Tuesday, March 11, 2014
- A Phase 2 trial of Oxigene's (OXGN) Zybrestat ovarian cancer drug (used in combination with Roche's Avastin) "met its primary endpoint of a statistically significant increase in progression-free survival." (PR)
- Oxigene expects full study results to be "submitted for presentation at a future scientific meeting."
- CEO Peter Langecker: "Zybrestat is the first vascular disrupting agent to show a statistically significant progression-free survival benefit, and we are evaluating next steps to advance this combination to patients in need."
- Seadrill Partners (SDLP) agrees to acquire the West Auriga ultra-deepwater drillship from Seadrill (SDRL) for ~$797M.
- The drillship is expected to carry out operations in the Gulf of Mexico until the end of its contract in Oct. 2020 at a dayrate of $565K/day.
- SDLP will recommend an increase in cash distributions of $0.13-$0.15/unit, which would take effect in the June 2014 quarter.
- SDLP plans a public offering of 10.4M common units to fund the transaction; SDRL has committed to purchase at least $50M worth of the units at the public offering price.
- SDRL +0.9%, SDLP -2.4% AH.
- MagnaChip's (MX) audit committee has determined the company "incorrectly recognized revenue on certain transactions." Restatements are planned for 2011, 2012, and the first three quarters of 2013. (PR)
- In addition, MagnaChip is withdrawing its prior Q4 guidance due to the review. The company doesn't expect its restatements will affects its reported cash/debt balances for the covered periods.
- CFO Margaret Sakai will no longer serve as MagnaChip's principal accounting officer. Jonathan W. Kim, once the CFO of cloud software firm Zero Desktop, is now MagnaChip's chief accounting officer.
- MagnaChip originally delayed its Q4 report on Jan. 27 to give itself more time to review its numbers.
- Noranda Aluminum (NOR) -4.2% AH after announcing a secondary public offering of 10M common shares by Apollo Global Management; NOR will receive no proceeds from the offering.
- NOR also discloses that extraordinary weather production disruptions may result in a $0.03-$0.04 increase in integrated cash cost per pound during Q1 vs. prior expectations; the New Madrid and Gramercy facilities have resumed normal operations after severe winter weather hurt production in January and February.
- VeriFone (PAY) expects FQ2 revenue of $440M-$445M and EPS of $0.30-$0.32 vs. a consensus of $439.1M and $0.31. FY14 (ends in Oct.) guidance is for revenue of $1.78B-$1.81B and EPS of $1.40 vs. a consensus of $1.79B and $1.39.
- After declining 12% Y/Y in FQ4, revenue grew 2% in FQ1 thanks to a 19% increase in services revenue (boosted some by acquisitions) to $174.9M. System (hardware) revenue fell 7% to $261.2M, but that's better than FQ4's 23% drop.
- Gross margin fell 200 bps Y/Y to 42%. Opex jumped 18% Y/Y to $152M (exc. amortization costs), with R&D and G&A spend each rising 27%. Sales/marketing spend rose 10.5%.
- North American sales -2% Y/Y, Latin America -3.4%, EMEA +3.4%, Asia-Pac +6.3%.
- Shares have crossed their 52-week high of $30.72 in AH trading.
- FQ1 results, PR
- Rentech (RTK -7.1%) and Rentech Nitrogen Partners (RNF -2.4%) tumble after posting wider than expected net losses and disappointing revenue.
- RTK reported a Q4 loss of $0.06/share, $0.04 worse than the consensus analyst estimate, while revenues fell 14.3% Y/Y to $79.3M vs. $84.7M consensus.
- RNF reported a Q4 loss of $0.45/share vs. consensus estimate of an $0.08 loss, while revenues fell 40.9% Y/Y to $54.6Mvs $69.7M consensus.
- Management believes completed capacity expansion projects have increased production rates and should increase production for the year at the Pasadena and East Dubuque facilities.
- "While I strongly support GSE reform that protects taxpayers, such efforts should also be mindful of investors," says Senator Pat Toomey, sticking up for preferred and common stockholders of Fannie Mae (FNMA -30.6%) and Freddie Mac (FMCC -27.5%) in wake of a proposed bill to wind down the GSEs.
- "Taxpayers should be fully compensated, but once they are, investors ... should not be denied their fair share of any remaining value."
- "The government¹s actions with respect to the GSEs' profits raise serious concerns, including whether these actions lawfully respect the rights and interests of all Americans."
- Previous: Fannie and Freddie plunge on wind-down proposal.
- Alcoa (AA +1.7%) has enjoyed a 15% run YTD, and Morgan Stanley’s Paretosh Misra thinks shares look expensive at 34x 2014 earnings forecasts vs. the historical one-year forward P/E of 14x, but the firm sees three reasons Alcoa shares could hold up nicely.
