Today - Wednesday, November 25, 2015
- Tongue River Railroad Co. -- a joint project by BNSF Railway, Arch Coal (ACI +2.9%) and a limited liability financing company -- has indefinitely suspended plans for a $400M railroad to haul coal from a proposed mine owned by Arch Coal.
- The Otter Creek Mine on the Wyoming-Montana border has run into concerns including delayed permits and a softening coal market overall. The TRRC had hoped to begin production at the mine by January 2017, but "with mine permitting delays and near-term market weakness, that timeline now appears unachievable."
- The company hasn't withdrawn its application, though, and BNSF's Matt Jones says TRRC could renew it once Montana issues a mine permit and lawsuits are resolved.
- Before the report, Arch Coal shares had jumped 15.7% after hours, following on a strong 2.9% gain today.
- While VimpelCom (VIP +6.8%) got a boost today on news that it may be close to settling with the U.S. in an Uzbekistan corruption probe, TeliaSonera (OTCPK:TLSNY +2.2%) may be facing a bigger headache as the U.S. looks to extend the probe into other markets, according to Swedish daily Svenska Dagbladet.
- Danske Bank analysts think the company could now be facing compensation claims of 15B kronor ($1.72B), triple what they had expected before.
- The probe is reportedly widening to TeliaSonera's activities in Kazakhstan and Azerbaijan, and even Nepal.
- Other companies besides VimpelCom and TeliaSonera -- Mobile TeleSystems (NYSE:MBT) and Telenor (OTCPK:TELNY) -- are linked to dealings with Takilant, the company tied to Gulnara Karimova, daughter of Uzbekistan President Islam Karimov.
- VimpelCom (VIP +6.8%) is looking at stable debt even with ongoing dollar risks, Fitch says, giving the Russia-focused telecom a BB+ Issuer Default Rating with stable outlook.
- While VimpelCom's debt is moderate and declining, 71% is in U.S. currency, which may increase costs for Amsterdam-based VimpelCom as the U.S. raises rates.
- VimpelCom's interests in Italy's Wind are "highly leveraged but ring-fenced," the firm says.
- Fitch expects VimpelCom to stay a strong mobile player in Russia despite competition from Mobile TeleSystems (NYSE:MBT), Millicom (OTCPK:MIICF) and Megafon (OTC:MFOYY): "Although its market share has been on a steady decline over the three years to 2014, a catch-up in capex should allow it to compete on a more level playing field with its larger peers."
- Shares finished strong today after a report the company may be near a settlement with U.S. authorities related to an Uzbekistan corruption probe.
- Previously: VimpelCom up 2.4% on report it's near $775M U.S. settlement (Nov. 25 2015)
- PPG Industries (NYSE:PPG) rose 0.9% today, and Valspar (NYSE:VAL) dropped 1.4%, as J.P. Morgan says it now prefers PPG in the chemical coatings space.
- Morgan's Jeffrey Zekauskas downgraded Valspar to Neutral, from Overweight, but raised its price target to $85, from $83. After a two-month run where Valspar rose 15.6%, shares closed today at $84.21.
- With its price gain, Valspar's free cash flow yield is 5.1% -- fair value, according to Zekauskas, since it's not high compared to the average in their coverage universe.
- Valspar's revenues should be flat or lower in fiscal 2016 as forex challenges offset acquisition-based sales growth, he writes: “We think the coatings company now offering the most favorable risk/reward balance for investment in the year ahead is PPG. ... We expect PPG to benefit from a favorable raw material dynamic and good domestic volume growth versus weak 1H:15 domestic volume comparisons.”
- Valspar was also downgraded at RBC Capital (though like J.P. Morgan, the firm raised its price target, to $82).
- Valspar shares fell 0.4% after hours.
- S&P +0.01%.
- 10-yr -0.02%.
- Euro -0.04% vs. dollar.
- Crude +0.16% to $43.20.
- Gold -0.02% to $1,070.50.
- Walt Disney (DIS +0.6%) is keeping its toes dipped into the burgeoning phenomenon of e-sports, teaming up again with Nintendo (OTCPK:NTDOY +1%) for a second original show devoted to watching competitive videogaming.
- The company's Disney XD channel will air Clash of Karts: Mario Kart 8 Dec. 5, a one-hour special where four two-person child teams will compete with the help of "YouTube influencers" as coaches.
- Disney says it saw some positive results from an Oct. 16 special based on the Nintendo World Championships, and is taking a more specific game tack with this one because the Mario Kart franchise is cross-generational and also lends a comedy element.
- “With e-sports we’re seeing the growth of a new business,” Disney's Marc Buhaj says. “We need to make sure that our game shows are appropriate to the folks watching. If we see a gaming opportunity that pops up, we’ll look at it.”
- Elsewhere: As the company is moving toward a high-profile opening of its park in Shanghai, China has fined five fake Disney hotels that had set up in the area, for trademark infringement. The five hotels, all owned by Shenzhen Vienna Hotels Group, were penalized a combined 100K yuan (about $15,656).
- Endeavour Silver (NYSE:EXK) has struck a deal with Cowen to sell up to $16.5M worth of shares via at-the-market distributions. Cowen will receive a discount equal to 3% of the gross sales price of sold shares.
- Net proceeds and existing cash will be used to "expedite the Company's brownfields exploration drilling programs at existing operations in order to extend their mine lives, to advance the exploration and development of the Company's Terronera Project with further drilling, engineering and related studies, and to add to working capital."
- The Canadian silver miner had $22.8M in cash at the end of September, and $22M in credit facility debt.
- China's Bona Film Group (NASDAQ:BONA) is up 1% after hours in the wake of a largely in-line Q3 report, though revenue fell and profits declined by nearly half.
- Non-GAAP net income fell to $5.1M from a year-ago $9.3M. EBITDA of $9.9M beat an expected $8.2M.
- Revenue breakout: Film distribution, $47.8M; Film investment and production, $12.6M; Movie theaters, $33.8M; Talent agency, $0.1M. Intersegment eliminations were $15.4M.
- The company distributed and/or invested in five films, with top performers being Bride Wars (domestic receipts of 173.3M yuan, about $27.1M) and The Dead End (receipts of 304.5M yuan, about $47.7M).
- Cash and equivalents came to $150.9M as of Sept. 30, as cash used in operating activities jumped to $164.9M.
- Conference call to come at 8 p.m. ET.
- Press Release
- Activist Elliott Management has disclosed after the bell it now owns 9.1% of American Capital (NASDAQ:ACAS), up from the 8.4% disclosed last week. The firm also states it has reached an agreement with ACAS to obtain confidential/non-public information.
- ACAS +1.4% after hours to $15.43. Shares rose 9.5% in regular trading after the investment firm announced it has launched a strategic review and upped the size of its buyback program, thereby addressing some of Elliott's demands.
- Spark Therapeutics (ONCE +3.7%) has filed an S-1 for a proposed public offering of shares.
- Some of the stock in the offering would be sold by Spark, and some by the Children's Hospital of Philadelphia Foundation, the company said.
- Shares in the company are up 36.6% since news on Oct. 5 that it saw positive results from a late-stage trial of a gene therapy candidate for patients with genetic blinding conditions.
- Previously: Spark Therapeutics misses by $0.22, misses on revenue (Nov. 04 2015)
- Shares in Bombardier (OTCQX:BDRBF +13.5%, OTCQX:BDRAF +5.6%) rose in their biggest gain in seven weeks after an investor presentation cheered shareholders looking for the company's direction after new government investments.
- New CEO Alain Bellemare and his team gave a presentation where they said lower production of business jets would drive down revenue as well as earnings in 2016, but that the company would target higher-profile buyers of its CSeries jets and build that fleet to 250 aircraft by 2020.
- “People like the management,” Canaccord Geniuity's David Tyerman told Bloomberg. “This management team gives a ton more information than the previous team. At least we have an idea of where we are going.”
- The company wants to deliver 30-35 CSeries craft in 2017, and up to 55 the year after that.
- The investor day was the first real news since Quebec's government and its public pension fund manager promised $2.5B in investments to mitigate liquidity risk.
- Previously: Bombardier's investor day gets underway (Nov. 24 2015)
- Through a string of purchases starting on Oct. 27 (the most recent disclosed purchase was yesterday), T.J. Rodgers has upped his Cypress Semi (NASDAQ:CY) stake to 8.37M shares (roughly a 2.5% stake).
- The purchases have come with the microcontroller/flash memory vendor trading well below a March high of $16.25, hit amid a chip stock rally and Spansion merger enthusiasm.
- S&P +0.01%.
- 10-yr -0.02%.
- Euro -0.18% vs. dollar.
- Crude +0.15% to $43.19.
- Gold -0.01% to $1,070.60.
- Enbridge (ENB -1.1%) says it's acquired 100% interest in the New Creek Wind Project, an under-development 103-megawatt wind farm, from EverPower Wind Holdings.
- Enbridge is in for about $200M on the West Virginia project, which is backed by renewable energy credit sales and off-take agreements with fixed pricing. It gives Enbridge an interest in a total near 2,000 megawatts of net renewable generating capacity.
