Today - Tuesday, September 16, 2014
- YRC Worldwide (NASDAQ:YRCW) +9.8% AH after launching an amendment to its term loan credit agreement to revise its leverage ratio covenant from Q3 2014 through Q4 2016.
- YRCW also says it expects to report adjusted EBITDA of $75M-$80M and operating income of $22M-$27M for Q3, vs. year-ago Q3 adjusted EBITDA of $62M and operating income of $59M.
- U.S. Steel (NYSE:X) +6.8% AH after updating its Q3 outlook and saying it expects a significant improvement in operating income, and Q3 earnings will come in significantly higher than current consensus estimates.
- The company announces three key strategic actions: It will not proceed with an expansion at its iron ore pellet operations in Keewatin, will forgo further development and construction of the carbon alloy facilities at Gary Works, and will apply for relief for U. S. Steel Canada from its creditors and will be deconsolidated from U.S. Steel's financial statements.
- The estimated capital investment that would have been required to complete these projects was more than $800M; the company estimates the strategic actions will result in total charges of $550M-$600M.
- "Based on Rackspace's (NYSE:RAX) reaccelerated revenue growth and its potential trajectory for the coming year, the board concluded the company is best positioned to maximize shareholder value by executing its strategy as the #1 managed cloud company."
- A share repurchase plan was also nixed as the company wants to maintain flexibility.
- Graham Watson is out as CEO, and Taylor Rhodes has been appointed to replace him and to join the board. Watson is now non-executive chairman. Rhodes joined Rackspace in 2007 and has been president since February.
- Shares -16.5% AH
- Guidance is on the light side, with FQ4 revenue expected at $1.025B-$1.075B vs. the Street outlook of $1.09B, and EPS of $0.26-$0.32 vs. the Street at $0.31.
- Guidance is located in the earnings call presentation. The live call starts at 5 ET.
- ADBE -4% AH
- Previously: Adobe Systems beats by $0.02, misses on revenue
- Ocean shipping of dry bulk commodities and oil will nearly double earnings capacity during the next several years while the smaller container ship industry will tread water, Deutsche Bank says.
- The firm believes the industry is "on the cusp of entering a new era of prosperity," driven by improved supply/demand dynamics, increased fleet utilization and abundant capital to fund profitable growth.
- On average, DB forecasts a near doubling of earnings power across its coverage universe by 2016 vs. 2013, led by shippers in the Dry Bulk and Oil trades.
- Initiated with Buy ratings: TNK +9.8%, CPLP +2.5%, DSX +2.8%, DRYS +5.5%, DLNG +2.4%, NNA +2.1%, SALT +0.8%, SSW +1.3%, GASS +3.3%.
- Started at Hold: TK +1.2%, NMM +0.3%, FRO +3.3%, TGH -0.6%.
- AK Steel (AKS +4.4%) says it sees the recently completed Severstal Dearborn acquisition as accretive to its earnings and credit enhancing; it anticipates annual cost-based synergies of ~$50M, with ~$25M realized in 2015.
- Cowen raises its price target to $11 from $9 as it becomes more constructive on AKS shares, especially given the recent ~18% pullback; the firm thinks AKS could benefit from upside to production guidance, an improving product mix at the Dearborn facility, and margin expansion on lower raw material inputs (Briefing.com).
- Sears Holdings (SHLD -9.1%) grabbed hold of $400M in cash last night when it secured a short-term loan from Eddie Lampert, but the stock has lost roughly $320M in market cap today as some investors were left with an uneasy feeling over the real estate pledged to back the Lampert loan.
- Though the cash was needed to buy inventory for the holiday shopping season, skeptics are focused on the additional risk of seeing Sears assets dumped at below-market prices.
- Shares of SHLD carved out a new 52-week low of $30.16 earlier.
- "We are bolstered by the fact that the patents were again found valid and that it was confirmed that Apple's VPN on Demand functionality infringes the VirnetX (VHC -41.7%) patents," says CEO Kendall Larsen. "We look forward to readdressing the FaceTime infringement and damages issues as soon as possible."
- Source: Press Release
- Previously: VirnetX plunges as jury award over Apple is vacated
- Tracking 60 semiconductor M&A deals since 2009, analyst Rajvindra Gill says the median enterprise value/sales ratio is 2x, and the mean 2.4x. The average 1-day premium takeout price has been 31%.
- Given Entropic's (ENTR +8%) recent struggles, Gill puts a conservative 1.5x revenue estimate on the stock and comes up with a number around $4.50 per share. Murata's purchase of PSMI last month is a good comp, and that was done at 2.1x EV/Sales, representing a 62.5% premium to the previous price.
