Wednesday, December 11, 2013
5:38 PMGenVec +23.6% AH after RAC approves initiation of CGF166 phase I study
- GenVec (GNVC) shares spike 23.6% AH after the company discloses the National Institutes of Health's Recombinant DNA Advisory Committee unanimously approved the initiation of a Phase I study of CGF166, an adenoviral vector engineered to express the atonal gene in patients with severe hearing loss. (8-K)
- CGF166 uses GenVec's adenovectors tech and is being developed by the Novartis Institute for Biomedical Institute under a research collaboration and license agreement with GenVec.
- An investigational new drug application is expected to be filed in Jan.
5:24 PMFacebook, Alliance Data, Mohawk joining S&P 500
- Better a week late than never. Facebook (FB) will be joining the S&P 500 following the Dec. 20 close, and will also be added to the S&P 100. The social networking giant is replacing test equipment vendor Teradyne (TER).
- Alliance Data Systems (ADS) and Mohawk Industries (MHK) are also joining the S&P 500 following the Dec. 20 close. They're replacing Abercrombie & Fitch (ANF) and JDS Uniphase (JDSU).
- FB +3.9% AH. MHK +2.4%. ANF -0.8%. JDSU -0.6%.
5:11 PMIAMGOLD suspends dividend, shares -2.3% AH
- IAMGOLD (IAG) -2.3% AH after suspending future dividend payments until further notice.
- CEO Steve Letwin says the company is taking the action to preserve its balance shee and allows it to conserve cash and ensure the flexibility needed "to take advantage of opportunities when they arise."
- IAG joins the likes of Barrick Gold (ABX) and Kinross Gold (KGC), which cut or suspended their dividends earlier this year.
4:58 PMathenahealth stumbles on weak 2014 outlook
- athenahealth (ATHN) reaffirms its FY13 outlook and provides guidance for FY14.
- FY13: Adjusted EPS of $1.05-1.15 on revenue of $580-615M.
- FY14: Adjusted EPS of $0.98-1.10 on revenue of $725-755M.
- Consensus for 2014 is $1.38/share on sales of $765.28M.
- CFO Tim Adams is "very excited about growth opportunities and [is] pleased to present an ambitious financial plan for fiscal year 2014." (PR)
- Investors don't seem so excited: ATHN -12% AH.
4:51 PMSunEdison issues Q4 warning, shares -7.7% AH
- SunEdison (SUNE) now expects its chip wafer division, soon to be spun off in an IPO, to post Q4 revenue of $205M-$215M, down from prior guidance of $220M-$230M. The company blames "continued market weakness." Pricing and market share are said to be largely unchanged. (PR)
- SunEdison is also cutting its Q4 solar systems sales forecast to 209MW-234MW from a prior 234MW-264MW. However, the cut is simply due to a decision to keep more projects on the company's balance sheet. Completed systems guidance is unchanged at 209MW-234MW, and guidance for systems retained on SunEdison's balance sheet has been raised to 100MW-110MW from 75MW-80MW.
- Separately, SunEdison is announcing a debt refinancing effort. The company plans to sell $800M worth of convertible senior notes (half due in 2018, the other half in 2021), and use the proceeds to redeem $550M worth of 7.75% senior notes due 2019 and a $200M term loan sporting a 10.75% interest rate.
4:48 PMUNS Energy +30% AH after Fortis agrees to acquire for $60.25/share
- UNS Energy (UNS) agrees to be acquired by Fortis (FRTSF), Canada's largest investor-owned gas and electric distribution utility, for $60.25/share, a 31% premium to today's closing price.
- The $4.3B deal, which includes the assumption of ~$1.8B in debt, would provide additional capital and new resources for UNS subsidiaries including Tucson Electric Power and UniSource Energy Services.
- Fortis serves more than 2.4M through its electric utilities in five Canadian provinces and two Caribbean countries, a natural gas company in British Columbia, and a gas and electric utility in New York.
- UNS +30.2% AH.
4:23 PMImmunoCellular cut in half as ICT-107 misses primary OS endpoint
- ImmunoCellular (IMUC) collapses 50% AH.
- The company is out with results from a Phase 2 study of ICT-107 in newly diagnosed glioblastoma multiforme.