- The project comprises 49 turbines and is expected to be in service in December 2016.
- Enbridge shares were up 0.5% after hours ahead of the news.
- Scorpio (NYSE:SALT) is selling two Capesize dry bulk vessels and four newbuilding Capesize dry bulk vessels under construction for $227M.
- Two of the vessels were delivered to Scorpio this year. One is expected to be delivered in Q4, and three in Q1 2016.
- SALT +2.4% after hours to $0.89. The dry bulk shipper had $274M in cash at the end of September, and $328M in bank loans, and $74M in senior notes.
- Game maker NetEase (NASDAQ:NTES) finished up 2.7% today after Goldman Sachs launched coverage of the stock at Buy.
- The firm set a price target of $190; shares had closed yesterday at $164.98 and today at $169.43, implying 12% upside from here.
- Other analysts had chimed in with price target increases this month after NetEase beat Q3 earnings expectations on strong revenues that doubled Y/Y. Barclays had raised its own price target to $171, from $153.
- Meanwhile, BNP Paribas raised its own target to $190 from a previous $170. Both Barclays and BNP Paribas rate the stock a Buy as well as Goldman.
- ZAGG has filed to sell up to $100M worth of stock through future offerings. The company has also filed to sell 80.1K shares obtained by foreclosure of a judgment lien, and to allow seven existing holders to collectively sell up to 194.3K shares obtained via warrant exercises at their discretion. (S-3 filing)
- Zagg has fallen to $10.00 after hours. The mobile accessory maker had $15M in cash at the end of Q3. Shares made a fresh 52-week high of $10.49 earlier today, before closing at $10.40 (up 3.6%).
- Amgen (NASDAQ:AMGN) submits its first biosimilar Biologics License Application (BLA) to the FDA for ABP 501, a biosimilar version of AbbVie's (NYSE:ABBV) Humira (adalimumab).
- EVP of R&D Sean Harper, M.D., says, "The submission of Amgen's first biosimilar application to the FDA is an exciting milestone, expanding our inflammation portfolio to provide additional therapeutic options to patients. Patients with chronic inflammatory conditions are faced with a significant burden of disease requiring long-term treatment. Amgen's branded biologic medicines and biosimilars are developed and manufactured according to the same high standards and we are committed to delivering high quality medicines to patients with serious inflammatory diseases."
- Previously: Amgen's ABP 501 equivalent to Humira in late-stage RA study (Nov. 9)
- Stocks finished up unchanged in a calm pre-Thanksgiving trading day, as the Dow Jones Industrial Average eked out a 1-point gain to end at 17,813, and the S&P 500 fell just a quarter-point to 2,088.87. Nasdaq stocks rose 0.3%.
- A heavy data dump in the morning brought generally positive news, in a last pre-break indicator that the economy may be strong enough to withstand the first Fed rate hike in years. New home sales rose nearly 7% but came in just short of expectations, while durable goods orders rose 3% vs. 1.5% expected.
- Personal income (+0.4%) was as expected, but a bare gain in personal spending was below expectations for a 0.3% increase.
- Oil's rig count declined for the second straight week, while oil inventories were up. Crude gained 0.5% to $43.10.
- Digital Turbine (APPS -2%) is making expansion plans in Durham, N.C., as it looks to consolidate headcount and grow space that belonged to Appia, which it acquired in the spring.
- CEO Bill Stone says the company is negotiating with landlord American Tobacco Campus to move into thousands of square feet of extra space to accommodate Appia's growth.
- Digital Turbine has relocated technical and product development work for its DT Ignite product to Durham from Israel, and says it continues to hire there. "We expect it to continue to organically grow," Stone says.
- He has also urged patience from investors and to let the company get through the holiday season, since gifted smartphones can boost the company's profits.
- Shares in the company are down 55% YTD.
- Dow +0.01% to 17,813.07. S&P -0.01% to 2,088.70. Nasdaq +0.26% to 5,116.20.
- Treasurys: 30-year +0.16%. 10-yr +0.01%. 5-yr -0.02%.
- Commodities: Crude +0.54% to $43.10. Gold -0.36% to $1,069.90.
- Currencies: Euro -0.23% vs. dollar. Yen +0.15%. Pound -0.29%.
- Qunar (QUNR +4.1%) is back above $40 after beating Q3 estimates with the help of a 381% Y/Y increase in mobile revenue to $153.5M (now 73.6% of total revenue). Q4 guidance is for 105%-125% Y/Y sales growth (largely below a 124.6% consensus) and 85%-105% gross profit growth.
- Top-line performance: Adjusting for a bookings model shift, hotel reservation revenue rose 188.6% Y/Y to $50.7M, and flight revenue 91.2% to $93.9M. Hotel and flight volume respectively rose 119.8% and 49.4% to 22M rooms and 33.9M tickets.
- Financials: Spending remained heavy: Sales/marketing spend +188.6% Y/Y to $120.9M, R&D +78.1% to $64.3M, product sourcing 87.5% to $29.4M, G&A +15.6% to $19.4M. Due to certain hotel reservations being recognized on a gross basis, gross margin fell to 62.4% from 72% in Q2 and 72.4% in Q3 2014. The Ctrip deal has been expected to eventually yield lower spending growth.
- On the earnings call (transcript), China's second-biggest online travel firm suggested it expects to reach EBITDA breakeven in Q3 2016. The company also said it remains on track to pare its aggressive offline marketing spend (aims to grow Qunar's customer base) in 1H16.
- Q3 results, PR
- Ongoing drama around the health of Sumner Redstone resulted today in Redstone's team issuing a statement denying claims that he's incapacitated.
- A lawsuit filed by one-time girlfriend Manuela Herzer claims that he is mentally impaired and unable to make decisions in a home that has "become a de facto intensive care unit."
- The suit is challenging an Oct. 12 decision to expel Herzer from Redstone's home, and the transfer of Redstone's advance healthcare directive from Herzer to Viacom CEO Philippe Dauman.
- Herzer's suit is a "meritless action, riddled with lies, and a despicable invasion of his privacy," says Redstone's statement.
- The health of the 92-year-old media mogul has become a subject in rampant succession discussions at the two companies where he is chairman of the board: CBS (CBS +0.7%) and Viacom (VIA +1.6%, VIAB +1.9%).
- Elsewhere, FBR Capital raised its price target on Viacom to $65 on optimism about its potential breakup value. Shares in VIAB are up 1.9% to $51.86 (more than 25% upside potential in FBR's target).
- Japan's Nikkei reports Apple (AAPL -0.5%) will launch iPhones sporting OLED displays starting in 2018. To date, the company has exclusively used LCDs for its retina displays.
- The paper adds securing enough OLEDs to meet Apple's needs (the company sells over 200M iPhones/year) could be difficult, and that Apple will "work over the next year or so" with suppliers to see if it can obtain enough displays and eliminate technical drawbacks such as performance degradation.
- iPhone LCD supplier LG Display (LPL +6.9%), which has already unveiled plans to invest ~$8.5B in OLED manufacturing through 2018, is said to be "planning capacity upgrades." OLED materials/IP provider Universal Display (OLED +5.2%) have caught a bid on the Nikkei's report; LPL was already higher on the day.
- OLEDs have long been a staple on Samsung's Galaxy S and Note lines. Supporters of the technology praise its high contrast/deep blacks and potential thickness and power consumption advantages. Apple, however, has argued its LCDs provide superior color accuracy.
- There have long been rumors Apple is thinking of adopting OLEDs. The company recently filed a patent application for an integrated OLED display and touch panel, with a fingerprint reader located underneath.
- Earlier: Apple buys Star Wars motion capture tech developer Faceshift
- Five months ago: Apple reportedly working on iPhone design that eliminates home button
- Dow +0.12%.
- 10-yr +0.04%.
- Euro -0.26% vs. dollar.
- Crude +0.13% to $42.93.
- Gold -0.35% to $1,070.00.
- The U.S. oil rig count falls by 9 to 555. One year ago it was 1,851.
- The total rig count of 744 is lower by 13 from last week and by 1,173 from a year ago.
- The news seemed to be enough to help crude to a modestly higher close at $42.93 per barrel.
- Previously: Crude inventories higher by 1M to 488.2M barrels (Nov. 25)
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, UGA, USL, DNO, UHN, OLO, SZO, OLEM
- Frontier Communications (NASDAQ:FTR) may be eyeing Connecticut -- where it acquired territory from AT&T -- as the spot of its next gigabit Internet service launch, to judge from marketing.
- The company hasn't announced any formal plans, but users noticed website materials (now removed) pointing toward a fiber Internet launch.
- The state has been subject to a dearth of options in high-speed Internet, and local governments have begun the (slow) process of pursuing municipal gigabit networks on their own.
- Any Frontier gigabit deployment might be limited for some time. The company recently said it could provide some customers with new options, at download speed tiers of 90 Mbps and 115 Mbps. (via FierceTelecom)
- The FHFA won't hike the limits in most markets on mortgages backed by Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) beyond $417K - it's the 11th consecutive year that number has been in place.
