MARKET CURRENTS
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MARKET CURRENTS
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Friday, May 17
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6:50 PM UniPixel (UNXL -26%) crashed today in the absence of major news. Williams Financial's Cody Acree, who rates shares a Buy: "There were a lot of speculative things today, a lot of which probably got blown out of proportion." Among other things, Acree notes a recent Apple patent application for a large-display touch sensor panel (not a competitive threat), and the fact a 13G filed by Goldberg Capital notes the firm's stake in UniPixel has fallen to 5.25% (Acree says this is only due to dilution from the stock offering). Shares still +99% YTD. 17 Comments
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6:35 PM SolarCity's (SCTY +25.7%) big rally is "bubble-like," cautions Raymond James' Pavel Molchanov, who tried to temper enthusiasm about First Solar last month. Molchanov warns a June 11 lockup expiration could "open the floodgates." Credit Suisse also cited the lockup when downgrading shares on Tuesday; the firm estimates the lockup will increase SolarCity's tradable float by 8x-10x. (earlier) 1 Comment
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6:08 PM Ubiquiti (UBNT) -5.9% AH after filing to sell 7.7M shares on behalf of existing shareholders through a public offering. CEO/NBA owner Robert Pera will be selling 1.7M shares, lowering his stake to 64.4% from 66.4%. Investment firm Summit Partners will be selling 6M, lowering its stake to 10.5% from 17.3%. The filing comes shortly after Ubiquiti closed near its 52-week high, and a week after shares took off in response to a Q1 beat and strong guidance. (S-1) 2 Comments
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5:46 PM QLogic (QLGC) CEO Simon Biddiscombe has resigned from his position, as well as from the company's board, to "pursue other opportunities." CFO Jean Hu has been named interim CEO while a search commences for a replacement. Biddiscombe became CEO in Nov. 2010, after serving as CFO for two years. QLogic has had a rough time during Biddiscombe's tenure, as both the company and archrival Emulex contended with soft storage adapter card demand and competitive pressures. Shares -2.2% AH. Comment!
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5:28 PM Accenture (ACN) is acquiring e-commerce/online ad consulting firm Acquity Group (AQ) for $316M, or $13/share, in cash. The price represents an 118% premium to Acquity's close today. Much like Accenture's recent purchases of Fjord and avVenta, the deal is about increasing Accenture's exposure to a burgeoning Web/digital marketing services space, and pitch more comprehensive solutions to CMOs and ad agencies. Accenture notes Acquity brings expertise in popular platforms such as Adobe and hybris. Acquity shares +111% AH to $12.56. Comment!
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5:13 PM After taking a hit earlier this month on a weak earnings report, Con-Way Trucking (CNW +3.4%) has steadily rebounded and posted another strong showing today. Optimistic investors turned towards the options pit on a buying spree in the name today. Total option volume was 100 times greater than average in the name yesterday, with calls accounting for 96% of the total. Comment!
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5:04 PM GameStop (GME +4.5%) closed with a big gain after NPD reported U.S. physical retail video game sales fell 17% Y/Y in April, better than some feared; they fell 1% in March, and 27% in Feb. Hardware sales fell 42%, as gamers wait for this fall's launches. Total industry physical retail sales fell 25%; as Electronic Arts (EA +0.9%) and Activision's (ATVI +0.5%) latest results show, such sales make up a declining portion of industry revenue. Take-Two's (TTWO +1.9%) Bioshock: Infinite and NBA 2K13 were the month's 3rd and 7th-most popular titles, and Activision's Call of Duty: Black Ops 2 and Skylanders Giants were #4 and #8. Comment!
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4:49 PM The week's ETF movers - Gainers: TAN +9.6%. XLF +3.7%. UNG +3.4%. GAZ +3.2%. EWJ +3.0%.