- ICT-107 showed statistically significant PFS superiority over placebo. K-M curves (entire sample of 124 patients): Favors ICT-107; HR of 0.56; p=0.014; median PFS increase was two months. K-M curves (per-protocol population): Favors ICT-107; HR of 0.53; p=0.0074; median PFS increase was three months.
- OS K-M curves fail to hit statistical significance. OS was the primary endpoint. Summary (intent-to-treat): HR of 0.87; p=0.58. Summary (per-protocol): HR of 0.79; p=0.40.
- For more, see here.
4:16 PMGood timing: NorthStar launches secondary offering
- NorthStar Realty Finance (NRF) takes advantage of today's 20% moonshot in the stock, launching a 50M share secondary. Part of the proceeds will fund the cash portion of an approximately $400M portfolio of manufactured housing communities under contract. The rest will be for other potential investments.
- Shares -4.2% AH
- Press release
3:58 PMEPA official says exceeding 10% ethanol in fuel isn't feasible
- Shares of ethanol makers slide as an EPA official tells a congressional panel it’s not feasible for gasoline refiners to use as much ethanol next year as had been mandated, which is why the agency proposed easing the requirement.
- Producers of ethanol, biodiesel and advanced biofuels have criticized the EPA’s proposal, saying it undercuts a growing, domestic industry.
- ADM -1.5%, BIOF -3%, GPRE -3.8%, REGI -4.8%, SYNM -5.7%, PEIX -9.6%, KIOR -12.8%.
3:51 PMBarron's: Forestar trades at a big discount to NAV
- The 20% dip in Forestar (FOR +1.7%) shares since mid-October looks like a buying opportunity, Barron's writes, as FOR sells lots and realizes income from its oil and gas properties over the next year.
- FOR, which owns 132K acres of real estate in 10 states including in attractive markets in Texas, is on track to sell ~1,900 residential lots this year, more than double last year's 926 lots, and production in its burgeoning oil and gas unit is up 170% Y/Y.
- Proceeds from a recent equity offering, which raised $145M, while dilutive, will further develop FOR's real estate and energy properties in 2014, which could lead to a higher NAV over time.
3:08 PMBroad slide in equity REIT sector
- The equity REITs are particularly weak today as the 10-year Treasury yield heads higher by 4 basis points to 2.85%. Senior Housing (SNH -2.3%), Omega Healthcare (OHI -2.6%), American Realty Capital (ARCP -1.7%), Stag Industrial (STAG -2%), Equity Residential (EQR -1.4%).
- Retail and shopping center/mall REITs also have the weak retail traffic numbers to mull over: Realty Income (O -1.4%), National Retail (NNN -2.8%), Simon Property (SPG -1.4%), General Growth (GGP -2.6%), Kimco (KIM -2.6%), Brixmor (BRX -0.8%).
2:59 PMIndustrials and homebuilders lead market decline
- The two worst-performing sectors on a down day are industrials (XLI -1.4%) and homebuilders (XHB -1.5%), (ITB -1.9%).
- Industrials are taking a hit after Joy Global (JOY -6.3%) missed earnings estimates and provided disappointing guidance. "With a limited number of projects that can book in time to help 2014, we continue to see both the need and opportunity to lower the cost base in our business," says the company. Caterpillar (CAT -1.2%).
- Homebuilders continue to digest Toll Brothers' (TOL -1.8%) "leveling in demand" comments from yesterday's earnings results - in the 19 weeks since August 1, business has been flat vs. last year, and in the first 5 weeks of FQ1 (beginning Nov. 1) business has also been flat from 2012 (though Hurricane Sandy makes a tricky comparison).
- CEO Doug Yearley on the earnings call (transcript): "There's just not a lot of action [this time of year]. We still feel like pent-up demand is building, demographics are on our side, affordability is in place, and we are cautiously optimistic about the spring season, which begins the end of January."
- Lennar (LEN -2.3%), D. R. Horton (DHI -3%), KB Home (KBH -3.1%), Hovnanian (HOV -3.3%)
2:47 PMDeutsche downplays alleged "price war" for Gilead, AbbVie HCV drugs
- "The biggest U.S. drug benefits manager plans to start a price war over a new generation of hepatitis C treatments that will cost $1,000 a pill, in a bid to drive down spending on the medicines," Bloomberg said Tuesday, tying comments made by Express Scripts (ESRX -0.5%) CMO Steven Miller to pricing for Gilead's (GILD -2.1%) sofosbuvir and upcoming HCV treatments from AbbVie (ABBV +1.2%).