- Primo areas like San Jose, San Francisco, and New York will keep their limit of $625K, while 39 other counties will see increases of $5.75K-$34.5K.
- It might be good news for roughed-up Redwood Trust (RWT +2.1%), which packages non-conforming mortgages. Through the end of September, jumbo mortgages made up nearly 19% of the market, according to Inside Mortgage Finance - up from a low of 5.5% in 2009 and the highest market share since 2006.
- The news is also something builders in high-cost areas are going to have to deal with. Moving a community just a little bit can have quite the effect - in San Bernardino County, the $417K cap is in place, but in neighboring L.A. County, the limit moves to $625K.
- Energy Transfer Partners (NYSE:ETP) is underperforming a benchmark index since recently forecasting it could generate almost $5B in organic growth capital next year, and that's on top of a yearlong decline amid tumbling energy prices.
- Energy analyst Phil Adams is still rating the bonds Underperform, calling the MLP a "hostage" to commodity prices that he expects will stay low.
- "ETP is the anchor of ETE’s midstream empire," Adams writes. "But with ETP’s unit price down a net 42% so far in 2015, issuing equity in balance with debt to finance growth capex is unattractive. ETP’s units probably won’t recover until energy commodity prices trend higher, and ETP’s bond spreads won’t likely recover significantly before ETP’s equity."
- ETP is trading at $38.76 today, and this month has been floating a bit over its 52-week low of $36.84, reached in late September.
- Ares Capital (ARCC -0.4%) CEO Kip deVeer has played down a whole lot of interest in launching some sort of consolidation wave in the BDC sector, but it could be the most logical buyer of American Capital (ACAS +8.2%) should the company put itself on the block, writes Gillian Tan.
- Even though Ares trades at a lower P/E multiple than ACAS, on a relative book value basis, American Capital is the cheaper stock, so a deal could make sense. As always, it'll come down to price, and Elliot Capital's price target of at least $23 per share - a 60% premium to yesterday's close - looks very steep.
- American Capital's board, and Elliot - whose average buy price is $13.30 - may have to settle for less.
- Previously: American Capital gains on strategic review, boost to buyback (Nov. 25)
- Dow +0.18%.
- 10-yr +0.04%.
- Euro -0.27% vs. dollar.
- Crude -0.4% to $42.70.
- Gold -0.32% to $1,070.40.
- United Continental (UAL -1.1%) will offer pilots a pay rate increase of 13% in 2016 under the terms of a new contract offer, sources tell Bloomberg.
- Pilots would earn pay raises of 2% and 3% in the following two years.
- The company is negotiating with the pilots union well in front of the expiration of the current contract in the early part of 2017.
- Seadrill (NYSE:SDRL) is off 1.2% today, a reversal from yesterday's 2.4% gain even after the stock missed earnings expectations in Q3 and swung to a loss.
- Evercore saw "slightly positive implications" in the firm's report, but Credit Suisse is reiterating an Underperform rating.
- Analyst Gregory Lewis reduced EPS estimates for 2015 to $1.20 from $1.40, and for 2016 to $2.15 from $2.30 "to account for updated downtime and utilization assumptions."
- Though Seadrill pointed to "challenging" market conditions through 2016, it sees some recovery the year after. But Lewis thinks customer rig spending would need to increase 30% from 2016 estimates just to get back to 2015 levels.
- Lewis has a $5 price target on Seadrill; shares closed yesterday at $6.48 and are trading currently at $6.40.
- What used to be HP's PC/printing unit (NYSE:HPQ) has plunged below $13 after missing FQ4 sales estimates on the back of 14% Y/Y sales drops for both its PC and printing segments, and cutting its FY16 EPS guidance below consensus.
- With printing op. income (-18% in FQ4 to $862M) well above PC segment op. income (-17% to $294M), printing headwinds are getting a lot of attention. On the earnings call (transcript), CEO Dion Weisler stated weak market demand and price pressure both weighed on printing. "We do not expect the landscape to improve in the near future and we will constantly assess how the market evolves."
- He added forex is affecting pricing, and that lower printer price points are "attracting buyers that might have different usage patterns then we originally targeted." Printing supplies revenue stabilization now isn't expected until the end of 2017. The growth of online/mobile document and photo sharing has been a major printing headwind for some time.
- Needham's David Rold has downgraded to Hold just three weeks after upgrading to Buy on account of a low valuation and 3%-4% dividend yield. "[A]s some of the valuation argument has played out, we believe further upside will require real improvement in the underlying business. The sharp turn of the Printing market (and delay in improvement that results) in just 2-3 months since last speaking with the Street warrants caution..."
- Likewise, Goldman's Simona Jankowski (Neutral) is worried about soft supplies demand (sales -10% in FQ4). "While the company intends to reduce its cost base to partially offset market headwinds, we would need to see evidence of supplies stabilization before becoming meaningfully more positive on HP Inc.’s trajectory."
- Deutsche's Sherri Scribner (Buy) remains bullish. "While we do not expect HPQ to be immune to [market] trends, we believe the company can outgrow its peers and end markets, driven by market share gains and a focus on profitable growth opportunities. A recovery in supplies is a key driver of free cash flow strength longer term, and while we were disappointed by the push out of this recovery to later in FY-17, we believe [management] has the right tools in place to stabilize this business."
- Straight Path Communications (NYSEMKT:STRP) is up strong for a second day -- 26.2% higher today, making a 59% run including yesterday's.
- The U.S. Court of Appeals for the Federal Circuit today handed the company a victory, rejecting a claim construction on which the U.S. Patent Trial and Appeal Board relied in canceling claims on a Straight Path patent relating to Point-to-Point Internet Protocol.
- The court reversed the patent board's decision and remanded the case back for further action. The case pitted Straight Path IP Group against Sipnet EU.
- Previously: Straight Path +26.1% as activist Miller discloses 7.5% stake (Nov. 24 2015)
- Previously: Straight Path sinks 41.4% on new report alleging fraud (Nov. 05 2015)
- Jerusalem, Israel-based Kitov Pharmaceuticals (KTOV +7%) completes its IPO of 3,168,900 American Depository Shares (ADSs) and five-year warrants to purchase up to 3,158,900 ADSs for a combined price of $4.13. Each ADS represents 20 ordinary shares. Each warrant is immediately exercisable at $4.13. Underwriters over-allotment is an additional 473,835 ADSs and/or warrants to purchase an additional 253,761 ADSs at a price of $4.12 and $0.01, respectively.
- The clinical-stage biopharmaceutical firm develops combinations of existing drugs that are in late-stage development. Its pipeline includes KIT-301, a fixed-dose combination of naproxen and isradipine, for the treatment of pain caused by osteoarthritis (OA) without the hypertensive side effects, and KIT-302, a fixed dose combination of celecoxib and amlodipine besylate, also for the treatment of OA-related pain. In the near term, the company is focusing its efforts entirely on bringing KIT-302 to market.
- 2015 Financials (6 mo.)($M): Operating Expenses: 3.1 (+92.0%); Net Loss: (3.2) (-90.8%); Cash Burn: (1.3) (+55.6%).
- Dow +0.19%.
- 10-yr +0.04%.
- Euro -0.19% vs. dollar.
- Crude -0.42% to $42.69.
- Gold -0.34% to $1,070.20.
- MagicJack VocalTec (NASDAQ:CALL) was down briefly as much as 4.7% after a Street Sweeper article pointed to "perilous declines in users, activations and app users," but has rebounded since early this morning, now up 7.5%.
- "Any smidgen of magic left in magicJack VocalTec is vanishing quicker than street magician David Blaine can make a new quarter disappear," the article posed, setting a "generous" valuation at $5/share.
- The stock had closed at $9.52 yesterday; it's now up to $10.23.
- Volume has already surpassed its daily average, though the biggest blocks came in the early minutes to prompt the decline.
- Calling Carl Icahn an "activist agitator," analyst Joshua Shanker says it's a foolish short-term move to sell a high ROE business like United Guaranty (AIG's mortgage insurance operation) and plow the money into buybacks. Such a move could very well prove to be ROE-destructive rather than accretive (the exception would be if AIG could find a buyer willing to pay too high a price for United).
- It would be a better idea, he says, to sell low ROE businesses near book value and instead use that money to return capital.
- There's also no guaranty a sale would allow AIG to unburden itself of its SIFI status, says Shanker, and besides the SIFI designation has no effect on AIG's business and imposes no capital constraints on the company.
- Nike (NKE +0.9%) carved out a new all-time high of $134.55 earlier today as the company's revelation of a stock split and dividend hike continue to help bring in buyers.
- SA contributor Tim McAleenan has a breakdown on why he thinks Nike is still a strong dividend stock to hold.
- Previously: Nike shares the spoils with new buyback plan, dividend hike, and stock split (Nov. 19 2015)
- Previously: Nike +4% after string of good news (Nov. 20 2015)
- 3D Systems (DDD +5.8%), Stratasys (SSYS +5.1%), Voxeljet (VJET +4.6%), and (especially) ExOne (XONE +16.6%) are up strongly on a day the Nasdaq is up 0.4%.