ETF Losers: GDXJ -14.2%. GDX -11.5%. PSLV -7.3%. SLV -6.9%. SIVR -6.7%. 1 Comment -
4:23 PM Gilead Sciences (GILD +2.4%) finishes higher today after UBS raised its price target to $67 from $63 and reiterated its Buy rating. Analyst Matthew Roden sees ongoing strength for its HIV franchise, saying the firm conducted a survey of top-volume prescribers to gauge initial receptiveness and expected utilization once available,and results were highly supportive of TAF, its HIV treatment, as a next-gen replacement for Viread. 1 Comment
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3:58 PM TC Pipelines (TCP +2.6%) is upgraded to Buy from Neutral with a $51 price target at BAML on plans to acquire additional equity interests in Gas Transmission Northwest and Bison. The firm views TCP's recently announced drop-down as alleviating most concerns about uncertainty around the ability to re-contract pipeline capacity on attractive terms and below peer-average distribution growth. Comment!
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3:56 PM Oncothyreon (ONTY +0.9%) gets a boost from Wedbush today, as the firm upgrades he stock to Outperform and raises the price target from $2 to $5. Wedbush says that its partner Merck KgA may be successful in negotiating a path to approval for Stimuvax with the existing and anticipated new data from ongoing clinical trials. Merck expects to provide an update on their discussion with regulators in 2013. 1 Comment
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3:46 PM The yen (FXY -0.9%) legs down to a new multi-year low - the dollar now buying ¥103.24 - continuing a truly remarkable move since late last year. It's an instance where politicians told you they were going to devalue, every trader and strategist around told you they were shorting the yen, and sure enough the yen went down ... hard, and in as straight of a line as markets ever allow. Ah, if it were always that easy. Other ETFs: JYN, YCL, YCN. 4 Comments
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3:43 PM Shares of Amarin (AMRN -1.1%) rebound somewhat from an earlier dip on news that its Vascepa wasn't in the FDA's Orange Book for April. 5 Comments
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3:22 PM Gold miners (GDX -3.2%) take another beating as gold continues to lose its allure amid disclosures of reduced bets by hedge funds, a World Gold Council report showing gold demand at a three-year low, and a surging dollar. For the miners, it's an ugly world of lower production, higher costs and falling prices. At least nine miners hit 52-week lows: NEM -3%, GG -2.7%, AUY -4.8%, HMY -6.3%, AU -2.5%, BVN -1.1%, ANV -7.4%, NG -2.7%, GSS -5.8%. 16 Comments
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2:55 PM Volatile NII Holdings (NIHD +10%) is soaring after pricing a $700M debt refinancing deal. The Latin American carrier, which originally was looking to raise $500M, will be paying 7.875% on senior notes due Aug. 2019, and intends to use the proceeds to pay back Mexican and Brazilian loans. NII had $5.7B in debt on its balance sheet as of March 30, and $1.9B in cash/investments. 40.7% of the float was shorted as of April 30. (PR) Comment!
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2:21 PM Tesoro (TSO +5.3%) says the FTC approved its purchase of BP's 240K bbl/day Carson, Calif., refinery and other assets. The commission found the deal would not substantially lessen competition among seven refiners for gasoline in California, the largest U.S. gasoline market. Tesoro Logistics (TLLP +3.5%) will acquire the first portion of Carson logistics assets from TSO for $640M. Comment!
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2:07 PM Michael Talbert is voted out as board chairman at Transocean (RIG -1.7%) and will be replaced by Icahn-nominee Samuel Merksamer. But that was Icahn's only victory, as shareholders re-elected the other four company nominees. Earlier today, shareholders rejected Icahn's $4 annual dividend proposal, supporting the company's more modest $2.24. Comment!