- Deutsche's Robyn Karnauskas thinks the comments might have been taken out of context given that "the CMO did not mention GILD or any other company/drug."
- Other takeaways from Deutsche's conversation with ESRX: The company says it "spoke about various formulary changes and [while] HCV might be one of them, this is not something new [as it] works on formularies everyday."
- Also: ESRX says it does not "comment on drug/companies specifically. For Gilead drug, the internal committee still has to vote."
2:43 PMFinisar upsizes, prices convertible debt offering; shares edge higher
- Finisar (FNSR +0.7%) has upsized its offering of convertible senior notes due 2033 to $225M from a prior $200M. Underwriters now have a $33.75M overallotment option, up from a prior $30M. (PR)
- The notes carry an interest rate of just 0.5%, and have an initial conversion price of $30.18. That represents a 39% premium from current levels. Finisar can't redeem the notes before Dec. 22, 2018.
2:42 PMGold producers' balance sheets would weaken below 1250/oz., TD says
- Gold producers' balance sheets appear relatively stable with gold prices at ~$1,250/oz. but would weaken further on lower prices, TD Securities says in an analysis of miners' sensitivity to changes in gold prices.
- At $1,100/oz, companies with the highest forecast ratio of net debt to total capitalization include Barrick Gold (ABX -2.5%), Newmont Mining (NEM -1.9%), Agnico Eagle Mines (AEM -2.5%) and Detour Gold (DRGDF +3.3%).
- TD's top picks include Eldorado (EGO -3.1%), Goldcorp (GG -1.5%), B2Gold (BTG -3.7%), Primero Mining (PPP -0.6%) and Silver Wheaton (SLW -2%).
- ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST.
2:19 PMWorthington to close Baltimore steel plant, shares -2.5%
- Worthington (WOR -2.5%) discloses that its Baltimore steel facility will close by the end of its 2014 fiscal year ending May 31, concluding it can more efficiently service its Mid-Atlantic customers from other company facilities and partners.
- With the consolidation of the steel industry, many of the mills that previously supplied the Baltimore plant have closed, negatively impacting the supply chain there, WOR says.
2:18 PMDolby higher after announcing deals with Fox, Anchor Bay
- 20th Century Fox and Anchor Bay Entertainment plan to have digital content made available via the UltraViolet DRM platform support Dolby Digital Plus (DLB +3.8%) audio. (PR)
- UltraViolet, which allows purchased movies/TV shows ti be downloaded and streamed onto multiple devices, has seen a mixed reception: Disney, Apple, and certain other firms have withheld their support, and users have complained about DRM restrictions and confusing download procedures.
- But with most major studios supporting UltraViolet and offering digital copies with Blu-ray/DVD purchases, the platform could still generate healthy licensing sales for Dolby. Shares are making new 52-week highs, and are up 29% YTD.
1:46 PMGW Pharmaceuticals gets patent for use of cannabinoids in glioma| 1 Comment
1:28 PMJA Solar announces management shakeup, shares drop
- JA Solar (JASO -3.9%) COO Jian Xie is set to "assume broader leadership" within the company, and become its president. CTO Yong Liu will take over Xie's current job. (PR)
- In addition, CFO Min Cao is being reassigned to the role of chief strategy officer. Replacing him is Herman Zhao, who was JA's CFO from 2006-2008 and has since been the CFO of two other companies.
12:52 PMTesoro -1.8% despite positive comments after analyst day
- Tesoro (TSO -1.8%) apparently didn't offer enough good news at yesterday's analyst day, as shares tumble despite the general perception from the meeting as "incrementally positive."
- The key messages in the meeting surrounded progress of the synergy capture from the Carson acquisition, continued margin improvement through feedstock and product optimization and driving additional logistics growth.
- TSO sees rail unloading capacity along the U.S. west coast for North Dakota crude oil growing to nearly 1M bbl/day through 2015; TSO's $100M rail-to-barge project in Washington is the largest of the offloading projects announced so far.
