MARKET CURRENTS
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MARKET CURRENTS
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Tuesday, June 18
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7:36 PM Pool Corp. (POOL) lowers its FY13 earnings guidance as the wholesale distributor said cooler and unusually wet weather in its seasonal markets in North America and Europe led to later-than-usual pool openings and lower-than- expected sales. The company cut its 2013 per-share earnings view by a dime, now expecting to earn between $2.03 to $2.13. Shares -6.3% AH. 1 Comment
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6:44 PM More on China Cord Blood (CO): FQ4 easily beats estimates across the board on a 33% jump in total sales. Accumulated subscriber base rose by 30.1% Y/Y. Gross margin also rose to 79.8%, from 76.6%. Shares +3.4% AH. Comment!
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6:07 PM Red Hat (RHT +2.1%) rallied ahead of tomorrow's FQ1 report after SA Pro contributor/former hedge fund analyst Josh Burwick offered a bull case, and Piper made cautiously optimistic remarks. Burwick argues fears about the impact of Amazon Web Services on Red Hat are overblown, that slowing billings growth is offset by major growth in unbilled revenue, and that newly-announced OpenStack cloud infrastructure and app platform offerings should fare well. Piper says checks indicate FQ1 billings could be light, but adds Red Hat will make up for it in FQ2, and sees shares bottoming in the $40s. Comment!
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6:03 PM Biodel (BIOD) is trading lower in the post session after announcing a public offering to sell an undisclosed number of shares with a 30-day option on an additional 15% to cover overallotments, if any. Shares -8.2% AH. Comment!
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5:24 PM Long-term care provider AdCare Health Systems (ADK) says the NYSE has approved its plan to regain compliance with the exchange's continued listing standards was accepted. The NYSE granted until July 16, an extension for the company to regain compliance with respect to the Annual Report, and until August 15 for its 10-Q. Shares +1.7% AH. Comment!
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5:00 PM PetroLogistics (PDH) says it's successfully completed repairs to its propane dehydrogenation facility and the facility has resumed propylene production. The facility was closed earlier this month for repairs on two of the eight reactors at the plant. Total costs for all completed repairs are expected to be less than $2.5M. Shares +0.7% AH. Comment!
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4:53 PM Today's 14% jump caps a five-day 60% advance in Zion Oil & Gas (ZN) on no apparent news, but this isn't the first time ZN shares have seen such wild swings. Evan Buck urges extreme caution in the company that's "definitely not a kosher investment," highlighting Delek US Holdings (DK) and Noble Energy (NBL) as far wiser plays on Israel's natural gas finds. 2 Comments
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4:35 PM More on Adobe: FQ3 guidance is for revenue of $975M-$1.025B and EPS of $0.29-$0.35, vs. consensus of $1.01B and $0.35. FY13 guidance is for revenue of $4.1B and EPS of $1.45 vs. consensus of $4.11B and $1.44. Paid Creative Cloud subs +221K Q/Q to 700K in FQ2, better than FQ1's +153K. CC annual recurring revenue +$123M Q/Q to $356M (rose $80M in FQ1), 81% of subs use full suite. Digital Media revenue -18% Y/Y to $670M (shift to subscriptions), Digital Marketing (Omniture, AdLens) revenue +11% to $285M. ADBE +3.9% AH, CC at 5PM ET (webcast). (slides) (datasheet) (prepared remarks) (PR) Comment!
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3:53 PM Traders place bullish bets in the options market on Infinity Pharmaceuticals (INFI +13.5%). Notably, 2K July $16 strike puts were sold today and volume in the $17.50 strike far exceeds open interest as the stock rallies double-digits. Comment!
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3:50 PM Is a bidding war breaking out for Kabel Deutschland? Bloomberg reports Vodafone (VOD +0.4%) has raised its preliminary bid for the German cable giant to €7.5B ($10B), or €85/share, matching an offer recently made by Liberty Global (LBTYA -0.1%). Vodafone is said to be studying Kabel's books "before it presents an official offer in the coming weeks." Kabel closed at €85.51 in Frankfurt, up 3.7%. (previous) Comment!