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1:48 PM Real Goods Solar (RSOL +105.9%) skyrockets after SA contributor Andy Zelenak makes a bull case, citing the potential of the company's partnership with homebuilder Lennar (LEN) and its PowerOn solar modules. Zelenak notes the Lennar deal allows home buyers to install panels "with no money down at a guaranteed 20% lower-than-grid cost," and that PowerOn modules sell for just $2.33/watt, well below the national average of $4/watt. He also considers its valuation reasonable relative to that of high-flyers such as SolarCity. 2 Comments
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1:36 PM For-profit education stocks rally as some bubbling enthusiasm over financial aid legislation is just enough to pressure short sellers in the sector. Gainers: ITT Educational Services (ESI) +10.2%, Career Education (CECO) +11.5%, Corinithian Colleges (COCO) +15.3%, Lincoln Education (LINC) +5.2%, Education Management (EDMC) +5.5%, Bridgepoint Education (BPI)+4.4%, Devry (DV) +3.1%, Capella Education (CPLA) +5.5%, 1 Comment
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1:07 PM BofA took a trip to Phoenix, paid Honeywell's (HON +2%) Aerospace facilities a visit, and came away impressed after management said it believes "air transport hours bottomed in Q1" meaning demand should accelerate going forward "driving mid single digit aftermarket growth" in H2. Aerospace sales fell 1% in Q1. HON price target raised to $88 from $79. Comment!
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12:51 PM After barely moving yesterday in response to nearly in-line Q1 results and strong Q2 revenue guidance, Youku (YOKU -9.6%) is falling hard today. The decline comes even though Youku has received two upgrades since the report (from HSBC and Maxim), as well as a bullish coverage launch from BofA. Concerns about mobile monetization could be a factor. On its earnings call, Youku stated mobile daily video views rose 50%+ Q/Q and are now above 170M, that mobile monthly users have topped 100M (PC users are around 400M), and that mobile now makes up ~30% of traffic. However, the company added "mobile monetization this year is relatively modest." 2 Comments
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12:48 PM Walgreen (WAG +1.3%) and Alliance Boots receive the regulatory clearances for their equity investment in AmerisourceBergen (ABC +0.4%). The clearances permit both to purchase up to 7% of ABC in the open market, and the exercise of two warrants for 16% in the aggregate in 2016 and 2017. Comment!
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12:43 PM JPMorgan lifts its price target ($70 from $68) on Northrop Grumman (NOC +3.6%) to reflect Thursday's announcement that the company plans to reduce the number of outstanding shares by 25% by 2015. More interesting is the color in the note regarding NOC's position relative to peers: the company "intends to return essentially all cash to shareholders. Besides LMT's nearly 50% payout ratio (which we believe is likely to rise still higher in September), this is the clearest multi-year strategic statement we have seen among large defense companies, and we think the market will reward this," notes analyst Joseph Nadol III. 1 Comment
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12:43 PM Tetra Technologies (TTI +4.6%) is upgraded to Outperform with a $12 target price, up from $10, at RBC Capital, which says TTI appears to be in the early phases of a transformation that will help boost free cash flow generation. The firm believes the current share price offers an attractive entry point to take advantage of TTI's repositioning strategy. Comment!
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12:26 PM Cosi (COSI -13.7%) takes a double-digit dive after its Q1 report misses by what might fairly be called a "wide margin". Revenues fall 13% Y/Y due to store closures and lower comps. Comps breakdown: -6.6% and -1.3% for company-owned restaurants and franchise-operated locations respectively. From the CC: "Dinner [is] where we took the greatest [comp percent] hit." Summing it up is CEO Carin Stutz: "Q1 results were unacceptable … [if] profitable sales [are] the measure of our success … we have not succeeded." Northland Capital rubs a little salt in the wound, downgrading the shares to Market Perform from Outperform (see analyst Chris Krueger's Q&A on the CC). 2 Comments
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12:20 PM Quicksilver Resources (KWK -4.4%) announces a multi-year profit improvement plan it says will focus on prioritizing its core brands, globalizing key functions and reducing its cost structure, Briefing.com reports. KWK expects the plan will improve EBITDA by $150M by 2016. Also, KWK will be replaced in the S&P 400 after the close of trading May 23. Comment!
