Seeking Alpha
  • Today - Tuesday, March 3, 2015

  • 1:20 PM
    • Shares of Lumber Liquidators ((NYSE:LL+9.6%) stage a comeback with several investment firms out with a defense.
    • Janney Capital thinks the company will be exonerated as it notes the lack of "victims" from the transgressions alleged in the 60 Minutes piece.
    • Most traders think today's action is more than just shorts closing their position.
    • Despite the mini-rally, there's no shortage of negative views still floating out there on Lumber Liquidators. Whitney Tilson and SA contributor Orange Peel come to mind.
    • Previous on LL and 60 Minutes
    | 1 Comment
  • 1:03 PM
    • Orexigen Therapeutics (OREX +53%) short sellers are licking their wounds today. Shares are up on a whopping 22x surge in volume in response to the news that patients taking its obesity med Contrave (naltrexone HCl/bupropion HCl) may reduce their risk of having a heart attack by almost 50%.
    • The data behind the news comes from an interim analysis of the 9,000-patient LIGHT study which is being conducted to determine the heart-safety profile of the obesity med. The analysis showed patients receiving Contrave experienced 35 major adverse cardiac events (MACE) compared to 59 for those taking placebo. The benefit was statistically significant. A MACE is a heart attack, stroke or heart-related death.
    • The company will conduct a second interim analysis of the data at 50% of events, which should happen in the next several weeks. Orexigen is also required to run a second heart-safety study as a condition of its clearance by the FDA in September 2014.
    • Contrave is sold in the U.S. by Takeda Pharmaceutical Co. (OTCPK:TKPHF) (OTCPK:TKPYY).
    • According to Yahoo Finance, almost 42% of Orexigen's float (more than 38M shares) was sold short as of February 13.
    • Related tickers: (VVUS +4.3%)(ARNA -5.5%)
    | 1 Comment
  • 1:02 PM
    • "Micron is undershipping demand in DRAM, as technology migrations limit supply output," writes Nomura's Romit Shah, downgrading Micron (MU -4.4%) to Neutral and cutting his target by $10 to $30. He also thinks the memory giant "seems behind on technology transitions," and that FQ3 (May quarter) estimates are too high.
    • Shah believes Micron has lost a couple hundred bps of DRAM share to Samsung, and expects bigger DRAM/NAND investments in 2016 in order to sustain share. His 2015 and 2016 EPS estimates have respectively been cut by $0.30 and $0.86 to $3.35 and $4.00.
    • Shares are below $30 for the first time since Feb. 10. They sold off last week following a downbeat Cleveland Research note and a report that Samsung would be supplying mobile DRAM for the iPhone 6S, but pared their losses after analysts defended the company and Micron offered positive remarks at a Susquehanna conference.
    • Nomura upgraded Micron to Buy in Dec. 2013, when shares were at $22.50.
    | 10 Comments
  • 12:57 PM
    • Miller Energy (MILL +7.1%) moves steadily higher on news it drilled and completed two new gas wells at its North Fork Unit, and brought both into production.
    • The first productive zone flowed in the first well is producing at a rate of ~1,650 cf/day, and MILL says it will open and sequentially flow-test two additional zones in the well once the first zone stabilizes; the second well is producing at ~350 cf/day.
    • MILL says it came in under budget for both wells, averaging well below expected gross costs of $9M/well.
    | Comment!
  • 12:45 PM
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  • 12:39 PM
    • BofA/Merrill's Wamsi Mohan has reinstated coverage on Seagate (STX -5.4%) with an Underperform rating and $50 target, and on Western Digital (WDC -3.3%) with a Neutral rating and $117 target.
    • Mohan is worried Q1 and Q2 hard drive demand (i.e. TAM) is tracking below expectations. With regards to Seagate, he's also worried about its relatively high PC exposure (especially for business PCs), SSD cannibalization risk in both the client and (high-margin) performance hard drive segments, and potential conflicts with OEM customers from Seagate's systems business (stems from the Xyratex acquisition).
    • Though worried about Western's exposure to the same TAM issues as Seagate, Mohan is relatively positive on the company due to its "solid" SSD position (partly the result of acquisitions) and strength in the growing high-capacity enterprise drive segment (boosted by demand from Internet giants).
    • Top hard drive/SSD controller supplier Marvell (MRVL -2.1%) is following Seagate/Western lower, as is hard drive assembly supplier Hutchison (HTCH -1.7%). The Nasdaq is down 0.9%.
    • Marvell's decline comes as the company reveals a Release 10 4G modem at the Mobile World Congress (competes with chips from Qualcomm, Intel, and others), as well as a partnership with Google to support the Web giant's Ara modular phone project.
