Friday, December 9, 2016
- AT&T's (T -0.1%) deal to acquire Time Warner (TWX +0.7%) adds up for consumers, according to Activate founder Michael Wolf.
- Wolf, formerly chief operating officer of MTV Networks, thinks the deal can go forward even with previous threats from president-elect Donald Trump about blocking it.
- "This deal makes a lot of sense from a consumer perspective," Wolf says. "It's not taking away any real control of voices in the Internet or in media."
- Helping AT&T's cause there: a likely rollback of power at the FCC, which has authority over many deals with a mandate for the best interest of consumers.
- Broadcasters like Sinclair (SBGI -1.9%) are also likely to be able to buy more stations despite being up against an ownership limit today, Wolf says.
- Vivendi (OTCPK:VIVHY +5.8%) is edging closer to what could be a hostile takeover of Ubisoft (OTCPK:UBSFY +1%) after it crested the 25% ownership threshold.
- The media giant filed a report on crossing 25% capital ownership with securities regulator Autorité des Marchés Financiers. Vivendi, run by mogul Vincent Bollore, holds about 22.92% of Ubisoft voting rights.
- The founding Guillemot family has been taking steps all year to fend off increasing ownership by Vivendi. Vivendi had taken 100% control of Gameloft -- also run by the Guillemot family -- this year after achieving the votes to control that company in May.
- If Vivendi crosses the 30% capital ownership mark, it's required by law to make a buyout offer.
- In its filing, Vivendi laid out its "objectives over the coming six months," including: financing acquisitions using disposable cash; not working with any third party on its Ubisoft investment; considering more share purchases of Ubisoft; "not considering the launch of a public tender on Ubisoft nor acquiring the control of the company"; and achieving board seats and "a fruitful cooperation."
- Live Ventures (LIVE -3.4%) has wrapped a 1-for-6 reverse split, which it had undertaken to appeal to institutional investors rather than any Nasdaq compliance reason.
- The company's in full compliance with Nasdaq standards, it notes.
- The reverse split doesn't affect proportionate voting rights or any other common-stock rights. Fractional shares were rounded up to a full share.
- Previously: Live Ventures to fire off reverse split (Nov. 28 2016)
- Today's selloff in Swift Transportation (SWFT -7.7%) should be "relatively short-lived," Deutsche Bank says, as management's update call today was cautious on near-term prospects but cautiously optimistic on the medium term and long term.
- SWFT cut its guidance on FY 2016 EPS to $1.20-$1.30 from a prior $1.30-$1.40, below $1.32 analyst consensus estimate, and Q1 2017 EPS to $0.13-$0.18 vs. $0.24 consensus.
- Deutsche Bank analyst Amit Mehrotra calls the call a "recalibration of near-term expectations after a strong run in shares" and expects the stock to move back up to his $28 price target as improving trucking conditions emerge; he keeps a Buy rating on the shares.
- SWFT notched a fresh YTD high earlier this week amid a broad rally in transportation stocks.
- Broadcom (NASDAQ:AVGO) -- up 4.4% after its continuing operations marked a solid beat in yesterday's earnings report -- is seeing price target hikes as analysts weigh the impact on the company and on peer wireless players.
- B. Riley's Craig Ellis has boosted his price target generously to $235 from $215, implying near-32% upside from today's higher price. Strength should continue in optical and data center, and wireless should see a seasonal drop, falling in the mid-teens ("about 50% greater than our projection after seasonal tailwinds go from positive to negative").
- Canaccord Genuity analyst Mike Walkley has reiterated a price target of $250, 40% upside. "Consistent with our iPhone estimates, we believe the strong Broadcom wireless sales that increased 32% sequentially are consistent with our modeling of strong content share gains driving more of the year-over-year sales growth versus iPhone units."
- Meanwhile, Instinet's Romit Shah boosted his price target to $190 from $180, and Morgan Stanley's Craig Hettenbach reiterated a $210 price target on the stock he calls a "core holding."
- Previously: Northland Securities suggests Broadcom's Q4 indicates positively for Qualcomm, Marvell Technology, Silicon Motion Technology (Dec. 09 2016)
- Casella Waste Systems (CWST -5.2%) is downgraded to Equal Weight from Overweight with a $15 price target at First Analysis Securities following the stock's post-election run higher.
- The firm still likes the company, citing strong progress in improving its operating effectiveness, pricing, free cash flow and balance sheet, and believes the efforts will continue to bear fruit in 2017 and beyond, positioning CWST to achieve its 2018 EBITDA and free cash flow targets a year early.
- Titan International (TWI -2.5%) appoints Paul Reitz as its new CEO and President, effective Jan. 1, replacing the retiring Maurice Taylor.