- Imperial Capital raises its TSO price target TSO to $63 from $57, and Howard Weil lifts its target to $66 from $62.
- Other refiners are lower too: VLO -1.3%, PSX -0.7%, MPC -1.8%, WNR -2.6%, HFC -1.6%, ALJ -1%, NTI -0.2%, DK -1.9%, CLMT -2.7%.
12:31 PMU.S. Steel defended at Morgan Stanley, but shares -1.7%
- U.S. Steel (X -1.7%) has edged lower since Morgan Stanley went against the grain with its upgrade a month ago, so the firm is out defending its optimistic view.
- On skepticism over X's cost cutting program, the firm believes management was right when it decided to not set a concrete cost savings target; as a result, the firm thinks each individual cost savings announcement over the coming year will be its own incremental positive catalyst, and the dispersion of announcements will make life more difficult and less predictable for short sellers.
- The firm also says the impact of lower iron ore prices will be more than offset by improvements to earnings power from Project Carnegie cost savings, fixed cost absorption, and enhanced pricing power as operating rates rise.
12:11 PMPDC Energy -6.7% after unveiling $647M capex budget for 2014
- PDC Energy (PDCE -6.7%) slides after announcing a 2014 capital budget of $647M, targeting organic growth within its inventory of liquid-rich projects in the core Wattenberg Field and Utica Shale.
- Production for 2014 is seen averaging 9.5M-10M boe/day, up 34% Y/Y, with 60% in crude oil and natural gas liquids; guidance includes a reduction in dry gas volumes due to the anticipated closing of the sale of its shallow Upper Devonian assets and the suspension of drilling in its Marcellus Shale assets.
12:06 PMNQ Mobile slumps; SA contributor criticizes financials, conflicts of interest
- While relying heavily on baseball analogies, SA contributor Robert Zangrill takes aim at NQ Mobile's (NQ -7.1%) financial metrics, as well as various conflicts of interests he sees in the company's business dealings.
- Zangrill notes NQ has grown its revenue/employee by 817% over the last five years, and estimates the company is "on pace to generate about 20% more in revenue per computer than any other software company did in 2012."
- These eye-popping figures lead Zangrill to believe NQ is either "lying about its revenue, or ... has discovered the greatest business model ever - one that requires no capital investment, no assumption of risk, not even the headache of having to deal with additional employees."
- Much like Muddy Waters, Zangrill also thinks NQ is "round tripping" revenue via deals with affiliated parties. Among other things, he points out NQ relies on a payment processor owned by its former marketing chief, and has multiple directors with ties to a major Asian billing software provider.
- Shares are currently down ~50% from where they traded before Muddy Waters' allegations arrived in late October.
11:46 AMDeutsche a fan of NorthStar spinoff plan
- "We believe the separation of the asset management business will create value for shareholders, as the management company will trade at higher multiples than the traditional mortgage REIT and real estate business," says analyst Stephen Laws, reiterating his Buy rating on NorthStar Realty (NRF +16.2%) after the announced spinoff plan for the asset management business.
- His $12.50 price target is a "conservative valuation" given it values the asset management business at 12x 2014 cash available for distribution - the low end of a likely range of 12-18x. He also believes CAD is likely to show continued expansion thanks to growth in the non-listed REIT business as well as potential new income streams from managing additional funds.
- Earlier coverage
11:21 AMGevo -27% after raising $25M to restart biofuel plant
- Gevo (GEVO -27.7%) plunges to 52-week lows after pricing a public offering of 18.53M common shares at $1.35 each.
- Funds raised by the offering will be used to restart biofuel production at its facility in Luverne, Minn., and repay $5.1M in long-term debt; Gevo halted production of isobutanol in Luverne in Sept. 2012 after contamination issues prompted an adjustment of its manufacturing process.
- Gevo cancels plans to issue convertible senior notes.
11:17 AMSpotify launches new mobile service, adds 20 markets; Pandora drops
- Spotify has launched its rumored free/ad-supported mobile library streaming service. As expected, the service (unlike Spotify's ad-supported PC offering) doesn't provide unfettered access to Spotify's giant music library. Rather, it allows users to stream tracks from a particular artist or featured playlist in shuffle mode.
- Pandora (P -3.9%), whose Web/mobile radio platform has headed off threats from Spotify, Apple, and others, is selling off.
