Seeking Alpha
  • Today - Thursday, August 21, 2014

  • 11:47 AM
    • Some observers believe Pfizer (PFE -0.4%) will rekindle its bid for AstraZeneca (AZN +3%) by late 2014. The British firm rejected its ₤71B offer in May. Pfizer walked away despite being within 7% of the price AstraZeneca wanted.
    • Under British takeover rules, the negotiations could restart as early as August 26 if AstraZeneca invites Pfizer back to the table. Pfizer cannot initiate discussions until November 26. The rules also allow Pfizer to make a single offer via private phone call to AstraZeneca but this option is rarely used because the process stops if the target says no.
    • It all depends on Ian Read's enthusiasm for a higher bid. This may be unlikely considering what happened in May.
    | 1 Comment
  • 11:43 AM
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  • 11:35 AM
    • Plains All American Pipeline (PAA -0.5%) announces plans to construct a 440-mile pipeline from its Cushing, Okla., terminal to Valero's (VLO +0.2%) Memphis refinery, to provide capacity of up to 200K bbl/day of domestic sweet crude.
    • PAA expects total project investment of ~$900M and completion in late 2016.
    • PAA says the Diamond pipeline project is underpinned by a long-term shipping agreement with VLO and a related contract for storage and terminalling services at the Cushing terminal.
    • VLO holds an option until Jan. 2016 to become a partner in the pipeline and purchase a 50% interest.
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  • 11:29 AM
    • Aviation site RGN states "Wall Street is now buzzing that Verizon might be studying a potential joint venture, acquisition or partnership" with GOGO.
    • Verizon archrival AT&T announced plans in April to offer U.S. in-flight Wi-Fi services "as soon as late 2015;" Gogo tumbled on the news. Meanwhile, RGN has previously stated Gogo rival Row 44 is rumored to be on the block. Verizon exited the in-flight telecom services market after Gogo purchased spectrum in '06.
    • Analyst Tim Farrar: "I think that an interest in Gogo would certainly make sense because life is getting increasingly difficult for standalone connectivity providers ... When you have the big boys coming in from the equipment side, the Panasonic and Honeywell-types of the world, and also the terrestrial connectivity side in terms of AT&T, you’ve got to pick your partners."
    • 30% of Gogo's float was shorted as of July 31.
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  • 11:19 AM
    • Eli Lilly (LLY +0.5%) Bio-Medicines chief David Ricks says that "complete resolution of psoriasis is possible for significantly more people" after the company's therapy candidate, ixekizumab, achieves all primary and secondary endpoints in a 3,866-patient Phase 3 clinical trial comparing it to placebo and Amgen's (AMGN -0.1%Enbrel (etanercept).
    • Patients receiving both dosing regimens of ixekizumab (80 mg every two or four weeks) had significantly greater levels of skin clearance than the control group or the etanercept cohort. Between 78% and 90% of the test group achieved at least a 75% reduction in PASI score at 12 weeks. Also, 31% to 41% achieved PASI 100 (clear skin) at week 12 compared to 5% - 7% in the etanercept group.
    • Lilly plans to submit its marketing application to regulators in 1H 2015.
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  • 11:12 AM
    • Though its FQ3 EPS was only in-line, the $2.6B in free cash flow H-P (NYSE:HPQ) produced beat BofA/Merrill's forecast of $2.1B, and its guidance for $9B in FY14 FCF was also better than expected.
    • Moreover, BofA is hiking its FY15 and FY16 EPS estimates on expectations of rising services margins. BMO observes H-P expects services margin to grow in FY15 even though signings are set to drop 6%-8% in FY14.
    • Morgan Stanley is focusing on H-P's improving top-line: It points out annual revenue growth was positive for the first time in 2.5 years, and views recent PC, x86 server, and networking strength as "sustainable medium-term."
    • Goldman, which finally upgraded H-P to Neutral in June, says it's still cautious due to long-term concerns. "Non-PC revenue and gross margin expansion will become increasingly important as we transition into 2015."
    • Shares have made fresh multi-year highs.
    • Prior H-P earnings coverage
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  • 11:10 AM
    • Popeyes Louisiana Kitchen (PLKI -2.3%) reports a system-wide gain of 3.6% in comp sales during Q2.
    • Growth was stronger at  the company's domestic units than international stores.
    • Profit was down 2% from a year ago due to costs tied to executive transitions.
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  • 11:07 AM
    • A planned $2B deal between Rosneft (OTC:RNFTF) and oil trader Vitol has been scrapped, FT reports, in the clearest sign yet that tougher western sanctions are hurting the Russian state oil group’s ambitions.
    • Vitol, the world’s largest independent oil trader, had been in talks to raise the money from international banks to make an advance payment to Rosneft in exchange for future oil supplies, but sources say the deal has been shelved in the wake of the latest round of sanctions.
    • Bankers and traders say the latest round of sanctions likely will discourage western banks from financing new such prepayment deals, even if existing deals are unaffected.
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  • 11:00 AM
     
    • Dow +0.47%.
    • 10-yr +0.03%.
    • Euro +0.19% vs. dollar.
    • Crude +0.72% to $94.12.
    • Gold -1.29% to $1,278.50.
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  • 10:57 AM
    • Bombardier ((OTCQX:BDRBF +0.4%), (OTC:BOMBF)) and leasing company Akiem have signed on a deal for the delivery of 10 TRAXX DC locomotives, with an option of up to 10 additional trains. The new order will expand Akiem’s TRAXX fleet of 15 locomotives that were ordered in 2013.