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3:50 PM Orchard Supply (OSH -18%) gets a burst of heavy volume late in the day on reports that the company is permitted to seek bids for store closing sales. Comment!
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3:32 PM Shares of World Acceptance (WRLD -1.1%) "stumble" after Herb Greenberg reminds investors via Twitter that the company filed an incomplete 10-K due to "additional review and analysis needed to support the allowance for loan losses." 1 Comment
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3:30 PM Huntington Ingalls (HII +1.6%) ticks up today, despite Stifel Nicolaus initiating the shares with a tepid Hold rating. The company says the stock is fairly valued at current levels, but the outlook could become more favorable should progress on achieving 9%-plus margins by 2015 continue and its return of cash to shareholders fall more in line with its defense industry peer group. Comment!
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3:29 PM Prospect Global Resources (PGRX +51.2%) terminates the rights offering which was scheduled to expire yesterday, obtains an extension of its obligation to raise $7M until June 24, and says its ongoing engineering optimization work and analyses will result in release of a pre-feasibility study in July. Comment!
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3:23 PM Moneygram (MGI +3.1%) pops higher on a Dealreporter story the company is in talks with potential suitors and has hired Bank of American to advise. Comment!
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3:21 PM J.P. Morgan isn't giving up on GenMark Diagnostics (GNMK -12.2%) despite the shares' ~35% decline since June 10. Analyst Tycho Peterson acknowledges the company's tepid guidance, but maintains an Overweight rating on the stock. PT lowered to $15 from $17. Comment!
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3:16 PM Some of today's bounce in Linn Energy (LINE +3%) is attributed to comments by Leon Cooperman in his letter to shareholders which said his hedge fund remained "comfortable" with the stock. Cooperman argues LINE has capitalized the costs of its energy hedges in accordance with GAAP, and notes Citigroup and Credit Suisse value LinnCo (LNCO -0.8%) at $35.92 and $39.64, above the current share price. (earlier) 13 Comments
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3:14 PM Paris Air Show: Gencorp's (GY +4.5%) Aerojet Rocketdyne unit says it's expanded an accord with Russian Experimental Design Bureau Fakel, obtaining the right to market and sell the Russian company's low-power Hall thrusters in the U.S. market. No financial details were given. Comment!
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2:58 PM Marathon Oil's (MRO +3%) outlook is upgraded to positive from stable by Fitch Ratings, which cites strong growth in its shale liquids plays, particularly at Eagle Ford. MRO also boasts a sizable, multi-year inventory of drilling opportunities in the shale plays that provides good visibility on future production and reserve growth, raising Fitch's confidence that it should be able to sustain its positive momentum. 1 Comment
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2:47 PM Schlumberger (SLB +1.9%) acquires Gushor, a Canadian geochemistry company that supports exploration and production companies working with heavy oil and oil sands, for an undisclosed sum. SLB says Gushor will complement its leading fluids and rocks technology portfolio with geochemical and fluid property analysis capabilities. Comment!
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2:45 PM Bill Ackman's Pershing Square says Herbalife (HLF +1.6%) "refuses" to release actual sales data, which violates a California injunction, and is requesting that regulators "promptly" initiate a probe of the company. Ackman says the release of the actual data collected by its distributors would "put to rest" whether it is or isn't a pyramid scheme. 40 Comments
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2:44 PM Tesla Motors (TSLA +1.3%) shares are on the move amid some chatter that General Motors is interested in the EV automaker's technology. Though Tesla supplies Mercedes-Benz with electric drivetrains, there hasn't been any prior indication that the Big Three automakers have had any serious interest in working a deal with Tesla. 13 Comments
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2:39 PM TransDigm Group (TDG +2.8%) says it's requested amendments to its senior secured credit facilities in connection with the possible payment of a special dividend. The amendments seek to increase the company's existing senior secured term facility by $700M and to change certain ratios. TDG is considering paying a cash dividend of $1B - $1.8B with the proceeds. Comment!