- Reitz joined TWI in 2010 as CFO and was promoted to President in 2014; he had been chief accounting officer for Carmike Cinemas.
- Taylor, who has served the company since its inception in 1983, will continue to serve as Chairman.
- The slide presentation at CTAD 2106 notes serious adverse events in two or more patients, "including one subject with a concurrent SAE of seizure and loss of pulse."
- Mizuho's Salim Syed says the company wasn't willing to say a lot beyond the slide, but what we do know is the seizure patient also had ARIA. Further, this was a pretty small study, so should there be more events like this expected in Phase 3.
- Jefferies wants to know more, but continues to believe safety remains the main risk to the program.
- The safety data look good to RBC, which advises buying on weakness.
- BIIB -0.2%
- Previously: Positive early-stage data on Alzheimer's candidate stokes Biogen; shares up 4% premarket (Dec. 9)
- Brazil's environment regulator approves a 10-year operating license for the S11D iron ore mine being constructed by Vale (VALE -2%).
- The mine will have a capacity of 90M metric tons and reasserts Vale's position as the world's top iron ore producer after years of stagnation; it is expected to start operations by year-end, with the first shipment set for January 2017.
- The license is "an important milestone in consolidating Vale's position as the producer with the lowest C1 cash cost in the industry," the company says.
- Investors are selling the news as they mull what's next after Synergy's (SGYP -6.8%) successful Phase 3 trial for plecanatide. There's another Phase 3 trial, but those results aren't to be released for several weeks.
- Also an issue is who might step up for a buyout given the costs associated with bringing the drug to market.
- Citi's Liav Abraham sees Takeda Pharmaceutical (OTCPK:TKPYY +1.5%) as the most likely buyer in her coverage universe, and the FT today reported the company as willing to spend up to $15B in acquisitions to boost its U.S. presence. Abraham retains her Neutral rating and $4 price target (current price is $5.15).
- Source: TheFly
- Related tickers: Ironwood Pharma (IRWD +2.3%), Sucampo Pharma (SCMP +4.3%)
- Fresh off the announcement of a merger into medical tissue company PolarityTE, videogame maker Majesco Entertainment (COOL -11.8%) has named Dr. Michael Neumeister as its chief medical officer.
- Neumeister is a veteran plastic and reconstructive surgeon who was formerly president of the Plastic Surgery Foundation and Plastic Surgery Research Council.
- When the merger is completed, PolarityTE will operate as a wholly owned subsidiary of Majesco Entertainment, which will change its name to Polarity.
- Previously: Majesco Entertainment and PolarityTE to merge (Dec. 08 2016)
- Centerra Gold (OTCPK:CAGDF -4.4%) falls as much as 7% after saying it will suspend quarterly dividends, citing financial restrictions by Kyrgyzstan on its Kumtor Gold subsidiary.
- The Kyrgyzstan government has long sought to renegotiate its 2009 agreement with Centerra to secure a bigger share of income, and the company finally took the dispute to international arbitration in May; a Kyrgyzstan court ruling in June restricted Kumtor from making certain financial transactions, including the transfer of money to parent Centerra.
- Given Centerra’s restricted cash flow, RBC analysts say the dividend suspension - which will save $35M/year - is a prudent decision .
- The healthcare sector - particularly pharmaceuticals and biotechs - had a rough session on Wednesday after the president-elect promised to bring down drug prices.
- Sporting sizable gains yesterday afternoon and again this session, the sector has recovered all of Wednesday's slide and more.
- Up 1.15% today, the XLV has joined the broader market in the green for the week, as has the IBB. The SPDR S&P Pharmaceuticals ETF (XPH +1.5%) is having the best day of all, but remains marginally lower on the week.
- Individual movers: The Medicines Co. (MDCO +6.2%), Alexion Pharma (ALXN +5.5%), Arena Pharma (ARNA +4.7%), Teva (TEVA +1.3%)
- ETFs: IBB, XLV, IYH, XBI, VHT, PJP, BBH, HQH, FBT, CURE, HQL, XPH, PBE, FXH, FHLC, IHE, RXL, LABU, BBC, PPH
- Thinly traded nano cap Jaguar Animal Health (JAGX +34.8%) heads north on almost a 5x surge in volume in apparent response to its announcement of its promotional activities related to dehydration treatment Neonorm at a recent conference of equine (horse) veterinarians.
- The company exhibited Neonorm in distributor Henry Schein's booth then presided over a gathering of 16 prominent equine vets.
- Neonorm Calf, as the names implies, is a treatment for scours in dairy calves. Neonorm Foal is targeted for young horses.
- The company says the addressable market for Neonorm would be significantly expanded if it can demonstrate Neonorm's effectiveness in adult horses.
