Today - Thursday, May 28, 2015
- Alcoa (NYSE:AA) shares posted a modest loss of less than 1% in today's trade but it was enough to result in a 52-week low, as J.P. Morgan's Michael Gambardella cuts estimates and price targets for Alcoa and Century Aluminum (NASDAQ:CENX) based on his expectation of lower aluminum regional premiums.
- Gambardella says the timing lag in the business means the two companies will not feel the full brunt of the lower premiums until H2, but AA's diversity in its midstream and downstream segments will shield the impact of the lower premiums; the analyst maintains his Neutral rating on the stock and cuts his stock price target by just $1 to $14.
- However, CENX is a primary aluminum metal producer and highly leveraged to changes in the LME aluminum price and regional premiums, and will suffer more from lower prices, Gambardella says.
- Syngenta (NYSE:SYT), which already has rejected an unsolicited $45B takeover offer from Monsanto (NYSE:MON), is building up defenses as it prepares for a possible higher bid, Bloomberg reports.
- SYT is said to have added UBS to its stable of advisers led by Goldman Sachs, as it expects MON could return as soon as next week with a bid that tops the unsuccessful recent offer of 449 Swiss francs/share.
- SYT, which snubbed MON’s proposal because it deemed the offer too low and the execution risk too high, may be willing to consider an offer of 500 francs or more, according to the report.
- The April Prices Index for agricultural production, up 2% from the March index but 9.6% below the April 2014 index.
- The crop production index rose 3.5% M/M to 85, while the livestock index fell 0.9% to 116.
- Food grains -1.2% M/M and -18% Y/Y.
- Feed grains -1.6% M/M and -20% Y/Y.
- Oilseeds -1.3% M/M and -31% Y/Y.
- Fruits and nuts -1.6% M/M and +3.3% Y/Y.
- Other crop +3.6% M/M and -10% Y/Y.
- Related ETFs: DBA, RJA, DAG, JJA, RGRA, AGA, AGF, FUD, USAG, UAG, DIRT, TAGS, ADZ
- Century Aluminum (CENX -9.1%) opens sharply lower after J.P. Morgan's Michael Gambardella slashes his estimates for the company well below Wall Street consensus.
- The analyst reiterates his Underweight rating and cuts his stock price target to $5, as he forecasts a $0.27 loss for CENX's FY 2015 vs. the Street's $1.52 in earnings, citing a weak aluminum pricing environment.
- Also: AA -0.7%, ACH -5.3%, RS -1.2%, NOR -3.4%, CSTM -2.7%, KALU -0.1%.
- The price of iron ore has climbed to its highest level in nearly three months despite consistent downbeat coverage from analysts and a rising U.S. dollar, which typically dampens demand for commodities.
- Iron ore stockpiles in China have been declining as steelmakers build up their stores of the material, resulting in limited availability for some types of ore, analysts say; inventories at China's port facilities have dropped to ~85M tons from 86.6M a week earlier and ~100M tons at the start of 2015.
- Iron ore prices have lifted from a decade-low below US$47/ton last month but are still down nearly 40% Y/Y, and analysts lately have turned sour on the commodity’s outlook; Citigroup this week cut its long-run iron ore price forecast by a third to US$55/ton and said it expects prices to average closer to $40 during 2016-18.
- BHP -1.5%, RIO -1.3%, VALE -1.5% premarket.
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