MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Friday, May 24, 2013
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8:57 AM Whiting Petroleum (WLL) is upgraded to Buy from Neutral with a $58 price target, up from $51, at SunTrust, due to valuation and upcoming catalysts that include results from its first Bakken Silt and Sanish down-spacing tests, Niobrara results and potential monetization of its Potle EOR field. Shares +1.5% premarket. Comment!
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Thursday, May 23, 2013
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3:56 PM Devon Energy (DVN -1.4%) is downgraded to Neutral from Overweight at J.P. Morgan. Although DVN's decision on its midstream MLP is expected by the end of Q2 and other potential strategic changes by year-end, the firm is skeptical that any changes would be enough to cause mid- to long-term stock outperformance. 1 Comment
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3:15 PM ReneSola (SOL -5.3%) is downgraded to Underperform from Neutral with a lower $1.50 target price at Credit Suisse based mostly on rising costs including increases via outsourcing; SOL won't get much of a break in China, where wafer and module costs may slip only $0.01 in Q2 and may be flat in H2. Also, the firm doesn't expect progress in tariff talks between Europe and China. Comment!
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12:50 PM The defensive utility sector (XLU -1%) isn’t looking very safe at the moment, as the break below the 50-day moving average suggests further weakness in the days ahead. Technician Ralph Acampora sees the break as a short-term sell for the Dow Jones Utility index but also a longer-term positive for the broader market as investors rotate out of defensive sectors and into more economically sensitive stocks. 1 Comment
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12:27 PM New Gold (NGD +1.8%) is initiated with a Buy rating and $9.50 price target at Global Hunter. NGD is a mid-cap gold producer with four operating mines which also gets a significant portion of its revenue and earnings power from copper and silver exposure, which the firm believes gives it an advantage over peers in a declining gold price environment. 1 Comment
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12:13 PM Dover (DOV +4.8%) is upgraded to Buy from Neutral with a $90 price target at BAML following news it is spinning its Knowles and Sound Solutions businesses into a new public company. The firm had been concerned about DOV's exposure to Nokia (NOK) and Blackberry (BBRY) platforms as well as the pace of the value ramp up on Apple's (AAPL) iPhone. Comment!
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12:11 PM Shares of small-cap, generic pharmaceutical maker Lannett Company (LCI +5%) get a boost today after being initiated at Needham with a Buy rating and a price target of $15. The firm calls FY13 a transition year for LCI as its operations are positioned for strong future growth, with potentially significant upside coming from additional generic approvals/product launches, and progress around key product filings. Technical note: The stock is currently in the process of breaking out of its 52-week range of $3.72 - $12.57. Comment!
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11:20 AM Coal (KOL) has been gaining on natural gas in U.S. power generation, but coal producers aren't enjoying the benefits, buffeted by headwinds including increased regulations. Simmons analysts say most coal names do not screen as cheap, and the firm sees near-term volatility as investors trade around macro events; its sector favorites are Cloud Peak Energy (CLD) and Walter Energy (WLT). 9 Comments
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6:31 AM Goldman drops a Sell rating on Realty Income (O): "We believe upside earnings surprise risk is larger in small-cap healthcare and traditional net lease REITs due to their smaller asset bases. Additionally, O trades at a 38% premium to our net lease and healthcare names on a 2013E AFFO multiple basis. Although we believe O's record of a sustainable and growing dividend will continue, we also think material dividend increases are more likely across the REIT sector (average AFFO payout of 77%) than for O (92%)." O fell 4.8% yesterday and is off 1.3% premarket. 4 Comments
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Wednesday, May 22, 2013
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3:46 PM Credit Suisse stresses a more defensive posture in MLPs, focusing attention on large, relatively liquid, investment-grade MLPs or affiliates with exposure to the coming crude oil production boom in North America. Its eight favorite MLPs to buy now: WMB, QRE, LNG, TRGP, CQP, XTEX, ACMP, GEL. 8 Comments
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11:15 AM Rosetta Resources (ROSE -0.3%) is downgraded to Hold from Buy at Cowen, which thinks significant credit is priced in for vertical drilling potential in Permian assets. The firm's long-term positive view on ROSE is based on focused Eagle Ford development drilling, strong cash flow growth and a conservative balance sheet. Comment!
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10:28 AM BlackBerry (BBRY -0.4%) is downgraded to Underperform at Exane BNP, which says its profit pools are drying up. While news flow around the BB10 likely will remain the primary driver for the shares in the short-term, the firm says BBRY's long-term profitability prospects hinge essentially on the longevity of its service revenues, which are "unsustainable." 46 Comments
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9:40 AM A favorite of value investors, Symetra Financial (SYA) just repurchased about 5% of its float - buying 6.1M shares from an affiliate of Vestar Capital Partners (director Sandy Levy) at $13.43 each. The board boosted the 10M share buyback program by 6M to accommodate the purchase. Book value as of March 31 was $18.32/share. Comment!
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8:23 AM More on the Multiband (MBND) acquisition at $3.25/share: Congrats to SA Pro's Inefficient Market who - less than 24 hours ago and at a price of about $2.30 - told readers he was buying the stock "hand over fist." "In my opinion, Multiband's MDU unit alone is worth more than the entire company's current enterprise value of $82M." Comment!
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8:21 AM Chesapeake Energy (CHK) +1.7% premarket as Susquehanna upgrades the stock to Positive from Neutral, believing CHK should get a boost from both higher oil and gas prices and its new CEO. The firm boosts its valuations for CHK's oil and gas reserves, saying investors have become more comfortable with higher prices; asset sales so far have been of "mixed quality." Comment!
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Tuesday, May 21, 2013
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6:55 PM Why do so many investors believe in a summer rally? On average, in the 116 years since the Dow was created, the Dow gained 5.29% from the end of May through its highest close over the next three months. Before you get too excited, Mark Hulbert calculates that every season of the calendar can boast a rally of similar magnitude - 5.23%. 2 Comments
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12:38 PM Oil States (OIS -0.6%) is downgraded to Neutral from Buy at Sterne Agee after shares jump 30% since Jana Partners disclosed its big stake and suggested turning its worker accommodations business into a REIT. Indeed, OIS shares could be worth $130-$145 with such a change, the firm says, but investors buying shares now are betting on exactly that; Sterne says it isn't yet willing to handicap the potential. Comment!
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11:59 AM Risks surrounding the Chinese-fueled commodity supercycle leave higher, fixed-cost specialty metals and miners vulnerable, so in preparing a list of stocks to buy, BAML seeks companies able to control more of their destiny beyond waiting for improving market conditions. BAML says a rebound in global growth over 12-18 months could spark these favorites: NUE, KALU, SXCP, TMS, RS, ATI, RTI, CNX. Comment!
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10:04 AM SA Pro author Money Investor is even more convinced of his short thesis (see comment thread) on hhgregg (HGG -8.5%) after listening to last night's earnings call (transcript). A focus on various non-standard promotions is a tell of a company grasping at ways to drum up business, he says, and flat-negative same-store sales guidance shows management doesn't see things getting better. Comment!
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Monday, May 20, 2013
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5:35 PM Deutsche Bank remains bullish on oil service stocks (OIH), seeing favorable underlying trends in Q1 as North American margins improved Q/Q despite a decline in the rig count, suggesting significant operating leverage as activity levels recover. DB's four top stocks to buy, all with price targets well in excess of Wall Street consensus: BHI, HAL, NBR, HERO. Comment!
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