- Neonorm given to preweaned dairy calves decreases the severity of scours, an affliction characterized by debilitating diarrhea that kills more than half newborn calves. Non-prescription Neonorm is an extract of a South American tree called Croton lechleri, known as the Dragon's blood tree because of the blood red latex it produces.
- On another note, the company filed an S-1 on Wednesday, December 7 registering ~6.7M common shares for sale by current stockholders. The company will receive no proceeds from the sales.
- Cliffs Natural Resources (CLF -5.5%) likely will generate “a lot” of cash next year to help pay down debt, CEO Lourenco Goncalves tells Bloomberg, crediting Pres.-elect Trump’s focus on infrastructure building and a crackdown on unfair trade.
- CLF shares had nearly quadrupled through early November amid signs of improving demand and successful U.S. trade cases against steel imports, and have surged an additional 69% since the election; if Trump implements just part of his promises, "not only will the country be a lot better after these things are implemented, but businesses like Cliffs and all steel mills in the United States will benefit very much," the CEO says.
- Paying down debt will continue to be the most important use of proceeds of any cash CLF generates, Goncalves says, adding that he has no plans to raise equity for now because he does not want to dilute the shares.
- Emergent BioSolutions (EBS +19.6%) inks a follow-on contract with the U.S. Centers for Disease Control and Prevention (CDC) valued at up to $911M to supply ~29.4M doses of anthrax vaccine BioThrax to the Strategic National Stockpile (SNS) through September 2021.
- The company plans to deliver ~9M doses of BioThrax in each of 2017 and 2018, followed by 10M doses in 2019.
- Also, the federal government's Biomedical Advanced Research and Development Authority (BARDA) has issued a notice to procure ~$100M of BioThrax for delivery to the SNS over a period of 24 months. The contract, separate from the CDC's, should be awarded in H1 2017.
- Updated 2016 guidance: Revenue: $485M - 505M (with Aptevo) and $465M - 485M (without Aptevo); Net Income: $35M - 45M (with) and $50M - 60M (without). The company spun out Aptevo Therapeutics in August.
- The FDA accepts under Priority Review AstraZeneca's (AZN +3.7%) Biologics License Application (BLA) seeking approval of durvalumab for the treatment of patients with locally advanced or metastatic urothelial carcinoma whose disease has progressed during or after one line of platinum-based chemo.
- The agency's specific action date (PDUFA) is not provided, but should happen in Q2 2017 considering the six-month review clock.
- Breakthrough Therapy-tagged durvalumab is a human monoclonal antibody that binds to programmed death ligand-1 (PD-L1) which is expressed by some tumors to evade detection by the immune system by binding to PD-1 on cytotoxic T lymphocytes. Blocking the interaction between PD-L1 and PD-1 enhances the immune system's ability to detect and kill cancer cells.
- The impact of "market forces" are on full display with nano cap Sunshine Heart (SSH +19%). Shares have jumped 250% since yesterday. The company faces possible delisting from Nasdaq because its share price and stockholders equity are below minimum standards. The company says it is "working diligently" to address the situation before the March 20 deadline.
- Underwriters will work their magic here. The company's cash balance at the end of September was only $792K so a capital raise is essential.
- In the company's proxy materials for its January 9 special stockholders meeting, management is seeking shareholder approval to issue common shares tied to recently sold convertible preferred stock and a 1:20 reverse split of its common shares.
- The conversion of preferred shares will open the door for a possible new offering of convertible stock.
- Previously: Sunshine Heart gets extension to address Nasdaq listing deficiency (Nov. 22)
- Shake Shack (NYSE:SHAK) has a new growth engine with breakfast sandwiches if a positive review posted by Eater.com is accurate.
- The upside for the company is that it only offers breakfast service in less than 10% of its outlets and it could launch an all-day breakfast initiative.
- Shares of SHAK are up 1.29% to $37.74.
- Teck Resources (TECK -4.8%) will consider raising its dividend in April as a way to further reward shareholders who already have enjoyed a 6x surge in the shares this year, CEO Don Lindsay tells Bloomberg.
- The CEO says Teck generates “well over” C$1B ($759M) per quarter in cash, and the first priority for the money will be reducing debt to $5B or less, which he says will be achieved in Q1 or soon after; then, the dividend would be a priority for the board, both raising it and potentially changing its structure.
- Rather than offer a stable dividend that rises over time with production capacity, Lindsay says shareholders would be better served by a regular base dividend that is “topped up” at year-end if commodities outperform.
- Nano cap Opexa Therapeutics (OPXA +47.7%) jumps on more than triple normal volume. Shares are up 160% since bottoming at $0.50 on November 9 after the Tcelna flop in a multiple sclerosis study.
- No particular news accounts for the action, but the company stated in a November 14 press release that its quick assets will only be sufficient to fund operations into Q1. An equity offering could be announced any time.
