MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Monday, May 20, 2013
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2:44 PM Coinstar (CSTR +1%) offers to let consumers watch The Hobbit: An Unexpected Journey for free as long they sign up for a Redbox Instant account, give up their credit card information, and take to Twitter to spread the word. The promotion could boost quarterly subscriber numbers for the streaming service as it runs into a soft patch for its movie release schedule and with Netflix breathing down its neck. Comment!
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2:26 PM Pitney Bowes (PBI +2.6%) looks like the one of the five most interesting ideas out there to value-seeking SA contributor Ulfberht Capital. The take focuses on the premise Pitney Bowes can deleverage its balance sheet and will benefit incrementally from an improving U.S. economy. Though the dividend payout rate could be at risk, a 4.94% yield on PBI shares is also enticing. 4 Comments
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1:54 PM The latest batch of data on gambling revenue from Macau looks promising with the average daily rate over a 7-day tracking period ending yesterday coming in ahead of expectations. If the MTD trend holds, May could be Macau's second best month and help boost the bottom lines for Melco Crown (MPEL +2.4%), Wynn Resorts (WYNN +1.4%), MGM Resorts (MGM +1.5%), and Las Vegas Sands (LVS +0.3%) during the quarter. Comment!
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1:06 PM LMC Automotive thinks demand for automobiles in China will return to a double-digit pace next year and stay stable for the four to five years. It's a common enough forecast in the industry with IHS Automotive going so far as to say there is "no chance" for a negative growth environment in China due to the less than 7% of the population that owns a car. Rough forward-looking China capacity counts: General Motors (GM +1.4%) 5M vehicles a year; Hyundai and Kia (HYMLF.PK) combined 1.8M; Ford (F +0.4%) 1.2M by 2015; Volkswagen (VLKAY.PK) 4M by 2018. Comment!
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12:55 PM Kellogg (K -0.9%) has seen its Special K brand be a star performer for the company for years as it continues to peck away more market share due to low-calorie products which have been decidedly on-trend. The next step from the brand is a wave of new products which will feature additional nutritional benefits on top of the low calorie counts. Kellogg has also developed a loyal following from its online weight management program which claims over 2M members. Comment!
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12:39 PM Where's the love for Wal-Mart (WMT -0.3%)? Despite projections the retail giant will grow earnings at a double-digit rate, the stock trades with a lower multiple than defensive-oriented peers such as Hershey, Kellogg, and Procter & Gamble, observes Stephen Leeb. The company is also gobbling up market share in the grocery category and its e-commerce sales growth beat Amazon's (30% vs. 22%) during the last quarter. 4 Comments
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12:38 PM Jefferies raises its price target on Zumiez (ZUMZ +1.8%) to $28 from $22 saying the specialty retail group has likely moved past "the noise in Q1" and faces easier compares going forward. Comment!
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12:29 PM Priceline (PCLN +3%) is the "clear global winner" in the online travel agency space, writes Deutche's Ross Sandler, who is upgrading shares to Buy and raising his PT to $900. Sandler touts Priceline's "unique supply footprint, industry-high growth rates and margins, and over-exposure to ... international hotel bookings." He thinks margins (recently pressured by heavy search ad spend) will begin stabilizing in 2H, sees upside to consensus forecasts, and predicts earnings will "grow at a 20% CAGR over the next 3 years." Sandler is also raising his PTs for Expedia (EXPE unchanged) and TripAdvisor (TRIP +3.8%), while reiterating Buys. Comment!
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11:21 AM Senator Charles Schumer wants airlines to reverse their steep increase on flight change fees after Delta Air Lines (DAL -0.5%), United Airlines (UAL -1.1%), American Airlines (AAMRQ.PK), and U.S. Airways (LCC -0.6%) all bumped off their charge to $200 from $150. Last year, the top airlines collected $2.6B in reservation change fees which accounted for a decent portion of the overall growth in the industry. 2 Comments
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11:15 AM Pinterest says it's in partnership with several retail brands including Target (TGT -0.8%), Netflix (NFLX +0.3%), and Sony (SNE +2.8%) to include more detailed information on product pins. The photo-sharing website is starting to draw more interest from retailers due to its higher signal-to-noise ratio and average user income than other social networking sites. Comment!
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10:41 AM Disney (DIS -0.5%) says Lucasfilm started production on the next animated Star Wars TV series with a fall 2014 release scheduled. The launch of the series will mark the first time the mighty Disney marketing machine is behind the show and is expected to have some tie-ins to the company's studio, theme park, and consumer products segments as well as the intriguing Disney Interactive - viewed as an earnings wildcard in the Disney mix. Comment!
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10:27 AM A number of auto supplier stocks trade higher again as enthusiasm from last week on global demand spills over to early trading this week. A Goldman Sachs upgrade on Meritor (MTOR +6.7%) to a Buy rating is also helping to lift sentiment. Advancers: Federal-Mogul (FDML) +1.9%, Oshkosk (OSK) +1.4%, Icahn Enterprises (IEP) +2.8%, Stoneridge (SRI) +3.8%. Comment!
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10:19 AM Ford (F +0.5%) thinks the percentage of U.S. vehicles sold with four-cylinder engines will rise to over two-thirds by the end of the decade, an estimate that looks like a "stretch" to some industry insiders. Though the automaker sees making more headway with its four-cylinder models in many segments, it fell short of saying the smaller engine would take off in the large SUV or pickup segment. Comment!
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9:40 AM Shares of Rite Aid (RAD +4.7%) are up again after setting new 52-week highs on Friday. The company is not just a turnaround story but also a deleveraging story, according to SA contributor Matthew Smith. 1 Comment
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9:16 AM Stifel Nicolaus downgrades Kansas City Southern (KSU) to a Sell rating after shares went on a M&A-fueled rally to push valuation high for a railroad concern. KSU +40% YTD, -0.6% premarket. 3 Comments
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9:12 AM General Motors (GM) CFO Dan Ammann says the automaker is "reasonably" on its way to realizing cost savings by streamlining its business across divisions and operations. The automaker's reorganization involves breaking down long-standing fiefdoms within GM and banking on its ability to bring many tech and engineering functions in-house. Comment!
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9:09 AM Jefferies downgrades Bed Bath & Beyond (BBBY) to Hold from Buy (price target to $71 from $76) citing valuation. "The company has all the potential to become an omni-channel leader in the home furnishings retail vertical in several years' time," notes analyst John Marrin. Up until then however, it will be "a pretty bumpy ride," he says. Comment!
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9:08 AM Oppenheimer takes a more cautious view of Lowe's (LOW) in front of its Q1 earnings report with a downgrade to Perform and a $46 price target. LOW -0.5% premarket to $42.45. (earnings preview) Comment!
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8:54 AM Barnes & Noble (BKS) is up 3.8% premarket after a weekend Barron's article pitches that the stock is an undervalued sum-of-the-parts story set to pop. Admittedly, the Microsoft-buying-Nook factor is a huge wildcard with B&N, but the valuation on the company's bookstore business looks appealing at current levels despite what happens with Nook Media. Comment!
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