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2:19 PM Gevo (GEVO +22.5%) has restarted commercial production of isobutanol at its plant in Luverne, Minn. CEO Patrick Gruber says there was some microbial contamination at the plant that Gevo has since learned how to control and manage by making equipment modifications, changing fermentation conditions and improving operating procedures. Comment!
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2:11 PM Cytokinetics (CYTK +24%) soars today, after its selection for presenting results from a Phase II trial of its of omecamtiv mecarbil at a "Hot Line Late Breaking Trials Session" at the European Society of Cardiology Congress 2013 in late August sent signals that its experimental drug for acute heart failures will have success in a mid-stage trial. Comment!
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2:09 PM Sweet! Longbow raises its price target on shares of Krispy Kreme (KKD +4.2%) to $23 from $20, representing a 35% upside from Monday's close. Channel checks reportedly suggest franchise comps growth may come in at 8.2% for Q2. Meanwhile, SA contributor Sean Weston says international franchise numbers "are not in the midst of an attractive trend." Comment!
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1:47 PM Helix Energy Solutions (HLX +4%) gains after saying it's closed the previously announced sale of its pipelay vessel, the Caesar, to Trevaskis Limited for a total of $138M. Comment!
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1:38 PM Rackspace (RAX +6.4%) is rallying, apparently on rumors it has bagged Fidelity as a customer for its OpenStack cloud infrastructure offerings. Cowen thinks the deal will be announced at the June 19-20 GigaOm Structure conference. Rackspace could definitely use a big OpenStack customer win, given its recent news flow. 11.3% of the float was shorted as of May 31. Comment!
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1:30 PM Brocade (BRCD -2.3%) slides on news Americas sales chief Tom Ellery has resigned. The departure comes 4 months after Brocade hired Juniper's Jeff Lindholm to be its new global sales chief, and a year after Lindholm's predecessor, Ian Whiting, left to join Riverbed. Wells Fargo views Ellery's resignation as a negative. "We believe he was well respected in the Ethernet sales organization and his resignation may lead to additional turnover in the business." The firm also notes Brocade is trying to cut costs and focus its Ethernet efforts on high-margin areas, actions that could lead to near-term disruption. Comment!
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1:28 PM Astronics' (ATRO +1.8%) says its Canadian subsidiary, Luminescent Systems Canada, has landed an extension of its supply agreement with Rockwell Collins (COL). Under the agreement, Luminescent Systems will supply illuminated cockpit control panels, keyboards, display bezels and related assemblies, which are integral parts of COL's advanced avionics product offerings. The company will also supply new products as part of COL's next generation of avionics solutions. Comment!
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1:14 PM Nokia (NOK +9.3%) soars after the chairman of Huawei's consumer business group says his company would be open to buying Nokia in an off-hand remark. Any offer from Huawei would face intense EU scrutiny, given long-standing worries about the company's Chinese government/military ties. Is this a repeat of BlackBerry/Lenovo? 26 Comments
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1:09 PM STAAR Surgical (STAA +11%) soars again today, tacking on big gains to yesterday's 6% move after it said it had received regulatory approvals to market its Visian Implantable Collamer Lens technology in Korea and the ANMAT in Argentina. STAA's Asia Pacific Regional President says the refractive procedure market in Korea is both significant and fast growing, and the approval represents "a very important milestone." Comment!
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12:56 PM Ascent Solar (ASTI +5.2%) rallies to $0.76 after announcing a deal to sell $6M worth of preferred shares at a price of $0.80, and issue 3-year warrants to buy 2.625M shares at an exercise price of $0.90 (potential proceeds of $2.36M), with an unnamed "high net worth private investor in Asia." Ascent, which has been steadily burning cash, says it will use the proceeds to "fund the continued expansion of its retail channels" of its EnerPlex solar charger/accessory line. (PR) Comment!
