Today - Thursday, December 5, 2013
2:51 PMCrestwood companies down sharply after providing 2014 guidance
- Crestwood Midstream (CMLP -2.4%) and Crestwood Equity Partners (CEQP -10.6%) are sharply lower after providing 2014 financial and operational guidance.
- At CMLP, adjusted EBITDA is seen at $465M-$510M, a 34% increase from anticipated 2013 performance; distributable cash flow is estimated at $330M-$360M, 6%-10% Y/Y growth at coverage of 1.05x-1.1x cash distributions paid.
- Adjusted 2014 EBITDA from operational assets owned by CEQP is estimated at $55M-$60M; distributable cash flow is estimated at $85M-$95M, 5%-10% Y/Y growth at coverage of 1x-1.05x cash distributions paid.
2:20 PMAfter big rally, Oculus falls on offering announcement| Comment!
1:55 PMUniPixel rallies following upbeat SA column
- SA contributor Graycell Advisors, who has been bullish on UniPixel (UNXL +5.6%) for a while, thinks it's "fairly clear" the company has been "making meaningful progress and achieving key capacity milestones" in its efforts to ramp InTouch sensor production, in spite of concerns to the contrary.
- Graycell argues UniPixel's "production risk" in the wake of its initial purchase orders, and that worries about lamination yields and supply issues are unwarranted.
- The author does admit recent touch sensor price erosion is worrisome, and estimates Atmel (ATML -1.2%) ha a 2 to 3-month lead on UniPixel in commercializing its metal mesh sensors, but also argues UniPixel's additive manufacturing process provides it with a cost advantage.
- An eye-popping 67% of the float was shorted as of Nov. 15.
1:50 PMNoble Financial likes TherapeuticsMD's CSO appointment
- Noble Financial analyst Nathan Cali is excited about TherapeuticsMD's (TXMD +2.6%) move to appoint Joel Krasnow as CSO and head of regulatory development.
- Dr. Krasnow's experience provides TXMD with a well rounded clinical team to execute Phase 3 studies towards FDA approval for three late stage compounds; potential FDA approvals expected to start in 2015, Cali says.
- Buy rating maintained.
- Price target is $7.25.
1:35 PMKroger takes down other grocery store stocks
- A disappointing pace of sales growth from Kroger (KR -1.9%) has fouled the mood on the grocery store sector a bit.
- The company didn't raise its outlook for FY13 EPS as analysts had expected. A miss by the typically-steady Kroger has analysts resetting expectations for the group.
- Decliners: Safeway (SWY) -3.3%, Delhaize Group (DEG) -1.2%, Ingles Markets (IMKTA) -2.4%, Sprouts Farmers Market (SFM) -1.4%, Whole Foods Market (WFM) -0.9%.
1:19 PMTitan Machinery lowers guidance, shares fall
- Titan Machinery (TITN -7.2%) slides after missing on both lines with Q3 results.
- Equipment sales fell 3.2% Y/Y during the period, while parts and services revenues both rose.
- Gross profit was down slightly.
- "Our Q3 financial results reflect the continuation of challenges in both the agriculture and construction industries that we have previously discussed," CEO David Meyer says.
- FY guidance: $0.55-0.75/share on sales of $2.15-2.35B. Previous guidance was $1.20-1.50/share on revenue of $2.25-2.45B. (PR)
1:17 PMAnnaly and American Capital lead mREIT decline after Sell rating
- A check of the mortgage REITs following Goldman's interestingly-timed initiation of Annaly (NLY -1.6%) and American Capital Mortgage (AGNC -1.1%) with Sells finds the sector (REM -0.8%) again underperforming the broad market.
- To review: Annaly is off about 40% in 8 months and American Capital is off about 42% in 7 months. Yes, higher interest rates have delivered a hit to their portfolios (which tend to be longish in duration), but investor distaste for the names also has both trading at roughly 20% discounts to their book values.
- So is the call late? Maybe. On the other hand, one well-known hedge funder defines a 50% loss as holding a stock that goes from being down 80% to being down 90%.
- Other names of interest: CYS Investments (CYS -0.4%), Western Asset (WMC -1%).
- Related ETFs: MORT, MORL
12:52 PMVale considers selling stakes in coal, fertilizer businesses
- Vale (VALE +1.7%) says it might sell stakes in its global fertilizer and coal businesses to strategic partners to lighten project costs but isn't targeting the segments for divestments as it still considers them part of its long-term core.
- The two segments account for a small portion of Vale's revenue - a combined 7.9% in Q3 - and have weighed on cash flow.
- Vale says it is considering selling a 15%-25% stake in its coal division, although it plans to invest ~$2.8B in the business next year.
- Vale's efforts to become a major player in fertilizers took a hit this year when it suspended a $6B potash project in Argentina; it has just $52M set aside for investing in new fertilizer projects next year.
12:31 PMAdvantage Oil says Glacier Upper Montney well tested at record level
- Advantage Oil & Gas (AAV +3.7%) says its Glacier Upper Montney well in Alberta tested at a record 21M cfe/day and that its Lower Montney wells continue to outperform expectations.
- AAV says its Phase VI Glacier capital development program designed to ramp production to 135M cfe/day is progressing on track with three drilling rigs.