- Profit-taking from shorts is likely helping out: 3D had 34.1M shares (32% of its float) shorted as of Oct. 30. Stratasys had 12.4M shares (25% of its float) shorted, ExOne 2.5M shares (26% of its float), and Voxeljet 1.3M shares (10% of its float).
- ExOne's gains come less than three weeks after shares plunged on account of a Q3 miss and full-year guidance cut.
- "It almost feels like 2008 a little bit," says Wasserstein's Rajay Bagaria, who woke up one morning to find his holdings in one issuer had fallen 19% overnight after a weak earnings forecast.
- Other recent free-falls include Chesapeake Energy, Men's Wearhouse, and Scientific Games. According to Deutsche Bank, the debt of the riskiest companies is selling off at four times the rate of the least-risky junk borrowers - typically to rate is 1.6x.
- "A less diverse group of investors hold a lot more bonds," says Citi's Stephen Antczak, pointing out concentration risk as an overlooked element contributing to big price swings. "The difference between incremental buyer is more now than it used to be. It takes a bigger move to get people interested."
- ETFs: HYG, JNK, HIX, HYLD, DHY, PHT, EAD, HYT, JQC, CIK, DSU, HHY, SJB, NHS, PHF, ACP, FHY, ARDC, MCI, VLT, KIO, CIF, AIF, MHY, ANGL, PCF, DHG, MPV, IVH, HYLS, JSD, UJB, CJNK, GGM, QLTC
- Dow +0.09%.
- 10-yr +0.01%.
- Euro -0.27% vs. dollar.
- Crude -1.12% to $42.39.
- Gold -0.23% to $1,071.30.
- Citing high toxicity levels for non-target plants, the EPA has revoked the registration of Dow Chemical's (DOW -2.6%) Enlist Duo herbicide.
- Enlist Duo, which targets severe weed resistance (hinders crop production), was approved last month with a series of restrictions. Dow says it's working with the EPA to provide additional assurances for the product.
- Cowen & Company sees only a minimal risk to traffic at Costco (COST -0.1%) from the E. coli contamination of chicken salad at stores in several states.
- The outbreak is smaller than the incidents at Chipotle and less likely to harm overall brand reputation, reasons Cowen.
- Previously: Costco chicken salad linked to E.coli poisoning in seven states (Nov. 24 2015)
- Smart Beta equity ETPs brought in $3B of new assets in October, according to ETFGI, bringing the year-to-date total to $53.7B. There are a total of 764 smart beta equity ETPs, with 1,336 listings, and assets of $399B.
- This compares to assets of $1.79T for market cap equity ETPs.
- The five-year compounded growth rate of assets in smart beta products is 39.3% vs. market cap at 18.6%.
- WisdomTree (NASDAQ:WETF) is the leader this year in smart beta net inflows with $20B, followed by iShares (NYSE:BLK) at $13.4B, and Vanguard at $6.4B.
- Credit Suisse thinks 2016 is the year that sales leverage kicks in for Tesla Motors (NASDAQ:TSLA). The bullish note from the firm includes a prediction of lower-than-consensus SG&A spending and R&D investments to help free up cash flow. In the near term, CS says 17K units in Q4 is "achievable" after factoring in some extra sales in Denmark and the U.K.
- Tesla more than doubled the number of superchargers in the U.S. to 224 over the last year, but saw an even higher pace for new destination chargers. The number of destination chargers at hotels, restaurants, and other retail outlets now totals over 1.2K, according to Cleantechnica.com
- Earlier this week, several research firms issued positive forecasts for U.S. auto sales in November. It's unclear if that burst of buying during a typically dull month will extend out to Tesla. YTD electric vehicle sales in the U.S. have trailed the pace of overall auto sales. $2 gas prices at the pump aren't helping that trend.
- Shares of Tesla are up 3.89% to $226.75
- Stating it sees only 14% upside for shares relative to 31% for other Buy-rated names, Goldman has downgraded eBay (EBAY -0.7%) to Buy from Conviction Buy, albeit while hiking its target by $3 to $33.
- Goldman still thinks eBay's "ongoing investments into technology should serve to improve the user experience and conversion rates, while potentially slowing the declines in organic traffic from search results." It also sees potential for improved focus following the PayPal split, and notes StubHub and eBay Classifieds are performing well.
- The online marketplace owner, pressured for some time by share losses to Amazon and Google algorithm changes, currently trades for 14.6x a 2016 EPS consensus of $1.97. Shares jumped last month in response to a Q3 beat and better-than-feared guidance.
- Thinly traded Aduro Biotech (ADRO +11.8%) is up on average volume in response to its announcement that all of its clinical trials will continue unaltered and as planned.
- Apparently, one clinical trial participant who received the company's lead oncology candidate, CRS-207, which is based on engineered Listeria mononcytogenes bacteria, showed signs of Listeria infection subsequent to a protocol violation. The investigator could not rule out that the infection was not attributed to the administration of CRS-207 so the case was filed as listeriosis (disease caused by listeria infection) related to CRS-207 infusion. The company believes the incident arose from inappropriate access of the central line port during infusion. The FDA was apprised of the situation almost two months ago and has provided no comments or guidance that would delay or alter ongoing or planned trials. The patient, who was treated with IV antibiotics which resolved the infection, remains in the study and continues to receive CRS-207 and GVAX Pancreas vaccine.
- The most frequent CRS-207-related adverse event (AE) (Grade 3 (severe) or 4 (life threatening or disabling)) seen in a Phase 2a study was lymphopenia (abnormally low level of white blood cells). Three patients experienced a Grade 3 AE and two a Grade 4 AE.
- The combination of CRS-207 and GVAX Pancreas is currently being evaluated in a Phase 2b study in metastatic pancreatic cancer. CRS-207 is also being investigated, with and without cyclophosphamide, in a Phase 1b study in mesothelioma. A Phase 2 study in platinum-resistant ovarian, fallopian or peritoneal cancer should commence in early 2016.
- During yesterday afternoon's FQ4 earnings call (transcript), HP Enterprise (HPE +3.1%) CEO Meg Whitman disclosed Microsoft Azure (MSFT -0.5%) "will become a preferred public cloud partner" for HPE, through a partnership that will be detailed next week. In return, HPE will "serve as a preferred provider of Microsoft infrastructure and services for its hybrid cloud offerings."
- The deal comes a month after HP announced it's shutting down its public cloud services ops, rather than compete head-on with well-established players such as Amazon (the market leader), Microsoft (#2), IBM, and Google. The company, whose on-premise IT service ops have been pressured by cloud adoption - enterprise services division revenue fell 9% Y/Y in FQ4 to $5B - added it's still committed to offering private and managed cloud services.
- For Microsoft, the deal gives Azure the backing of HP's still-massive enterprise sales and IT services workforces. It follows a multifaceted Azure partnership with server OS rival Red Hat. Microsoft reported Azure revenue rose over 100% Y/Y in calendar Q3, but didn't give a figure.
- HPE continues trading higher after beating depressed FQ4 sales estimates with the help of positive x86 server and networking hardware growth, and reiterating its FY16 EPS guidance (while guiding FQ1 below consensus). Analyst reactions have been mixed - bulls are trumpeting a low valuation and the potential for improved execution following HP's breakup, while bears argue sales and cash flow pressures remain substantial.
- The GDPNow model sees Q4 GDP growth of just 1.8%, that's down from 2.3% forecast just one week ago. It also stands against the positively rosy 2.8% median guess of the Blue Chip consensus.
- Behind the drop the Atlanta Fed estimate was this morning's weaker-than-anticipated personal income and outlays report for October.
- Dow +0.16%.
- 10-yr -0.06%.
- Euro -0.4% vs. dollar.
- Crude -0.79% to $42.53.
- Gold -0.25% to $1,071.10.
- Keurig Green Mountain (GMCR +7.3%) extends its post-earnings rally. Shares of GMCR are now up 30% since the Q3 numbers and fresh guidance came in.
- The one-week rally for Keurig is putting some pressure on shorts.
- GMCR short interest position by date
- Previously: Keurig Green Mountain beats by $0.14, beats on revenue (Nov. 18 2015)
- Previously: Keurig Green Mountain roars back after earnings (Nov. 18 2015)
10:49 AM| 10:49 AM | 2 Comments
- Reports over the coming holiday weekend on Black Friday traffic and estimates arriving early next week on store sales should be largely ignored, observes FiveThirtyEight.com.
- The correlation of total holiday season revenue to the length of lines at stores during Black Friday and the weekend sales tallies in years past has been nearly non-existent. This is due in part to the paradox that a strapped U.S. consumer is more likely to shop on Black Friday than wait until deeper in the season and vice versa.
- Holiday season bellwhethers to trust include any data dumps or notes from management at Amazon (NASDAQ:AMZN), FedEx (NYSE:FDX), UPS (NYSE:UPS), Visa (NYSE:V) or MasterCard (NYSE:MA).
- Vodafone (VOD +2%) has decided to pull a bond offering rather than give in to investor demands over risk protection.