    • Earlier: Western Digital buys object storage software firm
    | 2 Comments
  • 12:10 PM
    • Gogo (NASDAQ:GOGO) is now trading up 4.9% on heavy volume after selling off last night and at today's open, following its announcement of a $300M notes offering.
    • Gogo noted that the deal's combination with forward stock purchase transactions (and derivative transactions by the counterparties) "could have the effect of increasing, or reducing the size of any decrease in, the price of Gogo's common stock concurrently with, or shortly after, the pricing of the notes."
    • The percentage of float sold short was 34.4% as of Feb. 13.
    • Previously: Gogo up 8.1% as Q4 revenues grow 18% (Feb. 26 2015)
    | Comment!
  • 12:08 PM
    • "This is a bad deal. It's a very bad deal. We're better off without it," says Israeli PM Benjamin Netanyahu, speaking before Congress about U.S. negotiations with Iran over its nuclear ambitions. "The alternative to this deal is a much better deal."
    • For now, the clarity of his speech looks to have set back the chance of sanctions being lifted on Iran, and crude oil is more than $1 per barrel higher to $50.25 since the address' 11 ET start.
    • USO +0.95%
    • ETFs: USO, OIL, UCO, SCO, BNO, UGA, DTO, DBO, UWTI, USL, DWTI, UHN, DNO, SZO, OLO, TWTI, OLEM
    | 2 Comments
  • 11:58 AM
    • Ecopetrol (EC -5.6%) is sharply lower after unexpectedly recording its first quarterly loss since shares began trading in 2007 on rising costs and a decline in crude output and prices.
    • The Colombian state-owned oil producer posted a Q4 net loss of 844B pesos ($333M), far below analyst forecasts for a profit of 1.35T pesos and a profit of 2.43T pesos in the year-ago quarter.
    • EC's oil and gas production fell 1.8% Y/Y to 765.1K boe/day, while production for the full year fell 4.2% Y/Y to 755.4K boe/day; exploration costs rose 18 % in the quarter.
    • EC says the average price of crude, gas and other products was $10.6B less in 2014 than in the prior year.
    • ‘EC's "high leverage to oil price movements has contributed to its being one of the weakest performers,” BofA analysts say.
    | Comment!
  • 11:46 AM
    • As Ben Levisohn reports, Goldman Sachs analyst Jay Olson downgraded MannKind (MNKD -9.6%) after he revised his valuation model to include net discounts to Afrezza of 40% instead of 20% in light of the downward price pressure from payers to other diabetes product makers.
    • He cites the recent launches of Boehringer Ingelheim's Jardiance (empagliflozin) tablets and Eli Lilly's (LLY -1%) Trulicity (dulaglutide injection) that came in 75% below his Q4 estimates. Afrezza's launch trajectory based on script data, albeit early stage, is also falling short of expectations.
    • Mr. Olson has lowered his 2025 sales projection 50% for Afrezza to $1B from $2B and reduced EPS estimates from 2017 onward. He believes that MannKind will achieve the sales targets required to capture $925M in milestones from commercial partner Sanofi (SNY -0.1%), however.
    • His $3 price target leaves a 50% downside from the current price.
    • Previously: MannKind off 10% premarket on Goldman downgrade (March 3)
    | 26 Comments
  • 11:33 AM
    • Aviat (AVNW +10.2%) has risen to its highest levels since January (before shares tumbled due to the company's light FQ3 guidance) after announcing it's launching job cuts and narrowing its product and geographic focus.
    • Shares remain 33% below a 52-week high of $2.07. They trade for just 0.2x estimated FY15 sales.
    | Comment!
  • 11:28 AM
    • Volatile Vringo (VRNG +7%) has rallied strongly over the last two trading days after providing an update on its ongoing legal battle against ZTE, and publishing patent licensing rate term sheets on its site.
    • Of note: Vringo stated ZTE is seeking (in the U.S.) "a final determination on a global FRAND license for ZTE to Vringo`s standard-essential patents," and that its complaint will be heard in a Southern New York district court.
    • Also: Vringo says it filed a Statement of Case in the U.K. that "sets out terms for a FRAND license in the context of appropriate relief being determined" for a Vringo patent ZTE was ruled to infringe, should ZTE request a FRAND license.
    • Shares soared last month on hopes a ZTE settlement was near, but gradually gave back a chunk of their gains.
    | 5 Comments
  • 10:59 AM
    • Analysts say Petrobras' (PBR +1.8%) more aggressive divestment plan is a step in the right direction, and shares are higher following the company's plans to sell $13.7B in assets over the next two years after previously planning to sell $5B-$11B in assets in the five years through 2018.