- SunTrust analyst David Magee thinks Conn's (NASDAQ:CONN) could see a sharp drop in credit losses in 2017 and 2018.
- Magee lifts profit estimates on Conn's due to the boost n credit confidence on credit sets a price target of $20 on the Buy-rated retailer.
- Shares of Conn's are up 5.94% on the day.
- Thinly traded micro cap Edge Therapeutics (EDGE +5.5%) moves up in early trading, albeit on only 16K shares, on the heels of its announcement that results from its Phase 1/2 study, NEWTON, assessing lead product candidate EG-1962 for the treatment of aneurysmal subarachnoid hemorrhage (aSAH) will appear in the upcoming issue of Stroke.
- NEWTON compared escalating doses of EG-1962 to oral nimodipine, the current standard of care (SOC), in aSAH patients. The study met all primary and secondary endpoints. Results showed 60% of patients treated with EG-1962 achieved a favorable outcome compared to 28% for SOC. Additional benefits attributed to EG-1962 treatment were reductions in vasospasm, delayed cerebral ischemia, reduced use of rescue therapies and shorter stays in the ICU and hospital.
- Fast Track-tagged EG-1962 is microparticle formulation of nimodipine that it is administered through a device used in neurosurgery called an external ventricular drain which is used to relieve elevated intracranial pressure. Its value proposition is the ability to deliver a high concentration of nimodipine directly to the brain as a single dose with sustained drug exposure over 21 days while avoiding the dose-limiting side effects associated with oral nimodipine, a calcium channel blocker used to treat high blood pressure.
- Network-1 Technologies (NYSEMKT:NTIP) announced that its board has approved the initiation of a dividend policy.
- The dividend policy provides for the payment of a regular semi-annual dividend of $0.05/share commencing in 2017 and expects dividend will continue to be paid through March 2020 (the expiration of Network-1's Remote Power Patent) provided that Network-1 continues to receive royalties from licensees of its remote power patent.
- Shares +4.5%
- Press Release
- Coca-Cola-related names are trading higher after the company announces that Muhtar Kent is stepping down next April to be replaced by COO James Quincey
- There's a general sense that Quincey may be more open minded to M&A moves.
- Gainers within the KO extended family include Coca-Cola European Partners (CCE +2.4%), Monster Beverage (MNST +2.1%) and Coca-Cola Bottling Co. (COKE +1.6%).
- Beverage M&A targets Primo Water (PRMW +1.9%) and National Beverage Corp. (FIZZ +1.2%) are also showing a little pop.
- Interrestingly, PepsiCo (PEP +1.4%) is also ahead of broad market averages.
- Previously: Coca-Cola CEO to step down (Dec. 9)
- Previously: Coca-Cola higher after appointing new CEO (Dec. 9)
- American Airlines Group (AAL +4.1%) rallies after the company lifted it outlook for Q4 unit revenue to -1% to +1% growth vs. -2.5% to -0.5% prior forecast.
- The airline also expects improved yields, despite the increase in oil prices.
- United Continental (UAL +2.7%), SkyWest (SKYW +1.9%) and JetBlue (JBLU +1.6%) are also tracking higher on the day off the positive sector read.
- Related ETF: JETS.
- An improved outlook for interest rates (higher) and the hope for an easing of the DOL's new fiduciary rule in a Trump administration mean it's time to shift money into the life insurance sector, says RBC's Mark Dwelle.
- P&C insurers face weak pricing expectations, so the focus will be on accident-year margin pressure and the implications for reserves.
- Alongside an earlier-reported downgrade of Aflac (NYSE:AFL) to Underperform (stock is now down 2.3%), he cuts RLI Corp. (RLI -5.2%) to Underperform as well.
- Downgraded to Sector Perform are Unum (UNM -1.6%) and Selective Insurance (SIGI -4.6%).
- Favored pick in P&C is Chubb (CB -0.2%) as it's a "top underwriter" regardless of pricing, and has a clean balance sheet and attractive valuation.
- Upgraded to Outperform are Hartford (HIG +0.5%) and Lincoln National (LNC -0.1%), with LNC a Top Pick thanks to its leverage to higher rates and eased DOL rule.
- Top value ideas are AIG (AIG -0.1%) and Voya Financial (VOYA +0.5%). Top growth ideas: Arch (ACGL +0.6%), Principal Financial (PFG -1.1%). Top small-cap picks: American Equity (AEL +3.9%), Kinsale Capital (KNSL +1.1%). Top turnaround/self-help picks: MetLife (MET -0.6%), XL Group (XL -0.1%). Top defensive play: Marsh & McLennan (MMC).
- Source: Bloomberg
- MicroVision, having yesterday announced proposal for a public stock offering without specific size, updates this morning on terms for a 12.1M share and $1.07 price per event.