- The carrier planned an investment-grade deal of up to $2B, but balked as investors pressed for a change-of-control provision and wouldn't accept coupon step-ups that would come with credit agency downgrades.
- The change-of-control provision (forcing issuers to redeem bonds in case of takeover/merger) would have set an unwanted precedent at Vodafone, bankers suggested, and the carrier didn't want to do that or compensate with a wider spread.
- A similar risk-protection issue sunk a deal backing Carlyle Group's leveraged buyout of Veritas last week, as investors have grown demanding over bond terms following some high-profile change-of-control failures (as in Cablevision bondholders left dry when junk-rated Altice came in to buy the company).
- Less than a week after Pericom (PSEM - unchanged) shareholders approved Diodes' (DIOD +0.8%) planned $413M ($17.75/share) acquisition of the serial connectivity IC firm (thus turning their backs on a $19/share offer from China's Montage Technology that had financing/regulatory questions attached), the deal is officially on the books.
- Diodes CEO Keh-Shew Lu: "[T]his acquisition broadens Diodes analog footprint and adds a strong mixed-signal connectivity offering that will drive expanded product content in our target market applications. Pericom also provides an extensive timing product line that complements Diodes' standard product portfolio."
- The all-cash deal is expected to be immediately accretive. Pericom will stop trading on the Nasdaq following today's close.
10:30 AM| 10:30 AM | 30 Comments
- Swatch (OTCPK:SWGAY) and Visa (NYSE:V) plan to partner on a new smartwatch device to be sold in the U.S. and Europe, according to Swiss media reports.
- The smartwatch will allow owners to make payments through the Visa technology.
- A formal announcement from the companies is expected within a few days.
- General Electric (GE -0.7%) has completed the sale of its Australia and New Zealand consumer finance business, representing aggregate ending net investment of approximately $4.3B, to a consortium made up of Varde Partners, KKR (KKR -0.2%) and Deutsche Bank (DB +0.6%).
- "Combined with the recently announced agreement to sell our commercial lending business in A&NZ, this is a big step in the complete exit of GE Capital from the region," said Keith Sherin, GE Capital chairman and CEO.
- Previously: Investor group to buy GE Capital consumer finance arm for $6.3B (Mar. 15 2015)
- It's been nearly straight down out of the open for T-Mobile (NASDAQ:TMUS), down 2.2% after it announced a special "holiday gift" for Sprint (S -0.5%) customers: $200 to switch carriers.
- That's on top of the up to $650 T-Mobile is offering to cover early termination fees and phone payment balances, and it's $200 for each line switched.
- "I cannot think of any wireless customers in more desperate need of some holiday cheer than those Sprint customers still hanging on over there," said T-Mobile CEO John Legere. "Those poor people have put up with the nation's slowest and smallest LTE network, and their carrier throwing out a deal-of-the-month for everyone except them."
- The deal includes switching any Sprint number (postpaid, prepaid, Boost or Virgin Mobile) to a T-Mobile Simple Choice postpaid plan. It's effective starting Thursday.
- Legere promised additional "gifts" coming to Verizon and AT&T customers over the next few weeks.
- Apple (AAPL -0.3%) has bought Faceshift, a Zurich-based developer of technology for turning facial expressions into avatars and other animated material in real-time, for an undisclosed sum. TechCrunch reports several Faceshift employees are now working for Apple,
- Faceshift's technology, which can be used with off-the-shelf hardware, was used in Star Wars: The Force Awakens to make the facial expressions of non-human characters appear more human. It has also been applied towards gaming, where avatars can be altered based on a gamer's real-life expressions. (promo video)
- The acquisition follows Apple's 2013 purchase of former Kinect motion sensor tech provider PrimeSense, and its 2015 purchase of multi-sensor camera module developer LinX, whose modules enable (among other things) depth sensing and 3D image capture. It also comes two months after Apple launched (via the iPhone 6S/6S+) Live Photos, a camera feature that animates a photo when a user taps on it.
- Cellnex (along with partner F2i SGR) is getting close to making a bid that could come to $1.2B for a stake in the towers unit of Telecom Italia (TI +0.5%), Bloomberg reports.
- The companies could bid as early as the second week of December and would be seeking a stake of about 40% in Infrastrutture Wireless Italiane (Inwit), sources said.
- TI has a 60% stake in Inwit worth about €1.6B, and would aim to keep a minority stake of up to 20% of the unit along with one board seat of a potential new company.
- Cellnex was itself a towers spinoff of Abertis Infraestructuris (OTCPK:ABRTY) and holds 15,000 towers in Spain and Italy. Inwit owns 11,500 sites (about 27% of Italy's towers) and logged 2014 pro forma revenue of €314M against Cellnex's €436M.
- Previously: Bloomberg: Telecom Italia hires DB to work on towers sale (Oct. 09 2015)
- Previously: Reuters: Telecom Italia wants to close on Inwit deal by year-end (Sep. 28 2015)
- Dow +0.15%.
- 10-yr +0.02%.
- Euro -0.62% vs. dollar.
- Crude -2.24% to $41.91.
- Gold -0.47% to $1,068.80.
- The Petrobas scandal widened further today with the arrest of Grupo BTG Pactual founder and CEO Andre Esteves, and that bank has plunged 21% in local trading.
- "The scandal is becoming more debilitating by the day," says one strategist.
- The Bovespa is down 1.9%.
- Brazilian bank ADRs: BSBR -5.2%, BBD -6%, ITUB -5.8%
- CB Pharma Acquisition Corp. is a bio-tech focused blank check company, but it's made an offer of $3.25 per share in cash for broker-dealer National Holdings (NASDAQ:NHLD). Shareholders may also accept $3.50 in common stock of CB.
- NHLD closed last night at $2.60.
- CB says it has the cash on hand to make the purchase.
- Source: Press release
- As expected, the European Commission approves Roche's (OTCQX:RHHBY +1.5%) Cotellic (cobimetinib), in combination with Zelboraf (vemurafenib), for the treatment of adults with unresectable or metastatic BRAF V600 mutation-positive melanoma.
- Cobimetinib, co-developed with discoverer Exelixis (EXEL +1.1%), inhibits an enzyme called mitogen-activated protein kinase kinase (MEK), a mediator of downstream signaling of tumor growth factor receptors. Vemurafenib is a BRAF inhibitor that was discovered by Daiichi Sankyo's (OTCPK:DSKYF)(OTCPK:DSNKY) Plexxikon unit.
- Previously: European Ad Comm gives thumbs up to Roche's Cotellic/Zelboraf combo for certain type of melanoma (Sept. 25)
9:39 AM| 9:39 AM | Comment!
- The office buildings - all in Westwood, close to UCLA - total 1.7M square feet, and Blackstone (NYSE:BX) is talks to sell them to a group led by Douglas Emmett (NYSE:DEI), reports Bloomberg.
- The properties are among those remaining from Blackstone's purchase of Equity Office Properties in 2007. Most will have been sold by the end of the year, all probably gone by the end of 2016.
- The U.S. Marine Corps has placed a $13M order for AeroVironment's (AVAV +2.4%) small RQ-20A Puma AE UAVs and related spare parts. AeroVironment notes the Marines use the Puma AE as "the long-range solution for its small unit remote scouting system (SURSS), complementing the AeroVironment (NASDAQ:AVAV) RQ-11B Raven and RQ-12A Wasp."
- For reference, AeroVironment had July quarter UAS division revenue of $40.2M (-2% Y/Y). An charging system deal with Hyundai was announced yesterday.
- Dow +0.4% to 18,106.50. S&P +0.45% to 2,109.80. Nasdaq +0.6% to 5,024.79.
- Treasurys: 30-year +0.19%. 10-yr flat. 5-yr -0.03%.
- Commodities: Crude -1.96% to $42.03. Gold -0.42% to $1,069.30.
- Currencies: Euro -0.57% vs. dollar. Yen +0.24%. Pound -0.14%.
- VimpelCom (NASDAQ:VIP) is up 2.4% premarket on news that it's close to a near-record $775M payment to settle U.S. charges related to corruption in Uzbekistan dealings.
- A deal with the Justice Dept. and SEC could be announced in January, Bloomberg reports. Related to the Foreign Corrupt Practices Act, the payment would be second only to an $800M penalty paid by Siemens in 2008.
- The company had set aside $900M for potential liabilities. The U.S. began probing VimpelCom's dealings in Uzbekistan amid allegations that bribes were paid to companies connected to the Uzbek president's daughter in order to secure wireless spectrum rights.
- Previously: VimpelCom -7.3% as one-time items drive billion-dollar loss (Nov. 06 2015)
- Previously: VimpelCom making $900M provision amid Uzbekistan probes (Nov. 03 2015)
- Previously: U.S. telecom probe seeking to seize $1B in European assets (Aug. 13 2015)
- In a regulatory filing, Spectrum Pharmaceuticals (NASDAQ:SPPI) discloses that it has resubmitted its New Drug Application (NDA) to the FDA for Orphan Drug-tagged EVOMELA (melphalan) for the conditioning treatment prior to hematopoietic stem cell transplant in multiple myeloma patients or palliative treatment of multiple myeloma. The FDA's decision date (PDUFA) is May 9, 2016.
