MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Friday, May 25, 2012
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6:01 PM Quest Software (QSFT -0.1%) shares dived in the final minutes of trading to $25.15 after Reuters reported Dell (DELL) is expected to reach a deal to buy the company, perhaps as soon as this weekend, but at a price of $23-$26/share. Before the story broke, Quest traded as high as $26.73 on a Bloomberg report that mentioned Dell's interest, but didn't name a price. Reuters adds Dell's post-earnings crash led a prior deal to fall apart. Comment!
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4:38 PM Specialty chemicals manufacturer Albemarle (ALB) -1.5% AH after announcing it will increase global prices for all grades of ibuprofen by an estimated 15% effective immediately, or as contracts allow. Comment!
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4:28 PM Shares of Amylin Pharmaceuticals (AMLN +8.4%) finished markedly higher on reports that the company, which is on the sales block, was already receiving bids from Sanofi (SAN) and Merck (MRK) in excess of $25 per share. 1 Comment
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4:05 PM Dorman Products (DORM +2.9%) finishes the day solidly in the green after being upgraded to Buy from Hold in a coverage transfer at BB&T earlier today. Comment!
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3:34 PM Fresh off a big contract win to provide hardware and software for China National Petroleum's Turkmenistan gas fields, Recon Technology (RCON +12.2%) shares spike again on rumors of a potential contract with Sinopec (SNP). Comment!
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2:57 PM Shares of Vera Bradley (VRA +6.7%) move higher ahead of the company's earnings report slated to be released next week. The word from traders is that shares hit oversold territory as they etched out multi-year lows earlier this week on pesky concerns about luxury spending in the U.S. Comment!
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2:52 PM Extorre Gold Mines (XG +12.3%) approves the adoption of a shareholder rights plan, effective immediately but subject to shareholder ratification within six months in order to remain in place. Comment!
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2:51 PM Maxwell Technologies (MXWL -11.4%) is plunging to new multi-year lows following a downgrade to Neutral from Wedbush. The firm says its checks indicate new competition in Maxwell's ultracapacitor business from China's Lishen, while adding it believes Lishen's sales go against the spirit of its outsourcing partnership with Maxwell. (previous) Comment!
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2:44 PM Medicis (MRX +1.3%) gains on positive comments out of Goldman earlier today. The firm says the company is one of the most likely M&A targets in its peer group, and notes that its growth potential is under appreciated. It reiterats a Buy rated with a $45 price target. Comment!
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2:35 PM Shares of Dollar Thrifty (DTG +3.3%) jump higher off of a report that it's closing in on seeing a new offer from Hertz Global (HTZ +2.1%). It appears the biggest hurdle in the long-anticipated deal - finding a buyer for assets Hertz will need to divest - may have been finally cleared. Comment!
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2:12 PM America's Car-Mart (CRMT -8.9%) slides after reporting a mixed FQ4 result late yesterday, beating on a per share basis but coming up shy on revenue. Despite the mixed result, net profit actually jumped 15% as the used-car seller recorded stronger volume and selling prices. Comment!
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2:00 PM Legal software firm EPIQ Systems (EPIQ +4.9%) jumps after William Blair starts coverage with an Outperform. The firm notes EPIQ now generates 2/3 of its revenue from the growing e-discovery software market, rather than its legacy bankruptcy administration solutions. Guidance Software (GUID) also participates in the e-discovery market. (Q1 results) Comment!
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1:47 PM BMC Software (BMC +2%) spikes a little after InformationWeek reports tech giants and P-E investors have expressed interest in buying part or all of the company. The tech companies aren't specifically named, but are said to be from a list that includes Dell, Cisco, Oracle, EMC, and IBM. Activist investor Elliott Associates is pushing for a sale, but BMC has thus far resisted its efforts. Rival Quest Software (QSFT +4%) is rallying on reports Dell is in talks to buy the company. Comment!
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1:36 PM Chip design software firm Mentor Graphics (MENT -12.7%) tumbles after missing FQ1 revenue estimates. The decline comes even though Mentor's FQ2 guidance (revenue of $240M and EPS of $0.17) is largely in-line with estimates, and its FY13 EPS guidance of $1.37 is above a $1.33 consensus (revenue guidance of $1.1B is in-line). It could provide more ammo for 15% owner Carl Icahn, whose efforts to force a sale have thus far been stymied. Comment!
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1:11 PM Riverbed (RVBD +6.1%), which was down 44% from the time it issued a bleak Q1 report and Q2 guidance, is rallying after Gabelli's Hendi Susanto started coverage with a Buy and $30 PT. The firm is bullish due to the growth potential of the WAN optimization hardware market, in which Riverbed has a ~50% share, and which the company estimates is only 15%-20% penetrated. Susanto also notes rival Blue Coat was sold at much higher multiples than what Riverbed currently trades at. 1 Comment
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1:10 PM Illinois Tool Works (ITW +1.2%) gets a lift from an upgrade by JPMorgan to Overweight. The firm says ITW is committed to overhauling the diversified manufacturer's business portfolio. The company's performance has been weighed down by too many slow-growing businesses and a highly decentralized corporate structure, and recent activist moves to restructure its business indicate the company is making tangible moves to reinvent itself. Comment!
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12:55 PM What now? After Sycamore Partners backed off a deal to purchase the company at $3.05 a share, Talbots (TLB -38.1%) faces the moment of truth - nobody wants to buy it. Focus Investment Banking's Abe Garver says the company has already talked to every potential buyer without any positive results, while the advertised turnaround isn't on track with 90 stores closures and falling comparable-store sales the lead stories. Comment!
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12:49 PM Elan (ELN +7.6%) shares see notable strength following positive comments on the potential of the company's Alzheimer's drug Bapineuzumab: The FDA is signalling "they will be very reasonable about getting something to patients that has a modicum of benefit," Chairman Robert Ingram says. Also goosing shares is mention of ELN as a takeover target: "If an offer comes, we can't ignore it..." Comment!
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12:27 PM WESCO International (WCC -1.4%) slips on a tepid initiation by Wunderlich earlier this morning, starting the shares with a less than stellar Hold rating and a price target of $64 per share. Wunderlich says the weak rating is driven by a below-consensus 2012 EPS view largely resulting from revenue growth 80-90 bps slower than Street projections. The firm adds that near-term macro factors could present 2H12 challenges given the emergence of slowing business spending over the past five to six months. Comment!
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