- Estimated net proceeds are approximated at $11.8M and intended for general corporate purposes. Closure of the offering is expected on or around December 14.
- MicroVision (NASDAQ:MVIS) shares are at 21% losses early.
- There's a colorful array of words pouring out of Wall Street firms to describe Restoration Hardware's (NYSE:RH) earnings report.
- Cowen sees "many shortfalls" and raises concerns over "aggressive" SKU rationalization and says it's "unclear" if the business will improve.
- Telsey calls the retailer's forecast "disappointing" and points to "execution missteps."
- Oppenheimer sees "risks" to sales and EPS.
- Sources: CNBC TV and Bloomberg
- Previously: Restoration Hardware beats by $0.04, beats on revenue (Dec. 8)
- Previously: Restoration Hardware crushed after holiday guidance disappoints (Dec. 8)
- Shares of Restoration Hardware are down 17% premarket to $32.18 to erase their post-election gains.
- IRIDEX (NASDAQ:IRIX) is down 9% premarket on light volume in response to the pricing of its public offering of 1.15M common shares at $14. Underwriters over-allotment is an additional 172.5K shares.
- Net proceeds of ~$15.1M will fund working capital and general corporate purposes.
- Yesterday's close was $15.51.
- Thinly traded micro cap Clearside Biomedical (NASDAQ:CLSD) retreats 19% premarket on increased volume in response to its pending $75M public offering of common stock. Price, volume and terms have yet to be announced.
- Net proceeds will fund its pivotal Phase 3 study of suprachoroidal Zuprata for the treatment of macular edema associated with non-infectious uveitis, the initiation of its Phase 3 program of suprachoroidal Zuprata, in combination with Regeneron Pharmaceuticals' (NASDAQ:REGN) Eylea (aflibercept), for the treatment of macular edema associated with retinal vein occlusion, the completion of certain other clinical trials, working capital and general corporate purposes.
- Yesterday's close was $11.53.
- Frontline (NYSE:FRO) -1.5% premarket on news it has raised $100M through the issuance of more than 13.4M common shares at $7.45 each.
- FRO's largest shareholder, Hemen Holding, was allocated 10% of the offering, and now owns more than 82.1M shares, equaling a 48.4% stake.
- FRO says it will use the proceeds to fund vessel acquisitions and for general corporate purposes.
- The first of two Phase 3 clinical trials assessing Synergy Pharmaceuticals' (NASDAQ:SGYP) plecanatide for the treatment of adult patients with irritable bowel syndrome with constipation (IBS-C) met its primary endpoint of overall response rate at week 12.
- Specifically, the percentage of Overall Responders in the 3 mg cohort was 21.5% and 24.0% in the 6 mg cohort, both superior to placebo's 14.2% (p=0.009 and p<0.001, respectively). An Overall Responder was defined as one who experienced at least a 30% reduction in worst abdominal pain and at a least one complete spontaneous bowel movement from baseline, in the same week, for at least 50% of the 12 treatment weeks.
- The most common adverse event was diarrhea, which occurred in 3.2% and 3.7% of subjects in the 3 mg and 6 mg groups, respectively.
- Results from a second Phase 3 will be release in the coming weeks.
- Plecanatide is the first investigational therapy designed to replicate the activity of uroguanylin, a naturally occurring human gastrointestinal peptide, by working locally in the proximal small intestine to stimulate digestive fluid movement and support regular bowel function. It is currently under FDA review for the treatment of chronic idiopathic constipation with an action date of January 29, 2017.
- Shares are up 17% premarket on increased volume.
- Shares of Coca-Cola (NYSE:KO) are up 1.02% to $41.40 after the company announces COO James Quincey will step in for CEO Muhtar Kent in May.
- Kent will stay on as the Chairman of the Board.
- There's some speculation that a new CEO at Coca-Cola may be more amenable to a food M&A play to align the company similar to PepsiCo. Over the last five years, PEP shares have outperformed KO shares +57% to +21%.
- Previously: Coca-Cola CEO to step down (Dec. 9)
- American Airlines Group (NASDAQ:AAL) reports revenue passenger miles fell 0.2% in November to 16.8223B. Domestic RPMs fell 1.8% Y/Y.
- Capacity was up 0.1% Y/Y to 20.7863B available seat miles. Domestic ASMs decreased 0.6%.
- November load factor -30 bps to 80.9%.
- YTD load factor -130 bps to 81.8%.
- American expects Q4 unit revenue to fall in a range of -1% to +1%. Pre-tax margin of 6% to 8% is seen.
- AAL +1.87% premarket to $48.95.
- Shares of Duluth Holdings (NASDAQ:DLTH) dive after the retailer lowers full-year guidance.