- Stanley thinks Q1 consensus looks too low; based on quarter-to-date average FX, alumina and aluminum prices, the firm sees Q1 EPS at ~$0.10 vs. current consensus of $0.04.
- The auto body sheet story has gained traction, the firm says, sensing investors may overlook weakness in near-term earnings given the focus on 2015-20.
- Alumina prices are $15/ton below the YTD peak level, but the firm cites some expectation that Indonesia may not restart bauxite export this year, which could tighten the market.
- Still, Morgan’s base case for AA stock is $11, 11% lower than today’s price.
- The collapse in Plug Power (PLUG -40.8%) has pulled down other alternative fuel shares, as investors turned away from FuelCell Energy's (FCEL -21.6%) better than expected Q4 results to focus on Citron Research's report that said PLUG would be fairly valued at 50 cents.
- Citron's Andrew Left has since taken to the CNBC airwaves to say PLUG has no unique technology and PLUG's management cannot be trusted.
- Ballard Power (BLDP -26.6%), which earned 11% of its revenue last year by supplying the fuel cell stacks that run PLUG’s forklifts, also takes a beating.
- Faring better is Capstone Turbine (CPST +7.9%), off earlier five-year highs but still sharply higher, as the maker of microturbines has been moving slowly toward profitability.
- In one of the great delayed reactions of recent times, Fannie Mae (FNMA -39%) and Freddie Mac (FMCC -36.4%) plunge in wake of the proposed bipartisan Senate bill calling for their wind-down. Like Wile E. Coyote after running off the edge of a cliff, the stocks hung around in positive territory for a couple of hours after the news hit ... then they looked down.
- The Fannie "S" series preferred is off 9.9%, Freddie's is down 18.5%.
- NRG Energy (NRG +1.7%) agrees to acquire Dominion Resources' (D -0.2%) retail electric business for an undisclosed sum, in a bid to expand its presence in the northeastern U.S. and Texas.
- Dominion's retail electric business serves more than 600K customers in northern states from Illinois to New York, while its Cirro Energy brand is focused on Texas.
- NRG has made a steady series of deals to boost its retail power business and its collection of power plants; it became the biggest wholesale electric company in the U.S. last year after it acquired GenOn Energy for ~$1.7B, and it is buying coal plants, wind farms and other assets out of bankruptcy from an Edison International subsidiary.
- Edison Mission Energy wins court approval of a plan to exit Chapter 11 protection through a $2.64B asset sale to NRG Energy (NRG +1.7%) that will give NRG coal-burning power plants in the Midwest that may boost revenue if natural gas prices rebound.
- Edison Mission’s non-bankrupt parent, Edison International (EIX -1%), agreed last month to a nearly $1B settlement that resolved the unit’s tax, pension and other liabilities.
- NRG is paying $2.29B in cash and $350M in stock for the assets; EIX will continue to own what’s left of Edison Mission after the sale.
- Though ChipMos (IMOS -2%) missed Q4 EPS estimates by $0.09 (the company blames higher tax expenses and non-controlling interests), it's guiding for Q1 revenue to be "flat to up in the low single digits" from a Q4 level of $163.9M. That's favorable to a $161.4M consensus.
- Q4 revenue (-5% Q/Q) was in-line with guidance for a 4%-8% drop. Likewise, gross margin (18.9%, up from 13.7% a year ago and down from 22.2% in Q3) came within a guidance range of 16%-20%.
- Q1 GM is expected to be in a range of 17%-21%, and opex is expected to total 6%-8% of revenue. ChipMos' full-year capex is expected to be less than $80M. Tax rates are expected to remain high in Q1 before normalizing in Q2.
- The company says it remains "very positive" about its LCD driver/assembly ops, and expect process improvements to lower its materials costs.
- Q4 results, PR
- Buying low and selling high in the GSEs continues unabated as a long-awaited bipartisan Senate bill is introduced to continue government backing of mortgages, but wind down Fannie Mae (FNMA +4.5%) and Freddie Mac (FMCC +4.7%).
- The White House: “We support this effort and believe it is a workable bipartisan approach to complete the biggest remaining piece of post-recession financial reform.”
- A bill in the more conservative House would more or less cut the government out of housing finance. With elections months away, the chance of any sort of reform becoming law this year are probably slim.
- An rally that has already yielded huge gains for fuel cell and other alternative energy stocks is now propelling smart grid/wind turbine maker American Superconductor (AMSC +12.8%) higher.
- Last month, AMSC rallied on an FQ3 beat and a favorable legal ruling in its long-running battle against ex-customer Sinovel. 9% of the float was shorted as of Feb. 14.