Today - Friday, October 9, 2015
- Thinly traded micro cap Fibrocell Sciences (FCSC +16.3%) heads north, albeit on light volume, in apparent response to a poster presentation at the American Society of Human Genetics Annual Meeting in Baltimore, MD. The poster, titled "Pre-Clinical Development of a Genetically-Modified Human Dermal Fibroblast for the Treatment of Recessive Dystrophic Epidermolysis Bullosa" (RDEB) contained data from an in vivo pre-clinical study of FCX-007 in severe combined immunodeficiency mice (SCID).
- The study evaluated FCX-007 for toxicology and biological proof-of-concept in RDEB and normal human skin xenografts implanted in SCID mice. Toxicology results at week two and week six after administration showed no test article-related findings (no effects observed related to FCX-007), no tumors in the skin grafts or other organs, no statistical changes in blood chemistry and no apparent systemic distribution of the vector (genetically-modified fibroblast cells).
- Also, data supporting the proof-of-concept showed FCX-007 cells in a human xenograft model expressed COL7 (type VII collagen) that localized to the basement membrane zone where anchoring fibrils are formed. RDEB sufferers do not produce COL7, the main component of anchoring fibrils that connect skin layers. This causes their skin to blister and peel off in response to any kind of friction.
- FCX-007 is Fibrocell's gene therapy candidate for the treatment of RDEB. Its value proposition is the delivery of high levels of COL7 directly to affected areas. Current standard-of-care treatment, bandaging and antibiotics, just address the symptoms.
- Less than two hours after Reuters reported the company is in talks with P-E firms about potentially selling itself, SolarWinds (SWI +6.5%) announces it "has commenced a review of its strategic alternatives," including a possible sale or other business combination. JPMorgan and law firm DLA Piper have been hired to help out.
- Shares have pared the initial gains seen following Reuters' report, but remain sharply higher.
- Weatherford (WFT +2.1%) CEO Bernard Duroc-Danner defends his company’s recent restructuring, which involved cutting 40% of its global workforce, saying changes in its cost structure will help when oil prices rebound.
- Duroc-Danner says that while some of the cuts followed a decline in business due to oil prices dropping to below $50, there also was a drive to reduce costs by shedding layers of management within the company.
- The CEO also is optimistic that oil prices have bottomed out but is concerned about when demand will start to recover, saying it will take several more quarters before the oil glut begins to recede.
- Baird has launched coverage on Sigma Designs (NASDAQ:SIGM) with an Outperform rating and $14 target.
- The launch follows a nosedive that occurred in the wake of Sigma's Sep. 9 FQ2 report (occurred in spite of an FQ2 beat and above-consensus FQ3 guidance).
- Shares currently go for 17x an FY17 (ends Jan. '17) EPS consensus of $0.46, and less than 1x FY17E sales after backing out net cash.
11:33 AM| 11:33 AM | Comment!
- Reiterating the company line that higher rates are in store before the new year, FRBNY President Bill Dudley tells CNBC reminds this is only a forecast, not a promise.
- Even a hike this month is a possibility, says Dudley, acknowledging last week's disappointing employment report, but noting just 120K-150K jobs created monthly is enough to push unemployment down (especially with the denominator of headline UE rate equation - the labor force participation rate - continuing to shrink).
- Recent market volatility? It's natural as the Fed prepares to begin a tightening cycle.
- Previously: Atlanta Fed's Lockhart on board with 2015 hike (Oct. 9)
- ETFs: IEF, PST, IEI, TYO, DTYS, UST, VGIT, TBX, SCHR, GSY, TYD, ITE, DTYL, DFVL, FIVZ, TBZ, DFVS, TYNS, SYTL
- Albemarle (ALB +1.7%) is upgraded to Conviction Buy from Buy with a $63 price target at Goldman Sachs, reflecting increased confidence that ALB is "on the cusp of an unappreciated pricing cycle" in its bromine, lithium and refining solutions businesses.
- Goldman says the diversity and high cash flow of ALB’s businesses - the firm models 7% free cash flow yield in 2016 and 11% in 2017 - will enable the company to reduce net debt even in the event of economic malaise.
- The firm also believes the recent selloff provides an opportunistic entry point, as shares are lower by 20% in the past five months and its multiple has compressed to 11.7x 2016 EPS estimate vs. a historical average of ~14x.
- Arguing Rapid7's (NASDAQ:RPD) recent selloff provides a chance to obtain growth at a reasonable price, Barclays Saket Kalia has upgraded the security threat exposure management (TEM) and incident-detection/response software/services firm to Overweight, while keeping his target at $28.
- Kalia expects Rapid7's revenue to grow at nearly a 30% CAGR through 2017, and notes shares are trading at a discount to peers. He adds growing cybersecurity threats are transforming TEM from a "compliance/check-the-box tool to a proactive, high ROI security tool."