- Spotify has also announced it's launching its services in 20 new Latin American and Central/Eastern European markets. For now, Pandora is only available in the U.S., Australia, and New Zealand.
11:08 AMARC Group climbs after Brean provides first coverage: a Buy and $25 PT
- Shares of ARC Group Worldwide (ARCW +12.7%) climb after Brean Capital provides the first analyst coverage on the name, initiating the stock at Buy with a PT of $25.
- Analyst Ananda Baruah adds another voice to a heated debate of whether ARCW should garner a 3D play valuation, calling the stock "an attractive asset and an intriguing addition to our advanced technology sector coverage along with Buy-rated 3D Systems and Buy-rated Stratasys."
- Baruah sees 10%+ revenue and 15%-20% EPS growth in store for the company, with operating margin expansion opportunities.
- Upside includes potential for multiple expansion due to the secular attractiveness of ARCW's core Metal Injection Molding market and a "further embrace" by the company of 3D printing, automation, and robotics.
10:58 AMMicron, SanDisk slip; Hynix plant to reportedly be operational next month
- MKM reports the Wuxi, China SK Hynix (HXSCL) DRAM plant that was badly damaged in a September fire will be operational by mid-January, well ahead of the mid-2014 timeframe forecast by others.
- Micron (MU -2.1%) is slipping, as is SanDisk (SNDK -1.5%), which benefits when NAND flash capacity gets reallocated to deal with DRAM shortages.
- Micron and SanDisk rallied on Monday amid a flurry of positive DRAM sales, pricing, and supply-related news.
- Samsung (SSNLF, SSNGY), the world's largest DRAM manufacturer (37.1% Q3 share per DRAMeXchange), fell 1.4% overnight in Seoul. Hynix rose 0.8%.
10:44 AMNanoString Tech rallies on expanded availability for breast cancer diagnostic test
- NanoString Technologies (NSTG +16.2%) is enjoying a strong session after announcing that the Prosigna Breast Cancer Prognostic Gene Signature Assay will be available nationwide in Q1 2014.
- LH and DGX have "chosen to add the Prosigna Assay to their comprehensive suites of breast cancer diagnostic tests," NSTG notes. (PR)
- Meanwhile, Baird is out with an upgrade to Outperform from Neutral. Price target is now $18 (from $12).
10:38 AMSummer Street defends Avanir after trial miss
- Summer Street is out positive on Avanir Pharmaceuticals (AVNR -19.9%) as the shares sell-off on a Phase 2 miss for AVP-923 in central neuropathic pain.
- "Once the trial enrollment was cut in half we did not think the trial was powered for statistical significance," analyst Carol Werther says, adding that "a neuropathic pain indication cannot be ruled out when positive Phase 3 results have been published in patients with type 2 diabetes."
- Werther is also upbeat on Nuedexta.
- Buy rating maintained.
- Price target cut to $10 from $17.
10:32 AMLabCorp sees its price targets cut after delivering weak guidance
- Analysts are beginning to weigh in on shares of Laboratory Corporation of America (LH -9.1%) after the company's guidance disappointed investors on Tuesday evening.
- Canaccord has cut the shares to Hold from Buy. Price target slashed to $91 from $115.
- Credit Suisse takes its price target to $92 from $104.
10:29 AMCrossroads Systems climbs on SA Pro bull articles
- Shares of Crossroads Systems (CRDS +15%) climb after SA Pro's Valuable Insights lays out the bull case (embargoed until 10am ET tomorrow) for why the stock carries a "massively asymmetric risk-reward profile."
- The potential of near-term profitability with new management at the helm, a valuable IP position (a case also laid out by SA Pro contributor Markman Advisors), and the growth of a high-margin product could spell large upside for the company, which sports a $31.4M market cap.
10:20 AMAutohome the latest Chinese Web IPO to fly higher
- After pricing its 7.82M-share IPO at $17, above a range of $14-$16, Autohome (ATHM) opened at $30.16 and is currently at $29.97, up 76.3%. The Chinese automotive site owner currently has a market cap of $3.12B, or over 20x its likely 2013 sales (given recent growth rates).
- Over the first nine months of 2013, Autohome had revenue of $101M (+49% Y/Y), and net income of $55M. The company had over 7.7M registered users as of Sep. 30, and over 2.4M automobile listings.