- The company now sees FY16 revenue of $360M-$370M vs. $370M-$380M prior. EBITDA of $34M-$38M is anticipated vs. $40M-$42.5M prior.
- "Unseasonable weather, coupled with a highly promotional environment, continued into early fourth quarter," notes CEO Stephanie Pugliese.
- Previously: Duluth Holdings beats by $0.01, misses on revenue (Dec. 8)
- DLTH -16.71% premarket to $30.85 after gaining over 9% yesterday.
- Biogen (NASDAQ:BIIB) is up 4% premarket on average volume in response to its presentation of positive data from a Phase 1 study of Alzheimer's disease candidate aducanumab at the CTAD meeting in San Diego.
- Previously: Biogen perks up on leaked trial data on Alzheimer's candidate aducanumab (Dec. 8)
- Officials in Macau clarify that ATM card transactions have been limited to 5K patacas per transaction, but there is no change to the daily limit as reported yesterday by South China Morning Post.
- Shares of Las Vegas Sands (NYSE:LVS) are up 8% in premarket trading to take back much of the ground lost yesterday.
- Wynn Resorts (NASDAQ:WYNN) and Melco Crown (NASDAQ:MPEL) are up 6% and MGM Resorts (NYSE:MGM) has moved 4% higher.
- Previously: Macau stocks stung by Beijing crackdown on ATM withdrawals (Dec. 8)
- Previously: Macau to outline policy after casino shares tumble (Dec. 9)
- DavidsTea (NASDAQ:DTEA) reports a slightly larger loss for Q3 than anticipated amid what it calls a "challenging" backdrop.
- The company sees Q4 revenue of C$84.0M-C$88.0M vs.C$89.6M consensus.
- Christine Bullen is introduced as the new interim President and CEO.
- Ratings actions: BMO lowers to Market Perform with a $9 PT. William Blair lowers to Market Perform.
- Previously: DAVIDs TEA reports Q3 results (Dec. 8)
- DTEA -3.23% premarket to $9.00.
- Stillwater Mining (NYSE:SWC) +20.2% premarket after South Africa's Sibanye Gold (NYSE:SBGL) agrees to acquire the U.S.-based miner of platinum and palladium for $2.2B.
- The $18/share deal price represents a 23% premium to its closing price yesterday.
- The purchase is SBGL's third platinum acquisition since late 2015 but its first outside of South Africa, and would make the company, which until last year was solely a gold miner, the world’s third largest platinum producer.
- SWC is the only U.S. miner of platinum group metals and the largest primary producer of the metals outside of South Africa and Russia.
Thursday, December 8, 2016
4:57 PM| 4:57 PM | 12 Comments
- Zedge (ZDGE -2.7%) has posted fiscal Q1 earnings that saw profits and revenues decline, but the company's pointing to a late turnaround in users as a sunny sign.
- Revenue was off 7% and direct cost of revenue rose more than 24%. Income from operations fell to $113M from the prior year's $419M.
- Total installs rose 32.6% to 230.5M as of Oct. 31. Monthly active users got a late uptick, rising 2.6% in the last 30 days of the quarter to 31.6M.
- With revenue slipping 6.9%, average revenue per MAU fell 10.7% to $0.0233.
- The user uptick provides optimism, says CFO/COO Jonathan Reich: "The increase in MAU, one of our key performance indicators, is a good harbinger for revenue expansion and we remain focused on improving this metric in coming quarters."
- Conference call to come at 5:30 p.m. ET.
- Press Release
- Lions Gate Entertainment (LGF +4.4%) has closed on its $4.4B acquisition of Starz (STRZA +1.7%) after shareholders overwhelmingly approved.
- The cash and stock deal got an OK from 98% of Lions Gate voters and 95% of Starz voters. The companies say all closing conditions are satisfied, including regulatory approvals.
- The result means each previous share of LGF common stock has been reclassified into a 0.5 share of voting class (LGF.A) and 0.5 share of nonvoting class (LGF.B). Holders of Starz series A get $18/share in cash and 0.6784 shares of LGF.B for each share.
- Holders of Starz's series B (STRZB +4.9%) get $7.26 in cash, 0.6321 shares of LGF.A and 0.6321 shares of LGF.B.
- Existing LGF and Starz common shares will come off the NYSE and Nasdaq effective tomorrow.
- Broadcom (AVGO +1.3%) is up 2.6% after hours following a firm beat on profits from continuing operations, and solid guidance in fiscal Q4 results where it also doubled its dividend.
- The interim dividend was raised to $1.02/share. Net loss (including discontinued operations) was $668M, about $1.59/share. EPS from continuing operations was $3.47.