- Shares are up 52% from their $16 July IPO price, but down 9% from a post-IPO opening trade of $26.75.
- Apollo Education (NASDAQ:APOL) is down 10.6% to $11.05 after disclosing that the University of Phoenix is on probation with the DoD.
- Phoenix is no longer allowed to recuit on U.S. military installations.
- As tipped earlier, the for-profit sector is on edge with the ruling. Bridgepoint Education (BPI -3%), Career Education (CECO -2.2%), DeVry (DV -1.5%), Strayer Education (STRA -1.4%), and ITT Educational (ESI -1.1%) are some of the names trading off a bit.
- While most point to surging margin debt as a sign of trouble, Leuthold's Doug Ramsey is concerned it's falling too fast.
- He turned bearish this summer when margin debt fell more than 6% in July and August. Its drop below a seven-month moving average told Ramsey demand for stocks was quickly sliding.
- "Margin debt contracting is a sign of loss of investor confidence and it’s confirmation of a lot of other evidence we have that we’ve entered a cyclical bear market,” he says. “We got a lot of traditional warning signs leading up to the high in terms of market action, and deteriorating breadth and margin debt is important to the supply-demand analysis.”
- ETFs: CRF, VUG, VV, USA, SCHX, SCHG, ZF, FEX, JKD, EEH, IWY, JKE, EQL, PWB, IWL, FTC, ERW, SYG, FWDD, RWG, ZLRG, SYE, SBUS, GSLC
- SeaWorld Entertainment (SEAS -4.2%) slides after the company loses the rights to breed any of the 11 whales held at its park in California. The company also faces strict conditions set by the California Coastal Commission on transporting new orcas to the complex.
- The high-profile battle between PETA and SeaWorld has drawn activism on both sides of the issue.
- The company issued a short statement in which it indicated it will review its options.
- Previously: SeaWorld Entertainment dealt a blow in California (Oct. 09 2015)
- Dow +0.29%.
- 10-yr -0.09%.
- Euro +0.69% vs. dollar.
- Crude +0.99% to $49.92.
- Gold +1.17% to $1,157.70.
- Vale (VALE +3.6%) says Canadian environment authorities raided one of its offices in Sudbury, Ontario, yesterday, investigating allegations the company violated the Fisheries Act in 2012.
- The agency apparently is investigating a spill that affected fish and wildlife, but no other information on the nature of the alleged violations is known.
- It is not clear whether the probe could affect Vale's mining operations in the Sudbury area.
- Cadiz (CDZI -14.3%) extends this week's 60% loss, as a GeoInvesting short sell recommendation says the stock is headed to zero after the U.S. Bureau of Land Management told CDZI earlier this week that a BLM permit would be required for its water project’s proposed use of a railroad right-of-way.
- The BLM letter tells CDZI that it would not be allowed to use a loophole the company was seeking to use in order to move its water pipeline project forward.
- CDZI is "essentially a one trick pony and has been working on the same 'water project'... for years, with very little tangible progress being made on the necessary regulatory front, while enriching insiders and burning through millions of dollars," according to GeoInvesting's report.
- Cowen has reiterated an Outperform rating and $60 target for Universal Display (NASDAQ:OLED). Shares have rallied towards $39.
- Earlier this week, Cowen argued Samsung's Q3 pre-announcement boded well for Universal, given Samsung's better-than-expected numbers appeared to stem from OLED and logic IC strength. "When we visited Seoul in September, Samsung noted rising [OLED panel] shipments to other OEMs along with better Y/Y compares for Galaxy models. We note recent [OLED-supporting] models including Google Nexus 6P, and Microsoft Lumia 950/950 XL."
- Short-covering could be helping out: Universal had 3.7M shares (nearly 10% of the float) shorted as of Sep. 15.
- Reuters reports SolarWinds (SWI) is talking with several P-E firms about potentially selling itself.
- The systems/app management software vendor's shares have spiked higher. They're still more than $7 below a 52-week high of $53.44.
- A slew of enterprise tech firms have been acquired by P-E over the last two years. Examples include Riverbed, Tibco, and Informatica.
- Airline stocks are showing some strength in early trading as investors shrug off another uptick in oil prices.
- Solid traffic reports from United Continental and American Airlines Group are turning attention back to the robust profits being churned up in the sector.
- United raised its Q3 profit forecast, while American saw a big jump in its load factor for September in a positive sign and gave its own favorable estimate on margins.
- Gainers: United Continental (UAL +7.1%), American Airlines Group (AAL +4.4%), Delta Air Lines (DAL +2.5%), Hawaiian Holdings (HA +3.9%), Southwest Airlines (LUV +2.6%), Spirit Airlines (SAVE +4.7%), Virgin America (VA +3%), Allegiant Travel (ALGT +3.1%), Alaska Air Group (ALK +1.8%), JetBlue (JBLU +4.9%).
- Related ETF: JETS.
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