- Also, the previously announced strategic alternatives process remains ongoing; the bid date communicated to interested parties has passed and the company is reviewing proposals.
12:08 PMPenn Virginia +1.7% as Imperial starts at Outperform
- Penn Virginia (PVA +1.7%) is initiated with an Outperform rating and $13.50 price target at Imperial Capital, which says PVA has transformed itself from a gas producer to an oil producer with a 67K net acre position and rapidly growing production in the Eagle Ford oil window.
- PVA also has succeeded in improving operational efficiency and reducing costs, the firm says, anticipating liquids will grow 64% in 2014, with overall production rising by a third.
12:04 PMSolarCity offering backup energy storage using Tesla batteries
- SolarCity (SCTY +5.5%) is launching DemandLogic, an energy storage solution that's meant to complement its solar installations, and which relies on battery packs from fellow Elon Musk brainchild Tesla (TSLA +2.1%).
- DemandLogic can act as a backup energy source during grid outages, reduce or eliminate the need for grid power during times when the sun isn't shining, and lower the "demand charges" faced by businesses (tied to peak grid usage) by acting as an electricity source during peak hours.
- Much like SolarCity's panel installations, DemandLogic comes with no up-front cost, and is instead monetized via (10-year) service agreements.
- SolarCity admits DemandLogic generally doesn't make financial sense for homeowners at this time, but argues some businesses paying steep demand charges could see an immediate benefit.
12:02 PMJ.C. Penney down 8.4% in wild swing
- The enthusiasm over J.C. Penney's (JCP -8.4%) double-digit comp growth mark for November comes to a screeching halt as shares dive on heavy trading volume.
- A report that Kyle Bass has dumped his stake in the retailer appears to be the impetus for the swoon.
- Though plenty of analysts are having some fun with 'I-told-you sos' - perhaps the biggest lesson from the wild swing is that a JCP investment (long or short) isn't for the faint of heart.
12:01 PMBlow to banks' hedging in Volcker Rule
- The Too Big To Fail banks lead to the downside amid a report the set-to-be-voted on Volcker rule will not contain language allowing portfolio hedging - trades supposedly designed to protect against losses in a broad portfolio of assets.
- Banks can thank JPMorgan's (JPM -1.7%) London Whale fiasco for this as the Whale's trades were ostensibly set up for this portfolio hedging, but ended up costing the bank $6B.
- The move is a big blow to the banks which had sent their big lobbying guns in to try and prevent the disallowing of this practice. Banks often hedge to offset risks from trading with clients, but often there is no great hedge, and this is where portfolio hedging comes in ... or used to.
- "Volcker has morphed a bit, thanks to the Whale," says UBS' Brennan Hawken. "Now a big component of it has become about hedging. What can you hedge, and what can't you? It's really unclear." The CFTC and SEC are each set to vote on the rule on Dec. 10.
- Citigroup (C -1.9%), Bank of America (BAC -1.2%), Goldman Sachs (GS -1%), Morgan Stanley (MS -2.2%).
11:44 AMEA halting projects due to Battlefield 4 issues, shares tumble
- With complaints about bugs and connectivity issues piling up for Electronics Arts' (EA -7.3%) recently-launched Battlefield 4, EA's DICE unit (responsible for developing the game) is halting the release of additional Battlefield 4 expansion packs, and is also stopping work on all "future projects," until the game's issues are sorted out.
- EA investors aren't responding well to the news. Without healthy sales of Battlefield 4 and its $50 premium service, EA could struggle to hit its Dec. quarter forecasts. Moreover, DICE's project halts could delay the release of two anticipated titles: Star Wars: Battlefront (due in 2015) and Mirror's Edge 2 (due in 2015/2016).
- Activision (ATVI -2%), whose mainstay Call of Duty franchise is the top rival to EA's Battlefield franchise, is also selling off.
11:38 AMARCP lower after convertible offering
- $250M of 3% senior convertible notes due in 2018 have a conversion rate of 59.8050 shares of American Realty Capital (ARCP -1.7%) common stock per $1K principal amount of the notes, equivalent to a conversion price of $16.72 (vs. yesterday's close of $13.17).
- $350M of 3.75% senior convertible notes due in 2020 have a conversion rate of 66.0262 shares of ARCP common stock per $1K principal amount of the notes, equivalent to a conversion price of $15.15 per share.
- Press release
11:34 AMHalcon Resources +6.5% on Morgan Stanley upgrade
- Halcon Resources (HK +6.5%) is upgraded to Equal Weight from Underweight at Morgan Stanley, which says bearish catalysts have played out and shares no longer reflect overly optimistic growth and NAV assumptions.
- HK already has raised capex guidance and lowered production expectations for 2013 and 2014, exploration disappointed the market's high hopes, and HK raised capital to maintain liquidity.
11:12 AMEcopetrol to ramp up output in promising Colombian oil field
- Colombian's state-controlled oil company Ecopetrol (EC +1.9%) says it is ready to start ramping up production in its promising Eastern Caño Sur oil block as part of its efforts to boost production by a third over the next two years.
- EC says the block is commercially viable and will see production rise to 25K bbl/day by 2016 from the current 1,700; investment will total $656M through 2018, with ~135 wells expected to be dug.
- EC has said its 2012 production of 754K bbl/day will reach 1M by 2015, as it pours money into exploration and drilling.