- The company received a Complete Response Letter (CRL) in October in response to its initial submission.
- Previously: No FDA approval for Spectrum Pharma's CE-Melphalan NDA, CRL received; shares down 21% premarket (Oct. 23)
- The average price for a gallon of gas in the U.S. has now dropped to $2.06 per gallon - a mark that is 27% lower than where gas prices stood heading into the holiday period last year. Despite the extra dollars in the wallets of consumers, most forecasts for holiday retail sales are on the modest side (below 4%).
- The extended period of sub-$3 gas prices in the U.S. hasn't exactly lit consumer spending across broad retail on fire (just ask Wal-Mart) - although it has stoked auto sales for the Detroit Three (GM, F, FCAU). The regional casino sector (ISLE, PENN, BYD, ERI, MTN, MCRI) and cruise line stocks (NCLH, RCL) have also benefited more than major chain stores. Some have suggested that lower gas prices are also an understated driver for Starbucks (NASDAQ:SBUX) and Netflix (NASDAQ:NFLX) which both score high on customer stickiness.
- What next? Seeking Alpha's Stock Pitch Contest on retail is still open until November 30 amid the reset on consumer spending expectations. Current long ideas include PLAY, FRAN, CASY, SKX, WMT, PSUN, HGG, PRTY, TJX, TA, VSTO - while short bets on WMAR, TIF, RT, AMZN, UA, LB, and OUTR are on record.
- Related ETFs: XLP, XLY, VDC, XRT, VCR, RTH, RETL, FXG, PBJ, IYK, IYC, FXD, PEJ, FDIS, RHS, FSTA, SCC, UCC, RCD, PMR, PEZ, UGE, PSL, PSCC, PSCD, SZK, BITE.
- Grupo BTG Pactual is lower by 20% in Brazilian trade after its billionaire founder and CEO Andre Esteves was arrested as part of the investigation into the pay-to-play scheme between a group of builders and Petrobras (NYSE:PBR). Police also detained the government's leader in the Senate, Delcidio Amaral, on suspicion of harming the probe.
- The action's "take the Petrobras probe to a whole new level," says Nicholas Spiro at Spiro Sovereign Strategy. "The scandal is becoming more debilitating by the day."
- PBR -4.7%, EWZ -4.1%, VALE -2.8% premarket
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
- UBS has downgraded both SunEdison (NYSE:SUNE) and its TerraForm Power (NASDAQ:TERP) YieldCo to Sell. The former has fallen to $3.93 premarket, and the latter to $8.30.
- The downgrades come a day after SunEdison's beaten-down shares rose 37.3% following news the company has paid down $95M of a $100M margin loan, and is selling 425MW of Indian assets to TerraForm Global. Two days ago, SunEdison announced it's putting CFO Brian Wuebbels in charge of its YieldCos, and giving chairman Manny Hernandez a more hands-on role.
- Needham's Edwin Mok (Buy rating) is talking up SunEdison's recent moves. "We see the management shake-up at the board level and the yieldcos, the drop down of higher yield projects to GLBL, and SUNE's pay down of the margin loan as positive signs that SUNE is responding to investor concerns regarding its liquidity and cash flow generation ... As SUNE continues to improve the operation structure, we see potential for shares to move higher given the depressed levels."
- The FDA designates Cellceutix's (OTCPK:CTIX) Phase 2-stage oral rinse Brilacidin-OM for Fast Track review for the prevention of oral mucositis, a common and debilitating inflammation and ulceration in the mouth that occurs as a side effect of certain cancer treatments. There is only one approved therapy for the condition, AMAG Pharma's (NASDAQ:AMAG) MuGard oral rinse.
- According to clinicaltrials.gov, the estimated final data collection date for the primary endpoint (WHO OM Score) in the 60-subject Phase 2 trial is June 2016. The estimated study completion date is December 2016.
- Fast Track status allows for more frequent interactions with the FDA review team and a rolling review of the New Drug Application (NDA).
- Following the company's quarterly results yesterday, RBC Capital VAL)+to+Underperform/11106620.html" target="_blank">downgrades Valspar (VAL) from Sector Perform to Underperform.
- The brokerage firm, however, raised the price target on the stock to $82 from a previous PT of $80.
- Previously: More on Valspar's FQ4 (Nov. 24 2015)
- S&P +0.17%.
- 10-yr -0.01%.
- Euro -0.47% vs. dollar.
- Crude -1.45% to $42.25.
- Gold -0.34% to $1,070.20.
- A Phase 3 clinical trial assessing Pfizer's (NYSE:PFE) LYRICA (pregabalin) for the treatment of chronic post-traumatic peripheral neuropathic pain failed to achieve its primary endpoint of a statistically valid reduction in pain from baseline to week 15.
- There are currently no approved treatments in the U.S. for the condition. The company does not disclose whether it is abandoning its pursuit of the indication or considering another late-stage trial.
- LYRICA is currently approved for the treatment of neuropathic pain associated with diabetic peripheral neuropathy, postherpetic neuralgia, adjunctive therapy in adults with partial onset seizures and neuropathic pain associated with spinal cord injury.
- Now an activist target, American Capital (NASDAQ:ACAS) responds, hiring Goldman Sachs to assist with a strategic review of all alternatives, including a sale of the company or various business lines.
- The just-launched $300M-$600M buyback program is increased to $600M-$1B. Purchases will only be made at prices less than 85% of net asset value (Sept. 30 NAV was $20.44; yesterday's close of $13.90 was a 32% discount to that). The company expects to complete the buyback by June.
- Results of the strategic review are anticipated no later than Jan. 31.
- Source: Press Release
- ACAS +6.4% premarket to $14.79.
- Previously: American Capital becomes activist target; up 5% premarket (Nov. 16)
- Sales of Star Wars consumer products could reach $5B over the first year after the December release date of Star Wars: The Force Awakens, according to some high-flying projections.
- The mark would smash the previous movie product sales record of $2.8B set by Cars 2.
- Disney (NYSE:DIS) turned the screws on licensing partners by working a deal for a ~20% royalty which is about double the normal rate. Hasbro (NASDAQ:HAS) is the major licensee for Star Wars toys, while a host of other companies have bits and pieces - including Jakks Pacific (NASDAQ:JAKK), Lego, Kay Jewelers (NYSE:SIG), Topps, Electronic Arts (NASDAQ:EA), Rubie's Costume Company, and even CoverGirl (NYSE:COTY).
- Pandora (NYSE:P) states the Register of Copyrights declined to express an opinion on the matter of differentiated music webcasting royalty rates. She added that since all participants in the ongoing Web IV rate proceeding had assumed a non-differentiated (uniform) rate structure, such a structure is the only reasonable outcome for the proceeding.
- Pandora has been seeking a uniform rate structure. The Register of Copyrights' opinion comes ahead of a mid-December decision by the Copyright Royalty Board (CRB) on the recording royalty rates Pandora will pay from 2016-2020. Pandora rose in September after the CRB backed the admissibility of Pandora's deal with indie music rights agency Merlin as a benchmark for broader recording royalty rates.
- Recording royalty payments account for much of Pandora's content acquisition costs, which in turn totaled $129.5M (42% of revenue) in Q3 after backing out one-time charges. Shares have risen to $13.97 premarket.
- Total (NYSE:TOT) is raising about $1.2B of new debt financing through a structure combining the issue of non-dilutive cash-settled convertible bonds with the purchase of cash-settled call options to hedge the company's exposure to the exercise of the conversion rights under the bonds.
- The combination of the two products will create a synthetic bond financing equal to a standard debt instrument with no dilution for shareholders.
- TOT -0.2% premarket
- Allergan (NYSE:AGN) and start-up Rugen Therapeutics enter into an exclusive collaboration to discover and develop novel therapies for Autism Spectrum Disorders and Obsessive Compulsive Disorders, focusing on small molecule candidates.
- Under the terms of the agreement, Rugen will receive an upfront payment and milestones. Allergan will have the exclusive option to acquire all rights, including global IP, to the compounds following clinical proof-of-concept studies. Specific financial terms are not disclosed.
- As expected, the European Commission approves Impax Laboratories' (NASDAQ:IPXL) NUMIENT (carbidopa-levodopa extended-release capsule) for the symptomatic treatment of adults with Parkinson's disease (PD). It is the company's first branded drug approval outside of the U.S.
- In clinical studies, PD patients receiving NUMIENT (formerly IPX066) experienced a decrease in "off" time (36.9% to 23.8%) compared to immediate-release levodopa-carbidopa. An "off" episode is a period of time when PD symptoms reemerge despite taking PD medications. In addition, NUMIENT patients increased "on" time without dyskinesia (abnormal involuntary movements) by 1.9 hours compared to 0.8 hours for the immediate-release version.
- IPX066 is marketed under the brand name RYTARY in the U.S.