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12:52 PM Argentina's Santa Cruz province slaps a 1% annual tax on mine resources, a move mining companies say they will challenge in court. While the percentage seems small, miners say it will cost them $100M in new taxes next year, as the tax amounts to ~8% of the total resources of a mine with a 15-year life. Among miners with operations in Santa Cruz: AU -3.5%, MUX -2.3%, GG -2.5%, PAAS -1.4%. Comment!
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12:44 PM MannKind (MNKD -12%) takes a hit today on no specific new-related driver. Speculation is circulating that a number of hedge funds are leaning on the shares to flush out supply from retail investors. 9 Comments
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12:38 PM BlackBerry (BBRY +4.3%) gets a lift from a positive note from RBC's Mark Sue (Market Perform), who now thinks 3.5M BB10 phones were shipped in the May quarter (up from a prior 2.75M) thanks to new Z10 carrier deals and channel fill. Sue adds "BB10 demand appears to be mixed by region," with the U.K., Canada, and the Middle East seeing the strongest sales, and U.S. demand weaker. He now expects BlackBerry to report above-consensus FQ1 revenue and EPS on June 28, and thinks heavy short interest (32% of float shorted) could lead to a squeeze. (Deutsche) 15 Comments
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12:29 PM VeriFone (PAY +4.1%) pops after director Alex Hart discloses he bought 10K shares on Friday at $15.72. Shares of the payment-processing hardware vendor remain down 45% YTD thanks to a lot of bad earnings news. Comment!
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12:21 PM RedHill Biopharma (RDHL +5%) says its New Drug Application for marketing approval in the U.S. of RHB-103 by the company and its co-development partner, IntelGenx (IGXT +5.3%), has been accepted for substantive review by the FDA. RHB-103 is an oral, thin film formulation of rizatriptan, which is used to treat acute migraine. The application is subject to a standard 10-month review period and will have a PDUFA goal date of Feb. 3, 2014. Comment!
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12:17 PM Thousands of opponents of the $5B Minas Conga copper and gold project in Peru march on Lake Perol, vowing to stop Newmont Mining (NEM -3%) from eventually draining it to reservoirs NEM and partner Buenaventura (BVN -2.6%) are building. Protesters, who fear the mine would threaten their water, say they plan to build a permanent camp near the lake to impede work on the site. Comment!
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12:14 PM A Swiss court gives Suntech's (STP +5%) European unit a 6-month moratorium on creditor claims; the unit had been given a 2-month reprieve on April 9. Suntech's Chinese subsidiary remains in the midst of bankruptcy proceedings. Shares have more than tripled from a March 21 low of $0.30. Comment!
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12:08 PM Ingersoll-Rand (IR +1.9%) completes its $1.55B debt offering consisting of 3 tranches; $350M in aggregate principal amount of 2.875% notes due in 2019, $700M of 4.25% notes due in 2023, and $500M of 5.75% notes due in 2043. The company plans to use the funds to retire existing senior debt and to fund expenses related to its Allegion spinoff. Comment!
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11:50 AM Newfield Exploration (NFX +3.6%) is upgraded to Buy from Hold with a $29 price target at Stifel Nicolaus, which cites an upcoming increased proved NAV from expected ~$1.15B in H2 international asset sales, upside to 2013 guidance (possibly with Q2 results), and delivery of growth showing up from its domestic core areas. Comment!
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11:50 AM SolarCity (SCTY +3%) trades higher this morning after the company reported earlier that its 2013 megawatts deployed is now estimated to be around 270MW, up from mid-May guidance of 250MW. Comment!
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11:35 AM KBR (KBR +1.6%) shares move higher following positive comments by Deutsche Bank, which notes the energy engineering services company's "significant advantage" given its ability to compete from a vertically integrated position in liquefied natural gas, and sees upside potential from new wins for its ammonia business. Comment!