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12:18 PM Marketo's (MKTO) IPO is nearly as good as Tableau's. Shares opened at $20 and are currently moving at $20.24, up 55.7% from an IPO price of $13. That gives the cloud marketing automation software vendor and occasional subject of Salesforce buyout speculation a valuation of $722M, or 12x 2012 sales. (S-1) Comment!
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12:14 PM A revenue miss and light guidance lead Brocade (BRCD -4.2%) to slump. On its earnings call, Brocade guided for FQ3 revenue of $510M-$530M and EPS of $0.11-$0.13, below a consensus of $556M and $0.15. The company partly blames soft storage array sales from OEM partners (IBM, H-P, and Dell appear to be culprits, NetApp could be another). Brocade's storage switch division sales (69% of total) fell 10% Q/Q and 6% Y/Y in FQ2, in spite of growing demand for 16G Fibre Channel switches (Brocade has had a big lead on Cisco (CSCO) here, but Cisco is finally catching up). Ethernet switch division sales -4% Q/Q and +15% Y/Y. Comment!
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12:06 PM Thoratec Corporation (THOR -1.5%) says it's received FDA approval to market the HeartMate II Pocket Controller, the small face of the HeartMate II LVAD System. The device controls the left ventricular assist device or LVAD, which is a kind of mechanical heart which is put inside a person's chest, to help the heart pump oxygen-rich blood throughout the body. Comment!
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11:47 AM MicroVision (MVIS +12.2%) jumps after announcing it has raised $5.85M by selling 2.6M shares and warrants to acquire another 2M shares to investment firm Crede and other buyers. The sale gives MicroVision, which had just $3.8M in cash/investments on its balance sheet as of March 31 (down from $7.3M on Dec. 31), a needed liquidity injection as it continues it efforts to commercialize its PicoP mobile projection tech. Comment!
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11:43 AM A broad rally in auto supplier stocks isn't a shocker after positive news piled in from across the globe. In Europe, a long slide in sales has finally reversed while China is opening up the western part of its territory for manufacturers. Just to top it off quite nicely, consumer sentiment rose briskly in the U.S. Advancers: American Axle (AXL) +4.5%, Dana Holding (DAN) +4.1%, TRW Automotive (TRW) +2.2%, Navistar (NAV) +4.4%, Federal-Mogul (FDML) +4.2%, Magna International +1.9%, Meritor (MTOR) +2%, Johnson Controls (JCI) +1.9%, Exide Technologies (XIDE) +5.5%. Comment!
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11:33 AM U.S. Cellular (USM +5.5%) spikes higher after announcing a $5.75/share special dividend that will be paid on June 25 to shareholders on record as of June 11. The announcement comes as USM states it has closed its $480M deal to transfer spectrum and 420K customers to Sprint. Comment!
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11:14 AM Take this one with a grain of salt: an "industry source" claims Baidu (BIDU +1.6%) has reached a deal to buy Sohu's (SOHU +2.5%) Sogou search unit for $2B-$2.5B in cash and shares of Baidu's iQiyi online video unit. Though Sohu is rallying, the entire company still only has a market cap of $2.4B, indicating investors are as skeptical of this report as they were of Qihoo deal reports. Acquiring Sogou would pose integration challenges for Baidu, and (given Baidu's dominant Chinese search share) could also draw a regulatory response. (previous) Comment!
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11:05 AM Triple-S Management (GTS -4.8%) slides after pricing a secondary offering of 5.4M Class B shares at $18.25, a 4.5% discount to Thursday's close. As part of the Offering, 4,400,368 shares were sold to the public in a conversion from Class A shares, and 1M shares were purchased by the Company. Triple-S will not receive any proceeds from the Offering. Comment!