- Previously: European Ad Comm backs Impax Labs' NUMIENT for Parkinson's symptoms (Sept. 25)
- Yingli (NYSE:YGE) expects to report Q3 revenue of $340M-$350M, a range declared to be "in-line with management's previous estimation," but which is below a $355.2M consensus.
- Module shipments are expected to total 450MW-460MW, below prior guidance of 550MW-580MW - Yingli blames "lower-than-expected utilization of production facilities for in-house PV [modules]." Gross margin is expected to rise to 8%-9% from Q2's 6.3% thanks to higher ASPs and lower unit costs.
- A $581.3M non-cash impairment charge will be recorded, primarily "due to the lower-than-expected utilization of certain production facilities" in 2015.
- Q3 results are due on the morning of Dec. 2. Shares haven't yet moved premarket. They closed yesterday at $0.70, having plunged this year due to solvency fears.
- Update (9:49AM ET): Yingli is down 4.3%.
- Cowen and Company projects holiday retail sales will increase between 2% and 3%. The forecast is below the 3.5% to 4.2% consensus range of analysts.
- Analyst Olivia Chen notes the earlier start to the promotional season and that online is driving a larger percentage of revenue. Typically, online shopping leads to a smaller basket size when compared to brick-and-mortar shopping and a higher degree of fragmentation of sales. Both trends work against big-box retailers (TGT, WMT, COST, BBY]]).
- ETFs: XLY, XRT, VCR, RTH, RETL, FXD, FDIS, RCD, PMR, BITE
- Citigroup initiates Lindblad (NASDAQ:LIND) with a Buy rating and $13 price target - 20% above last night's close.
- Things are going to plan, according to Lindblad bull Dane Capital Management, who expects sell-side coverage will be one of the catalysts for driving this inexpensive (in Dane's estimation) and under-followed stock higher.
- Previously: Lindblad Expeditions launches buyback (Nov. 9)
- Related: Lindblad Expeditions: An Unheard Of Small-Cap With An Impressive Growth Story (Nov. 18)
- Adjusted net earnings of $45.4M, or $0.34 per diluted share vs. $55.9M or $0.40 per diluted share in the same quarter a year ago.
- Net sales declined 9.8% to $538M from $596.5M in the same period of fiscal 2015. Gross margin of 33.1% vs. 35%.
- Repurchased 2.07M shares at an average price of $32.85 for a total of $68M.
- Fiscal 2016 outlook: Adjusted EPS of $1.49 -$1.69 (prior guidance of $1.57-$1.77). Sales between $2.2B-$2.3B.
- The board has approved an operated drilling and completion capital budget of $70M for drilling nine gross wells through the first half of 2016, and completing 18 gross wells through Aug. 2016, This compares to $171M through Aug. 2015.
- Development next year will be focused on natural gas drilling and completion activities in North Louisiana and East Texas where the company is targting 20-35% rates of return.
- Source: Press Release
- 58.com (NYSE:WUBA) is selling a controlling stake in its Guazi.com used car online marketplace business to co-CEO Mark Yang, the founder of classifieds site Ganji.com. The sale will leave 58.com with a 46% stake in Guazi.com.
- Yang will be stepping down as 58.com's co-CEO, leaving Michael Yao as the sole CEO. He'll remain co-chairman.
- The move comes seven months after 58.com bought a 43% stake in Ganji.com for $2.8B, a move that was applauded by investors for its potential to curb the the online classifieds rivals' heavy marketing spend.
- Today will likely be a downer for DMD-related companies in light of BioMarin's (NASDAQ:BMRN) poor showing at yesterday's Ad Comm meeting. In premarket trading, BMRN is down 4% on increased volume, Sarepta Therapeutics (NASDAQ:SRPT) is down 1% on light volume and PTC Therapeutics (NASDAQ:PTCT) is down 12% on light volume (Jefferies just downgraded it to Underperform).
- S&P +0.22%.
- 10-yr +0.05%.
- Euro -0.43% vs. dollar.
- Crude -1.60% to $42.19.
- Gold -0.11% to $1,072.60.
- China Nepstar Chain Drugstore (NYSE:NPD) reports comparable-store sales rose 13.2% in Q3 primarily due to in-store marketing initiatives and improved product mix.
- Private label products sales represents ~13.6% of the total revenue & 20.5% of the gross profit.
- Revenue contribution by products: Prescription drugs 23.4%; OTC 43.1%; Nutritional supplements 11.5%; Herbal products 4.4%; Convenience and other products 17.6%.
- Gross margin rate improved 50 bps to 40.9% mainly due to improved product mix and increased store productivity.
- Inventory -3.2% Y/Y to $93.45M.
- Store count -83 Y/Y to 1,965.
- At its extraordinary general meeting of shareholders held today, WuXi PharmaTech (NYSE:WX) stockholders voted overwhelmingly in favor of its plan to go private. More than 75% of outstanding ordinary shares were voted, with more than 97% in favor of the merger with New WuXi Life Science Limited (Parent) and WuXi Merger Limited (subsidiary of Parent). The merger should be completed next month.
- Previously: WuXi Pharma sets special shareholders meeting for November 25 for "go private" vote (Oct. 20)
- LafargeHolcim (OTCPK:HCMLY) plans to raise to raise 3.5B Swiss francs ($3.5B) next year from selling off cement assets as the recently merged group adjusts to tough conditions in markets like China and India.
- The company announced the portfolio review after missing third-quarter sales and earnings expectations as the stronger Swiss franc and lower prices weighed on its results.
- Teva Pharmaceutical Industries (NYSE:TEVA) enters into a licensing and drug discovery agreement with Sosei Group's (OTCPK:SOLTF) Heptares Therapeutics for exclusive global rights to develop, manufacture and commercialize novel, small molecule calcitonin gene-related peptide (CGRP) antagonists discovered by Heptares for the treatment of migraine.
- Under the terms of the agreement, Heptares will receive an upfront payment of $10M, research funding, milestones up to $400M and royalties on commercial sales.
- Teva President of Global R&D and CSO Michael Hayden, M.D., Ph.D., says, "CGRP antagonism represents an exciting opportunity to treat migraine. We believe small molecule CGRP antagonists offer further opportunities that are highly complementary to our promising candidate, TEV-48125, an anti-CGRP antibody."
- About 36M Americans, 55M Europeans and 8M Japanese suffer from migraine.
- The two industrial buildings in Norcross, GA total 222.1K square feet. The combined year 1 NOI will be about $861.1K for a 6.9% initial cap rate. The annualized straight-line cap rate is expected at 7.5%.
- The all-cash purchase price was $12.5M, and the weighted-average remaining lease term is 8.9 years.
- Source: Press Release
- Among the moves being considered by the ECB, according to Reuters, are two-tiered charges to banks leaving cash with the central bank, the purchase of regional bonds, and even the acquisition of ABS of distressed loans.
- "We have deflation, so you have to do something," says a source. "How this all looks in a few years, nobody knows."
- The ECB meets next week, so we won't have to wait long to hear the real story.
- The euro (NYSEARCA:FXE) has dropped below $1.06, and the Stoxx 50 (NYSEARCA:FEZ) is higher by 1.2%, led by Germany's (NYSEARCA:EWG) 1.5% advance.
- ETFs: FXE, VGK, EUO, FEZ, HEDJ, ERO, IEV, EPV, EZU, DRR, FEU, EEA, EUFX, EURL, ULE, FEP, UPV, DBEU, URR, ADRU, HEZU, FEEU, IEUR, FIEU, DBEZ, FEUZ, SBEU, HFEZ, HEGE, HGEU
- Net income of $351.2M, or $1.08 per share vs. $649.2M, or $1.83 per share, for the same period of 2014.
- Net sales decreased 25% Y/Y to $6.7B from $9B in the same quarter a year ago. Segment Sales: Agriculture & Turf. -25%; Construction & Forestry -32%.
- Guidance: Company equipment sales are projected to decrease about 7% for fiscal 2016 and to be down about 11% for the first quarter compared with year-ago periods. Fiscal 2016 earnings are expected to be approximately $1.4B.
- "Sales and earnings for the year were the sixth-highest in company history," said CEO Samuel Allen. "Although our forecast calls for lower results in the year ahead, the outlook represents a level of performance that is better than Deere has experienced in previous downturns."
- FQ4 results
- DE +5.1% premarket
- Additional stimulus moves being considered by the ECB include a two-tier penalty charge on banks leaving cash with the central bank, purchases of regional bonds, and even buying ABS on distress loans.
- The euro has tumbled below $1.06 and European stocks are higher by nearly 1.5%.
- U.S. stock index futures are up 0.25%. Asia was mixed overnight.
- The 10-year Treasury yield is down one basis point to 2.23%, gold is little-changed, and oil is off $0.81 per barrel to $42.07.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, PSQ, SPXU, TQQQ, SPXL, RSP, SPXS, QID, SQQQ, QLD, DOG, DXD, RWL, UDOW, EPS, SDOW, DDM, VFINX, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, LLSP, UDPIX, OTPIX, RYARX
- The European Medicines Agency's Committee for Orphan Medicinal Products (COMP) issues a positive opinion backing Orphan Drug designation for avelumab, an investigational fully human anti-PD-L1 IgG1 monoclonal antibody, for the treatment of Merkel cell carcinoma (MCC), a rare and aggressive type of skin cancer that strikes 2,500 Europeans each year.