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11:35 AM AMD's first ARM-based server CPU, codenamed Seattle, will enter production in 2H14, the chipmaker announces. Seattle CPUs will feature 8 or 16 of ARM's (ARMH) high-end Cortex-A57 cores, with each running at 2GHz. or more. AMD claims the chips will "offer 3-4x the performance" of its new Opteron X-Series parts, and will integrate 10G Ethernet links and SeaMicro's Freedom Fabric tech. Seattle, aimed at the budding microserver market, will face competition from fellow ARM licensees AppliedMicro (AMCC +6.5% - appears to be rallying on the news), Marvell (MRVL), and startup Calxeda, and also Intel's Atom CPUs. Look for H-P to consider Seattle for its Moonshot server line. Comment!
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11:30 AM Hudson City Bancorp (HCBK +2%) pops as M&T Bank (MTB +0.6%) looks to soon be able to move forward with its purchase after agreeing with regulators to beef up its anti-money laundering policies. Comment!
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11:09 AM Stemline Therapeutics (STML +10%) moves up again today after being initiated at Ladenburg Thalmann with a Buy rating and a hefty $36 price target. The stock has been moving steadily higher over the past few weeks, after the FDA granted an Orphan Drug Designation to its treatment for blastic plasmacytoid dendritic cell neoplasm, SL-401. Comment!
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10:59 AM Health Net (HNT +1.1%) reaffirms its FY13 guidance of $2.20 - $2.30 per share on revenues of between $10.7B - $11.2B. Street estimates are for an EPS of $2.23 on revenues of $11.17B. Comment!
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10:54 AM With liquidity a relevant topic lately among coal companies, Alpha Natural Resources (ANR +2.1%) proactively tells a Brean Capital analyst it is confident in its current liquidity to meet $417M in debt obligations due in 2015 without tapping equity, which ANR sees as a poor option at today's prices. ANR also says it isn't inclined to employ its current liquidity toward additional acquisitions. 1 Comment
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10:45 AM Sunshine Heart (SSH +8%) pops after achieving a milestone for its flagship C-Pulse device, which is designed to treat Class III and ambulatory Class IV heart failure. The company said the devices has been implanted in 25 patients in North America and Germany, with the 25th patient implanted on June 14th at the German Heart Institute in Berlin. 3 Comments
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10:41 AM Walter Energy (WLT +12%) finally turns around since dropping 12% after delaying plans to refinance existing debt, as Morgan Stanley steps in to say WLT's potential upside has finally grown too large to ignore. Other coal names (KOL +0.6%) also move higher, perhaps aided by Sterne Agee's slightly improved view for the sector:ACI +4.2%, CLF +3.2%, ANR +3%, BTU +1.3%. Comment!
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10:20 AM CommVault (CVLT +3.3%) rallies after Pac Crest starts coverage with an Outperform and $92 PT. The firm notes CommVault is gaining share (IDC's figures back that up), and expects the high-end backup software vendor to benefit from a new product cycle - CommVault announced a new version of its flagship Simpana backup/archiving software platform in February. 1 Comment
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10:15 AM PennyMac Mortgage Investment Trust (PMT -1.1%) is downgraded to Sell at Ladenburg Thalmann. The move stands in contrast with Compass Point's Buy recommendation from last week in which Kevin Barker argued the housing recovery should allow continued gains from PMT's distressed loan portfolio and the stock trades at a meaningful discount to its mREIT peers. 2 Comments
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10:13 AM Mechel (MTL +11.2%) leaps higher on news the company's board authorized the buyback of up to $100M of ADRs representing Mechel's common shares. Comment!
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9:58 AM Premier Exhibitions (PRXI +11.8%) races higher, boosted by the announcement of a buyback authorization and SA Pro's nonpareil special situations aficionado Whopper Investments arguing the stock is trading well below a very conservative estimate of breakup value (article embargoed until tomorrow morning). Comment!