- Net revenue by segment: Wired infrastructure, $2.07B (up 449% Y/Y; up 1% Q/Q); Wireless communications, $1.35B (up 98%; up 34% Q/Q); Enterprise storage, $561M (down 12%; up 6% Q/Q); Industrial and other, $155M (up 8%; down 21% Q/Q).
- Cash from operations was $1.352B, and it got $200M in net cash from completing divestitures.
- For the coming first quarter of fiscal 2017, Broadcom sees net revenue (on a non-GAAP basis) of $4B-$4.15B, above consensus for $3.96B, and gross margin of 60.5%-62.5%. It's forecasting operating expenses of $785M, interest and other expenses of $101M and has a $73M provision for income taxes.
- Conference call to come at 5 p.m. ET.
- Press Release
- Results – revenue $369.86M (+15.2% Y/Y, $7.8M above estimates), EPS $0.58 ($0.12 above estimates), gross margin 37.2% (vs. 33.1% Q/Q), operating expenses $69.4M (vs. $69.3M Q/Q), operating margin 18.5% (vs. 12.8% Q/Q), cash, cash equivalents and short-term investments $626.3M (+$32.5M Q/Q)
- Q3 projections – revenue $378M-$398M (consensus $376.56M), gross margin 37%-38%, operating margin 18.5%-19.5%, EPS $0.58-$0.64 (consensus $0.48)
- Finisar (NASDAQ:FNSR) CEO Jerry Rawls: "This growth was primarily driven by strong demand for 100G transceivers. In addition, customer demand for wavelength selective switch and ROADM line card products was strong. Our gross margins improved significantly due to a favorable product mix and leverage achieved from our vertical integration with larger volumes. The combination of revenues being at the higher end of our guidance range with higher gross margins resulted in earnings per fully diluted share above our guidance range."
- Conference call
- Press release
- Restoration Hardware (NYSE:RH) lowers full-year profit guidance after citing weak holiday sales.
- "Our business in November was below our expectations, which we largely attribute to consumer softness related to the US election and our Fall 2016 Source Books getting in homes later than planned," notes CEO Gary Friedman.
- The company now sees FY16 EPS falling in a range of $1.19-$1.29 vs. $1.60-$1.80 prior and $1.63 consensus.
- Previously: Restoration Hardware beats by $0.04, beats on revenue (Dec. 8)
- RH -18.80% AH to $31.83.
- Tyson Foods (NYSE:TSN) is up 4.35% as investors continue to snap up shares following yesterday's presentation at the Bernstein Consumer Summit.
- CFO Dennis Leatherby drew attention when he said the company is positioned to make another Hillshire-sized acquisition.
- A confident tone was also struck by Tyson management over the price collusion allegations.
- Tysons says it's having a a good beginning to the fiscal year. "The first quarter is off to a phenomenal start," noted CEO Tom Hayes.
- Biogen (BIIB +1.2%) is in positive territory for the day after data were leaked from a Phase 1 clinical trial, PRIME, investigating Alzheimer's disease (AD) candidate aducanumab. The results will be presented in a research meeting tomorrow.
- Titration dosing of aducanumb up to 10 mg/kg produced significant reductions in amyloid plaque burden during the 12 months of treatment. The slowing of cognitive and functional decline as measured by a scale called CDR-SB in aducanumab-treated patients was statistically significant compared to placebo.
- Data from the long-term phase showed patients receiving aducanumab continued to show a decrease in brain amyloid plaque burden in a dose- and time-dependent manner over 24 months (measured by PET scan).
- Aducanumab is a human recombinant monoclonal antibody derived from a library of B cells collected from healthy elderly subjects with no signs of cognitive impairment. It is being developed under a global deal with Neurimmune inked in November 2007.
- Continental Resources (CLR -1.6%) is downgraded to Hold from Buy with a $64 price target at Deutsche Bank as the company continues to shift exposure to Permian Basin.
- Although more STACK well results are still ahead, the firm thinks 2016 likely was more rich in catalysts for CLR, and while visibility in the forward outlook has significantly improved post OPEC, it sees the shares largely reflecting this view.
- Deutsche Bank says investors should have some exposure outside the Permian and sees better value in other diversified producers with similar or better balance sheet profiles, including Newfield Exploration (NFX +1.4%), Oasis Petroleum (OAS +0.9%), QEP Resources (QEP +0.8%), Encana (ECA +3.3%) and WPX Energy (WPX -0.3%).
- CLR also has been downgraded at J.P. Morgan and KLR Group in recent days.
- AZZ (AZZ -7.2%) is downgraded to Sell from Hold with a $57 price target, cut from $63, at Stifel, which believes shares are extended ahead of Q3 results that could miss investor expectations.