- Previously: Entropic up 7.7% as strategic options to be explored
- Cowen Research initiates Boston Beer (SAM +3.3%) with a rosy Outperform rating and $250 price target.
- The investment firm thinks the brewer has done a solid job of keeping its brands vibrant.
- Expecting a Boston Beer takeover? Insko Capital Management's Tim Insko rains on that parade with a dig into the company's SEC filings.
- "Tableau's (DATA +2.6%) valuation relative to its potential revenue growth [is] compelling," says analyst Phil Winslow, upgrading to Outperform and lifting the price target to $100 from $87.50. Trading at an enterprise value to revenue ratio of 10.2x, Tableau isn't cheap, concedes Winslow, but is only just above its historical average.
- Tableau, says Winslow, should be able to expand the market for business intelligence tools to small and medium enterprises, as well as grow within the enterprise customer base. He's also sees potential in international sales as Tableau gets just 23% of revenue from outside North America vs. the industry grabbing 53% of revenue overseas.
- It doesn't take much to move Digital Ally (DGLY +8%), and the release of a Justice Department report titled, "Implementing a Body-Worn Camera Program" appears to be doing the job today.
- "Body-worn cameras can help improve the high-quality public service expected of police officers and promote the perceived legitimacy and sense of procedural justice that communities have about their police departments."
- Also higher, but somewhat calmer is Taser International (TASR +0.8%).
- Telecom Italia (TI -1.2%) is evaluating a potential acquisition of Brazilian carrier Oi (OIBR +11.8%) through its Tim Participacoes (TSU -2.1%) unit to challenge Telefonica (TEF +0.9%) in Latin America's largest phone market, Bloomberg reports.
- In a deal, Tim, Brazil's second largest mobile phone company, would gain Oi’s fixed-line network to sell broadband services after losing out to Spain's Telefonica in a bid to merge with another local landline provider, GVT.
- "Investors are watching election polls very closely, and people are betting that Dilma’s support is losing momentum," says one fund manager as the Bovespa jumps 3.5%. The latest polls suggest opposition candidate Marina Silva has a 70% chance of winning, says Nomura's Tony Volpon.
- Individual names: Petrobas (PBR +8.1%), Vale (VALE +1.5%) - even amid the "End of the Iron Age", Itau Unibanco (ITUB +5.6%).
- The iShares Brazil MSCI Index (EWZ +4%).
- Brazil ETFs: EWZ, BRF, BRXX, EWZS, BRAQ, BRZU, BRAZ, BZQ, BRAF, UBR, BRZS, DBBR, FBZ
- The iShares S&P LatAM 40 Index (ILF +3.1%)
- Broad LatAm ETFs: ILF, LBJ, GML, EEML, FLN
- Broad emerging markets: EEM +1.5%, VWO +1.6%
- Thinly-traded nano cap MediciNova (MNOV -10.9%) is off on 5x higher volume as traders take some money off the table from the sharp run-up that began on August 26 when the firm announced the impending start of a clinical trial evaluating MN-166 as a treatment for patients with ALS.
- Shares peaked yesterday at $3.38 which represented a 62.5% jump from August 25's close of $2.08.
- The last week has seen a number of shops moving forward their forecasts for the timing of Fed rate hikes, and suggesting the FOMC will set the stage for tighter policy by removing the rates at zero for a "considerable time" language from its policy statement tomorrow.
- Not so fast, says the WSJ's Jon Hilsenrath in a video chat. The "considerable time" pledge will, in fact, remain.
- The news is enough the send a previously flatlining S&P 500 (NYSEARCA:SPY) to a 0.65% gain. The Nasdaq 100 (QQQ +0.5%) and DJIA (DIA +0.5%) rise alongside.
- ETFs: SPY, SH, SSO, SDS, VOO, IVV, SPXU, UPRO, SPXL, RSP, RWL, EPS, BXUB, SPLX, SFLA, BXUC, SPUU
- Netflix (NFLX -1.4%) has given an "eye-popping" two-year commitment to comedy series Love from Judd Apatow, reports Variety. CCO Ted Saranos says the new series will bring a whole new level of "agony and ecstasy" to the modern day comedy of manners.
- The company cleared a hurdled in France after telecom Bouygues announced it would integrate the streaming service into its set-top boxes this fall. Orange may follow suit.
- The third season of House of Cards is currently being filmed. The 13-episode original series is expected to debut in February of 2015.
- Shares of Netflix dipped below $450 for the first time since mid-August before recovering a bit.