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11:04 AM SolarCity (SCTY +15.3%) won't take a breather. Shares are blasting off to new post-IPO highs a day after rallying on news of an expanded financing partnership with Goldman. "We hope [the deal] sends a signal that solar is a stable and reliable asset to invest in," CEO Lyndon Rive tells Bloomberg. Meanwhile, some Chinese solar names are up following a rally in Shanghai: YGE +4.1%. LDK +5.1%. SOL +6.1%. JASO +3.5%. CSIQ +2.5%. Comment!
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11:01 AM Goldman's Tuesday bear call on agricultural commodities has implications for Deere (DE -2.7%) which gets a downgrade to Sell from Neutral. Analyst Jerry Revich says "recovering commodity inventories point to lower U.S. farm income and capex." As recently bearish Barron's notes (channeling Wells Fargo's Andrew Casey) "as goes the North American corn crop, so goes DE's stock price." For their part, GS says only a "major weather shock" could keep corn crop (CORN +0.1%) prices "near their current levels." Price target: $85 from $98. Comment!
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10:58 AM Vertex Energy (VTNR +3.1%) is started with a Buy rating and $4 price target at Wunderlich, which cites flexibility in responding to price/supply fluctuations across the collection/resale markets for used oil. In addition to economies of scale and low capital requirement, the spread between VTNR's feedstock and its end products are more highly correlated than fully re-refined Group II base lube oils, the firm says. Comment!
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10:51 AM Vanda Pharmaceuticals (VNDA +20%) pops after Lazard pounds the table on the stock and ups its price target by nearly 55% to a whopping $17 from $11. The firm cites positive checks from sleep specialists on tasimelteon for non-24 hour insomnia disorder. Comment!
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10:41 AM Tableau's (DATA) IPO is as good as advertised. Shares opened at $47 and are currently at $49.82, up 61% from a raised IPO price of $31. That gives the analytics/data visualization software vendor a valuation of $2.86B, or a whopping 22x 2012 revenue. Rival Qlik (QLIK +4.6%) is up in sympathy - a bullish BMO note might also be helping. (S-1) (Pac Crest) Comment!
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10:37 AM Halozyme Therapeutics (HALO +1%) continues its run again today, on the back of an 18% gain in yesterday's regular session. Late Wednesday, the company said that positive clinical data from a Phase 1b trial of PEGPH20 in combination with gemcitabine to treat patients with stage IV metastatic pancreatic cancer will be presented at the 2013 American Society of Clinical Oncology Annual Meeting. Comment!
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10:27 AM The call option otherwise known as National Bank of Greece (NBG +19.2%) soars again, now closing in on being a 4-bagger in a month. The capital raise plan has been approved - though surely dilutive, it keeps the bank privately-owned - and an upgrade cycle has begun for the country and the banking system. The Greek ETF (GREK +3.1%). Comment!
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10:25 AM While Aruba crashes thanks to soft July quarter guidance and worries about Cisco's efforts to bundle Wi-Fi hardware in enterprise deals, carrier Wi-Fi rival Ruckus (RKUS +2.6%) is adding to yesterday's Cisco-fueled gains thanks to an upgrade to Buy from Goldman's Simona Jankowski. She notes shares closed yesterday down 41% YTD and 11% from their $15 IPO price thanks to Ruckus' Q1 miss and Q2 guidance, and argues Ruckus' long-term story is intact. Deals with tier-1 carriers such as AT&T and Vodafone are expected, and Ruckus is seen as a "key beneficiary" of efforts to integrate small cell base stations with Wi-Fi access points. Comment!
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10:16 AM Aruba (ARUN -26.8%) is slammed with 9 downgrades after providing light guidance to go with its FQ3 results. Aruba is "likely dealing with a multi-quarter, if not structural, change in its competitive landscape and growth rate," writes Needham, cutting shares to Hold. Wells Fargo, downgrading to Market Perform, notes Cisco (CSCO - 27% Y/Y Wi-Fi growth in FQ3) is extending its efforts to bundle Wi-Fi hardware with other enterprise gear to Europe/Asia, and that Aruba plans to invest more to compete better. Along with the report, Aruba announced it's buying Meridian Apps, a developer of mapping/navigation software for hotels, subways, hospitals, etc. (transcript) Comment!