- Other recent successful Chinese Web IPOs: Qunar, 58.com, 500.com
- F-1, IPO preview
10:02 AMSmith & Wesson execs see strong industry trends
- Smith & Wesson (SWHC +5%) trades higher following its FQ2 report and early look at FQ3 projections.
- Execs with the company say they expected the big drop in November for NCIS background checks, a trend they see continuing through May of next year. They note the upcoming comparables run up against an enormous period of demand and they still see industry trends as positive.
- Related stocks RGR, CAB.
- Earnings call transcript
9:56 AMA roundup of tech ratings changes
- Ruckus (RKUS +2.9%) has been started at Buy by Craig-Hallum. Stephens started coverage at Overweight yesterday afternoon, Goldman upgraded shares to Buy on Dec. 2, and Stifel launched coverage at Buy on Nov. 27.
- Demand Media (DMD +9.3%) has been upgraded to Market Perform by JMP.
- Radware (RDWR +2.5%) has been upgraded to Outperform by Wells Fargo.
- E2open (EOPN +2.2%) has been started at Buy by Janney.
9:15 AMAnalysis: A Discovery Communications-Scripps deal is no sure thing
- Sterne Agee doesn't think Discovery Communications (DISCA) will end up buying Scripps Networks Interactive (SNI).
- The investment firm rates the chances of a deal at 10% with the Variety report perhaps overstating the level of interest by Discovery to buck up.
- SNI has peeled back some of its gains with some of the bloom off the rose, up 5.9% premarket.
8:49 AMCB&I reaffirms 2013 guidance, sees 2014 EPS and revenue in-line
- CB&I (CBI) reaffirms guidance for 2013, seeing EPS of $4.00-$4.35 vs. $4.16 consensus estimate and revenue of $10.7B-$11.2B vs. $11.17B consensus.
- Issues in-line guidance for 2014, seeing EPS of $4.80-$5.65 vs. $5.16 consensus estimate and revenue of $12.6B-$13.2B vs. $12.98B consensus. (Investor Day slides)
- CBI +1.9% premarket.
8:43 AMUrban Outfitters busts out of retail malaise
- Urban Outfitters (URBN) gains after disclosing it's running a rosy-sounding mid single-digit comp for FQ4.
- What to watch: The solid report isn't expected to give a lift to the sector, according to analysts. The out-performance compared to other mall-based retailers could be based on the company's vibrant e-commerce business and an assortment that is seen as fashion-forward.
- URBN +4.1% premarket to $37.20.
8:42 AMSpectrum Pharma outlines Marqibo, Folotyn studies
- Spectrum Pharmaceuticals (SPPI) is up 5% in premarket action.
- Out Wednesday morning are what the company calls "encouraging" data from Marqibo and Folotyn studies.
- Results from a Phase 2 study suggest Marqibo could have utility in the treatment of diffuse large B-cell lymphoma" (front-line). Summary: Marqibo substituted for Vincristin in R-CHOP; ORR, 95%; CRR, 90%; 10-year PFS, 64%; 10-year OS, 87%.
- As for Folotyn, data suggest the drug "may provide benefit to patients with early stage peripheral T-cell lymphoma." (PR)
8:25 AMAlibaba signals delay in IPO plans
- Likely signaling a sizable delay in the timing of its IPO, Alibaba is reportedly seeking to extend the draw-down period of an $8B loan to December of next year (from January).
- "We have plenty of cash on the balance sheet and there is no need to draw down at this time, so we are extending the availability of funds to maintain flexibility," the company says.
- YHOO -0.6% premarket
8:23 AMCytRx reports positive top-line data from aldoxorubicin STS trial
- CytRx (CYTR) is out with top-line results from a Phase 2b study of aldoxorubicin in first-line metastatic, locally advanced or unresectable STSs.
- Summary (intent-to-treat analysis): Median PFS for aldoxorubicin, 8.4 months; median PFS for doxorubicin, 4.7 months.
- Summary (blinded central lab review): Median PFS for aldoxorubicin, 5.7 months; median PFS for doxorubicin, 2.8 months.
- OR rate: 25.4% for aldoxorubicin, 5.4% for doxorubicin.