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9:54 AM Goldman downgrades Charles River Labs (CRL -1.7%) to Sell from Neutral and lowers its price target to $38 from $44. Analyst Robert Jones cites (among other factors) "recent … channel checks [which] indicate still subdued early-stage spend and excess capacity as pharma prioritizes late-stage pipelines." Comment!
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9:29 AM Cytokinetics' (CYTK) results from a Phase II trial of its of omecamtiv mecarbil treatment for heart failure have been accepted for presentation at a "Hot Line Late Breaking Trials Session" at the European Society of Cardiology Congress 2013, which is taking place from Aug. 31 until Sep. 4. Cytokinetics' hasn't revealed any results but shares are up 14.4%. Those of partner Amgen (AMGN) are a mere +0.7%. In other news, Cytokinetics is set to join the Russell Global Index on June 28. Comment!
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9:15 AM Market preview: U.S. stock futures and European shares are flat-to-higher after U.S. CPI comes in slightly below expectations and as the FOMC meets on the first day of a two-day policy meeting. The S&P Mini is flat. "Today should be quiet, as people are only asking about tomorrow," says economic strategist Andrew Wilkinson. Sony is +4.25% after Dan Loeb ups the ante over a spin-off for the company's entertainment division. Ongoing: Paris Air Show Comment!
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9:06 AM Exide Technology (XIDE) jumps 17.65% after a judge ruled that the maker of lead-acid batteries can reopen a plant in California that was closed by the state's Department of Toxic Substances Control. The permission to reopen is pending a hearing next month. The department had ordered Exide, which recently filed for Chapter 11, to suspend operations at the plant in April, saying the facility's arsenic emissions posed “an unacceptable risk to public health.” Comment!
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8:58 AM Goldman Sachs removes Williams Cos. (WMB) from its Conviction Buy List and lowers its price target to $40 from $45, and cuts Williams Partners (WPZ) to Neutral from Buy with a $52 price target, down from $58. Goldman believes last week's explosion at the Geismar chemical plant adds material risk to near-term growth of both WMB and WPZ, putting dividend growth targets at risk. WMB -1.9% premarket. Comment!
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8:58 AM Erickson Air-Crane (EAC), still stinging from a sell-off last week triggered by SA contributor Richard Pearson's ZM Funds questions, rises 5.5% premarket after announcing a contract extension worth some $24M. (PR) Comment!
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8:24 AM A profit warning from Hormel is enough to scare off some investors across the sector. Premarket: Tyson Foods (TSN) -1.3%, Pilgrim's Pride (PPC) -2.0%, Seaboard (SEB) inactive. Comment!
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8:19 AM Hormel (HRL) lowers estimates for profitability this year, dropping its EPS outlook to $1.88-$1.96 from prior guidance of $1.93-$2.03. The company cites higher input costs and poor pork sales for the shortfall. HRL -9% premarket, working off much of the gains picked up from enthusiasm in the sector after Smithfields Foods was bought out. 2 Comments
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7:52 AM Shares of Sony move up 3.6% premarket after Dan Loeb turns up the heat on his proposal to see the company spin off its entertainment business. What to watch: Sony holds its annual meeting on Thursday where execs will have to either publicly back a plan to keep the firm together or leave the door open just a crack that a spinoff is a possibility. Comment!
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4:13 AM Asian and European (FEZ) shares are mixed as markets await the word from the FOMC, which is due to start a two-day session today. "I think the Fed is secretly sitting with its fingers crossed, hoping that the froth continues to be skimmed off asset markets," says analyst Nick Beecroft. "I don't think they will be bothered at all if the S&P 500 or other risk markets fall 5 or 10%, as long as it didn't happen in a (single) day." Japan -0.2%, Hong Kong flat, China +0.1%, India -0.2%. EU Stoxx 50 -0.2%, London +0.4%, Paris -0.2%, Frankfurt -0.1%, Madrid +0.4%, Milan +0.4%. 3 Comments
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