- Stifel also thinks a continuation of AZZ's FQ2 volume challenges into Q3 will reign in investor ebullience and bring focus back to the next 12-month outlook, driving multiple compression; combined with what it anticipates will be downward revisions to earnings, the firm sees meaningful downside to shares at current levels.
- Time Inc. (NYSE:TIME) has jumped 7% on word that it's fielding takeover offers and has hired bankers for that purpose, after news that it's getting overtures from a group led by Edgar Bronfman Jr.
- The company's engaged with Morgan Stanley and Bank of America to discuss offers, The Wall Street Journal reports.
- Bronfman runs a private-equity firm now but is the former CEO of Warner Music Group. He's reportedly partnering with Ynon Kreiz and Len Blavatnik on an $18/share offer, so far rebuffed by Time, which closed yesterday at $16.45.
- Macau stocks are down sharply after South China Morning Post reports that Beijing is taking aim at the flight of capital from Macau.
- The Monetary Authority of Macau is poised to limit the amount of cash China UnionPay bank cardholders can withdraw per day from ATM machines to 5K patacas from 10K.
- The policy is expected to take effect this weekend.
- Movers: Wynn Resorts (WYNN -9.9%), Las Vegas Sands (LVS -11.6%), Galaxy Entertainment (OTCPK:GXYEF -2.9%), Melco Crown (MPEL -12.2%) and MGM Resorts (MGM -4.3%)
- SunPower's (SPWR -4.7%) new restructuring plan is indicative of worsening solar photovoltaic market fundamentals, Axiom’s Gordon Johnson says.
- The analyst says SPWR thinks the U.S. residential market has “corrected” while he believes the correction seems “far from over," manufacturers continue to expand capacity causing price competition that is driving ASPs to new lows, lower cost targets translate to lower growth given the capital intensity of SPWR's PV projects.
- Johnson has Sell ratings on SunEdison (OTCPK:SUNEQ -5.8%), JA Solar (JASO -4%), Trina Solar (TSL), Yingli Green Energy (YGE -3.1%) and SolarEdge (SEDG -2.1%).
- Morgan Stanley says it remains cautious on the 2017 outlook given limited indications of a PV industry recovery, also noting that SPWR did not provide margin or EBITDA targets and said it would focus on maximizing cash flow and liquidity rather than to growth; the firm rates SPWR at Equal Weight with a $6 price target.
- Media General (NYSE:MEG), up 1.7% to a two-year high, has extended a change of control offer to purchase notes issued by its LIN Television unit.
- The offer to pay cash (at 101% of principal) for outstanding 5.875% senior notes due 2022 was set to expire at midnight last night, but has been extended a week.
- The company had received tenders from holders of $28.75M in principal (about 7.19% of outstanding principal) by 5 p.m. ET yesterday.
- The move comes in conjunction with the company's plans to merge with Nexstar Broadcasting Group (NASDAQ:NXST).
- With a $74 target (current price $63.37).
- Analyst Karen Lau attributes healthy growth rates within the machine vision industry (high single to low double-digit annuals), Cognex product sales for factory automation implementations that are above that pace, prospects within logistics ID and mobile computing, a projected rise in automation investment on possible trade policy revisions and other catalysts.
- Cognex (NASDAQ:CGNX) shares have been on a steady trajectory of late, higher by 7% today, 16% on the month, 28% over the last three and 73% since this point last December.
- Boyd Gaming (BYD +5%) rallies after Deutsche Bank names the stock its top regional gaming pick.
- Analyst Carlo Santarelli thinks macro factors are setting up favorably for the broad regional casino sector to set it up for margin expansion.
- Price target hikes: Penn National Gaming (PENN +3.3%) to $18 from $17, Pinnacle Entertainment (PNK +0.9%) to $16 from $13 and Red Rock Resorts (RRR +0.8%) to $28 from $26.
- Radius Health (RDUS -17.7%) is getting some rude treatment today on more than double normal volume. Investors were apparently expecting good news when the company announced data from two Phase 1 trials on breast cancer candidate RAD1901 in San Antonio earlier today but instead got a some rather tepid numbers.
- As of the October 7 cut-off date in the first study, 20 heavily pretreated patients with ER+, HER2- advanced breast cancer had been treated in the Phase 1b safety expansion cohort at the 400 mg dose. 95% (n=19/20) had measurable disease at baseline. There were only two partial responders. Across the dose escalation phase (n=13) and safety expansion cohort (n=20), 14 patients were on study drug for at least four months, five patients were on at least six months and seven remained on treatment.
- In its ongoing Phase 1 study in Europe, three patients were enrolled at the 400 mg dose as of October 7. Only one had a confirmed partial response. All patients remained on treatment for a mean duration of 5.64 cycles.
- RAD1901 is a selective estrogen receptor degrader. It is also being investigated for the treatment of hot flashes in postmenopausal women.
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