- "These results are extraordinary for a single agent treating these chemotherapy-resistant tumors," the study's principal investigator says. (PR)
- CYTR +32% premarket.
8:11 AMEcho Therapeutics rises on Chinese licensing deal for Symphony System
- After rallying 8% Tuesday, shares of Echo Therapeutics (ECTE) are up some 26% in premarket action.
- The company has inked a licensing, development, and commercialization agreement with Medical Technologies Innovation Asia for the manufacture and distribution of the Symphony CGM System in China, Hong Kong, Macau, and Taiwan.
- Medical Technologies Innovation will take on the development, marketing, and manufacturing costs for the Chinese market, and will also be responsible for "obtaining regulatory approval for the product in the licensed territories."
- Medical Technologies Innovation is also entitled to $1.5M in development cost reimbursement, payable in ECTE stock.
- The companies will share any net sales of the system in the region. (PR)
8:08 AMWalter gains after MSR acquistion
- Walter Investment Management (WAC) is up 1.7% premarket after agreeing to buy MSRs with about $30B in UPB from "a large national depository."
- The portfolio consists of about 270K accounts - projected to be 99% current - and includes more than 100K HARP-eligible mortgages. The transfers are expected to occur in staged boardings in the first three quarters of 2014.
- Management's plan is to acquire MSRs with UPB of about $62B, and, to date, the company has entered into agreements for about $54B.
- Press release
8:08 AMCostco lower after expenses cut into profits
- Costco (COST) slips in early trading after an increase in expenses cut into profitability during the retailer's FQ1.
- Retail analysts are still finding plenty to like in Costco's report. For starters, amid a promotional retail atmosphere selling margin was higher and membership income grew at a nice clip during the period.
- An important note on Costco (h/t SA contributor The Investment Doctor): This year's FQ1 doesn't include Black Friday like it did last year.
- COST -2.5% premarket.
7:55 AMNorthStar flies on spinoff plan
- NorthStar Realty (NRF) is now ahead 16.7% in the premarket following its plan to spin off its asset management business.
- The conference call is set for 10 ET, but the presentation slides are currently available.
- Certainly working at the moment is page 14 of the presentation which compares NRF's P/E multiple (8.3x) with that of what it picks out as competitors - Real Estate Managers (19.4x), Small Traditional Asset Managers (19.9x), MLP GPs (35.1x), and Altisource Asset Management (AAMC) at 50.1x.
- The comps may or may not make sense, but if NorthStar Asset Management is anything like the Altisource Asset Management spinoff, investors would be wise to get in early ... in size. AAMC's more than a 10-bagger since being spun off from Altisource Portfolio Solutions (ASPS) one year ago.
7:32 AMGroupon gains amid positive sell-side calls
- Wells Fargo upgrades to Groupon (GRPN +2.4%) to Buy and raises its price target to $13-$14 from $5-$6. "We believe Groupon is positioned well to take continued share in the massive local commerce market," says analyst Trisha Dill. "We are bullish on the company’s strategy to transform into a “pull” marketplace, away from its daily deals legacy, and early indications suggest this transition is gaining traction."
- Morgan Stanley's Scott Devitt - after meetings with management - said the company is making progress on becoming a unique mobile commerce marketplace.
- He thinks it's a $15 stock by the end of next year thanks to improved deal quality and density in the U.S. and improvements internationally. Near-term, the site redesign is a positive tailwind.
- Earlier coverage from Devitt
5:30 AMWorld shares mixed following U.S. budget deal
- Global equities are mixed as markets mull the impact of U.S. Congressional leaders agreeing to a budget deal.
- Such an agreement would normally be construed as a good thing, but not so when there's the Fed's QE to consider.
- "The deal...would certainly have the potential to bring forward the prospect of tapering," says Interactive Investor's Rebecca O'Keeffe. This, in turn, would weigh on stocks.
- Asian shares are lower, with profit-taking also affecting shares. Japan -0.6%, Hong Kong -1.7%, China -1.5%, India -0.4%.
- EU Stoxx 50 +0.3%, London +0.1%, Paris +0.7%, Frankfurt +0.2%, Milan -0.2%, Madrid +0.5%.
- U.S. stock futures: Dow flat. S&P flat. Nasdaq -0.05%.