    • The firm order is valued at approximately $44M; Total potential contract value if the option is exercised is valued at $86M.
    • Delivery is scheduled between Q3 of 2015 and Q1 of 2016.
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  • 10:52 AM
    • Norway's $880B sovereign wealth fund has been boosting investments in emerging markets since the government in 2012 approved a plan to cut holdings in Europe to 41% from 54% of the portfolio. "We are gradually picking up some new markets, but at a less rapid pace than we did at the beginning of the year," says Yngve Slyngstad, the fund's CEO.
    • China, however, remains a key target, says Slyngstad, noting the fund's investment relative to the size of that country's economy is "miniscule."
    • The fund - which owns 1.3% of the world's stocks - has missed its 4% real return target since its inception in the late 90s. It reported a 3.3% return in Q2, in part because of a strong rally in emerging markets.
    • ETFs: EEM, VWO, EDC, EDZ, SCHE, IEMG, EEV, ADRE, EET, EUM, GMM, EEME, DBEM, EMCR, FEM, EWEM, EMLB, EMSA, EMFT, EMDR
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  • 10:46 AM
    • Yoga apparel sales grew 45% last year while participation in yoga the sport was only up 4.5%, according to industry tracking.
    • The disparity indicates the impressive momentum built up by the athleisure category is beyond just a fad.
    • Barclays forecasts that the broader retail athletic apparel market will grow by around 50% to exceed $100B by 2020.
    • The trend is positive for early adopters Lululemon (NASDAQ:LULU), Under Armour (NYSE:UA), Gap (NYSE:GPS), Nike (NYSE:NKE) - while a host of other retailers (LB, DKS, TJX, TGT) and department store chains (KS, BONT, DDS, M, JCP) say they will try to carve out space in the athleisure market for themselves.
    • On tap: Designers have their eyes on creating more men's lines and hybrid yoga-business outfits that will fly in the C-suite.
    | 8 Comments
  • 10:42 AM
    • Penn West Petroleum (PWE -0.6%) says holders of its unsecured notes have provided waivers that give it until at least Oct. 14 to fix defaults arising from the previously announced restatement of more than four years of financial results that revealed hundreds of millions in expenses had been classified incorrectly.
    • PWE previously received waivers from the defaults under its bank lending agreements; it announced last week it had access to up to $660M under the bank facility, of which $250M had been drawn.
    | 3 Comments
  • 10:37 AM
    • Sarepta Therapeutics (SRPT) establishes a multi-year multi-product partnership with Colorado-based Flagship Biosciences LLC to develop automated tissue-based quantitative tests related to muscular dystrophy that will support the advancement of Sarepta's product pipeline.
    • There is a significant need for the ability to quantify dystrophin levels, for example, since the absence of the protein causes Duchenne muscular dystrophy. Measuring the specific levels of the biomarker in biopsy samples would be the most effective way to assess a therapy's (eteplirsen) efficacy.
    • Financial details of the partnership are not disclosed.
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  • 10:30 AM
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  • 10:28 AM
    • LSI Industries Inc. (NASDAQ:LYTS): FQ4 EPS of -$0.01 misses by $0.04.
    • Revenue of $73.86M (+7.3% Y/Y) beats by $1.51M.
    • Shares -1.9%.
    • Press Release
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  • 10:23 AM
    • Though it has rejected Carl Icahn's call for a PayPal spinoff, eBay (EBAY +3%) has been "telling potential recruits for the position of PayPal CEO that it’s considering spinning off the payments business as soon as next year," The Information reports.
    • eBay and Icahn engaged in a war of words earlier this year, with the former insisting it needed to hold onto PayPal due to various synergies with Marketplaces, and the latter arguing eBay's board was compromised by conflicts of interest.
    • eBay has spiked in response to the report. PayPal, which saw respected division chief David Marcus leave in June for Facebook, almost certainly accounts for over half the company's $68B market cap.
    | 8 Comments
  • 10:18 AM
    • The Children's Place (PLCE +4.2%) says it still has $73.7M of its $100M share repurchase allowance available to it.
    • The company only bought back stock worth $14.5M in Q2.
    • Previous: earnings, dividend announcement
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  • 10:16 AM
    • Though it beat Q2 estimates, 58.com (NYSE:WUBA) is guiding for Q3 revenue of $66M-$68M, below a $72.6M consensus.
    • Also: The Chinese online classifieds leader stated it needs to "invest aggressively now to strengthen our competitive advantages in order to extend our lead and ensure future sustainable growth." Credit Suisse (target lowered to $40) expects major increases in sales, advertising, and R&D spend.
    • Membership revenue +70.6% Y/Y in Q2 to $35.1M, with paying merchant members rising by 69K Q/Q to 510K (better than Q1's 48K increase). Online marketing (ad) revenue +107.7% to $14.1M.
    • Gross margin rose 80 bps Y/Y to 94.7%. Opex rose 89.2% to $53.9M, exceeding revenue growth of $53.9M. Sales/marketing spend +106.6% to $40.3M, fueled by higher mobile marketing spend. R&D +56.9% to $9.5M; G&A +39.5% to $4.1M.
    • 54% of page views came from mobile vs. 51% in Q1. Paying merchants still account for less than 10% of total merchants.
    • Q2 results, PR
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  • 10:14 AM
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