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10:08 AM Stemline Therapeutics (STML +6.2%) ramps higher after it prices its 4.2M share public offering at $14.50 per share, just a 3.3% discount to yesterday's close. The pricing puts the tally on gross proceeds at around $60M. The company intends to use the proceeds to fund ongoing clinical trials of its potential leukemia and lymphoma treatments SL-401 and SL-701, as well as for other general corporate purposes. Comment!
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10:01 AM Pike Electric (PIKE +5.6%) rises after Stifel Nicolaus makes a valuation call, upgrading the shares to Buy and setting a $14.50 price target. Having sold-off ~24% since earnings, including ~9% since announcing its secondary, the stock represents a bargain given that "the fundamental story is sound." As was the case the last time Stifel made a call on PIKE, the stock is trading on heavy volume (30% of the average 10-day volume has already changed hands in the first ~30 minutes of trading). Comment!
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9:48 AM Laredo Petroleum (LPI +4.2%) is started with a Buy rating and $23 target price at Topeka Capital, which thinks the market is undervaluing its Anadarko Basin assets: "The story may require patience to get the balance sheet in shape and asset value to be realized, but we believe this could evolve sooner rather than later." Comment!
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9:35 AM A downgrade to Hold from Maxim's John Tinker leads Pandora (P -0.2%) to open lower, but shares have quickly bounced. Tinker cites valuation, noting Pandora trades near the $17 PT Maxim set back in Aug. '11. He's otherwise positive, noting improved mobile monetization and the fact Pandora support is now built into 95 car models. Piper raised its estimates yesterday. 1 Comment
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9:29 AM James River Coal (JRCC) +10.3% premarket after announcing separate exchange agreements in connection with its 4.50% and 3.125% convertible senior notes. JRCC will exchange $243M of existing senior convertible notes for $123M of new senior convertible notes due in 2018. Comment!
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9:22 AM Tableau Software (DATA) and Marketo (MKTO) are will begin trading today after pricing their IPOs at levels that indicate strong demand. Tableau, set to become the Street's latest big data/analytics darling, priced its offering at $31, above a prior range (also raised) of $28-$30. The company sold 8.2M shares, up from a prior 7.2M, as insiders used the demand to sell an extra 1M shares. Marketo priced its offering at $13, at the high end of an $11-$13 range. The IPO prices give Tableau a valuation of $1.78B, and Marketo a valuation of $464M. (S-1s: Tableau, Marketo) Comment!
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9:10 AM Leap Wireless (LEAP) -2.5% after Barclays starts coverage with an Underweight and $4 PT as part of a broader coverage launch of U.S. telecom service providers. Tower owners SBA (SBAC) and American Tower (AMT) have been started at Overweight, and so has Verizon (VZ). AT&T (T) and T-Mobile USA (TMUS) have been started at Equal Weight. Comment!
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8:22 AM The FDA clears Oramed Pharmaceuticals' (ORMP) Investigational New Drug application for the oral insulin capsule ORMD-0801. Earlier this month, SA contributor Len Zehr flagged the IND application as a catalyst. Shares +14.84% premarket. (PR) Comment!
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8:05 AM EnteroMedics (ETRM) rises 15% before the bell after saying it has concluded a pre-Premarket Approval (so you're saying its preliminary?) application meeting at which the FDA said that once the company's application for the Maestro Rechargeable System's VBLOC vagal blocking therapy is accepted, and once a detailed review of the data is validated, the company can "anticipate presenting the PMA before a future FDA Advisory panel." Parsing that language: ETRM plans to submit a PMA in Q2. (PR) Comment!
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