $1385.95. Comment!
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6:57 AM Sony (SNE) plans to sell $1.5B in five-year bonds in June. Of the total $1.1B is slated to be used to pay existing debt and $400M is planned for capital investment. SNE -1.5% premarket. [Global & FX, Consumer] Comment!
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6:47 AM Citigroup thinks new Procter & Gamble (PG) CEO A.G. Lafley will lower the company's FY14 growth estimates as takes the helm. The investment firm would like to see Lafley put the old band back together by hiring some P&G alums from under his previous tenure. [Consumer] 2 Comments
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6:00 AM The costs of a U.S. Air Force heavy rocket launch program have more than doubled to $70.7B after the Pentagon added 60 more launches and extended the schedule by a decade. Lockheed (LMT) and Boeing (BA) joint venture United Launch Alliance should benefit even though the project is being opened up to competition. 2 Comments
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6:00 AM Overseas: Japan +0.89%. Hong Kong -0.23%. China +0.57%. India +0.31%. London -0.61%. Paris +0.11%. Frankfurt -0.62%. Comment!
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5:59 AM The estimated development and production costs of the F-35 fighter program have actually fallen for a change, dropping 1.1% to $391.2B as the Pentagon and Lockheed Martin (LMT) start to get a grip on a project whose expenses had soared out of control. Comment!
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5:52 AM America's Car-Mart (CRMT): FQ4 EPS of $0.92 misses by $0.03. Revenue of $125.5M beats by $6.3M. (PR) [Earnings, Breaking News] Comment!
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5:37 AM IBM (IBM) CFO Mark Loughridge has forecast that the company's earnings will rise 8% Y/Y this quarter, which would be in line with market expectations. The prediction suggests that EPS will increase to about $3.79 from $3.51 last year. Loughridge reiterated that H2 growth will be stronger, with "double-digit performance" in Q4. Meanwhile, IBM will reportedly lay off 270 people in the U.K. and Ireland. [Tech] Comment!
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5:27 AM Elan (ELN) intends to issue $850M worth of senior notes with a coupon of 6.25%. The offer for the debt, which matures in 2021, is due to close on Friday next week. The pricing of the bonds comes a day after Elan rejected a sweetened takeover bid from Royalty Pharma. Shares +0.65% premarket. (PR) [Healthcare] Comment!
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5:20 AM U.S. and Chinese regulators have signed a memorandum of understanding that gives U.S. authorities increased access to documents from Chinese audit firms. The agreement comes after scores of U.S.-listed Chinese companies faced questions over their accounting practices, with the SEC suing around a dozen for fraud and other charges. However, the new deal is limited and doesn't cover routine inspections of audit firms. [Global & FX] 1 Comment
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5:08 AM KKR (KKR) and Carlyle Group (CG) are among several investment funds that are reportedly expected to bid for shares in Panasonic's (PCRFY.OB) healthcare business, for which the Japanese conglomerate hopes to raise up to $1B. Toshiba is among the strategic investors that could make an offer. The deadline for first-round bids is Monday. [Healthcare, M&A] Comment!
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4:35 AM U.S. District Judge Denise Cote has dealt a blow to Apple (AAPL) over charges that it manipulated e-book prices, giving a "tentative view" that the Department of Justice will be able to show "direct evidence" that Apple took part in a conspiracy with publishers to raise prices. Apple is the last man standing in the case after all the publishers involved settled. The trial is due to start on June 3. [Tech, Consumer] 7 Comments
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4:26 AM Google (GOOG) could reportedly enter the fray for Israeli start-up Waze, which provides a mobile phone app that helps drivers avoid traffic jams and has over 40M users. Waze has been holding talks with Facebook (FB) for a $1B deal while there was chatter earlier this year of Apple offering $500M. Waze could disappoint them all by raising more venture-capital money and staying independent. [Tech, Consumer, Top Stories] 1 Comment
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4:11 AM German Ifo index of business confidence rises to 105.7 in May from 104.4 in April and tops estimates of 104.5. Current conditions 110 vs 107.3 and 107.2. Expectations static at 101.6, as forecast. The euro (FXE) spikes vs the dollar is now +0.1% after being lower, while the DAX is +0.1%. [Global & FX, Top Stories] Comment!
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4:03 AM District Court Judge John Gleeson is reportedly considering rejecting HSBC's (HBC) $1.9B deal with authorities over money laundering charges involving terrorists and drug dealers. Should Gleeson quash the agreement, HSBC could be left open to criminal prosecution and a ban from operating in the U.S., although the DOJ is questioning whether the judge has the authority to reject the deal. We could hear more details at HSBC's annual meeting today. Shares -0.9% in London. [Financials, Top Stories] 2 Comments
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3:47 AM European shares enjoy a technical bounce and broadly follow Japanese stocks higher following yesterday's sharp sell-off in both regions. Things got a "bit scary," says technical analyst Valerie Gastaldy. "But my advice to clients is that we shouldn't panic and we should try to buy." EU Stoxx 50 flat, London +0.2%, Paris +0.2%, Frankfurt +0.3%, Italy +0.1%, Madrid -0.2%. [Global & FX, On the Move] Comment!
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3:41 AM The yen is higher vs the dollar as volatility in the currency markets somewhat echo the gyrations in Japanese stock markets. Bank of Japan Governor Haruhiko Kuroda says that the BOJ has no set target for the yen and that stability in Japanese debt market is "extremely desirable." His comments follow the extreme instability yesterday, when 10-year JGB yields rose as high as 1%, prompting the BOJ to step in with a fund-supplying operation. Dollar -0.5% at -¥101.54. [Global & FX, Top Stories] Comment!
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3:17 AM German Q1 GDP (second reading) +0.1% Q/Q (flash +0.1%) vs -0.6% in Q4. On year, -1.4% (-1.4%) vs +0.1%. Private consumption adds 0.4 percentage point but gross capital investment cuts 0.3 point. (PR) [Global & FX] Comment!
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3:08 AM Japanese shares end +0.6% following a volatile session in which stocks rose and fell by over 3% vs the close yesterday, when they slumped 7.3%. The plunge on Thursday was "just a speed bump" given this year's strong returns, says U.S. fund manager Audrey Kaplan. Improving economic conditions "will support the market going forward." Hong Kong flat, China +0.6%, India +0.3%. [Global & FX, Top Stories, On the Move] 2 Comments
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