- Pfizer (NYSE:PFE) and alliance partner Merck KGaA (OTCPK:MKGAF)(OTCPK:MKGAY) are currently conducting a Phase 2 trial, JAVELIN Merkel 200, assessing avelumab in patients with metastatic MCC whose disease has progressed after at least one prior line of chemotherapy. According to clinicaltrials.gov, the estimated final data collection date for the primary endpoint (confirmed best overall response) is January 2016. The estimated study completion date is January 2017.
- The companies inked a deal in November 2014 to co-develop and co-commercialize the product.
- Among the benefits of Orphan Drug status in the EU is a 10-year period of market exclusivity for the indication, if approved.
- Previously: Pfizer and Merck KGaA's avelumab a Breakthrough Therapy for rare skin cancer (Nov. 18)
- The European Commission approves the use of Pfizer's (NYSE:PFE) XALKORI (crizotinib) as first-line treatment of anaplastic lymphoma kinase (ALK)-positive advanced non-small cell lung cancer (NSCLC). Its previous indication was for the second-line treatment of NSCLC.
- The data supporting the expanded label was generated by the Phase 3 PROFILE 1014 study.
- XALKORI was the first ALK inhibitor cleared in the EU, China, U.S. and Japan. It is commercially available in more than 85 countries. More than 20K patients have been treated to date.
- S&P +0.25%.
- 10-yr +0.05%.
- Euro -0.52% vs. dollar.
- Crude -1.06% to $42.41.
- Gold -0.07% to $1,073.10.
6:38 AM| 6:38 AM | 3 Comments
- "The slowing of growth in China since the beginning of 2015 has reduced euro area exports, in particular exports of machinery and transport equipment," the ECB said in its twice-yearly Financial Stability Review.
- "This has had adverse repercussions for, in particular, exporters of manufactured goods, which account for almost 90% of goods exports to China."
- The central bank went on to raise its risk-assessment level for global financial-market instability to 'medium' and kept the same level for dangers to the banking system due to low interest rates.
- The main cabin crew union at Lufthansa (OTCQX:DLAKY) is calling off a strike planned for this week after progress was made in talks with management over retirement and pension benefits.
- Relations between the two sides soured over the past few months as Lufthansa sought to push cost cuts, resulting in the airline's cabin crew staging the longest ever strike in the history of the German carrier.
- Japan -0.39%.
- Hong Kong -0.40%.
- China +0.88%.
- India Closed.
- London +0.94%.
- Paris +1.32%.
- Frankfurt +1.04%.
- A flurry of U.S. economic data will be crammed into the market session today, as trading activity slows before a long Thanksgiving weekend.
- Coming up: Durable Goods, Jobless Claims, Personal Income, New Home Sales, Consumer Sentiment and EIA Petroleum Inventories.
- The figures come on the back of a solid revision to third quarter GDP and could provide more evidence that the economy is strong enough to withstand a rate hike in December.
- U.S. equity-index futures are all up by 0.3%.
- With the holidays incoming, Sony (NYSE:SNE) has picked today to reveal that it has sold 30.2M PlayStation 4 videogame consoles to date, suggesting that it's dominating in the console wars.
- While there have not been official sales figures for Microsoft's Xbox One since last November (when it recorded 10M unit sales), analysts say it is still lagging far behind the PlayStation 4.
- Nintendo's Wii U, which was released in November 2012 - a year before the Xbox One and PS4 - sold 10.73M units as of September 30.
- Investors across the world are closely watching rising geopolitical tensions between Russia and NATO member Turkey after a Russian SU-24 warplane was shot down by a Turkish F-16 fighter jet on Tuesday.
- Russia has warned its former ally and trade partner that diplomatic and commercial relations between the countries are at risk, calling the downing "a stab in the back."
- The incident also dims the prospects for a grand international coalition to change the course of chaos in Syria.
- ETFs: RSX, TUR, RUSL, RUSS, ERUS, RSXJ, RBL, TKF
- The partners in Israel's massive offshore natural gas field Leviathan have signed a preliminary deal to supply gas to Egypt via an existing underwater pipeline to the Sinai peninsula.
- The agreement would supply Egypt's Dolphinus Holdings with up to 4B cubic meters of gas a year for 10-15 years.
- Leviathan (expected to begin production in 2019-2020) is owned by a group led by Texas-based Noble Energy (NYSE:NBL) and Israel's Delek Group (OTCPK:DGRLY).
- Previously: Israel to fast-track development of Leviathan (Nov. 01 2015)
- Minutes from the Bank of Japan's latest meeting show that some policymakers believe an output gap was one reason the country was taking longer to meet its 2% inflation target, highlighting a lingering worry that quantitative easing may not be working.
- An output gap is the difference between what an economy is producing and what it could produce if operating at its most efficient.
- Separately, Japan announced it will raise the minimum wage by 3% each year from the next fiscal year as part of a package targeting consumer spending and economic growth.
- Nikkei -0.4% to 19,848.
- ETFs: DXJ, EWJ, DFJ, DBJP, NKY, JOF, EZJ, JEQ, JPNL, DXJS, EWV, SCJ, HEWJ, JSC, JPXN, JPP, QJPN, FJP, JPMV, DXJT, DXJC, DXJR, DXJH, JHDG, DXJF, HEGJ, JDG, JPN, FXJP, HGJP
- Syngenta (NYSE:SYT), in the past a takeover target for Monsanto, is looking at takeovers, joint ventures or asset sales, the company's chairman told Switzerland's Tages-Anzeiger.
- "I would be surprised if no transaction materializes in the next half year," Michel Demare said in an interview published on Wednesday.
- Syngenta shares have climbed 15% YTD.
- Investigators looking into the E. coli outbreak at Chipotle (NYSE:CMG) restaurants face "significant challenges" in finding the source of the sickness, according to U.S. food safety detectives.
- The bacteria has so far sickened more than 40 people, sending Chipotle shares to their lowest level in more than a year.
- New cases identified last Friday, however, could make it easier to use supplier management systems to find the source of the outbreak, which has spread to Washington, Oregon, California, New York, Minnesota and Ohio.
- EU authorities are proposing a system to share the cost of protecting savers during banking crises, as the FDIC does in the United States.
- But the European Deposit Insurance Scheme, which would protect savings accounts of up to €100K, could face opposition from Germany, which has long resisted sharing fiscal risks with other eurozone countries.
- Meanwhile, the ECB said it would temporarily pause its asset purchase program over the holiday season (December 22-January 1) "to reduce possible market distortions" during a period of "lower market liquidity."
- At least 12 people were killed and another 17 were injured when a bus carrying Tunisian presidential guards was struck by a bomb in the country's capital late on Tuesday.
- Tunisia, often described as the sole success story of the Arab Spring revolts, has experienced several recent attacks by Islamist extremists, including a mass shooting at a beach resort this year that damaged the nation's tourism industry.
- President Beji Caid Essebsi has declared a 30-day state of emergency and imposed an overnight curfew.
- German prosecutors have opened another investigation into Volkswagen (OTCQX:VLKAY), this one focusing on whether the company broke local tax laws in connection with cheating on carbon dioxide emissions tests.
- A car's level of CO2 helps determine how much tax auto owners must pay every year.
- Volkswagen estimates it will cost €2.2B to reimburse European governments for the tax breaks, which would be on top of the €6.7B the company has already set aside to address its main air pollution crisis.
- Argentine President-elect Mauricio Macri is pledging to get the country's stalled economy moving again but needs to settle a decade-long conflict with holdout creditors before he can return to global credit markets.
- The debt battle pushed Latin America's No. 3 economy back into default last year.
- Removing currency controls and unifying the exchange rate are also on Macri's agenda, but opponents warn his proposal will trigger a "mega-devaluation."
- ETFs: ARGT
- Standard & Poor's has lowered its unsolicited rating outlook on Yahoo (NASDAQ:YHOO) to negative from stable, citing prospects for poor revenue growth, management instability and higher costs for acquiring traffic.
- "We could lower our rating on Yahoo if the company's competitiveness in its display or search advertising businesses continues to decline and it is not able to reverse the negative operating trends affecting EBITDA," S&P said in a statement.
- For the three and a half years Marissa Meyer has led the company, revenues are down about 10%, EBITDA is down 45%, and 13 top executives have left the firm this year alone.
- 7:00 MBA Mortgage Applications
- 8:30 Durable Goods
- 8:30 Initial Jobless Claims
- 8:30 Personal Income and Outlays
- 9:00 FHFA House Price Index
- 9:45 PMI Services Index Flash
- 9:45 Bloomberg Consumer Comfort Index
- 10:00 New Home Sales
- 10:00 Reuters/UofM Consumer Sentiment
- 10:30 EIA Petroleum Inventories
- 11:30 Results of $29B, 7-Year Note Auction
- 12:00 PM EIA Natural Gas Inventory
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