    • The news "reflects the new management’s focus and sense of urgency in addressing the company’s need to reduce leverage, preserve cash, and rationalize investments,” Banco Santander analysts say, adding that “its execution will be key."
    • PBR is developing the largest group of offshore discoveries this century, but it emerged from the recent commodities boom with $135B of total debt after missing output targets and years of subsidizing imported fuel.
    | Comment!
  • 10:50 AM
    • Navistar (NYSE:NAV) reports sales of manufactured products rose 9.96% to $2.39B in FQ1.
    • Segment results: North America Truck: $1.705B (+17.51%); North America Parts: $626M (+6.83%); Global Operations: $152M (-28.30%); Financial Services: $60M (+9.09%).
    • Class 8 heavy-duty truck chargeouts +7.0% Y/Y.
    • Order backlog for class 6-8 trucks +27.0% Y/Y.
    • FQ2 Guidance: Adjusted EBITDA: $100 to $150M; Manufacturing cash, cash equivalents and marketable securities: $700M to $800M.
    • FY2015 Guidance: Retail deliveries of Class 6-8 trucks and buses in the United States and Canada will be between 350,000 units to 380,000 units.
    | Comment!
  • 10:37 AM
    • Springleaf's (LEAF +28.5%) B rating and OneMain's B+ rating have both been put on CreditWatch with negative implications at S&P following the deal for LEAF to buy OneMain from Citigroup.
    • S&P expects Springleaf to have a stronger market position following the merger, but substantially higher leverage, and - depending on the details of the financing - the agency expects to cut LEAF's rating by either one or two notches. OneMain's rating will likely be lowered by a similar amount.
    • Efficient markets? The purchase of OneMain by Springleaf has been one of the market's worst kept secrets for some time, yet LEAF is higher by nearly 30% on the announcement.
    • Previously: Springleaf sees big things with OneMain purchase (March 3)
    • Previously: Springleaf (finally) lands Citi's OneMain Financial (March 3)
    | Comment!
  • 10:09 AM
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  • 10:02 AM
    • TowerJazz (NASDAQ:TSEM) is at its highest levels since 2011 after announcing it has begun producing an IR sensor that Intel will use in one of its 3D depth-sensing camera solutions (presumably involving Intel's RealSense platform).
    • The specialty foundry notes it developed a unique sensor pixel for Intel that "allows high quantum efficiency at near infrared light, specifically at the scanning laser wavelength with high sensor resolution," and that its proximity to Intel's Israeli ops (responsible for its 3D sensing efforts) also helped.
    • Shares are adding to the gains they saw yesterday amid a chip stock rally.
    | 1 Comment
  • 10:00 AM
    • After a nice run higher for LTC Properties (LTC -2%) - up about 20% over the past five months even after a pullback in February - Mizuho heads to the sidelines, downgrading to Neutral from Buy.
    | Comment!
  • 9:45 AM
    • In addition to beating Q4 estimates, JD.com (JD +2.3%) is guiding for Q1 revenue of RMB34.8B-RMB35.8B ($5.55B-$5.71B), good for 54%-58% Y/Y growth and slightly above a $5.6B consensus at the midpoint. Given JD's history of revenue beats, the outlook might be conservative.
    • GMV rose 119% Y/Y in Q4 to $13.8B, a slight improvement from Q3's 111% growth. Fulfilled orders +95% to 217.8M, annual active customer accounts +104% to 96.6M. 36% of fulfilled orders were via mobile, up from Q3's 29.6%. Direct sales rose 67% Y/Y to $5.22B, and services/other revenue rose 199% to $377M.
    • With JD spending heavily on its warehouses and logistics infrastructure to differentiate itself, fulfillment spend rose 107% to $400M. Marketing spend rose 121% to $200M, tech/content spend 124% to $100M, and G&A spend 63% to $56M.
    • Gross margin rose to 12.6% in Q4 from Q3's 12.2% and the year-ago period's 10.1%. 2014 free cash flow (kept down by heavy spending) was $139.4M.
    • Q4 results, PR
    | Comment!
  • 9:24 AM
    • Ford (NYSE:F) unit sales -1.9% to 180,383 vs. the +5% to +6% expected range from analysts.
    • Passenger car sales fell 8.1% to 56,081 during the month.
    • Utilities sales -2.3% to 54,420.
    • Truck sales +4.0% to 69,882 led by the new aluminum-bodied F-150.
    • Shares of Ford are down 3.8% premarket to $15.95 after the sales report.
    | 22 Comments
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